Overstock.com 2009 Annual Report Download - page 106
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Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
2. ACCOUNTING POLICIES (Continued)
using the straight-line method over the estimated useful lives of the related assets or the term of the related capital lease, whichever is shorter, as follows:
Life
(years)
Computer software 2-3
Computer hardware 3
Furniture and equipment 3-5
Leasehold improvements are amortized over the shorter of the term of the related leases or estimated useful lives. Depreciation and amortization expense
is classified within the corresponding operating expense categories on the consolidated statements of operations as follows (in thousands):
Year ended December 31,
2007 2008 2009
(Restated)
Cost of goods sold—direct $ 1,882 $ 1,674 $ 1,264
Sales and marketing — — —
Technology 27,507 21,140 10,943
General and administrative 106 154 676
Total depreciation and amortization, including internal-use
software and website development $29,495 $ 22,968 $12,883
Upon sale or retirement of assets, cost and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain
or loss is reflected in the consolidated statements of operations.
Internal-use software and website development
The Company includes in fixed assets the capitalized cost of internal-use software and website development, including software used to upgrade and
enhance its Website and processes supporting the Company's business. The Company capitalizes costs incurred during the application development stage of
internal-use software and amortizes these costs over the estimated useful life of two to three years. The Company expenses costs incurred related to design or
maintenance of internal-use software as incurred.
During the year ended December 31, 2008 and 2009, the Company capitalized $9.0 million and $5.4 million, respectively, of costs associated with
internal-use software and website development, both developed internally and acquired externally. Amortization of costs associated with internal-use software
and website development was $11.6 million and $6.0 million for those respective periods. The decrease in costs associated with internal-use software and
website development is primarily related to a greater number of software licenses purchased in 2008 compared to 2009.
Leases
The Company accounts for its lease agreements as either operating or capital leases depending on certain defined criteria. On certain of its lease
agreements, the Company may receive rent holidays and
F-12