Annual report pursuant to Section 13 and 15(d)

NOTE 7: - GOODWILL AND OTHER INTANGIBLE ASSETS, NET

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NOTE 7: - GOODWILL AND OTHER INTANGIBLE ASSETS, NET
12 Months Ended
Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]
NOTE 7:–                        GOODWILL AND OTHER INTANGIBLE ASSETS, NET

a.                 Goodwill

The Company allocates goodwill acquired in a business combination to the appropriate reporting unit as of the acquisition date. Currently, the Company’s reporting units are also its reportable segments and the associated goodwill was determined when the specific businesses in the reportable segments were purchased.

A summary of the goodwill by business segment is as follows:

   
December 31,
2013
   
Additions
   
Adjustments
(currency)
   
December 31,
2014
 
Training and Simulation Division
 
$
24,435,641
   
$
   
$
   
$
24,435,641
 
Power Systems Division
   
6,589,113
     
15,105,680
     
(708,215
   
20,986,578
 
Total
 
$
31,024,754
   
$
15,105,680
   
$
(708,215
 
$
45,422,219
 

From December 31, 2012 to December 31, 2013, the only change in goodwill was a $462,456 increase due to Power Systems Division’s goodwill due to currency adjustments.

b.                 Other intangible assets:

       
December 31,
 
       
2014
   
2013
 
   
Original Useful life
 
Cost
   
Net book value
   
Cost
   
Net book value
 
Technology
    4 - 8 years  
$
9,988,000
   
$
2,988,500
   
$
6,788,000
   
$
94,714
 
Capitalized software costs
    1 - 3 years    
4,072,045
     
347,740
     
3,694,091
     
129,437
 
Trademarks
       10 years    
28,000
     
2,800
     
28,000
     
11,200
 
Backlog/customer relationship
  1 - 10 years    
2,844,000
     
1,440,200
     
744,000
     
24,800
 
Covenant not to compete
         6 years    
400,000
     
382,000
     
-
     
-
 
Customer list
  2 - 10 years    
14,173,645
     
5,880,125
     
6,773,645
     
-
 
         
31,505,690
   
$
11,041,365
     
18,027,736
   
$
260,151
 
Less - accumulated amortization
       
(20,464,325
)
           
(17,767,585
)
       
Amortized cost
       
11,041,365
             
260,151
         
Trademarks (indefinite lives)
       
799,000
             
799,000
         
Net book value
     
$
11,840,365
           
$
1,059,151
         

Amortization expense amounted to $2,696,740 and $1,091,126 for the years ended December 31, 2014 and 2013, respectively, including amortization of capitalized software costs of $377,954 and $365,671, respectively.

c.                 Estimated amortization expenses, using both straight line and accelerated amortization methods, for the years shown is as follows:

Year ending December 31,
 
2015
 
$
2,978,937
 
2016
   
2,580,303
 
2017
   
1,816,875
 
2018
   
1,266,750
 
2019
   
885,000
 
Thereafter
   
1,513,500
 
Total
 
$
11,041,365
 

Goodwill and other intangible assets are adjusted on a quarterly basis for any change due to currency fluctuations and any variation is included in the accumulated other comprehensive income on the consolidated balance sheets.