Incredimail 2010 Annual Report Download - page 94

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INCREDIMAIL LTD AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-
line
method over the estimated useful lives of the assets at the following annual rates:
Leasehold improvements are depreciated by the straight-
line method over the term of the lease or the estimated useful life
of the improvements, whichever is shorter.
Intangible assets are amortized over their useful lives using a method of amortization that reflects the pattern in which the
economic benefits of the intangible assets are consumed or otherwise used, in accordance with ASC 350, "Intangibles
–
Goodwill and Other".
Amortization is calculated using the straight-
line method over their useful lives estimated to be three years (see 2j and
2m).
The Company's long-
lived assets, tangible and intangible, other than goodwill, are reviewed for impairment in accordance
with ASC 360, "Property Plant and Equipment", whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of
the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount
of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount
or fair value less costs to sell.
In 2008, the Company recorded an impairment loss to cost of revenues in the amounts of $44,000, in respect of core
technology acquired in the acquisition of Bizchord. No other impairments were recorded in 2009 and 2010.
The Company derives revenues from: (i) advertising and other services and (ii) from product sales. Revenues from
advertising and other services include search related advertising, other advertising and collaboration arrangements.
Revenues from products include licensing the right to use its email software, content database and email anti spam.
The Company generates revenues from search related advertising, receiving a share of the advertising revenues from
companies providing search capabilities. In addition, the Company offers advertisers the ability to place text-
based ads on
its home page and website and banners in its email clients. Advertisers are charged monthly based on the number of times
a user clicks on one of the ads. The Company recognizes revenue from advertisement at that time.
NOTE 2:
-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
f.
Property and equipment:
%
Computers and peripheral equipment
33
Office furniture and equipment
7
–
15
Motor vehicles
15
g.
Intangible assets:
h.
Impairment of long
-
lived assets:
i.
Revenue recognition:
F
-
11