Enom 2011 Annual Report Download - page 90

Registry fee expenses consist of payments to entities accredited by ICANN as the designated registry related to each top level domain (“TLD”).
These payments are generally fixed dollar amounts per domain name registration period and are recognized on a straight-line basis over the registration term.
The costs of renewal registration fee expenses for owned and operated undeveloped websites are also included in service costs. Amortization of the cost of
website names and media content owned by the Company is included in amortization of intangible assets.
Accounts Receivable
Accounts receivable primarily consist of amounts due from:
• Third parties who provide advertising services to the Company's owned and operated websites in exchange for a share of the underlying advertising
revenue. Accounts receivable from third parties are recorded as the amount of the revenue share as reported to the Company by the advertising
networks and are generally due within 30 to 45 days from the month-end in which the invoice is generated. Certain accounts receivable from these
parties are billed quarterly and are due within 45 days from the quarter-end in which the invoice is generated, and are non-interest bearing;
• Social media services customers and include (i) account set-up fees, which are generally billed and collected once set-up services are completed,
(ii) monthly recurring services, which are billed in advance of services on a quarterly or monthly basis, (iii) account overages, which are billed
when incurred and contractually due, and (iv) consulting services, which are generally billed in the same manner as set-up fees. Accounts
receivable from social media customers are recorded at the invoiced amount, are generally due within 30 days and are non-interest bearing;
• Direct advertisers who engage the Company to deliver branded advertising impressions. Accounts receivable from direct advertisers are recorded at
negotiated advertising rates (customarily based on advertising impressions) and as the related advertising is delivered over the Company's owned
and operated websites. Direct advertising accounts receivable are generally due within 30 to 60 days from the date the advertising services are
delivered and billed; and,
• Customers who syndicate the Company's content over their websites in exchange for a share of related advertising revenue. Accounts receivable
from these customers are recorded at the revenue share as reported by the underlying customers and are generally due within 30 to 45 days.
The Company's Registrar services are primarily conducted on a prepaid basis or through credit card or Internet payments processed at the time a
transaction is consummated, and as such, the Company does not carry significant receivables related to these business activities.
Receivables from registries represent refundable amounts for registrations that were placed on auto-renew status by the registries, but were not
explicitly renewed by a registrant as of the balance sheet dates. Registry services accounts receivable is recorded at the amount of registration fees paid by the
Company to a registry for all registrations placed on auto-renew status. Subsequent to the lapse of a prior registration period, a registrant either renews the
applicable domain name with the Company, which results in the application of the refundable amount to a consummated transaction, or the registrant lets the
domain name registration expire, which results in a refund of the applicable amount from a registry to the Company.
The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables from its customers based on its best
estimate of the amount of probable losses in existing accounts receivable. The Company determines the allowance based on analysis of historical bad debts,
advertiser concentrations, advertiser credit-worthiness and current economic trends. In addition, past due balances over 90 days and specific other balances are
reviewed individually for collectability at least quarterly.
The allowance for doubtful account activity for the years ended December 31, 2009, 2010 and 2011 is as follows:
Balance at
beginning of
period
Charged to
costs and
expenses
Write-offs, net
of recoveries Balance at end of period
Allowance for doubtful accounts:
December 31, 2009 $ 413 $ 178 $ (199) $ 392
December 31, 2010 392 144 (136) 400
December 31, 2011 400 125 (106) 419
Deferred Revenue and Deferred Registration Costs
Deferred revenue consists substantially of amounts received from customers in advance of the Company’s performance for domain name
registration services, licensing and subscription services for premium media content, social
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