TiVo 2008 Annual Report Download - page 67

Table of Contents
Property and Equipment
Property and equipment are stated at cost less depreciation. Maintenance and repair expenditures are expensed as incurred.
Depreciation is computed using the straight-line method over estimated useful lives as follows:
Furniture and fixture 3-5 years
Computer and office equipment 3-5 years
Lab equipment 3 years
Leasehold improvements The shorter of 4 years or the term of the lease
Capitalized software for internal use 1-5 years
Capitalized Software
Costs of computer software to be sold, leased or otherwise marketed have been accounted for in accordance with Statements of Financial Accounting
Standards No. 86, "Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed." The Company achieves technological
feasibility upon development of a working model. The period between the development of a working model and the release of the final product to customers
is short, and, therefore, the development costs incurred during this short period are immaterial and, as such, are not capitalized.
The Company accounts for costs related to internally-developed software and software purchased for internal use in accordance with the American
Institute of Certified Public Accountants (AICPA) Statement of Position No. 98-1 "Accounting for Cost of Computer Software Developed or Obtained for
Internal Use" (SOP 98-1). In accordance with SOP 98-1, software development costs incurred as part of an approved project plan that result in additional
functionality to internal use software are capitalized and amortized on a straight-line basis over the estimated useful life of the software, between one and five
years.
Intangible Assets
Purchased intangible assets include intellectual property such as patent rights carried at cost less accumulated amortization. Useful lives generally range
from five to seven years.
Sales Taxes
In accordance with the guidance of EITF Issue No. 06-3, "How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be
Presented in the Income Statement" (EITF 06-3), the Company accounts for sales taxes imposed on its goods and services on a net basis in the consolidated
statement of operations.
Revenue Recognition and Deferred Revenue
The Company generates service revenues from fees for providing the TiVo service to consumers and through the sale of advertising and audience
research measurement services. The Company also generates technology revenues from licensing technology and by providing engineering professional
services. In addition, the Company generates hardware revenues from the sale of hardware products that enable the TiVo service.
Service Revenues. Included in service revenues are revenues from recurring and prepaid subscription plans to the TiVo service and fees received from
the sale of advertising and audience research measurement services. Monthly and prepaid fixed-length subscription revenues are recognized over the period
the service is provided. Subscription revenues from product lifetime subscriptions are recognized ratably over the Company's estimate of the useful life of a
TiVo-enabled DVR associated with the subscription. Prior to November 1, 2007, the estimate of the useful life of these DVRs was 48 months. From
November 1, 2007 through October 31, 2008, the Company extended the period it uses to
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