Autodesk 2006 Annual Report Download - page 99

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Impairment of Long-Lived Assets
At least annually or sooner, as circumstances dictate, Autodesk assesses the recoverability of its long-lived
assets by comparing the undiscounted net cashflows associated withsuch assets against their respective carrying
values. Impairment, if any, is based on the excess of the carrying value over the fair value. There was no
impairment of long-lived assets during the year ended January 31, 2006.
During fiscal 2004 Autodesk identified an impairment related to certain intangible assets acquired in
relation to the acquisition of the software division of Media 100, Inc. (“Media 100”) attributed to the Media and
Entertainment Segment. Autodesk wrote down the remaining net book value of these intangibles by $1.8 million
to an amount equal to the fair value of the Media 100-based products. This charge was recorded in cost of license
and other revenues for the Media and Entertainment Segment of Autodesk.
In addition to the recoverability assessments, Autodesk routinely reviews the remaining estimated useful
lives of its long-lived assets. Any reduction in the useful life assumption will result in increased depreciation and
amortization expense in the quarter when such determinations are made, as well as in subsequent quarters.
Deferred Tax Assets
Deferred tax assets arise primarily from net operating losses, including stock option deductions, as well as
tax credits, reserves and timing differences for purchased technologies and capitalized software offset by the
establishment of U.S. deferred tax liabilities on unremitted earnings from certain foreign subsidiaries. They are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. Valuation allowances are established when necessary to reduce the deferred
tax assets to the amount expected to be realized.
Employee Stock Compensation
Autodesk accounts for employee stock options using the intrinsic value method of accounting in accordance
with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), as
permitted by Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”
(“SFAS 123”). As such, no compensation expense is recognized in Autodesk’s Consolidated Statements of Income,
other than for stock awards that have exercise prices less than the fair market value of Autodesk’s common stock
at the date of grant.
2006 Annual Report
AUTODESK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 1. Business and Summary of Significant Accounting Policies (Continued)
53