Adobe 2007 Annual Report Download - page 70

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Allowance for doubtful accounts
We maintain an allowance for doubtful accounts which reflects our best estimate of potentially uncollectible trade
receivables. We regularly review our trade receivables allowances by considering such factors as historical experience,
credit-worthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’ s
ability to pay.
Beginning
Balance
Due to
Acquisition
Charged/
(Credited) to
Operating
Expenses Deductions(*)
Ending
Balance
Allowance for doubtful accounts:
Year Ended:
November 30, 2007................................ $ 6,798 — $ (1,367) $ (1,033 ) $ 4,398
December 1, 2006 .................................. 5,376 2,105 1,107 (1,790 ) 6,798
December 2, 2005 .................................. 6,191 — 394 (1,209 ) 5,376
(*) Deductions related to the allowance for doubtful accounts represent amounts written off
against the allowance, less recoveries.
Other Receivables
Other receivables primarily include tax and interest receivables.
Foreign Currency Translation
We translate assets and liabilities of foreign subsidiaries, whose functional currency is their local currency, at exchange
rates in effect at the balance sheet date. We translate revenue and expenses at the monthly average exchange rates. We
include accumulated net translation adjustments in stockholders’ equity as a component of accumulated other comprehensive
income.
Property and Equipment
We record property and equipment at cost less accumulated depreciation and amortization. Property and equipment are
depreciated using the straight-line method over their estimated useful lives ranging from 2 to 7 years and not to exceed 35
years for buildings. Leasehold improvements are amortized using the straight-line method over the lesser of the remaining
respective lease term or useful lives.
We capitalize certain costs for internal-use software incurred during the application development stage, in accordance
with American Institute of Certified Public Accountants (“AICPA”) Statement of Position 98-1, “Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use”.
Goodwill and Purchased and Other Intangibles
In accordance with SFAS No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets,” we review our goodwill for
impairment annually, or more frequently, if facts and circumstances warrant a review. We completed our annual impairment
test in the second quarter of fiscal 2007 and determined that there was no impairment.
We evaluate goodwill for impairment by comparing the fair value of each of our reporting segments to its carrying
value, including the associated goodwill. To determine the fair values, we use the market approach based on comparable
publicly traded companies in similar lines of businesses and the income approach based on estimated discounted future cash
flows. Our cash flow assumptions consider historical and forecasted revenue, operating costs and other relevant factors.
Upon acquisition, our intangible assets, which are subject to amortization, are recorded at fair value. SFAS 142 requires
that intangible assets with finite lives be amortized over their estimated useful lives and reviewed for impairment whenever