4. Passur Network

12 Months Ended

Oct. 31, 2017

Notes

4. Passur Network

PASSUR Network

PASSUR Network consists of the following as of October 31, 2017 and 2016:

	2017	2016
		(As Restated)
PASSUR Network, beginning balance	$      18,387,000	$      17,765,000
Additions	1,401,000	622,000
Total capitalized PASSUR Network costs	19,788,000	18,387,000
Less accumulated depreciation	13,784,000	13,189,000
PASSUR Network, ending balance, net	$        6,004,000	$       5,198,000

The Company capitalized $1,197,000 and $489,000, of PASSUR Network costs, for the year ended October 31 2017 and 2016, respectively.  These amounts exclude $204,000 and $133,000 of parts purchased, related to the PASSUR Network, for the year ended October 31, 2017 and 2016, respectively. Depreciation expense related to the Company-owned PASSUR Network was $595,000 and $773,000 for the period ended October 31, 2017 and 2016, respectively. Depreciation is charged to cost of revenues and is calculated using the straight-line method over the estimated useful life of the asset, which is estimated at seven and five years for PASSUR and SMLAT systems, respectively.

The net carrying balance of the PASSUR Network as of October 31, 2017 and October 31, 2016, was $6,004,000 and $5,198,000, respectively. Included in the net carrying balance as of October 31, 2017, were parts and finished goods for PASSUR and SMLAT Systems totaling $1,636,000 and $642,000, respectively, which have not yet been installed. As of October 31, 2016, $1,815,000 and $911,000 of parts and finished goods for PASSUR and SMLAT systems, respectively, were included in the net carrying balance of the PASSUR Network. PASSUR and SMLAT Systems which are not installed are carried at cost and not depreciated until installed.

As of October 31, 2017, depreciation expense for the PASSUR Network assets, where depreciation has commenced is estimated to approximate $673,000, $659,000, $626,000, $412,000, and $255,000, for the fiscal years ended October 31, 2018, 2019, 2020, 2021 and 2022, respectively. The Company did not dispose of or record any impairments related to any of the PASSUR Network assets in fiscal years 2017 or 2016.