Western Union 2011 Annual Report Download - page 84
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Description Judgments and Uncertainties
Effect if Actual Results Differ from
Assumptions
Other Intangible Assets
We capitalize certain initial
payments for new and renewed
agent contracts as well as acquired
intangible assets and software.
We evaluate such intangible assets
for impairment on an annual basis
and whenever events or changes in
circumstances indicate the carrying
value of such assets may not be
recoverable. In such reviews,
estimated undiscounted cash flows
associated with these assets may
be compared with their carrying
values to determine if a write-
down to fair value (normally
measured by the present value
technique) is required.
The capitalization of initial
payments for new and renewed
agent contracts is subject to strict
accounting policy criteria and
requires management judgment as
to the appropriate time to initiate
capitalization. Our accounting
policy is to limit the amount of
capitalized costs for a given agent
contract to the lesser of the
estimated future cash flows from
the contract or the termination fees
we would receive in the event of
early termination of the contract.
The estimated undiscounted cash
flows associated with each asset
requires us to make estimates and
assumptions including among
other things revenue growth rates,
and operating margins based on
our budgets and business plans.
Disruptions to contractual
relationships, significant declines
in cash flows or transaction
volumes associated with contracts,
or other issues significantly
impacting the future cash flows
associated with the contract would
cause us to evaluate the
recoverability of the asset.
If an event described above occurs
and causes us to determine that an
asset has been impaired, that could
result in an impairment charge.
The net carrying value of our other
intangible assets as of
December 31, 2011 was $847.4
million.
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