Support.com 2008 Annual Report Download - page 61

Table of Contents
SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
includes the licensed software, the costs will be amortized using the straight line method over an estimated useful life in a range of 3-5 years. We acquired the
purchased technology in 2008 and recorded amortization expense of $57,000 during the year ended December 31, 2008.
Goodwill
We have recorded goodwill related to two transactions. The first recording of goodwill resulted from the Company’s acquisition of Core Networks on
September 2, 2004. This Core Networks goodwill, $9.7 million, is entirely attributable to the Enterprise segment. The other goodwill resulted from our
acquisition of YourTechOnline.com (YTO) on May 2, 2008. This YTO goodwill, $2.9 million, is attributable entirely to the Consumer segment. We apply the
provisions of SFAS No. 142, “Goodwill and Other Intangibles Assets,” which prohibits the amortization of goodwill.
We assess the impairment of goodwill annually or more often if events or changes in circumstances indicate that the carrying value may not be
recoverable. A potential impairment is assessed at the segment level. An impairment loss would be recognized if the fair value of the reporting unit is less than
the carry value of the reporting unit’s net assets on the date of the evaluation. Furthermore, we evaluate cash flows at the lowest operating segment level. The
estimate of cash flows is based upon, among other things, certain assumptions about expected future operating performance and an appropriate discount rate
determined by our management. Our estimates of discounted cash flows may differ from actual cash flows due to, among other things, economic conditions,
changes to the business model or changes in operating performance.
We conduct our annual evaluation for impairment of goodwill on September 30 of each year. No goodwill impairment charges have been recorded through
December 31, 2008.
Intangible Assets
The Company records purchased intangible assets at fair value. The original cost is amortized on a straight-line basis over the estimated useful life of each
asset. We assess the impairment of intangible assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. We
perform an annual review to determine if the carrying value of the intangible asset is impaired, unless events or circumstances indicate a potential impairment
exists in which case a review is performed more often. The review considers facts and circumstances, either internal or external, which indicate that the carrying
value of the asset cannot be recovered. If and when indicators of impairment exist, SupportSoft assesses the need to record an impairment loss, by comparing the
undiscounted net cash flows associated with related assets or group of assets over their remaining lives against their respective carrying amounts. Impairment, if
any, is based on the excess of the carrying amount over the fair value of those assets.
In December 2007, we recognized a write-down of the intangible assets originally acquired from Core Networks in 2004, in accordance with SFAS
No. 142. See Note 5 to the Consolidated Financial Statements.
Revenue Recognition
Consumer Revenue
Consumer revenue is derived primarily from fees for technology support services. These services include those that are delivered on a one-time basis
(“incident-based” services) as well as those that delivered over time (“subscription” services). We provide these services through channel partners and directly to
consumers.
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Source: SUPPORTSOFT INC, 10-K, March 11, 2009