Google 2007 Annual Report Download - page 96

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Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 4. Non-Marketable Equity Securities
In April 2006, we completed our $1.0 billion cash purchase of a five percent equity interest in a wholly-owned
subsidiary of Time Warner, Inc. that owns all of the outstanding interests of America Online (“AOL”). Our investment in
this non-marketable equity security is accounted for at historical cost (see Note 1). In March 2006, we entered into certain
commercial arrangements with AOL. We believe that the terms of the investment and commercial agreements are at fair
value, and as a result, they are accounted for in accordance with their contractual terms.
Further, we are obligated over a five year term to make up to $100 million of co-marketing payments (but not to
exceed $20 million per year plus any amounts not spent in prior years) and issue up to $300 million of AdWords credits
(but not to exceed $60 million per year plus any credits not redeemed in prior years). Co-marketing costs are expensed as
incurred, and AdWords credits are accounted for as a reduction to revenues in the periods they are redeemed. At
December 31, 2007, our remaining co-marketing and AdWords credits commitments were $79 million and $193 million,
respectively.
We did not experience any material impairment charges on our non-marketable equity securities in the years
presented.
Note 5. Interest Income and Other, Net
The components of interest income and other, net were as follows (in thousands):
Year Ended December 31,
2005 2006 2007
Interest income ......................................................... $121,038 $412,063 $559,205
Interest expense ........................................................ (776) (257) (1,203)
Other ................................................................. 4,137 49,238 31,578
Interest income and other, net ......................................... $124,399 $461,044 $589,580
Note 6. Property and Equipment
Property and equipment consist of the following (in thousands):
As of December 31,
2006 2007
Information technology assets .................................................... $1,778,028 $2,734,916
Construction in process ......................................................... 850,164 1,364,651
Land and buildings ............................................................. 352,112 951,334
Leasehold improvements ........................................................ 273,262 416,884
Furniture and fixtures ........................................................... 36,028 52,127
Total .................................................................... 3,289,594 5,519,912
Less accumulated depreciation and amortization ..................................... 894,355 1,480,651
Property and equipment, net ..................................................... $2,395,239 $4,039,261
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