Avis 2012 Annual Report Download - page 66

F-10
rentals of GPS navigation units, sales of loss damage waivers and insurance products, fuel and fuel service charges, and
other items. Revenue is recognized when persuasive evidence of an arrangement exists, the services have been rendered
to customers, the pricing is fixed or determinable and collection is reasonably assured.
Vehicle rental and rental-related revenue is recognized over the period the vehicle is rented. Licensing revenue
principally consists of royalties paid by the Company’s licensees and is recorded as the licensees’ revenue is earned
(generally over the rental period of a vehicle). Revenue and expenses associated with gasoline, vehicle licensing and
airport concessions are recorded on a gross basis within revenue and operating expenses.
Currency Translation
Assets and liabilities of foreign operations are translated at the rate of exchange in effect on the balance sheet date;
income and expenses are translated at the prevailing monthly average rate of exchange. The related translation
adjustments are reflected in “Accumulated other comprehensive income” in the stockholders’ equity section of the
Consolidated Balance Sheets and in the Consolidated Statements of Comprehensive Income. The accumulated currency
translation adjustment as of December 31, 2012 and 2011 was $193 million and $159 million, respectively. Currency
gains and losses resulting from transactions are included in earnings.
Cash and Cash Equivalents
The Company considers highly liquid investments purchased with an original maturity of three months or less to be cash
equivalents.
Property and Equipment
Property and equipment (including leasehold improvements) are stated 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:
Buildings 30 years
Furniture, fixtures & equipment 3 to 10 years
Capitalized software 3 to 7 years
Buses and support vehicles 4 to 15 years
The Company capitalizes the costs of software developed for internal use when the preliminary project stage is
completed and management (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 $71 million and $74 million as of December 31,
2012 and 2011, respectively.
Goodwill and Other Intangible Assets
Goodwill represents the excess, if any, of the fair value of the consideration transferred by the acquirer and the fair value
of any non-controlling interest remaining in the acquiree, if any, over the fair values of the identifiable net assets
acquired. The Company does not amortize goodwill, but assesses it for impairment 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 estimated useful lives and are evaluated
each reporting period to determine if circumstances warrant a revision to these 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 at the reporting unit level. If the carrying value of an intangible asset
exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.