Go Daddy 2015 Annual Report Download - page 95

Table of Contents
GoDaddy Inc.
Notes to Consolidated Financial Statements
(In millions, except share amounts which are reflected in thousands and per share amounts)
Capitalized Internal-Use Software Costs
Costs incurred to develop software for internal-use during the application development phase and for our websites are capitalized and amortized over such
software’s estimated useful life. Costs related to the design or maintenance of internal-use software are included in technology and development expenses as
incurred. Costs capitalized during all periods presented have not been material.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable intangible assets acquired in business
combinations. Indefinite-lived intangible assets consist of trade names and branding acquired in the Merger and our acquired domain portfolio. Goodwill and
indefinite-lived intangible assets are not amortized to earnings, but are assessed for impairment at least annually. As individual domains are sold, our indefinite-
lived domain portfolio intangible asset is reduced by the allocated carrying cost of each domain, which is included in cost of revenue.
We assess impairment annually for our single reporting unit during the fourth quarter of each year. We also perform an assessment at other times if events or
changes in circumstances indicate the carrying value of our goodwill or indefinite-lived trade names and branding may not be recoverable. If, based on qualitative
analysis, we determine it is more-likely-than-not the fair value of our reporting unit is less than its carrying amount, a two-step impairment test is performed. Our
qualitative analysis did not indicate impairment of such assets during any of the periods presented.
Our indefinite-lived domain portfolio is reviewed for impairment annually during the fourth quarter of each year. We also perform an assessment at other
times if events or changes in circumstances indicate the carrying amount of the asset may not be fully recoverable. Any identified impairment loss is treated as a
permanent reduction in the carrying amount of the asset. We did not record an impairment loss during any of the periods presented.
Long-Lived Assets and Finite-Lived Intangible Assets
Finite-lived intangible assets are amortized over their estimated useful lives, which are as follows:
Customer relationships acquired in the Merger 9 years
Customer relationships 1-5 years
Developed technology 1-7 years
Trade names 1-5 years
Other 3 years
Customer relationships are primarily amortized based on expected customer attrition. Developed technology, finite-lived trade names and other intangibles
are amortized on a straight-line basis. We regularly evaluate the estimated remaining useful lives of our intangible assets to determine whether events or changes in
circumstances warrant a revision to the remaining period of amortization.
Long-lived assets and finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount
of an asset may not be fully recoverable. An impairment loss is recognized if the sum of the expected long-term undiscounted cash flows the asset is expected to
generate is less than the carrying amount of the asset being evaluated. Any write-downs are treated as permanent reductions in the carrying amount of the
respective asset. We did not record an impairment loss during any of the periods presented.
Debt Issuance Costs
We defer and amortize issuance costs, underwriting fees and related expenses incurred in connection with the issuance of debt instruments using the effective
interest method over the terms of the respective instruments. Debt issuance costs, other than those associated with our revolving credit loan, are reflected as a direct
reduction of the carrying amount of the related debt liability. Debt issuance costs related to our revolving credit loan are reflected as an asset.
Derivative Financial Instruments
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