Jamba Juice 2007 Annual Report Download - page 125

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NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment (continued)
useful life of the asset generally ranging from three to seven years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the
related lease term, which is generally 10 years, commencing the month after the asset is placed in service. The costs of repair and maintenance are expensed
when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset
are capitalized.
Depreciation and amortization amounted to $622,469 as of December 13, 2005.
Long-Lived Assets
Asset impairments are recorded when the carrying values of assets are not recoverable. For purposes of recognizing and measuring impairment of long-
lived assets, the Company categorizes assets of operating stores as “Assets to Be Held and Used” and assets of stores that have been closed as “Assets to Be
Disposed Of.” The Company evaluates assets at the store level because this is the lowest level of identifiable cash flows ascertainable to evaluate impairment.
Assets being tested for recoverability at this level include tangible long-lived assets.
The Company reviews long-lived assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable or at least annually. Impairment losses are measured as the amount by which the carrying amount of assets exceeds
the fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate
commensurate with the risks associated with the recovery of the asset. No impairment losses were incurred in 2005.
Deferred Rent
The Company’s lease agreements generally include scheduled rent increases during the lease term, or for rental payments commencing at a date other
than the date of initial occupancy. Rent expense is recognized on a straight-line basis over the respective terms of the leases. The difference between the amount
charged to operations and cash paid under the leases is recorded as deferred rent.
Deferred Tenant Allowance
Deferred tenant allowance amounts represent tenant allowances provided by the landlord for leasehold improvements at various locations. The tenant
allowance amounts were previously recorded as an offset to the respective leasehold improvements which the Company determined was not in accordance with
generally accepted accounting principles but was not material enough to restate prior year’s financial statements. These amounts are amortized over the shorter
of the related leasehold improvement life or the term of the lease.
Revenue Recognition
Revenue is recognized when the product is sold. Revenue from jambacards and gift certificates are recognized upon redemption. If collection is doubtful,
a receivable and an allowance are recorded without any revenue recognition. Revenue is recognized at the time such receivables are collected. There was no
allowance required as of December 13, 2005.
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