Rosetta Stone 2012 Annual Report Download - page 91
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Table of Contents
There were no changes in the valuation techniques or inputs used as the basis to calculate the contingent purchase price accrual.
Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation on property, leasehold improvements,
equipment, and software is computed on a straight-line basis over the estimated useful lives of the assets, as follows:
Expenses for repairs and maintenance that do not extend the life of equipment are charged to expense as incurred. Expenses for major renewals and
betterments, which significantly extend the useful lives of existing property and equipment, are capitalized and depreciated. Upon retirement or
disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is
recognized.
Intangible assets consist of acquired technology, including developed and core technology, customer related assets, trade name and trademark, and
other intangible assets. Those intangible assets with finite lives are recorded at cost and amortized on a straight line basis over their expected lives in
accordance with ASC topic 350, ("ASC 350"). Annually, as of December 31, the Company reviews its indefinite
lived intangible assets for impairment based on the fair value of indefinite lived intangible assets as compared to the carrying value in accordance with
ASC 350. In the event the carrying value exceeds the fair value of the assets, the assets are written down to their fair value. There has been no
impairment of intangible assets during any of the periods presented.
The value of goodwill is primarily derived from the acquisition of Rosetta Stone Ltd. (formerly known as Fairfield & Sons, Ltd.) in January 2006
and the acquisition of certain assets of SGLC in November 2009. The Company tests goodwill for impairment annually on June 30 of each year at the
reporting unit level using a fair value approach, in accordance with the provisions of ASC topic 350, ("ASC 350") or
more frequently, if impairment indicators arise. The Company's annual testing resulted in no impairments of goodwill since the dates of acquisition.
Beginning in the fourth quarter of 2012, the Company began reporting its results in three reportable segments, which resulted in three reporting
units for goodwill impairment purposes—North America Consumer, ROW Consumer, and Institutional. Accordingly, the Company allocated goodwill
from our former Consumer reporting unit to the new reporting units, North America Consumer and
F-14
Software 3 years
Computer equipment 3-5 years
Automobiles 5 years
Furniture and equipment 5-7 years
Building 39 years
Building improvements 15 years
Leasehold improvements lesser of lease term or economic life
Assets under capital leases lesser of lease term or economic life