ServiceMagic 2010 Annual Report Download - page 66

Table of Contents
IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
fair value is determined to be other-than-temporary, an impairment charge is recorded in current earnings and a new cost basis in the investment
is established.
Accounts Receivable
Accounts receivable are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts receivable outstanding
longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a number of factors,
including the length of time accounts receivable are past due, the Company's previous loss history, the specific customer's ability to pay its
obligation to the Company and the condition of the general economy and the customer's industry. The Company writes off accounts receivable
when they become uncollectible. The Company also maintains allowances to reserve for potential credits issued to customers or other revenue
adjustments. The amount of these reserves are based, in part, on historical experience.
Property and Equipment
Property and equipment, including significant improvements, are recorded at cost. Repairs and maintenance costs are expensed as incurred.
Depreciation is recorded using the straight-line method over the estimated useful lives of the assets.
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 $33.9 million and $40.0 million as of December 31, 2010 and
2009, respectively.
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 2010, 2009 and 2008.
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Asset Category
Estimated
Useful Lives
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