Table of Contents
Liquidity Services, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
2. Summary of Significant Accounting Policies (Continued)
The Company recognizes all of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at
their fair value on the acquisition date. Acquisition-related costs are recognized separately from the acquisition and expensed as incurred. Restructuring costs incurred in periods subsequent to the
acquisition date are expensed when incurred. Subsequent changes to the purchase price (i.e., working capital adjustments) or other fair value
adjustments determined during the measurement period are recorded as an adjustment to goodwill, with the exception of contingent consideration, which is recognized in the statement of operations in
the period it is modified. All subsequent changes to a valuation allowance or uncertain tax position that relate to the acquired company and existed at the acquisition date that occur both within the
measurement period and as a result of facts and circumstances that existed at the acquisition date are recognized as an adjustment to goodwill. All other changes in valuation allowances are recognized
as a reduction or increase to income tax expense or as a direct adjustment to additional paid-in capital as required.
The Company considers all highly liquid securities purchased with an initial maturity of three months or less to be cash equivalents.
Accounts receivable are recorded at the invoiced amount and are non-interest bearing. The Company maintains an allowance for doubtful
accounts to reserve for potentially uncollectible receivables. Allowances are based on management's judgment, which considers historical experience and specific knowledge of accounts where
collectability may not be probable. The Company makes provisions based on historical bad debt experience, a specific review of all significant outstanding invoices and an assessment of general
Inventory consists of property obtained for resale, generally through the online auction process, and is stated at the lower of cost or
market. Cost is determined using the specific identification method. Charges for unsellable inventory are included in cost of goods sold in the period in which they have been determined to occur.
Property and equipment is recorded at cost, and depreciated and amortized on a straight-line basis over the following estimated useful
|Computers and purchased software
||One to five years
|Furniture and fixtures
||Five to seven years
||Shorter of lease term or useful life