Vistaprint 2010 Annual Report Download - page 52

loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has
been impaired or a liability has been incurred and the amount of loss can be reasonably estimated.
We regularly evaluate current information available to us to determine whether such accruals should
be adjusted. Specific information regarding litigation we are involved in is included under “Item 3.
Legal Proceedings.”
Business Combinations. We assign the value of the consideration transferred to acquire a
business to the tangible assets and identifiable intangible assets acquired and liabilities assumed on
the basis of their fair values at the date of acquisition. We assess the fair value of assets, including
intangible assets, using a variety of methods and each asset is measured at fair value from the
perspective of a market participant. The method used to estimate the fair values of intangible assets
incorporates significant assumptions regarding the estimates a market participant would make in order
to evaluate an asset, including a market participant’s use of the asset and the appropriate discount
rates for a market participant. Assets recorded from the perspective of a market participant that are
determined to not have economic use for us are expensed immediately. Any excess purchase price
over the fair value of the net tangible and intangible assets acquired is allocated to goodwill.
Transaction costs and restructuring costs associated with a transaction to acquire a business are
expensed as incurred.
Intangible Assets. Intangible assets include intellectual property consisting primarily of
patents, domain names and customer lists. We record acquired intangible assets at fair value on the
date of acquisition and amortize such assets using the straight-line method over the asset’s expected
useful life, unless another method is deemed to be more appropriate. For patents developed internally,
we capitalize costs incurred to obtain patents, including attorney fees, registration fees, consulting
fees, and other expenditures directly related to securing the patent. The costs of pursuing others who
are believed to infringe on the Company’s patents, as well as costs of defending our patents against
infringement claims, are expensed as incurred.
We evaluate the remaining useful life of intangible assets on a periodic basis to determine
whether events and circumstances warrant a revision to the remaining useful life. If the estimate of an
intangible asset’s remaining useful life is changed, we amortize the remaining carrying value of the
intangible asset prospectively over the revised remaining useful life.
Goodwill. Goodwill is evaluated for impairment on an annual basis during the fiscal third
quarter, or more frequently if certain indicators are present or changes in circumstances suggest that
impairment may exist.
Recently Issued Accounting Pronouncements
See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 2—Summary of
Significant Accounting Policies—Recently Adopted Accounting Pronouncements and Recently Issued
Accounting Pronouncements.”
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