AMERICAN WELDING SOCIETY, INC., AND AWS FOUNDATION NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 2015 1. NATURE OF ORGANIZATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Prepaid Expenses Prepaid expenses consists of work-in-process costs relating to various publications that have not yet been released for distribution. Once publications are complete and ready for their intended use, the costs are amortized over the life of the publications, usually between two to three years. Additionally, expenditures which relate to programs for the next fiscal year are reported as a prepaid asset and are expensed during the next year as the related program function takes place. Investments The Organizations reports investments in marketable securities with readily determinable fair values and all investments in debt securities at fair value. Purchased securities are stated at fair market value based on the most recently traded price of the security at the financial statement date. Donated securities are recorded at fair value and sold immediately. Investment gains and losses, including realized and unrealized gains and losses on investments, interest and dividends, are included in the accompanying Combined Statement of Activities. Other Asset In connection with the purchase of Weldmex, LLC in 2012, AWS fully allocated the purchase price to an indefinite-lived intangible asset identified as the rights to the Weldmex show (NOTE 3). Indefinite-lived intangible assets are evaluated for impairment at least annually and more often when events indicate that impairment exists. AWS follows an accounting standard which permits an entity to make a qualitative assessment of whether it is more likely than not that an asset’s fair value is less than its carrying value before applying the two-step impairment model. If it is determined through the qualitative assessment that the asset’s fair value is more likely than not greater than its carrying value, the two-step impairment test would be unnecessary. The qualitative assessment is optional, allowing entities to proceed directly to the quantitative assessment using the two-step approach. In the two-step approach, the first step identifies potential impairments by comparing the fair value of an asset with its book value. If the fair value of the asset exceeds the carrying amount, the asset is not impaired and the second step is not necessary. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of the asset with the carrying amount. If the implied fair value is less than the carrying amount, an impairment is recorded. No impairment was recorded for the year ended December 31, 2015. Goodwill Goodwill, which is an indefinite-lived intangible asset, represents the excess of costs over fair value of assets of businesses acquired. Goodwill is evaluated at least annually, and more often when events indicate that an impairment exists. In connection with the purchase of World Engineering Xchange Asia (“WEX Asia”) in 2014 (NOTE 6), AWS fully allocated the purchase price to goodwill. There were no assets or liabilities acquired. In 2015, AWS acquired World Engineering Xchange, LLC (“WEX LLC”) (NOTE 6) and allocated the purchase price primarily to goodwill. AWS does not amortize goodwill but opts to test for impairment annually based on the accounting standard described above. Property and Equipment, Net Property and equipment, net, are defined by the Organizations as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of one year. Property and equipment including building improvements are stated at cost and depreciated using the straight-line method over the following estimated useful lives of the respective assets: Estimated Useful Lives (Years) Building and improvements 14 – 39 Furniture and equipment 5 – 7 Software 3 48 WELDING JOURNAL / JUNE 2016
Welding Journal | June 2016
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