Adobe 2008 Annual Report Download - page 73

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credit-worthiness, the age of the trade receivable balances and current economic conditions that may affect a customer’ s
ability to pay and we specifically reserve for those deemed uncollectible.
2008
2007
2006
Beginning balance ..............................
$
4,398
$
6,798
$
5,376
Due to acquisition ..............................
—
—
2,105
Charged (credited) to operating expenses ...........
4,414
(1,367
)
1,107
Preference claim, charged to operating expense ......
(2,000
)
—
—
Deductions(*) ..................................
(2,684
)
(1,033
)
(1,790
)
Ending balance .................................
$
4,128
$
4,398
$
6,798
_________________________________________
(*) Deductions related to the allowance for doubtful accounts represent amounts written off against
the allowance, less recoveries.
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 up to 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, Purchased Intangibles and Other Long-Lived Assets
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 2008 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.
We evaluate long-lived assets, excluding goodwill, for impairment in accordance with SFAS No. 144, “Accounting for
the Impairment or Disposal of Long-Lived Assets.” SFAS 142 also requires that intangible assets with finite lives be
amortized over their estimated useful lives and reviewed for impairment whenever an impairment indicator exists under
SFAS No. 144. We continually monitor events and changes in circumstances that could indicate carrying amounts of our
long-lived assets, including our intangible assets may not be recoverable. When such events or changes in circumstances
occur, we assess recoverability by determining whether the carrying value of such assets will be recovered through the
undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of these
assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. We did
not recognize intangible asset impairment charges in fiscal 2008, 2007 or 2006.