Juno 2012 Annual Report Download - page 132

Table of Contents
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

which addresses financial accounting and reporting for the impairment and disposition of identifiable intangible assets and other long-lived assets.
Intangible assets acquired in a business combination are initially recorded at management's estimate of their fair values. The Company evaluates the
recoverability of identifiable intangible assets and other long-lived assets, other than indefinite-lived intangible assets, for impairment when events occur
or circumstances change that would indicate that the carrying amount of an asset may not be recoverable. Events or circumstances that may indicate that
an asset is impaired include, but are not limited to, significant decreases in the market value of an asset, significant underperformance relative to expected
historical or projected future operating results, a change in the extent or manner in which an asset is used, shifts in technology, loss of key management
or other personnel, significant negative industry or economic trends, changes in the Company's operating model or strategy, and competitive forces. In
determining if an impairment exists, the Company estimates the undiscounted cash flows to be generated from the use and ultimate disposition of these
assets. If an impairment is indicated based on a comparison of the assets' carrying amounts and the undiscounted cash flows, the impairment loss is
measured as the amount by which the carrying amounts of the assets exceed the respective fair values of the assets. Definite-lived intangible assets are
amortized on either a straight-line basis or an accelerated basis over their estimated useful lives, ranging from two to ten years.
—Member redemption liability for online loyalty marketing service points represents the estimated costs associated
with the obligation of MyPoints.com, Inc. ("MyPoints") to redeem outstanding points accumulated by its online loyalty marketing service members, as
well as those points purchased by its advertisers for use in such advertisers' promotional campaigns, less an allowance for points expected to expire
prior to redemption. The estimated cost of points is primarily presented in cost of revenues, except for the portion related to member acquisition
activities, internal marketing surveys and other non-revenue generating activities, which are presented in sales and marketing expenses. The member
redemption liability is recognized when members earn points, less an allowance for points expected to expire, and is reduced when members redeem
accumulated points upon reaching required redemption thresholds or when points expire prior to redemption.
MyPoints members may redeem points for third-party gift cards and other rewards. Members earn points when they respond to direct marketing
offers delivered by MyPoints, purchase goods or services from advertisers, engage in certain promotional campaigns of advertisers, or engage in other
specified activities.
The member redemption liability is estimated based upon the weighted-average cost and number of points that may be redeemed in the future. The
weighted-average cost of points is calculated by taking the total cost of items fulfilled divided by total points redeemed. MyPoints purchases gift cards
and other awards from merchants at a discount and sets redemption levels for its members. The discounts and points needed to redeem awards vary by
merchant and award denomination. MyPoints has the ability to adjust the number of points required to redeem awards to reflect changes in the cost of
awards.
MyPoints accounts for and reduces the gross points issued by an estimate of points that will never be redeemed by its members. This reduction is
calculated based on an analysis of historical point-earning trends, redemption activities and individual member account activity. MyPoints' historical
analysis takes into consideration the total points in members' accounts that have been inactive for six
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