Juno 2013 Annual Report Download - page 44

Table of Contents
best estimate of selling price, which considers market and economic conditions, internal costs, pricing, and discounting practices. The revenues allocated
to the free service plans are recognized ratably over the service period.
Probability of collection is assessed based on a number of factors, including past transaction history with the customer and the creditworthiness of
the customer. If it is determined that collectibility is not reasonably assured, revenue is not recognized until collectibility becomes reasonably assured,
which is generally upon receipt of cash.
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Goodwill represents the excess of the purchase price of an acquired entity over the fair value of the net tangible and intangible assets acquired.
Indefinite-lived intangible assets acquired in a business combination are initially recorded at management's estimate of their fair values. We account for
goodwill in accordance with ASC 350, , which among other things, addresses financial accounting and reporting
requirements for acquired goodwill. ASC 350 prohibits the amortization of goodwill and requires us to test goodwill at the reporting unit level for
impairment at least annually.
We test the goodwill of our reporting units for impairment annually during the fourth quarter of our fiscal year and whenever events occur or
circumstances change that would more likely than not indicate that the goodwill might be impaired. Events or circumstances which could trigger an
impairment review include, but are not limited to, a significant adverse change in legal factors or in the business climate, an adverse action or assessment
by a regulator, unanticipated competition, a loss of key management or other personnel, significant changes in the manner of our use of the acquired
assets or the strategy for the acquired business or our overall business, significant and sustained decline in market capitalization, significant negative
industry or economic trends, or significant underperformance relative to expected historical or projected future results of operations.
The determination of whether or not goodwill is impaired involves a significant level of judgment in the assumptions underlying the approaches
used to determine the estimated fair values of our reporting units. The determination of the fair values of our reporting units generally includes a study
of market comparables, including the selection of appropriate valuation multiples and discounted cash flow models based on our internal forecasts and
projections. The estimated fair value of each of our reporting units is typically determined using a combination of the income approach and the market
approach. The income approach is weighted at 75%, unless a meaningful base of market data is unavailable, in which case, the market approach is not
used.
We operate two reportable segments, in accordance with ASC 280, , and we have identified three reporting units—Classmates,
MyPoints, and Communications—for purposes of evaluating goodwill. These reporting units each constitute a business or group of businesses for
which discrete financial information is available and is regularly reviewed by segment management. The goodwill related to our acquired businesses is
specific to each reporting unit and the goodwill amounts are assigned as such.
Testing goodwill for impairment involves a two-step quantitative process. However, prior to performing the two-step quantitative goodwill
impairment test, we have the option to first assess qualitative factors to determine whether or not it is necessary to perform the two-step quantitative
goodwill impairment test for selected reporting units. If we choose the qualitative option, we are not required to perform the two-step quantitative
goodwill impairment test unless we have determined, based on the qualitative assessment, that it is more likely than not that the fair value of a reporting
unit is less than its carrying amount. If the two-step quantitative impairment test is required or chosen, the first step of the impairment test involves
comparing the estimated fair value of a reporting unit with its respective carrying amount, including goodwill. If the estimated fair value of a reporting
unit
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