Cash America 2007 Annual Report Download - page 84

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CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
64
Property and Equipment x Property and equipment is recorded at cost. The cost of property retired or sold
and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is
recognized in the consolidated statements of income. Depreciation expense is generally provided on a
straight-line basis, using the following estimated useful lives:
Buildings and building improvements (1) ........................................................... 7 to 40 years
Leasehold improvements (2) ............................................................................... 2 to 10 years
Furniture, fixtures and equipment ...................................................................... 3 to 7 years
Computer software............................................................................................. 3 to 5 years
(1) Structural components are depreciated over 30 to 40 years and the remaining building systems and
features are depreciated over 7 to 20 years.
(2) Leasehold improvements are depreciated over the terms of the lease agreements with a maximum of 10
years.
Software Development Costs x The Company develops computer software for internal use. Internal and
external costs incurred for the development of computer applications, as well as for upgrades and
enhancements that result in additional functionality of the applications, are capitalized. Internal and external
training and maintenance costs are charged to expense as incurred. When an application is placed in
service, the Company begins amortizing the related capitalized software costs using the straight-line method
based on its estimated useful life which currently ranges from 3 to 5 years.
Goodwill and Other Intangible Assets x SFAS No. 142, “Goodwill and Other Intangible Assets,” became
effective January 1, 2002, and, as a result, the Company discontinued the amortization of goodwill as of that
date. In lieu of amortization, the Company is required to perform an impairment review of goodwill at least
annually. The Company completed its reviews during 2007, 2006 and 2005. Based on the results of these
tests, management determined that there was no impairment as the respective fair values of each of the
Company’s reporting units exceeded their respective carrying amounts. See Note 6.
The Company amortizes intangible assets with an estimable life on the basis of their expected
periods of benefit, generally 3 to 10 years. The costs of start-up activities and organization costs are
charged to expense as incurred.
Impairment of Long-Lived Assets x An evaluation of the recoverability of property and equipment and
intangible assets is performed whenever the facts and circumstances indicate that the carrying value may be
impaired. An impairment loss is recognized if the future undiscounted cash flows associated with the asset
are less than the asset’s corresponding carrying value. The amount of the impairment loss, if any, is the
excess of the asset’s carrying value over its estimated fair value.
Income Taxes x The provision for income taxes is based on income before income taxes as reported for
financial statement purposes. Deferred income taxes are provided for in accordance with the assets and
liability method of accounting for income taxes in order to recognize the tax effects of temporary
differences between financial statement and income tax accounting.
Effective January 1, 2007, the Company began accounting for uncertainty in income taxes
recognized in the consolidated financial statements in accordance with Financial Accounting Standards
Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48
requires that a more-likely-than-not threshold be met before the benefit of a tax position may be recognized
in the consolidated financial statements and prescribes how such benefit should be measured. It also
provides guidance on derecognition, classification, accrual of interest and penalties, accounting in interim
periods, disclosure and transition. It requires that the new standard be applied to the balances of assets and