Goodwill and intangible assets

12 Months Ended

Dec. 31, 2013

5. Goodwill and intangible assets

The changes in carrying amount of goodwill are as follows:


Goodwill, gross, as of December 31, 2011	$	—
Acquisition of BPS		335,791
Impact of change in Euro exchange rate		11,808
Accumulated impairment losses as of December 31, 2012		—


Goodwill, gross, as of December 31, 2012		347,599
Impact of change in Euro exchange rate		14,464
Accumulated impairment losses as of December 31, 2013		—


Goodwill, net, as of December 31, 2013	$	362,063

The entire goodwill balance is assigned to the payment processing services segment. As this is the reporting unit expected to benefit from the synergies of the combination.

Intangible assets are recorded at estimated fair value and are amortized ratably over their estimated useful lives to processing and service costs, which are included in cost of revenue.

At December 31, the gross book value, accumulated amortization and amortization periods of intangible assets were as follows:

	As of December 31, 2013							As of December 31, 2012

	Gross book value		Accumulated amortization			Net book value		Gross book value		Accumulated amortization			Net book value		Amortization period (in years)
Trademarks and patents	$	1,100,696	$	(327,200	)	$	773,496	$	917,456	$	(258,325	)	$	659,131		15
Technology		3,015,192		(967,779	)		2,047,413		2,894,742		(351,018	)		2,543,724		5
Customer contracts		867,354		(867,354	)		—		867,354		(780,619	)		86,735		5


Intangible assets, net	$	4,983,242	$	(2,162,333	)	$	2,820,909	$	4,679,552	$	(1,389,962	)	$	3,289,590

Amortization expense related to intangible assets is as follows:

	Year ended December 31,

	2013		2012		2011
Amortization expense	$	735,265	$	569,721	$	224,486

Intangible amortization expense that will be charged to income for the subsequent five years and thereafter is estimated on the December 31, 2013 book value, as follows:


2014	$	677,007
2015		675,774
2016		675,378
2017		309,773
2018		70,912
Thereafter		412,065


Total	$	2,820,909

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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