YHOO » Topics » Long-Lived Assets:

These excerpts taken from the YHOO 10-K filed Feb 27, 2008.
Long-Lived Assets:
 
Property and Equipment.  Buildings are stated at cost and depreciated using the straight-line method over the estimated useful lives of 25 years. Leasehold improvements are amortized over the lesser of their expected useful life and the remaining lease term. Computers and equipment and furniture and fixtures are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally two to five years. The Company recognized depreciation expense on property and equipment of approximately $224 million, $302 million, and $409 million for 2005, 2006, and 2007, respectively.
 
Internal Use Software and Website Development Costs.  The Company capitalized certain internal use software and Website development costs totaling approximately $18 million, $84 million, and $111 million during 2005, 2006, and 2007, respectively. The estimated useful life of costs capitalized is evaluated for each specific project and ranges from one to three years. During 2005, 2006, and 2007, the amortization of capitalized costs totaled approximately $18 million, $14 million, and $48 million, respectively. Capitalized internal use software and Website development costs are included in property and equipment, net. The Company also capitalized $14 million and $16 million, respectively, of stock-based compensation expense in the years ended December 31, 2006 and 2007. The Company did not capitalize any stock-based compensation expense in the year ended December 31, 2005.
 
Goodwill.  Goodwill is carried at cost. Goodwill is not amortized but is subject to an annual test for impairment at the reporting unit level (operating segment or one level below an operating segment) and between annual tests in certain circumstances. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair value of the Company’s reporting units with the reporting unit’s carrying amount, including goodwill. The Company generally determines the fair value of its reporting units using the expected present value of future cash flows, giving consideration to the market valuation approach. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment loss, if any.
 
Intangible Assets Other than Goodwill.  Intangible assets other than goodwill are carried at cost less accumulated amortization. Intangible assets are generally amortized on a straight-line basis over the useful lives of the respective assets, generally two to seven years. Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the amount the carrying value exceeds the fair value of the asset.
 
Investments in Equity Interests.  Investments in entities in which the Company can exercise significant influence but does not own a majority equity interest or otherwise control, are accounted for using the equity method and included as investments in equity interests on the consolidated balance sheets. The Company records its share of the results of these companies one quarter in arrears within earnings in equity interests on the consolidated statements of income. The Company monitors its investments for other-than-temporary impairment by considering factors including the stock price of public companies in which it has an equity investment as well as current economic and market conditions and the operating performance of the companies and records reductions in carrying values when necessary. The fair value of privately held investments is estimated using the best available information as of the valuation date, including current earnings trends, undiscounted cash flows, quoted stock prices of comparable public companies, and other company specific information, including recent financing rounds.
 
The carrying amounts of these investments are greater than the underlying equity in net assets of these companies in certain cases due in part to goodwill, which is not subject to amortization in accordance with SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS 142”). This goodwill is evaluated for impairment in accordance with APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.”


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Table of Contents

 
Yahoo! Inc.
 
Notes to Consolidated Financial Statements — (Continued)
 
Foreign Currency.  The functional currency of the Company’s international subsidiaries is generally the local currency. The financial statements of these subsidiaries are translated into United States dollars using period-end rates of exchange for assets and liabilities and average rates of exchange for the period for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. The Company recorded foreign currency transaction gains and losses, realized and unrealized in other income, net on the consolidated statements of income, of approximately $8 million of net losses in 2005 and net gains of $5 million and $7 million in 2006 and 2007, respectively.
 
Long-Lived
Assets:



 



Property and Equipment.  Buildings are stated
at cost and depreciated using the straight-line method over the
estimated useful lives of 25 years. Leasehold improvements
are amortized over the lesser of their expected useful life and
the remaining lease term. Computers and equipment and furniture
and fixtures are stated at cost and depreciated using the
straight-line method over the estimated useful lives of the
assets, generally two to five years. The Company recognized
depreciation expense on property and equipment of approximately
$224 million, $302 million, and $409 million for
2005, 2006, and 2007, respectively.


 



Internal Use Software and Website Development
Costs.
  The Company capitalized certain internal
use software and Website development costs totaling
approximately $18 million, $84 million, and
$111 million during 2005, 2006, and 2007, respectively.
The estimated useful life of costs capitalized is evaluated for
each specific project and ranges from one to three years.
During 2005, 2006, and 2007, the amortization of capitalized
costs totaled approximately $18 million, $14 million,
and $48 million, respectively. Capitalized internal use
software and Website development costs are included in property
and equipment, net. The Company also capitalized
$14 million and $16 million, respectively, of
stock-based compensation expense in the years ended
December 31, 2006 and 2007. The Company did not capitalize
any stock-based compensation expense in the year ended
December 31, 2005.


