ServiceMagic 2009 Annual Report Download - page 71

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Table of Contents
IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment
Property and equipment, including significant improvements, are recorded at cost. Repairs and maintenance and any gains or losses on
dispositions are included in operations.
Depreciation is recorded on a straight-line basis to allocate the cost of depreciable assets and leasehold improvements to operations over
their estimated service lives.
The Company capitalizes certain internal use software costs including external direct costs utilized in developing or obtaining the software
and compensation and other employee-related costs for personnel directly associated with the development of the software. Capitalization of
such costs begins when the preliminary project stage is complete and ceases when the project is substantially complete and ready for its intended
purpose. The net book value of capitalized internal use software amounted to $45.9 million and $46.4 million as of December 31, 2009 and
2008, respectively.
Software Development Costs to Be Marketed to Others
The Company capitalizes certain software development costs, including costs to develop software products or the software component of
products to be marketed to external users. Such costs are capitalized since technological feasibility of the underlying software has been
established by the completion of the product design and a working model. Capitalization of such costs ceases when the software is available for
general release to customers. Unamortized software development costs are written-down if they exceed net realizable value. The software
development costs that have been capitalized to date are not significant.
Goodwill and Indefinite-Lived Intangible Assets
Goodwill acquired in business combinations is assigned to the reporting unit(s) that are expected to benefit from the combination as of the
acquisition date. The Company tests goodwill and indefinite-lived intangible assets for impairment annually as of October 1, or more frequently
if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or the fair value of an
indefinite-lived intangible asset below its carrying value. If the carrying value of a reporting unit's goodwill exceeds its implied fair value, an
impairment loss equal to the excess is recorded. If the carrying value of an indefinite-lived intangible asset exceeds its estimated fair value, an
impairment loss equal to the excess is recorded. See Note 5 for discussion of impairment charges recorded in 2009 and 2008.
63
Asset Category
Depreciation Period
Buildings and leasehold improvements
3 to 39 Years
Computer equipment and capitalized software
2 to 3 Years
Furniture and other equipment
3 to 10 Years