Stamps.com 2014 Annual Report Download - page 66

STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
We do not have any customers representing 10% or more of total accounts receivable as of December 31, 2014 and 2013, respectively. We have
accounts receivable from one partner that represented approximately 17% and 55% of the total accounts receivable balance as of December 31,
2014 and 2013, respectively.
Inventories
Inventories consist of finished products sold through our supplies store and are accounted for using the lower of cost (first-in, first-out method)
or market. Inventories reported as a component of other current assets in 2014 and 2013 were $2.4 million and $3.2 million, respectively.
Property and Equipment
We account for property and equipment at cost less accumulated depreciation and amortization. We compute depreciation using the straight-line
method over the estimated useful life of the asset, generally three to five years for furniture, fixtures and equipment and ten to forty years for
building and building improvements. We have a policy of capitalizing expenditures that materially increase assets’ useful lives and charging
ordinary maintenance and repairs to operations as incurred. When property or equipment is disposed of, the cost and related accumulated
depreciation and amortization are removed, and any gain or loss is included in operations.
On January 23, 2012, we completed the purchase of our new corporate headquarters in El Segundo, California, for an aggregate purchase price
of $13.4 million of which approximately $7.2 million was allocated to land value and $5.5 million was allocated to building value. The purchase
was accounted for as a business combination. The building is being depreciated on a straight-
line basis over the estimated useful life of 40 years;
the land is an asset that does not get depreciated. As a result of the purchase we also acquired existing leases of building tenants, and $700,000
of the initial purchase price was allocated to lease-in-place intangible assets and is being amortized over the remaining actual lease terms which
were as long as 5.5 years.
Goodwill
Goodwill represents the excess of the fair value of consideration given over the fair value of the tangible assets, identifiable intangible assets and
liabilities assumed in a business combination. We are required to test goodwill for impairment annually and whenever events or circumstances
indicate the fair value of a reporting unit may be below its carrying value. Goodwill will be reviewed for impairment annually on October 1
utilizing a qualitative assessment or a two-step process.
Trademarks, Patents and Intangible Assets
Acquired trademarks, patents and other intangibles include both amortizable and non-
amortizable assets and are included in intangible assets, net
in the accompanying consolidated balance sheets. Intangible assets are carried at cost less accumulated amortization. Cost associated with
internally developed intangible assets is typically expensed as incurred as research and development costs. Amortization of amortizable
intangible assets is calculated on a straight-line basis over the estimated useful lives of the assets, ranging from approximately 4 to 17 years.
Impairment of Long
-Lived Assets and Intangible Assets
Long-lived assets including intangible assets with definitive useful lives are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
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