American Home Shield 2009 Annual Report Download - page 83

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 1. Significant Accounting Policies (Continued)
2007 to December 31, 2007 and the Predecessor period from January 1, 2007 to July 24, 2007 was $150.0 million, $151.3 million, $66.5 million and
$75.2 million, respectively.
Inventory: Inventories are recorded at the lower of cost (primarily on a weighted average cost basis) or market. The Company's inventory primarily
consists of finished goods to be used on the customers' premises or sold to franchisees.
Property and Equipment, Intangible Assets and Goodwill:
Property and equipment consist of the following:
Balance as of
December 31,
Estimated
Useful
Lives
(Years)
(In millions)
2009 2008
Land $ 12.9 $ 12.9 N/A
Buildings and improvements 54.2 51.8 10 - 40
Technology and communications 125.8 107.1 3 - 7
Machinery, production equipment and vehicles 134.5 98.9 3 - 9
Office equipment, furniture and fixtures 17.7 17.1 5 - 7
345.1 287.8
Less accumulated depreciation (133.0) (72.2)
Net property and equipment $ 212.1 $ 215.6
Depreciation of property and equipment was $64.4 million, $55.6 million, $23.0 million and $27.2 million for the years ended December 31, 2009 and
2008, the Successor period from July 25, 2007 to December 31, 2007 and the Predecessor period from January 1, 2007 to July 24, 2007, respectively.
Intangible assets consisted primarily of goodwill in the amount of $3,119.8 million and $3,093.9 million, indefinite-lived trade names in the amount of
$2,380.1 million and $2,408.1 million, and other intangible assets in the amount of $407.1 million and $559.9 million at December 31, 2009 and 2008,
respectively.
Fixed assets and intangible assets with finite lives are depreciated and amortized on a straight-line basis over their estimated useful lives. These lives are
based on the Company's previous experience for similar assets, potential market obsolescence and other industry and business data. As required by accounting
standards for the impairment or disposal of long-lived assets, the Company's long-lived assets, including fixed assets and intangible assets (other than
goodwill), are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the
carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, an impairment loss would be recognized equal to the
difference between the carrying amount and the fair value of the asset. Changes in the estimated useful lives or in the asset values could cause the Company to
adjust its book value or future expense accordingly. As part of applying purchase accounting related to the Merger, the Company has established useful lives
for depreciable and amortizable assets and assigned fair values to its tangible and intangible assets.
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