Overstock.com 2013 Annual Report Download - page 77
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Table of Contents
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 capital lease, whichever is shorter, as follows:
Computer software 2-4
Computer hardware 3-4
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 and Comprehensive Income (Loss) as follows (in thousands):
Cost of goods sold - direct $380
$470
$714
Technology 12,917
14,177
14,433
General and administrative 1,225
1,362
1,203
Total depreciation and amortization, including internal-use software and website development $14,522
$16,009
$16,350
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, 2013 and 2012, we capitalized $11.4 million and $8.2 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 $8.0 million and $8.2 million for those respective periods.
We account for lease agreements as either operating or capital leases depending on certain defined criteria. In certain of our lease agreements, we receive
rent holidays and other incentives. We recognize lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer
the commencement date of required payments. Additionally, tenant improvement allowances are amortized as a reduction in rent expense over the term of the
lease. Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the life of the lease, without assuming renewal
features, if any, are exercised.
We account for treasury stock under the cost method and include treasury stock as a component of stockholders’ equity.
Other long-term assets consist primarily of long-term prepaid expenses.
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