Amazon.com 2013 Annual Report Download - page 57

46
Equity investments that have readily determinable fair values are classified as available-for-sale and are included in
“Marketable securities” in our consolidated balance sheets and are recorded at fair value with unrealized gains and losses, net
of tax, included in “Accumulated other comprehensive loss.”
We periodically evaluate whether declines in fair values of our investments below their book value are other-than-
temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the
unrealized loss as well as our ability and intent to hold the investment until a forecasted recovery occurs. Additionally, we
assess whether we have plans to sell the security or it is more likely than not we will be required to sell any investment before
recovery of its amortized cost basis. Factors considered include quoted market prices; recent financial results and operating
trends; implied values from any recent transactions or offers of investee securities; credit quality of debt instrument issuers;
other publicly available information that may affect the value of our investments; duration and severity of the decline in value;
and our strategy and intentions for holding the investment.
Long-Lived Assets
Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment
assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner
in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or
group of assets may not be recoverable.
For long-lived assets used in operations, impairment losses are only recorded if the asset’s carrying amount is not
recoverable through its undiscounted, probability-weighted future cash flows. We measure the impairment loss based on the
difference between the carrying amount and estimated fair value. Long-lived assets are considered held for sale when certain
criteria are met, including when management has committed to a plan to sell the asset, the asset is available for sale in its
immediate condition, and the sale is probable within one year of the reporting date. Assets held for sale are reported at the
lower of cost or fair value less costs to sell. Assets held for sale were not significant as of December 31, 2013 or 2012.
Accrued Expenses and Other
Included in “Accrued expenses and other” as of December 31, 2013 and 2012 were liabilities of $1.4 billion and $1.1
billion for unredeemed gift cards. We reduce the liability for a gift card when redeemed by a customer. If a gift card is not
redeemed, we recognize revenue when it expires or when the likelihood of its redemption becomes remote, generally two years
from the date of issuance.
Unearned Revenue
Unearned revenue is recorded when payments are received in advance of performing our service obligations and is
recognized over the service period. Unearned revenue primarily relates to Amazon Prime memberships and AWS.
Foreign Currency
We have internationally-focused websites for the United Kingdom, Germany, France, Japan, Canada, China, Italy, Spain,
Brazil, India, Mexico, and Australia. Net sales generated from these websites, as well as most of the related expenses directly
incurred from those operations, are denominated in local functional currencies. The functional currency of our subsidiaries that
either operate or support these websites is the same as the local currency. Assets and liabilities of these subsidiaries are
translated into U.S. Dollars at period-end exchange rates, and revenues and expenses are translated at average rates prevailing
throughout the period. Translation adjustments are included in “Accumulated other comprehensive loss,” a separate component
of stockholders’ equity, and in the “Foreign-currency effect on cash and cash equivalents,” on our consolidated statements of
cash flows. Transaction gains and losses including intercompany transactions denominated in a currency other than the
functional currency of the entity involved are included in “Other income (expense), net” on our consolidated statements of
operations. In connection with the settlement and remeasurement of intercompany balances, we recorded gains (losses) of $(84)
million, $(95) million, and $70 million in 2013, 2012, and 2011.