Note 7 - Internal Use Software

12 Months Ended

Dec. 31, 2012

Internal Use Software Disclosure [Text Block]

Note  7: Internal Use Software

Onvia capitalizes qualifying computer software costs incurred during the “application development stage” and other costs as permitted by ASC 350-40, Intangibles – Goodwill and Other Subtopic Internal-Use Software.  Amortization of these costs begins once the product is ready for its intended use.  These costs are amortized on a straight-line basis over the estimated useful life of the product, typically 3 to 5 years.  The amount of costs capitalized within any period is dependent on the nature of software development activities and projects in each period.

Onvia periodically evaluates the remaining useful lives and carrying values of internal use software.  If management determines that all or a portion of the asset will no longer be used, or the estimated remaining useful life differs from existing estimates, an abandonment will be recorded to reduce the carrying value or adjust the remaining useful life to reflect revised estimates.  In addition, if the carrying value of the software exceeds the estimated future cash flows, an impairment will be recorded to reduce the carrying value to the expected realizable value.

The following table presents a rollforward of capitalized internal use software for the twelve months ended December 31, 2012:

	Balance at December 31, 2011			Additions			Balance at December 31, 2012
Capitalized Internal Use Software	$	11,457,945		$	1,447,227		$	12,905,172
Accumulated amortization		(5,283,085	)		(2,082,253	)		(7,365,338	)
	$	6,174,860		$	(635,026	)	$	5,539,834

Amortization expense related to capitalized software was $2.1 million and $1.8 million for the twelve months ended December 31, 2012 and 2011, respectively.