Green Dot 2014 Annual Report Download - page 69

Note 2—Summary of Significant Accounting Policies (continued)
Property and Equipment
We carry our property and equipment at cost less accumulated depreciation and amortization. We generally
compute depreciation on property and equipment using the straight-line method over the estimated useful lives of the
assets, except for land, which is not depreciated. We generally compute amortization on tenant improvements using
the straight-line method over the shorter of the related lease term or estimated useful lives of the improvements. We
expense expenditures for maintenance and repairs as incurred.
We capitalize certain internal and external costs incurred to develop internal-use software during the application
development stage. We also capitalize the cost of specified upgrades and enhancements to internal-use software that
result in additional functionality. Once a development project is substantially complete and the software is ready for its
intended use, we begin depreciating these costs on a straight-line basis over the internal-use software’s estimated
useful life.
The estimated useful lives of the respective classes of assets are as follows:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 years
Computer equipment, furniture and office equipment . . . . . . . . . . . . 3-4 years
Computer software purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 years
Capitalized internal-use software . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 years
Tenant improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shorter of the useful life or the lease term
Impairment of Long Lived Assets
We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If the sum of expected undiscounted future cash flows from an
asset is less than the carrying amount of the asset, we estimate the fair value of the assets. We measure the loss as
the amount by which the carrying amount exceeds its fair value calculated using the present value of estimated net
future cash flows. Included in other general and administrative expenses in our consolidated statements of operations
for the years ended December„31, 2014, 2013 and 2012 were $0, $5.2 million and $1.0 million, respectively, of
recognized impairment losses on internal-use software and no such impairment losses were recognized during the
year ended 2014.
Business Acquisitions
We allocate the purchase price of business acquisitions to the assets acquired and liabilities assumed based on
their estimated fair value. The excess of the purchase price over estimated fair value of the net identifiable assets is
allocated to goodwill. Determining the fair value of assets and liabilities requires various assumptions and estimates.
These estimates and assumptions are refined with adjustments recorded to goodwill as information is gathered and
final valuations are completed over a one-year measurement period. The changes in these estimates or different
assumptions used in determining these estimates could impact the amount of assets, including goodwill, and liabilities
recorded on our consolidated balance sheet and could impact our operating results subsequent to such acquisition.
Goodwill and Intangible Assets
Goodwill is the purchase premium after adjusting for the fair value of net assets acquired. Goodwill is not amortized
but is reviewed for potential impairment on an annual basis, or when events or circumstances indicate a potential
impairment, at the reporting unit level. A reporting unit, as defined under applicable accounting guidance, is an operating
segment or one level below an operating segment, referred to as a component. We may in any given period bypass
the qualitative assessment and proceed directly to a two-step method to assess and measure impairment of the
reporting unit's goodwill. We first assess qualitative factors to determine whether it is more likely-than-not (i.e., a
likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying value. This step serves
as the basis for determining whether it is necessary to perform the two-step quantitative impairment test. The first step
of the quantitative impairment test involves a comparison of the estimated fair value of each reporting unit to its carrying
amount, including goodwill. If the estimated fair value of the reporting unit exceeds its carrying amount, goodwill of the
reporting unit is not impaired; however, if the carrying amount of the reporting unit exceeds its estimated fair value,
GREEN DOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)
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