America Online 2009 Annual Report Download - page 78

Table of Contents
Cash and Equivalents
Cash equivalents primarily consist of money market accounts and overnight deposits that are readily convertible into cash with original maturities of
less than three months. Cash equivalents are carried at cost, which approximates fair value.
Allowance for Doubtful Accounts
AOL's receivables consist primarily of two components, receivables from individual subscribers to AOL's subscription access service and receivables
from advertising customers. Management performs separate evaluations of these components to determine if the balances will ultimately be fully collected
considering management's views on trends in the overall aging of receivables. In addition, for certain advertising receivables, management prepares an
analysis of specific risks on a customer-by-customer basis. Using this information, management reserves an amount that is expected to be uncollectible. At
December 31, 2009 and 2008, total allowance for doubtful accounts was $31.7 million and $39.8 million, respectively.
Receivables from, and Payables to, Time Warner
Prior to the spin-off, receivables from, and payables to, Time Warner represented amounts due from or to Time Warner and its subsidiaries under
various arrangements which are discussed further in "Note 13: Related Party Transactions." Subsequent to the spin-off, amounts due from or to Time Warner
and its subsidiaries are reflected in the same manner as receivables and payables to other counterparties.
Property and Equipment
Property and equipment are stated at cost. Depreciation, which includes amortization of capitalized software costs and amortization of assets under
capital leases, is provided generally on a straight-line basis over the estimated useful lives of the assets. AOL evaluates the depreciation periods of property
and equipment to determine whether events or circumstances warrant revised estimates of useful lives. Depreciation expense, recorded in costs of revenues
and selling, general and administrative expense, totaled $261.5 million, $311.0 million and $402.7 million for the years ended December 31, 2009, 2008 and
2007, respectively.
Property and equipment, including assets under capital lease, consist of ($ in millions):
December 31, Estimated
Useful Lives
2009 2008
Land (a) $ 47.0 $ 47.0
Buildings and building improvements 407.6 387.1 15 to 40 years
Capitalized internal-use software costs 772.0 908.6 1 to 5 years
Leasehold improvements 165.5 182.0 5 to 15 years
Furniture, fixtures and other equipment 898.8 1,060.0 2 to 5 years
2,290.9 2,584.7
Less accumulated depreciation (1,586.1) (1,794.1)
Total $ 704.8 $ 790.6
(a) Land is not depreciated.
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