America Online 2010 Annual Report Download - page 83

Table of Contents
AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 as well as past collection experience. 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, 2010 and 2009, the total allowance for doubtful accounts was $16.1 million and $31.6 million, respectively.
Receivables are written off when amounts are deemed to be uncollectible and internal collection efforts are closed.
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 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 $196.3 million, $261.1 million and $310.6 million for the years ended December 31, 2010, 2009 and 2008,
respectively.
Property and equipment, including assets under capital lease, consist of ($ in millions):
December 31, Estimated
Useful Lives 2010 2009
Land (a) $ 40.5 $ 47.0 —
Buildings and building improvements 275.5 407.6 15 to 40 years
Capitalized internal-use software costs 561.9 772.0 1 to 5 years
Leasehold improvements 109.1 164.9 5 to 15 years
Furniture, fixtures and other equipment 778.7 898.1 2 to 5 years
1,765.7 2,289.6
Less accumulated depreciation (1,236.5) (1,584.9)
Total $ 529.2 $ 704.7
(a) Land is not depreciated.
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