Overstock.com 2011 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)
Prepaids and other assets
Prepaids and other assets represent expenses paid prior to receipt of the related goods or services, including advertising, maintenance, packaging,
insurance, and other miscellaneous costs, as well as investments in precious metals. Total prepaids and other assets at December 31, 2011 and 2010 were
$12.7 million and $11.7 million, respectively.
Fixed assets
Fixed assets, which include assets such as technology infrastructure, internal-use software, website development, furniture and fixtures and leasehold
improvements, are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets or the term of the related
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,
2011 2010 2009
Cost of goods sold—direct $ 714 $ 1,179 $ 1,264
Technology 14,433 12,489 10,943
General and administrative 1,203 912 676
Total depreciation and amortization, including internal-use software and website development $16,350 $14,580 $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
Included in fixed assets is the capitalized cost of internal-use software and website development, including software used to upgrade and enhance our
Website and processes supporting our business. We capitalize costs incurred during the application development stage of internal-use software and amortize
these costs over the estimated useful life of two to three years. Costs incurred related to design or maintenance of internal-use software are expensed as
incurred.
During the years ended December 31, 2011 and 2010, we capitalized $9.6 million and $8.2 million, respectively, of costs associated with internal-use
software and website development, both developed
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