Raytheon 2015 Annual Report Download - page 96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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impairment and then measure the amount of the related goodwill impairment loss, if any. We have identified our operating
segments as reporting units under the impairment test assessment criteria outlined in U.S. GAAP. In performing our annual
impairment test in the fourth quarters of 2015, 2014 and 2013 we did not identify any goodwill impairment.
We determine whether long-lived assets are to be held for use or disposal. Upon indication of possible impairment of long-
lived assets held for use, we evaluate the recoverability of such assets by measuring the carrying amount of the assets against
the related estimated undiscounted future cash flows. When an evaluation indicates that the future undiscounted cash flows
are not sufficient to recover the carrying value of the asset, the asset is adjusted to its estimated fair value. In order for long-
lived assets to be considered held for disposal, we must have committed to a plan to dispose of the assets. Once deemed held
for disposal, the assets are stated at the lower of the carrying amount or fair value.
Computer Software, Net—Internal use computer software, net, included in other assets, net, which consists primarily of our
enterprisewide software solutions, is stated at cost less accumulated amortization and is amortized using the straight-line
method over its estimated useful life, generally 10 years. Computer software development costs related to software products
developed for external use are capitalized, when significant, after establishment of technological feasibility and marketability.
There have been no such costs capitalized to date as the costs incurred during the period between technological feasibility to
general release have not been significant.
Advance Payments and Billings in Excess of Costs Incurred—We receive advances, performance-based payments and
progress payments from customers that may exceed costs incurred on certain contracts. We classify advance payments and
billings in excess of costs incurred as current liabilities. Costs incurred in excess of billings are classified as contracts in
process, net.
Deferred Revenue—We receive up-front payments related to software license sales for Forcepoint, which we recognize
ratably over the license term. We classify deferred revenue as current and noncurrent based on the timing of when we expect
to recognize revenue. The current and noncurrent portions of Forcepoint's deferred revenue are included in other accrued
expenses and accrued retiree benefits and other long-term liabilities, respectively, in our consolidated balance sheets.
Redeemable Noncontrolling Interest—Redeemable noncontrolling interest is recognized at the greater of the estimated
redemption value as of the balance sheet date or the initial value adjusted for the noncontrolling interest holder's share of the
cumulative impact of net income (loss) and other changes in accumulated other comprehensive income (loss). Adjustments
to the redemption value over the period from the date of acquisition to the date the redemption feature becomes puttable are
immediately recorded to retained earnings. We reflect the redemption value adjustments in the EPS calculation if redemption
value is in excess of the fair value of noncontrolling interest.
Other Comprehensive Income (Loss)—Other comprehensive income (loss) includes foreign exchange translation
adjustments, effective portion of gains and losses on derivative instruments qualified as cash flow hedges, unrealized gains
(losses) on available-for-sale investments, and gains and losses associated with pension and PRB. The computation of other
comprehensive income (loss) and its components are presented in the consolidated statements of comprehensive income.