Garmin 2010 Annual Report Download - page 87

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A ajoit of the Copas eseah ad deelopet is pefoed i the Uited States. Reseah ad
development costs, which are expensed as incurred, amounted to approximately $277,261, $238,378, and
$206,109 for the years ended December 25, 2010, December 26, 2009, and December 27, 2008, respectively.
Customer Service and Technical Support
Customer service and technical support costs are included as selling, general and administrative expenses
in the accompanying consolidated statements of operations. Customer service and technical support costs include
costs associated with performing order processing, answering customer inquiries by telephone and through Web
sites, e-mail and other electronic means, and providing free technical support assistance to customers. The
technical support is provided within one year after the associated revenue is recognized. The related cost of
providing this free support is not material.
Software Development Costs
The FASB ASC topic entitled Software requires companies to expense software development costs as they
incur them until technological feasibility has been established, at which time those costs are capitalized until the
product is available for general release to customers. Our capitalized software development costs are not
significant as the time elapsed from working model to release is typically short. As required by the Research and
Development topic of the FASB ASC, costs we incur to enhance our existing products or after the general release of
the service using the product are expensed in the period they are incurred and included in research and
development costs in the accompanying consolidated statements of operations.
Accounting for Stock-Based Compensation
The Company currently sponsors three stock based employee compensation plans. The FASB ASC topic
entitled Compensation – Stock Compensation requires the measurement and recognition of compensation
expenses for all share-based payment awards made to employees and directors including employee stock options
and restricted stock based on estimated fair values. See Note 9.
Accounting guidance requires companies to estimate the fair value of share-based payment awards
on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately
expected to vest is recognized as stock-based compensation expenses over the requisite service period in the
Copas osolidated fiaial stateets.
As stock-based compensation expenses recognized in the accompanying consolidated statement of income
are based on awards ultimately expected to vest, they have been reduced for estimated forfeitures. Accounting
guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods
if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience and
aageets estiates.
Recently Issued Accounting Pronouncements
In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, "Improving Disclosures
about Fair Value Measurements" ("ASU 2010-06"), which is included in the ASC Topic 820 (Fair Value
Measurements and Disclosures). ASU 2010-06 requires new disclosures on the amount and reason for transfers in
and out of Level 1 and 2 fair value measurements. ASU 2010-06 also requires disclosure of activities, including
purchases, sales, issuances, and settlements within the Level 3 fair value measurements and clarifies existing
disclosure requirements on levels of disaggregation and disclosures about inputs and valuation techniques. Except
as otherwise provided, ASU 2010-06 is effective for interim and annual reporting periods beginning after