Go Daddy 2015 Annual Report Download - page 81

Table of Contents
As of December 31, 2015 , our accrual for estimated indirect tax liabilities was $7.1 million , reflecting our best estimate of the probable liability, based on an
analysis of our business activities, revenues subject to indirect taxes and applicable regulations in the jurisdictions in which we conduct business. We continually
evaluate those jurisdictions in which nexus exists and believe our accrual for estimated indirect tax liabilities is reasonable; however, the final determination of
indirect tax audits and any related litigation could be materially different than the amounts we have established for indirect tax contingencies. Due to the
complexity and uncertainty surrounding indirect tax laws, we believe it is reasonably possible we have incurred additional losses related to indirect taxes; however,
we are not able to estimate a range of the loss at this time.
See Note 10 to our consolidated financial statements for additional information regarding indirect taxes.
Loss Contingencies
We are subject to the possibility of various loss contingencies arising from uncertain and unresolved matters in the ordinary course of business and from
events or actions by others having the potential to result in a future loss. Such contingencies may include, but are not limited to, intellectual property claims, labor
and employment claims, breach of contract claims, regulatory proceedings, product service level commitments and losses resulting from other events and
developments. We consider the likelihood of loss, the impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the
amount of loss, in determining loss contingencies.
When a loss is considered probable and reasonably estimable, we record a liability in the amount of our best estimate for the ultimate loss. When there
appears to be a range of possible costs with equal likelihood, liabilities are based on the low-end of such range. However, the likelihood of a loss with respect to a
particular contingency is often difficult to predict and determining a meaningful estimate of the loss or a range of loss may not be practicable based on the
information available and the potential effect of future events and decisions by third parties impacting the ultimate resolution of the contingency. It is also not
uncommon for such matters to be resolved over many years, during which time relevant developments and new information must be continuously evaluated to
determine both the likelihood of potential loss and whether it is possible to reasonably estimate a range of possible loss. When a loss is probable but a reasonable
estimate cannot be made, disclosure is provided.
Disclosure is also provided when it is reasonably possible a loss will be incurred, or when it is reasonably possible the amount of a loss will exceed the
recorded amounts. We regularly review all contingencies to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of
the loss or range of loss can be made. As discussed above, development of a meaningful estimate of loss, or a range of potential loss, is complex when the outcome
is directly dependent on negotiations with, or decisions by, third parties such as regulatory agencies, court systems in various jurisdictions and other interested
parties. Such factors bear directly on whether it is possible to reasonably estimate a range of potential loss and boundaries of high and low estimates.
See Note 10 to our consolidated financial statements for additional information regarding loss contingencies.
Recent Accounting Pronouncements
See Note 2 to our consolidated financial statements for information regarding recent accounting pronouncements.
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