Google 2008 Annual Report Download - page 90

Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Buildings are depreciated over periods up to 25 years. Leasehold improvements are amortized over the shorter of
the lease term or the estimated useful lives of the assets. Construction in progress is related to the construction or
development of property (including land) and equipment that have not yet been placed in service for their intended
use. Depreciation for equipment commences once it is placed in service and depreciation for buildings and
leasehold improvements commences once they are ready for their intended use.
Software Development Costs
We account for software development costs, including costs to develop software products or the software
component of products to be marketed to external users, as well as software programs to be used solely to meet
our internal needs in accordance with SFAS No. 86, Accounting for Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed and Statement of Position No. 98-1, Accounting for Costs of Computer Software
Developed or Obtained for Internal Use. We have determined that technological feasibility for our products to be
marketed to external users was reached shortly before the release of those products. As a result, the development
costs incurred after the establishment of technological feasibility and before the release of those products were
not material, and accordingly, were expensed as incurred. In addition, costs incurred during the application
development stage for software programs to be used solely to meet our internal needs were not material.
Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets
We review property and equipment and intangible assets, excluding goodwill, for impairment whenever events
or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of
these assets is measured by comparison of carrying amounts to the future undiscounted cash flows the assets are
expected to generate. If property and equipment and intangible assets are considered to be impaired, the
impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market
value. We have made no material adjustments to our long-lived assets in any of the years presented. In accordance
with SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), we test our goodwill for impairment at least
annually or more frequently if events or changes in circumstances indicate that this asset may be impaired. Our
tests are based on our single operating segment and reporting unit structure. We found no material impairment in
any of the years presented.
SFAS 142 also requires that intangible assets with definite lives be amortized over their estimated useful lives
and reviewed for impairment whenever events or changes in circumstances indicate an asset’s carrying value may
not be recoverable in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. We amortized our acquired intangible assets on a straight-line basis with definite lives over periods ranging
primarily from one to twelve years.
Income Taxes
We recognize income taxes under the liability method. Deferred income taxes are recognized for differences
between the financial reporting and tax bases of assets and liabilities at enacted statutory tax rates in effect for the
years in which differences are expected to reverse. The effect on deferred taxes of a change in tax rates is
recognized in income in the period that includes the enactment date.
Foreign Currency
Generally, the functional currency of our international subsidiaries is the local currency. The financial
statements of these subsidiaries are translated to U.S. dollars using month-end rates of exchange for assets and
liabilities, and average rates of exchange for revenues, costs and expenses. Translation gains and losses are
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