Enom 2010 Annual Report Download - page 67

Table of Contents
January 1, 2010, our net loss would decrease by approximately $2.5 million for the year ended December 31, 2010, and would increase by approximately
$3.7 million should the weighted average useful life be reduced by one year. We periodically assess the useful life of our content, and when adjustments in
our estimate of the useful life of content are required, any changes from prior estimates are accounted for prospectively.
Recoverability of Long-lived Assets
We evaluate the recoverability of our intangible assets, and other long-lived assets with finite useful lives for impairment when events or changes in
circumstances indicate that the carrying amount of an asset group may not be recoverable. These trigger events or changes in circumstances include, but are
not limited to a significant decrease in the market price of a long-lived asset, a significant adverse change in the extent or manner in which a long-lived asset
is being used, significant adverse change in legal factors, including changes that could result from our inability to renew or replace material agreements with
certain of our partners such as Google on favorable terms, significant adverse changes in the business climate including changes which may result from
adverse shifts in technology in our industry and the impact of competition, a significant adverse deterioration in the amount of revenue or cash flows we
expect to generate from an asset group, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development
of a long-lived asset, current or future operating or cash flow losses that demonstrates continuing losses associated with the use of our long-lived asset, or a
current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated
useful life. We perform impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of
the cash flows of other assets and liabilities. In making this determination, we consider the specific operating characteristics of the relevant long-lived assets,
including (i) the nature of the direct and any indirect revenues generated by the assets; (ii) the interdependency of the revenues generated by the assets; and
(iii) the nature and extent of any shared costs necessary to operate the assets in their intended use. An impairment test would be performed when the estimated
undiscounted future cash flows expected to result from the use of the asset group is less than its carrying amount. Impairment is measured by assessing the
usefulness of an asset by comparing its carrying value to its fair value. If an asset is considered impaired, the impairment loss is measured as the amount by
which the carrying value of the asset group exceeds its estimated fair value. Fair value is determined based upon estimated discounted future cash flows. The
key estimates applied when preparing cash flow projections relate to revenues, operating margins, economic life of assets, overheads, taxation and discount
rates. To date, we have not recognized any such impairment loss associated with our long-lived assets.
Income Taxes
We account for our income taxes using the liability and asset method, which requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in our financial statements or in our tax returns. In estimating future tax consequences, generally
all expected future events other than enactments or changes in the tax law or rates are considered. Deferred income taxes are recognized for differences
between financial reporting and tax bases of assets and liabilities at the enacted statutory tax rates in effect for the years in which the temporary differences
are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. We
evaluate the realizability of our deferred tax assets and valuation allowances are provided when necessary to reduce deferred tax assets to the amounts
expected to be realized.
We operate in various tax jurisdictions and are subject to audit by various tax authorities. We provide tax contingencies whenever it is deemed probable
that a tax asset has been impaired or a tax
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