Avis 2009 Annual Report Download - page 74

Table of Contents
PROPERTY AND EQUIPMENT
Property and equipment (including leasehold improvements) are recorded at cost, net of accumulated depreciation and amortization.
Depreciation (non-vehicle related) is computed utilizing the straight-line method over the estimated useful lives of the related assets.
Amortization of leasehold improvements is computed utilizing the straight-line method over the estimated benefit period of the related
assets, which may not exceed 20 years, or the lease term, if shorter. Useful lives are as follows:
The Company capitalizes the costs of software developed for internal use when the preliminary project stage is completed and management
with the appropriate authority (i) commits to funding the project and (ii) believes it is probable that the project will be completed and the
software will be used to perform the function intended. The software developed or obtained for internal use is amortized on a straight-line
basis commencing when such software is ready for its intended use. The net carrying value of software developed or obtained for internal
use was $84 million and $89 million as of December 31, 2009 and 2008, respectively.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill represents the excess of the cost of an acquired entity over the fair values assigned to the tangible assets acquired, the identifiable
intangible assets that are required to be valued and reported and the liabilities assumed. The Company does not amortize goodwill, but tests
it at least annually for recoverability. Other intangible assets, primarily trademarks, with indefinite lives are not amortized but are evaluated
annually for impairment. Other intangible assets with finite lives are amortized over their remaining useful lives.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company is required to assess goodwill and other indefinite-lived intangible assets for impairment annually, or more frequently if
circumstances indicate impairment may have occurred. The Company performs its annual impairment assessment in the fourth quarter of
each year. Each of the Company’s operating segments represents a reporting unit. If the carrying value of an intangible asset exceeds its fair
value, an impairment loss is recognized in an amount equal to that excess.
The Company assesses goodwill for such impairment by comparing the carrying value of each reporting unit to its fair value using the
present value of expected future cash flows. If this first step of the goodwill impairment test identifies a potential impairment, we perform a
second step for that reporting unit to determine the amount of impairment loss, if any. The Company determines the fair value of its
reporting units utilizing discounted cash flows and incorporates assumptions that it believes marketplace participants would utilize. When
available and as appropriate, comparative market multiples and other factors to corroborate the discounted cash flow results are used.
The Company also evaluates the recoverability of its other long-lived assets, including amortizable intangible assets, if circumstances
indicate impairment may have occurred. This analysis is performed by comparing the respective carrying values of the assets to the current
and expected future cash flows, on an undiscounted basis, to be generated from such assets. Property and equipment is evaluated separately
within each segment. If such analysis indicates that the carrying value of these assets is not recoverable, the carrying value of such assets is
reduced to fair value.
During 2009, there was no impairment of goodwill or other intangible assets.
F
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12
Buildings
30 years
Furniture, fixtures & equipment
3 to 10 years
Capitalized software
3 to 7 years
Buses and support vehicles
4 to 15 years