Vistaprint 2015 Annual Report Download - page 66

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assessment of the guidance. If upon completion of construction, the project does not meet the “sale-leaseback”
criteria, the lease will be treated as a financing obligation and we will depreciate the asset over its estimated useful
life for financial reporting purposes.
Intangible Assets
We capitalize the costs of purchasing patents from unrelated third parties and amortize these costs over
the estimated useful life of the patent. The costs related to patent applications, pursuing others who we believe
infringe on our patents, and defending against patent-infringement claims are expensed as incurred.
We record acquired intangible assets at fair value on the date of acquisition and amortize such assets
using the straight-line method over the expected useful life of the asset, unless another amortization method is
deemed to be more appropriate. We evaluate the remaining useful life of intangible assets on a periodic basis to
determine whether events and circumstances warrant a revision to the remaining useful life. If the estimate of an
intangible asset’s remaining useful life is changed, we amortize the remaining carrying value of the intangible asset
prospectively over the revised remaining useful life.
Long-Lived Assets
Long-lived assets with a finite life are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would
necessitate an impairment assessment include a significant decline in the observable market value of an asset, a
significant change in the extent or manner in which an asset is used, or any other significant adverse change that
would indicate that the carrying amount of an asset or group of assets may not be recoverable.
For long-lived assets used in operations, impairment losses are only recorded if the asset’s carrying
amount is not recoverable through its undiscounted, probability-weighted future cash flows. We measure the
impairment loss based on the difference between the carrying amount and estimated fair value. Long-lived assets
are considered held for sale when certain criteria are met, including when management has committed to a plan to
sell the asset, the asset is available for sale in its immediate condition, and the sale is probable within one year of
the reporting date. Assets held for sale are reported at the lower of cost or fair value less costs to sell. At June 30,
2015, we had a building with a carrying value of $1,913 that met the asset held for sale criteria and as such we
have classified the asset in other current assets in the consolidated balance sheet. We did not have any assets held
for sale as of June 30, 2014.
No material impairment charges were recorded for the years ended June 30, 2015, 2014 or 2013.
Business Combinations
We recognize the assets acquired and liabilities assumed in business combinations on the basis of their fair
values at the date of acquisition. We assess the fair value of assets, including intangible assets, using a variety of
methods and each asset is measured at fair value from the perspective of a market participant. The method used to
estimate the fair values of intangible assets incorporates significant assumptions regarding the estimates a market
participant would make in order to evaluate an asset, including a market participant’s use of the asset and the
appropriate discount rates for a market participant. Assets recorded from the perspective of a market participant
that are determined to not have economic use for us are expensed immediately. Any excess purchase price over
the fair value of the net tangible and intangible assets acquired is allocated to goodwill. Transaction costs and
restructuring costs associated with a business combination are expensed as incurred.
The consideration for our acquisitions often includes future payments that are contingent upon the
occurrence of a particular event. For acquisitions that qualify as business combinations, we record an obligation for
such contingent payments at fair value on the acquisition date. We estimate the fair value of contingent
consideration obligations through valuation models that incorporate probability adjusted assumptions related to the
achievement of the milestones and thus likelihood of making related payments. We revalue these contingent
consideration obligations each reporting period. Changes in the fair value of our contingent consideration
obligations are recognized within general and administrative expense in our consolidated statements of operations.