Cash America 2012 Annual Report Download - page 134

CASH AMERICA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
109
Property and Equipment
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. Costs associated with repair and maintenance activities are expensed as incurred. Depreciation expense is
generally provided on a straight-line basis, using the following estimated useful lives:

Buildings and building improvements(a) 7 to 40 years
Leasehold improvements(b) 2 to 10 years
Furniture, fixtures and equipment 3 to 7 years
Computer hardware and software 1 to 10 years
(a)Structural components are depreciated over 30 to 40 years, and the remaining building systems and features are
depreciated over 7 to 20 years. a
a
(b)Leasehold improvements are depreciated over the terms of the lease agreements with a maximum life of 10 years.

Software Development Costs
The Company applies ASC 350-40, Internal Use Software (“ASC 350-40”), to its software purchase and
development activities. Under ASC 350-40, eligible 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 or
over the related service period. When a software 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 two to five years, except the Company’s proprietary point-of-sale system, which is being amortized over
10 years.
Goodwill and Other Indefinite Lived Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable
intangible assets acquired in each business combination. In accordance with ASC 350-20-35, Goodwill – Subsequent
Measurement, the Company tests goodwill and intangible assets with an indefinite life for potential impairment
annually as of June 30 and between annual tests if an event occurs or circumstances change that would more-likely-
than-not reduce the fair value of a reporting unit below its carrying amount.
The Company uses the income approach to complete its annual goodwill assessment. The income approach
uses future cash flows and estimated terminal values for each of the Company’s reporting units that are discounted
using a market participant perspective to determine the fair value of each reporting unit, which is then compared to the
carrying value of that reporting unit to determine if there is impairment. The income approach includes assumptions
about revenue growth rates, operating margins and terminal growth rates discounted by an estimated weighted-average
cost of capital derived from other publicly-traded companies that are similar but not identical from an operational and
economic standpoint. The Company completed its annual assessment of goodwill as of June 30, 2012 and determined
that the fair value is significantly in excess of carrying value, and, as a result, no impairment existed at that date. See
“Impairment Testing Related to the Mexico Reorganization” in Note 4 for a discussion of the goodwill assessment
completed in September 2012 as a result of the Mexico Reorganization.
All of the amounts of goodwill recorded in connection with the Company’s acquisitions, except for the
acquisition of Prenda Fácil, are expected to be deductible for tax purposes.