Incredimail 2010 Annual Report Download - page 38

On January 1, 2007, we adopted ASC 740 with respect to uncertain tax positions which contains a two-
step approach to recognizing and
measuring uncertain tax positions accounted for in accordance with ASC 740, "Income Taxes". The first step is to evaluate the tax position taken
or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an
evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes.
The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.
Impairment of investments in marketable securities.
On April 1, 2009, we adopted a new guidance that changed the impairment and presentation model for our available for sale debt
securities. Under the amended impairment model, an other-than-
temporary impairment (OTTI) loss is recognized in earnings if the entity has the
intent to sell the debt security, or if it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost
basis. However, if an entity does not expect to sell a debt security, it still needs to evaluate expected cash flows to be received and determine if a
credit loss exists. In the event of a credit loss, only the amount of impairment associated with the credit loss is recognized currently in earnings.
Amounts relating to factors other than credit losses are recorded in other comprehensive income.
Upon adoption of the new guidance, we reclassified a non-
credit related amount of $210 thousand net of tax for OTTI losses recognized
in earnings prior to April 1, 2009, as a cumulative effect adjustment that increased retained earnings and decreased other comprehensive income
(OCI) at April 1, 2009.
Prior to April 1, 2009, we reviewed various factors in determining whether we should recognize an impairment charge for our
marketable securities, including our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery
in market value, the length of time and extent to which the fair value has been less than our cost basis, the credit ratings of the securities and the
financial condition and near-term prospects of the issuers.
Impairment of Long
-Lived Assets.
Our long-
lived assets include property and equipment and other intangible assets. In assessing the recoverability of our property and
equipment and other intangible assets, we make judgments regarding whether impairment indicators exist based on legal factors, market
conditions and operating performances of our business and products. Future events could cause us to conclude that impairment indicators exist
and that the carrying values of the intangible assets are impaired. Any resulting impairment loss could have a material adverse impact on our
financial position and results of operations.
We are required to assess the impairment of long-
lived assets, tangible and intangible, other than goodwill, under ASC 360, "Property
Plant and Equipment" on a periodic basis, when events or changes in circumstances indicate that the carrying value may not be recoverable.
Impairment indicators include any significant changes in the manner of our use of the assets or the strategy of our overall business, significant
negative industry or economic trends and significant decline in our share price for a sustained period.
Upon determination that the carrying value of a long-
lived asset may not be recoverable based upon a comparison of aggregate
undiscounted projected future cash flows to the carrying amount of the asset, an impairment charge is recorded for the excess of fair value over
the carrying amount. We measure fair value using discounted projected future cash flows.
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