Notes to Financial Statements Dollars in thousands, except share and per share amounts and where indicated as in millions or billions NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Investment Properties and Goodwill We record investment properties at cost. Investment properties include costs of acquisitions; development,  predevelopment, and construction (including salaries and related benefits); tenant allowances and improvements; and  interest and real estate taxes incurred related to construction. We capitalize improvements and replacements from repair  and maintenance when the repairs and maintenance extend the useful life, increase capacity, or improve the efficiency  of the asset. All other repair and maintenance items are expensed as incurred. We record depreciation on buildings and  improvements utilizing the straight-line method over an estimated original useful life, which is generally 10 to 35 years. We  review depreciable lives of investment properties periodically and we make adjustments when necessary to reflect a shorter  economic life. We record depreciation on tenant allowances, tenant inducements and tenant improvements utilizing the  straight-line method over the term of the related lease. We record depreciation on equipment and fixtures utilizing the  straight-line method over seven to ten years.  We review investment properties for impairment on a property-by-property basis whenever events or changes in  circumstances indicate that the carrying value of investment properties may not be recoverable. These circumstances  include, but are not limited to, declines in cash flows, occupancy and comparable sales per square foot at the property. We  recognize an impairment of investment property when the estimated undiscounted operating income before depreciation  and amortization is less than the carrying value of the property. To the extent impairment has occurred, we charge to income  the excess of carrying value of the property over its estimated fair value. We may decide to sell properties that are held for use  and the sale prices of these properties may differ from their carrying values. Goodwill resulted from our merger with Corporate Property Investors, Inc. in 1998. We adopted SFAS No. 142  “Goodwill and Other Intangibles” on January 1, 2002 and as a result we ceased amortizing goodwill in accordance with SFAS  No. 142 which was approximately $1.2 million annually. The impact of adopting SFAS No. 142 resulted in no impairment  of our goodwill. We review goodwill for impairment at the reporting unit level on an annual basis or more frequently if an  event occurs that would change the fair value of the reporting unit below its carrying amount. If we determine the reporting  unit is impaired, the loss would be recognized as an impairment loss in income. Goodwill is reflected in “deferred costs, other  assets, and minority interest, net” in the accompanying balance sheets. We consider all highly liquid investments purchased with an original maturity of 90 days or less cash and cash  equivalents. Cash equivalents are carried at cost, which approximates market value. Cash equivalents generally consist of  commercial paper, bankers acceptances, Eurodollars, repurchase agreements, and money markets. Our balance of cash  and cash equivalents includes a balance of $175.0 million related to our gift card program which we do not consider  available for general working capital purposes. See Notes 4, 8, and 10 for disclosures about non-cash investing and financing  transactions. Cash and Cash Equivalents Marketable Securities  52 simon property group, inc. Marketable securities consist primarily of the assets of the insurance subsidiaries of the Management Company and  are included in deferred costs, other assets, and minority interest, net. The types of securities typically include U.S Treasury  or other U.S. government securities as well as corporate debt securities. These securities are classified as available-for-sale and  are valued based upon quoted market prices or using discounted cash flows when quoted market prices are not available.  The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to  maturity. Changes in the values of these securities are recognized in accumulated other comprehensive income until the gain  or loss is realized and recorded in other income. However, if we determine a decline in value is other than temporary, then  we recognize the unrealized loss in income to write down the investments to their net realizable value. The insurance subsidiaries of the Management Company are required to maintain statutory minimum capital and  surplus as well as maintain a minimum liquidity ratio. Therefore, our access to these securities may be restricted.