Autodesk 2013 Annual Report Download - page 135

Impairment of Long-Lived Assets
At least annually or more frequently as circumstances dictate Autodesk reviews its long-lived assets for impairment
whenever impairment indicators exist. Autodesk continually monitors events and changes in circumstances that could indicate
the carrying amounts of its long-lived assets may not be recoverable. When such events or changes in circumstances occur,
Autodesk assesses recoverability of these assets. Recoverability is measured by comparison of the carrying amounts of the
assets to the future undiscounted cash flows the assets are expected to generate. If the long-lived assets are considered to be
impaired, the impairment to be recognized is equal to the amount by which the carrying value of the assets exceeds its fair
market value. There was no impairment of long-lived assets during the years ended January 31, 2013 and 2012.
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 tax credits, net operating losses, and timing differences for reserves, accrued
liabilities, stock options, purchased technologies and capitalized intangibles, partially offset by the establishment of U.S.
deferred tax liabilities on unremitted earnings from certain foreign subsidiaries, deferred tax liabilities associated with tax
method change on advance payments, and a valuation allowance against California and Canadian deferred tax assets. 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 gross deferred tax assets to the amount
“more likely than not” expected to be realized.
Revenue Recognition
Autodesk recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have
been rendered, the price is fixed or determinable, and collection is probable.
For multiple element arrangements containing only software and software-related elements, Autodesk allocates the sales
price among each of the deliverables using the residual method, under which revenue is allocated to undelivered elements
based on their vendor-specific objective evidence (“VSOE”) of fair value. VSOE is the price charged when an element is sold
separately or a price set by management with the relevant authority. If Autodesk does not have VSOE of an undelivered
software license, revenue recognition is deferred on the entire sales arrangement until all elements for which Autodesk does not
have VSOE are delivered. If Autodesk does not have VSOE for undelivered maintenance or services, the revenue for the
arrangement is recognized over the longest contractual service period in the arrangement. Revenue recognition for significant
lines of business is discussed further below.
For multiple elements arrangements involving non-software elements, including cloud subscription services, our revenue
recognition policy is based upon the accounting guidance contained in ASC 605, Revenue Recognition. For these
arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of
elements as a whole and to the non-software elements. We then further allocate consideration within the software group to the
respective elements within that group using the residual method as described above. Autodesk exercises judgment and uses
estimates in connection with the determination of the amount of revenue to be recognized in each accounting period.
Autodesk’s assessment of likelihood of collection is also a critical element in determining the timing of revenue
recognition. If collection is not probable, the revenue will be deferred until the earlier of when collection is deemed probable or
cash is received.
License and other revenue are comprised of two components: (1) all forms of product license revenue and (2) other
revenue: (1) All Forms of Product License Revenue
Product license revenue includes: software license revenue from the sale of new seat licenses, upgrades, product
revenue for Creative Finishing and revenue from cloud subscription services. Autodesk’s existing customers who
are using a currently supported version of a product can upgrade to the latest release of the product by paying a
separate fee at current available prices. An existing customer also has the option to upgrade to a different product,
which generally has a higher price, for a premium fee.
63
2013 Annual Report