 



Goodwill.  Goodwill is carried at cost.
Goodwill is not amortized but is subject to an annual test for
impairment at the reporting unit level (operating segment or one
level below an operating segment) and between annual tests in
certain circumstances. The performance of the test involves a
two-step process. The first step of the impairment test
involves comparing the fair value of the Company’s
reporting units with the reporting unit’s carrying amount,
including goodwill. The Company generally determines the fair
value of its reporting units using the expected present value of
future cash flows, giving consideration to the market valuation
approach. If the carrying amount of a reporting unit exceeds
the reporting unit’s fair value, the Company performs the
second step of the goodwill impairment test to determine the
amount of impairment loss, if any.


 



Intangible Assets Other than
Goodwill.
  Intangible assets other than goodwill
are carried at cost less accumulated amortization. Intangible
assets are generally amortized on a straight-line basis over the
useful lives of the respective assets, generally two to seven
years. Long-lived assets and certain identifiable intangible
assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. Determination of
recoverability is based on an estimate of undiscounted future
cash flows resulting from the use of the asset and its eventual
disposition. Measurement of any impairment loss for long-lived
assets and certain identifiable intangible assets that
management expects to hold and use is based on the amount the
carrying value exceeds the fair value of the asset.


 



Investments in Equity Interests.  Investments
in entities in which the Company can exercise significant
influence but does not own a majority equity interest or
otherwise control, are accounted for using the equity method and
included as investments in equity interests on the consolidated
balance sheets. The Company records its share of the results of
these companies one quarter in arrears within earnings in equity
interests on the consolidated statements of income. The Company
monitors its investments for other-than-temporary impairment by
considering factors including the stock price of public
companies in which it has an equity investment as well as
current economic and market conditions and the operating
performance of the companies and records reductions in carrying
values when necessary. The fair value of privately held
investments is estimated using the best available information as
of the valuation date, including current earnings trends,
undiscounted cash flows, quoted stock prices of comparable
public companies, and other company specific information,
including recent financing rounds.


 



The carrying amounts of these investments are greater than the
underlying equity in net assets of these companies in certain
cases due in part to goodwill, which is not subject to
amortization in accordance with SFAS No. 142
“Goodwill and Other Intangible Assets”
(“SFAS 142”). This goodwill is evaluated for
impairment in accordance with APB Opinion No. 18, “The
Equity Method of Accounting for Investments in Common
Stock.”





70





Table of Contents





 




Yahoo!
Inc.



 



Notes to Consolidated Financial
Statements — (Continued)


 



Foreign Currency.  The functional currency of
the Company’s international subsidiaries is generally the
local currency. The financial statements of these subsidiaries
are translated into United States dollars using period-end rates
of exchange for assets and liabilities and average rates of
exchange for the period for revenues and expenses. Translation
gains (losses) are recorded in accumulated other comprehensive
income (loss) as a component of stockholders’ equity. The
Company recorded foreign currency transaction gains and losses,
realized and unrealized in other income, net on the consolidated
statements of income, of approximately $8 million of net
losses in 2005 and net gains of $5 million and
$7 million in 2006 and 2007, respectively.


 




This excerpt taken from the YHOO 10-K filed Mar 3, 2006.
Long-Lived Assets.

Property and Equipment.   Buildings are stated at cost and depreciated using the straight-line method over the estimated useful lives of 25 years.  Leasehold improvements are amortized over the lesser of their expected useful life and the remaining lease term.  Computers and equipment and furniture and fixtures are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally two to five years.  The Company recognized depreciation expense on property and equipment of approximately $105 million, $165 million and $224 million for 2003, 2004, and 2005, respectively.

Goodwill.   Goodwill is carried at cost.  Goodwill is not amortized but is subject to an annual test for impairment at the reporting unit level (operating segment or one level below an operating segment) and between annual tests in certain circumstances.  The performance of the test involves a two-step process.  The first step of the impairment test involves comparing the fair value of the Company’s reporting units with the reporting unit’s carrying amount, including goodwill.  The Company generally determines the fair value of its reporting units using the expected present value of future cash flows, giving consideration to the market valuation approach.  If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment loss.  The second step of the goodwill impairment test involves comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill.

Intangible Assets Other than Goodwill.   Intangible assets other than goodwill are carried at cost less accumulated amortization.  Intangible assets are generally amortized on a straight-line basis over the useful lives of the respective assets, generally two to seven years.  Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.  Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition.  Measurement of any impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the amount the carrying value exceeds the fair value of the asset.

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