Symantec 2007 Annual Report Download - page 83

Capitalized Software Development Costs
Costs incurred in connection with the development of software products are accounted for in accordance with
SFAS No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed.
Development costs incurred in the research and development of new software products and enhancements to
existing software products are expensed as incurred until technological feasibility in the form of a working model
has been established. Our software has been available for general release concurrent with the establishment of
technological feasibility, and accordingly no software development costs have been capitalized in fiscal 2007, 2006,
and 2005.
Acquired Product Rights
Acquired product rights are comprised of purchased product rights, technologies, databases, patents, and
contracts from acquired companies. Acquired product rights are stated at cost less accumulated amortization.
Amortization of acquired product rights is provided on a straight-line basis over the estimated useful lives of the
respective assets, generally one to eight years, and is included in Cost of revenues in the Consolidated Statements of
Income.
Goodwill and Other Intangible Assets
We account for goodwill and other intangible assets in accordance with SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 142 requires that goodwill and identifiable intangible assets with indefinite useful lives
be tested for impairment at least annually, or more frequently if events and circumstances warrant. We evaluate
goodwill for impairment by comparing the fair value of each of our reporting units, which are the same as our
operating segments, to its carrying value, including the goodwill allocated to that reporting unit. To determine the
reporting units’ fair values in the current year evaluation, we used the income approach under which we calculate
the fair value of each reporting unit based on the estimated discounted future cash flows of that unit. Our cash flow
assumptions are based on historical and forecasted revenue, operating costs, and other relevant factors.
SFAS No. 142 also requires that intangible assets with finite useful lives be amortized over their respective
estimated useful lives and reviewed for impairment in accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets.
Long-Lived Assets
We account for long-lived assets in accordance with SFAS No. 144, which requires that long-lived and
intangible assets, including Property and equipment, net, Acquired product rights, net, and Other intangible assets,
net be evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. We would recognize an impairment loss when the sum of the undiscounted future
net cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying
amount. Such impairment loss would be measured as the difference between the carrying amount of the asset and its
fair value, which would be estimated based on the discounted cash flows expected to be generated by the asset.
Assets to be disposed of would be separately presented in the Consolidated Balance Sheets and reported at the lower
of the carrying amount or fair value less costs to sell, and no longer depreciated. The assets and liabilities of a
disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections
of the Consolidated Balance Sheets.
Income Taxes
We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. The provision
for income taxes is computed using the asset and liability method, under which deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences between the financial reporting and
tax bases of assets and liabilities, and for operating loss and tax credit carryforwards in each jurisdiction in which we
operate. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable
income in effect for the years in which those tax assets are expected to be realized or settled. We record a valuation
allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
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