Google 2011 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2011 Google annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Google Inc. and Summary of Significant Accounting Policies
Nature of Operations
We were incorporated in California in September 1998. We were re-incorporated in the State of Delaware in
August 2003. We generate revenues primarily by delivering relevant, cost-effective online advertising.
Basis of Consolidation
The consolidated financial statements include the accounts of Google Inc. and our wholly-owned subsidiaries.
All intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting
Principles (GAAP) requires us to make estimates and assumptions that affect the amounts reported and disclosed
in the financial statements and the accompanying notes. Actual results could differ materially from these
estimates. On an ongoing basis, we evaluate our estimates, including those related to the accounts receivable and
sales allowances, fair values of financial instruments, intangible assets and goodwill, useful lives of intangible
assets and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities,
among others. We base our estimates on historical experience and on various other assumptions that are believed
to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and
liabilities.
Revenue Recognition
The following table presents our revenues by revenue source (in millions):
Year Ended December 31,
2009 2010 2011
Advertising revenues:
Google websites .................................................... $15,723 $ 19,444 $ 26,145
Google Network Members’ websites .................................. 7,166 8,792 10,386
Total advertising revenues ...................................... 22,889 28,236 36,531
Other revenues ......................................................... 762 1,085 1,374
Revenues .............................................................. $23,651 $ 29,321 $37,905
Google AdWords is our auction-based advertising program that enables advertisers to place text-based and
display ads on our websites and our Google Network Members’ websites. Display advertising comprises the videos,
text, images, and other interactive ads that run across the web on computers and mobile devices, including smart
phones and handheld computers such as netbooks and tablets. Most of our AdWords customers pay us on a
cost-per-click basis, which means that an advertiser pays us only when a user clicks on one of its ads. We also
offer AdWords on a cost-per-impression basis that enables advertisers to pay us based on the number of times
their ads appear on our websites and our Google Network Members’ websites as specified by the advertisers.
Google AdSense refers to the online programs through which we distribute our advertisers’ AdWords ads for
display on our Google Network Members’ websites, as well as programs to deliver ads on television broadcasts.
56