Audiovox 2004 Annual Report Download - page 71

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AUDIOVOX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
November 30, 2002, 2003 and 2004
(Dollars in thousands, except share and per share data)
Depreciation is calculated on the straight−line method over the
estimated useful lives of the assets as follows:
Buildings 20−30 years
Furniture, fixtures and displays 5−10 years
Machinery and equipment 5−10 years
Computer hardware and software 3−5 years
Automobiles 3 years
Leasehold improvements are amortized over the shorter of the
lease term or estimated useful life of the asset. Assets acquired
under capital lease are amortized over the term of the lease.
Capitalized computer software costs obtained for internal use are
amortized on a straight− line basis.
Depreciation and amortization of property, plant and equipment
amounted to $3,666, $3,525 and $2,723 for the years ended
November 30, 2002, 2003 and 2004, respectively. Included in
depreciation and amortization expense is amortization of computer
software costs of $850, $500 and $149 for the years ended
November 30, 2002, 2003 and 2004, respectively. Included in
depreciation expense is $240 of depreciation related to property
under capital lease for each of the three years in the period
ended November 30, 2004.
(l) Goodwill and Other Intangible Assets
Goodwill and other intangible assets consists of the excess over
the fair value of assets acquired (goodwill) and other intangible
assets (patents and trademarks).
In July 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 141 "Business Combinations" (SFAS No. 141) and
SFAS No.142. The Company early adopted the provisions of SFAS No.
141 and SFAS No. 142 as of December 1, 2001. SFAS No. 141
requires that the purchase method of accounting be used for all
future business combinations and specifies criteria intangible
assets acquired in a business combination must meet to be
recognized and reported apart from goodwill. As a result of
adopting the provisions of SFAS No. 141 the Company accounted for
the acquisitions of Code−Alarm and Recoton under the purchase
method of accounting in accordance with SFAS No. 141 (see Note 5
of Notes to Consolidated Financial Statements).
SFAS No. 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead
tested for impairment at least annually or more frequently if an
event occurs or circumstances change that could more likely than
not reduce the fair value of a reporting unit below its carrying
amount. SFAS No. 142 also requires that intangible assets with
estimable useful lives be amortized over their respective
estimated useful lives and reviewed for impairment in accordance
with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long−Lived Assets".
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