Enom 2012 Annual Report Download - page 96

F-13
unexpired term of the related domain name registration, media subscription as services are rendered, over customer useful life,
or online value added service period.
Deferred registration costs represent incremental direct cost paid in advance to registries, ICANN, and other third
parties for domain name registrations and are recorded as a deferred cost on the balance sheets. Deferred registration costs are
amortized to expense on a straight-line basis concurrently with the recognition of the related domain name registration revenue
and are included in service costs.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-
line method over the estimated useful lives of the assets. Computer equipment is amortized over two to five years, software is
amortized over two to three years, and furniture and fixtures are amortized over seven to ten years. Leasehold improvements
are amortized straight-line over the shorter of the remaining lease term or the estimated useful lives of the improvements
ranging from one to ten years. Upon the sale or retirement of property or equipment, the cost and related accumulated
depreciation or amortization is removed from the Company’s financial statements with the resulting gain or loss reflected in the
Company’s results of operations. Repairs and maintenance costs are expensed as incurred. In the event that property and
equipment is no longer in use, the Company will record a loss on disposal of the property and equipment, which is computed as
difference between the sales price, if any, and the net remaining value (gross amount of property and equipment less
accumulated depreciation expense) of the related equipment at the date of disposal.
Intangibles—Undeveloped Websites
The Company capitalizes costs incurred to acquire and to initially register its owned and operated undeveloped
websites (i.e. Uniform Resource Locators). The Company amortizes these costs over the expected useful life of the underlying
undeveloped websites on a straight-line basis. The expected useful lives of the website names range from 12 months to
84 months. The Company determines the appropriate useful life by performing an analysis of expected cash flows based on
historical experience with domain names of similar quality and value.
In order to maintain the rights to each undeveloped website acquired, the Company pays periodic renewal registration
fees, which generally cover a minimum period of twelve months. The Company records renewal registration fees of website
name intangible assets in deferred registration costs and amortizes the costs over the renewal registration period, which is
included in service costs.
Intangibles—Media Content
The Company capitalizes the direct costs incurred to acquire its media content that is determined to embody a
probable future economic benefit. Costs are recognized as finite lived intangible assets based on their acquisition cost to the
Company. Direct content costs primarily represent amounts paid to unrelated third parties for completed content units, and to a
lesser extent, specifically identifiable internal direct labor costs incurred to enhance the value of specific content units acquired
prior to their publication. Internal costs not directly attributable to the enhancement of an individual content unit acquired are
expensed as incurred. All costs incurred to deploy and publish content are expensed as incurred, including the costs incurred for
the ongoing maintenance of the Company’s websites in which the Company’s content is published.
Capitalized media content is amortized on a straight-line basis over its useful life, which is typically five years,
representing the Company’s estimate of the pattern that the underlying economic benefits are expected to be realized and based
on its estimates of the projected cash flows from advertising revenue expected to be generated by the deployment of its content.
These estimates are based on the Company’s plans and projections, comparison of the economic returns generated by its
content of comparable quality and an analysis of historical cash flows generated by that content to date. Amortization of media
content is included in amortization of intangible assets in the accompanying statement of operations and the acquisition costs
are included in purchases of intangible assets within cash flows from investing activities in the Consolidated Statements of
Cash Flows.
Intangibles—Acquired in Business Combinations
The Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a
business combination and allocates the purchase price of each acquired business to its respective net tangible and intangible
assets. Acquired intangible assets include: trade names, non-compete agreements, owned website names, customer
relationships, technology, media content, and content publisher relationships. The Company determines the appropriate useful