Enom 2014 Annual Report Download - page 76

F-12
y 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;
y Direct advertisers who engage us 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 our 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;
y Customers who syndicate our content over their websites in exchange for a share of related advertising revenue. Accounts
receivable from these customers are recorded as the revenue share as reported by the underlying customers and are
generally due within 30 to 45 days; and
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 60 days and specific other balances are reviewed individually for collectability at least quarterly.
The allowance for doubtful account activity is as follows (in thousands):
Balance at Charged to Balance at
beginning of costs and Write-offs, net end of
period expenses of recoveries Period
December 31, 2014 $ 340 $ - $ (122 ) $ 218
December 31, 2013 $ 369 $ 61 $ (90 ) $ 340
December 31, 2012 $ 419 $ 75 $ (125 ) $ 369
Deferred Revenue
Deferred revenue consists of amounts received from customers before we have met all four criteria for the recognition of
revenue. Deferred revenue includes payments received from sales of our products on Society6 prior to delivery of such products;
payments made for original art and prints sold via Saatchi Art that are collected prior to the completion of the return period; and
amounts received from customers of our social media services in advance of our performance of such services. Deferred revenue for
social media services is recognized as revenue on a systematic basis that is proportionate to the services that have been rendered.
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 three years, software is amortized over
two to three years, and furniture and fixtures are amortized over five 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 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.
Intangible Assets — Media Content
We capitalize the direct costs incurred to acquire our 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 us. 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 our properties on which our
content is published.