EEI 2017 Form 10-K

Table of Contents The costs of computer software obtained or developed for internal use is amortized on a straight-line basis over the estimated useful life of the software. Amortization begins when the software and all related software modules on which it is functionally dependent are ready for their intended use. Amortization expense is recorded in depreciation and amortization in the consolidated statements of operations. The following software-related costs are expensed as incurred and recorded in general and administrative expenses on the consolidated statements of operations: · research costs, such as costs related to the determination of needed technology and the formulation, evaluation and selection of alternatives; · costs to determine system performance requirements for a proposed software project; · costs of selecting a vendor for acquired software; · costs of selecting a consultant to assist in the development or installation of new software; · internal or external training costs related to software; · internal or external maintenance costs related to software; · costs associated with the process of converting data from old to new systems, including purging or cleansing existing data, reconciling or balancing of data in the old and new systems and creation of new data; · updates and minor modifications; and · fees paid for general systems consulting and overall control reviews that are not directly associated with the development of software. Capitalized software costs are evaluated for recoverability/impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, including when: · existing software is not expected to provide future service potential; · it is no longer probable that software under development will be completed and placed in service; and · costs of developing or modifying internal-use software significantly exceed expected development costs or costs of comparable third-party software. Refer to Note 8 of these consolidated financial statements for additional disclosures regarding the Company’s property, buildings and equipment. Goodwill Goodwill is included in other assets on the accompanying consolidated balance sheets. Goodwill is subject to an annual assessment for impairment by comparing the estimated fair values of reporting units to which goodwill has been assigned to the recorded book value of the respective reporting units. The estimated fair value of reporting units is calculated using a discounted cash flows methodology. Goodwill is also assessed for impairment between annual assessments whenever events or circumstances make it more likely than not that an impairment may have occurred. Refer to Note 9 of these consolidated financial statements for additional disclosures regarding the Company’s recorded goodwill. Impairment of Long-Lived Assets The Company assesses recoverability of the carrying value of long-lived assets by estimating the future net cash flows (undiscounted) expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value. Income Taxes The Company follows the asset and liability approach to account for income taxes. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Although realization is not assured, management believes it is more likely than not that the recorded net deferred tax assets will be realized. Since in some cases management has utilized estimates, the amount of the net deferred tax asset considered realizable could be reduced in the near term. 43