3. PASSUR® Network
As of October 31, 2012 and 2011, the Company had $15,136,000 and $13,977,000 of Company-owned PASSUR® Systems capitalized, and $9,071,000 and $7,695,000 of accumulated depreciation related to such costs, resulting in a net asset of $6,065,000 and $6,282,000, 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 years. PASSUR® Systems which are not installed in the PASSUR® Network are carried at cost and no depreciation is recorded. These costs amounted to $1,124,000 and $134,000 as of October 31, 2012 and 2011, respectively. The Company capitalized $1,159,000 and $345,000 of costs to the PASSUR® Network during fiscal years 2012 and 2011, respectively. Included in the PASSUR® Network as of October 31, 2012 and 2011, are $766,000 and $637,000 of costs pertaining to raw material, work-in-process, and finished goods components. Depreciation expense related to the Company-owned PASSUR® Network was $1,376,000 and $1,364,000 in fiscal years 2012 and 2011, respectively. The Company did not dispose of any PASSUR® Network assets in fiscal years 2012 or 2011.