Travelzoo 2003 Annual Report Download - page 52

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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
(d) Use of Estimates
Management of the Company have made a number of estimates and assumptions relating to the reporting
of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare
these Ñnancial statements in conformity with accounting principles generally accepted in the United States of
America. Actual results could diÅer from those estimates.
(e) Property and Equipment
Property and equipment consisted of the following:
December 31,
2003 2002
Computer hardware and softwareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $316,837 $249,801
OÇce equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 193,722 141,266
510,559 391,067
Less accumulated depreciationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 346,525 248,976
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $164,034 $142,091
Property and equipment are stated at cost less accumulated depreciation. Additions, improvements and
major renewals are capitalized. Maintenance, repairs and minor renewals are expensed as incurred. Deprecia-
tion is provided using the straight-line method over the estimated useful lives of the assets. Estimated useful
lives are 3 years for property and equipment.
(f) Intangible Assets
Intangible assets consist of the following:
December 31,
2003 2002
Acquired amortized intangible assets:
Internet domain names ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $344,857 $344,857
Less accumulated amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 198,064 132,564
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $146,793 $212,293
Amortization expense was $65,500, $78,518 and $50,714 for the years ended December 31, 2003, 2002
and 2001, respectively.
In October 2001, the Company completed the acquisition of the weekends.com domain name. As
consideration for the purchase, the Company paid the seller $125,000 and agreed to provide a minimum
number of clicks to the seller's other websites through advertising placed on the Travelzoo website. The fair
value of the advertising services of $89,286 was determined based on the cash price of similar advertising
services and recorded as deferred revenue. The revenue was recognized as the clicks were delivered. During
the years ended December 31, 2002 and 2001, $3,410 and $16,449, respectively, of revenues related to this
arrangement were recognized. The agreement with the seller to provide advertising services expired on
September 30, 2002. As such, $69,427 of advertising was not delivered and the carrying amounts of the
intangible asset and related deferred revenue were reduced accordingly.
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