Enom 2013 Annual Report Download - page 89

Receivables from registries represent amounts due from r egistries and from certain domain reseller customers of our registrar service
offering. 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 us 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 us, 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 us.
We maintain an allowance for doubtful accounts to reserve for potentially uncollectible receivables from our customers based on our best
estimate of the amount of probable losses in existing accounts receivable. We determine the allowance based on an 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 is as follows (in thousands):
Deferred Revenue and Deferred Registration Costs
Deferred revenue consists primarily of amounts received from customers in advance of our performance for domain name registration
services, subscription services for premium media content, social media services and online value added services. Deferred revenue is
recognized as revenue on a systematic basis that is proportionate to the 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 t en years. Upon the sale or retirement of property or
equipment, the cost and related accumulated depreciation or amortization is removed from our financial statements with the resulting gain or loss
reflected in our results of operations. Repairs and maintenance costs are expensed as incurred. In the event that property and equipment is no
longer in use, we 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
We capitalize costs incurred to acquire and to initially register our owned and operated undeveloped websites (i.e. Uniform Resource
Locators). We amortize 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. We determine 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, we pay periodic renewal registration fees, which generally cover a
minimum period of 12 months. We record renewal registration fees of website name intangible assets in deferred registration costs and amortize
the costs over the renewal registration period, which is included in service costs.
F-13
Balance at Charged to Balance at
beginning of costs and Write-offs, net end of
period expenses of recoveries Period
December 31, 2013
$
369
$
61
$
(90
)
$
340
December 31, 2012
$
419
$
75
$
(125
)
$
369
December 31, 2011
$
400
$
125
$
(106
)
$
419