Intangible Assets
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Dec. 31, 2013
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Intangible Assets |
At December 31, 2013, the Company had the following intangible assets subject to amortization:
At December 31, 2012, the Company had the following intangible assets subject to amortization:
During 2012, as a result of the Company’s deteriorating business and significantly reduced market value as of June 30, 2012, the Company performed an interim impairment test prescribed by ASC 360 for long-lived assets. The Company determined that there was no impairment of long-lived assets for the LED signage and lighting strips asset group as its undiscounted cash flows were greater than its carrying amount as of June 30, 2012. However, the Company performed an interim impairment test for long-lived assets in the Company’s LED replacement lamps and fixtures asset group and determined that the carrying amount of the asset group was not recoverable as its undiscounted cash flows were less than its carrying amount. The Company further determined that the fair value of the asset group was less than its carrying value and therefore impairment must be recorded. The Company used the discounted cash flow method under the income approach to determine the fair value of the asset group. The impairment amount was determined by allocating the shortfall of fair value as compared to the carrying amount to each long-lived asset in the asset group on a pro rata basis using the relative carrying amount of the assets, except the carrying amount of each asset cannot be reduced below its fair value. To determine the fair value of each long-lived asset, the Company used the relief from royalty method for the patents and trademarks and estimated the fair value for the property and equipment and product certifications and licensing costs using a cost approach adjusted for physical, functional and economic obsolescence. For the LED replacement lamps and fixtures asset group, the Company recorded impairment charges in 2012 totaling $996,000 for intangible assets and $393,000 for property and equipment. In addition, the Company recorded an impairment charge in 2012 of $19,000 for intangible assets included in its corporate business unit. For the year ended December 31, 2012, the Company recognized the following impairment charges for intangible assets in the Company’s LED replacement lamps and fixtures division and its corporate business unit:
Patents and trademarks are amortized using the straight-line method over their useful lives ranging from 12 to 17 years. Amortization expense on patents and trademarks was $745,000, $109,000 and $123,000 for the years ended December 31, 2013, 2012 and 2011, respectively. Customer relationships are amortized using the straight-line method over their useful lives ranging from 10 to 12 years. Amortization expense on customer relationships was $1,248,000, $117,000 and $101,000 for the years ended December 31, 2013, 2012 and 2011, respectively. Technology is amortized over 10 years and related amortization expense was $67,000 in 2013. The favorable lease is amortized over 10 years and related amortization expense recorded in 2013 was $3,000. Non-compete agreements are amortized over 6 years and related amortization expense was $10,000 in 2013. Other intangible assets consist primarily of costs associated with product safety certifications (UL certifications) and Energy Star certifications. Amortization expense on other intangible assets was $46,000, $41,000 and $64,000 for the years ended December 31, 2013, 2012 and 2011, respectively. As of December 31, 2013, amortization expense on intangible assets for the next five years is estimated as follows:
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