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ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
81
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 1 to 5 years for computers and
equipment, 1 to 6 years for furniture and fixtures 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.
Goodwill, Purchased Intangibles and Other Long-Lived 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 2009 and determined that there was no impairment.
Goodwill is assigned to one or more reporting segments on the date of acquisition. 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 amortize intangible assets with finite lives over their estimated useful lives and review them for impairment
whenever an impairment indicator exists. 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 any intangible asset impairment charges in fiscal 2009, 2008 or 2007.
Our intangible assets are amortized over their estimated useful lives of 1 to 13 years as shown in the table below.
Amortization is based on the pattern in which the economic benefits of the intangible asset will be consumed.
Weighted Average
Useful Life (years
)
Purchased technology ....................................................................
7
Localization ............................................................................
1
Trademarks ............................................................................
7
Customer contracts and relationships .......................................................
10
Other intangibles ........................................................................
2
Software Development Costs
Capitalization of software development costs for software to be sold, leased, or otherwise marketed begins upon the
establishment of technological feasibility, which is generally the completion of a working prototype that has been certified as
having no critical bugs and is a release candidate. Amortization begins once the software is ready for its intended use,
generally based on the pattern in which the economic benefits will be consumed. To date, software development costs
incurred between completion of a working prototype and general availability of the related product have not been material.
Revenue Recognition
Our revenue is derived from the licensing of software products, consulting, hosting services and maintenance and
support. Primarily, we recognize revenue when persuasive evidence of an arrangement exists, we have delivered the product
or performed the service, the fee is fixed or determinable and collection is probable.