Incredimail 2013 Annual Report Download - page 106

PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
Goodwill reflects the excess of the purchase price of business acquired over the fair value of net assets acquired. Goodwill
is not amortized but instead is tested for impairment at least annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired.
The Company operates in one operating segment and this segment comprises the only reporting unit
In accordance with ASC No. 350 the Company performs an annual impairment test at December 31 each year. The first
step, identifying a potential impairment, compares the fair value of the reporting unit with its carrying amount. If the
carrying amount exceeds its fair value, the second step would need to be performed; otherwise, no further step is required.
The second step, measuring the impairment loss, compares the implied fair value of the goodwill with the carrying amount
of the goodwill. Any excess of the goodwill carrying amount over the applied fair value is recognized as an impairment
loss, and the carrying value of goodwill is written down to fair value.
During the years ended December 31, 2011, 2012
and 2013, no impairment losses were recorded.
Intangible assets that are not considered to have an indefinite useful life are amortized over their estimated useful lives,
which range from 3 to 10.25 years. The acquired customer arrangements, technology and logo are amortized over their
estimated useful lives in proportion to the economic benefits realized. This accounting policy results in accelerated
amortization of such intangible assets as compared to the straight-line method.
The Company generates revenues from three major sources; search related advertising, product sales and other
advertising.
Search related advertising revenues are generated by receiving a share of the advertising revenues from companies
providing search capabilities and are recognized when the Company is entitled to receive the fee. Advertisers are charged
and pay monthly, based on the number of clicks generated by users clicking on these ads. Persuasive evidence of an
arrangement exists based upon a written agreement or purchase order with a search provider or display advertiser.
Delivery occurs when a user clicks on the ad in the case of a cost-per-
click (CPC) arrangement, or the requisite number of
impressions is displayed pursuant to a cost-per-thousand impression (CPM) arrangement.
In addition, the Company also derives revenues from: (i) product sales (ii) other. Revenues from products include
licensing the right to use its email software, content database, photo sharing and social expression product and e-mail anti-
spam. Revenues from other services include search related advertising and other advertising. In accordance with ASC
605-
50, "Customer Payments and Incentives", the Company accounts for cash consideration given to customers, for whom
it does not receive a separately identifiable benefit or cannot, reasonably estimate fair value, as a reduction of revenue
rather than as an expense.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
h.
Goodwill and other intangible assets:
i.
Revenue recognition:
F
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