Activision 2010 Annual Report Download - page 64

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changes during our 2011 planning process conducted during the months of November and December, which resulted in a
strategy change to, among other things, focus on fewer title releases in the casual genre and no music titles with peripherals.
As we consider this an indicator of impairment of our intangible assets, we updated our future projected revenue streams for
certain franchises in the casual games and music genres. We performed recoverability tests and, where applicable, measured
the impairment of the related intangible assets in accordance with ASC Subtopic 360-10.
Determining whether impairment has occurred requires various estimates and assumptions, including determining
which cash flows are directly related to the potentially impaired asset, the estimated remaining useful life over which cash
flows will occur, the amount of these cash flows and the asset’s residual value, if any. For intangible assets that did not pass
the recoverability test, measurement of an impairment loss requires a determination of fair value, which is based on the best
information available. Based on the characteristics of the assets being valued and the availability of information, the
Company used the income approach, which presumes that the value of an asset can be estimated by the net economic benefit
to be received over the estimated remaining useful life of the asset, discounted to present value. We derived the required cash
flow estimates from our historical experience and our internal business plans and applied an appropriate discount rate. Based
on this analysis, we recorded impairment charges of $67 million, $9 million and $250 million to license agreements, game
engines and internally developed franchises intangible assets, respectively, for the year ended December 31, 2010 within our
Activision segment.
Similarly in 2009, we recorded impairment charges of $24 million, $12 million and $373 million to license
agreements, game engines and internally developed franchises intangible assets, respectively, within our Activision segment.
13. Current Accrued Expenses and Other Liabilities, and Other Current Assets
Current accrued expenses and other liabilities were comprised of the following (amounts in millions):
At
December 31,
2010 2009
Accrued royalties payable ................................................................................... $59 $64
Accrued selling and marketing costs ................................................................... 91 128
Current income tax payable ................................................................................. 95 —
Accrued payroll related costs .............................................................................. 386 271
Other .................................................................................................................... 187 316
Current accrued expenses and other liabilities ................................................ $818 $779
Included in other current assets of our consolidated balance sheets are deferred cost of sales—product costs of
$250 million and $255 million at December 31, 2010 and 2009, respectively.
14. Operating Segments and Geographic Region
Our operating segments are consistent with our internal organizational structure, the manner in which our operations
are reviewed and managed by our Chief Executive Officer, who is our Chief Operating Decision Maker (“CODM”), the
manner in which operating performance is assessed and resources are allocated, and the availability of separate financial
information. Currently, we operate under three operating segments: Activision, Blizzard and Distribution (see Note 1 of the
notes to the consolidated financial statements). We do not aggregate operating segments.