8x8 2014 Annual Report Download - page 59

INVENTORY
Inventory is stated at the lower of standard cost, which approximates actual cost using the first-in, first-out method, or market. Any write-down
of inventory to the lower of cost or market at the close of a fiscal period creates a new cost basis that subsequently would not be marked up
based on changes in underlying facts and circumstances. On an on-going basis, the Company evaluates inventory for obsolescence and slow-
moving items. This evaluation includes analysis of sales levels, sales projections, and purchases by item, as well as raw material usage related to
the Company's manufacturing facilities. If the Company's review indicates a reduction in utility below carrying value, it reduces inventory to a
new cost basis. If future demand or market conditions are different than the Company's current estimates, an inventory adjustment may be
required, and would be reflected in cost of goods sold in the period the revision is made. Inventory was comprised of the following:
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the
straight-line method. Estimated useful lives of three years are used for equipment and software and five years for furniture and fixtures.
Amortization of leasehold improvements is computed using the shorter of the remaining facility lease term or the estimated useful life of the
improvements. Property and equipment was comprised of the following:
Maintenance, repairs and ordinary replacements are charged to expense. Expenditures for improvements that extend the physical or economic
life of the property are capitalized. Gains or losses on the disposition of property and equipment are recorded in the income from operations.
ACCOUNTING FOR LONG
-LIVED ASSETS
The Company reviews the recoverability of its long-lived assets, such as property and equipment, intangible assets subject to amortization, and
capitalized software, when events or changes in circumstances occur that indicate that the carrying value of the asset or asset group may not be
recoverable. Examples of such events could include a significant disposal of a portion of such assets, an adverse change in the market involving
the business employing the related asset or a significant change in the operation or use of an asset. The assessment of possible impairment is
based on the Company's ability to recover the carrying value of the asset or asset group from the expected future pre-tax cash flows
(undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an
impairment loss is recognized for the difference between estimated fair value and carrying value. The measurement of impairment requires
management to estimate future cash flows and the fair value of long-lived assets. No such impairment charges were recorded in the periods
presented.
54
March 31,
2014
2013
(in thousands)
Work
-
in
-
process
$
23
$
23
Finished goods
788
488
$
811
$
511
March 31,
2014
2013
(in thousands)
Machinery and computer equipment
$
9,557
$
9,097
Furniture and fixtures
505
447
Licensed software
3,517
2,136
Leasehold improvements
3,468
3,343
17,047
15,023
Less: accumulated depreciation and amortization
(9,336)
(8,350)
$
7,711
$
6,673