Snapple 2008 Annual Report Download - page 84

For financial reporting purposes, depreciation is computed on the straight-line method over the estimated
useful asset lives as follows:
Asset Useful Life
Buildings and improvements ............................................ 40years
Machinery and equipment.............................................. 10years
Vehicles ........................................................... 5years
Cold drink equipment ................................................. 4to7years
Computer software ................................................... 3to5years
Leasehold improvements are depreciated over the shorter of the estimated useful life of the assets or the lease
term. Estimated useful lives are periodically reviewed and, when warranted, are updated.
The Company periodically reviews long-lived assets for impairment whenever events or changes in circum-
stances indicate that their carrying amount may not be recoverable. In order to assess recoverability, DPS compares
the estimated undiscounted future pre-tax cash flows from the use of the asset or group of assets, as defined, to the
carrying amount of such assets. Measurement of an impairment loss is based on the excess of the carrying amount of
the asset or group of assets over the long-lived asset’s fair value. As of December 31, 2008, no analysis was
warranted.
Goodwill and Other Intangible Assets
In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other
Intangible Assets, (“SFAS 142”) the Company classifies intangible assets into three categories: (1) intangible assets
with definite lives subject to amortization; (2) intangible assets with indefinite lives not subject to amortization; and
(3) goodwill. The majority of the Company’s intangible asset balance is made up of brands which the Company has
determined to have indefinite useful lives. In arriving at the conclusion that a brand has an indefinite useful life,
management reviews factors such as size, diversification and market share of each brand. Management expects to
acquire, hold and support brands for an indefinite period through consumer marketing and promotional support. The
Company also considers factors such as its ability to continue to protect the legal rights that arise from these brand
names indefinitely or the absence of any regulatory, economic or competitive factors that could truncate the life of
the brand name. If the criteria are not met to assign an indefinite life, the brand is amortized over its expected useful
life.
Identifiable intangible assets deemed by the Company to have determinable finite useful lives are amortized on
a straight-line basis over their estimated useful lives as follows:
Intangible Asset Useful Life
Brands . . ......................................................... 5to15years
Bottler agreements .................................................. 5to15years
Customer relationships and contracts ..................................... 5to10years
DPS conducts tests for impairment in accordance with SFAS 142. For intangible assets with definite lives, tests
for impairment must be performed if conditions exist that indicate the carrying value may not be recoverable. For
goodwill and indefinite lived intangible assets, the Company conducts tests for impairment annually, as of
December 31, or more frequently if events or circumstances indicate the carrying amount may not be recoverable.
DPS’ equity method investees also perform such tests for impairment for intangible assets and/or goodwill. If an
impairment charge was recorded by one of its equity method investees, the Company would record its proportionate
share of such charge. Impairment charges are recorded in the line item impairment of goodwill and intangible assets
in the Consolidated Statement of Operations. Refer to Note 3 for additional information.
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DR PEPPER SNAPPLE GROUP, INC.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)