Google 2011 Annual Report Download - page 89

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. We measure
recoverability of these assets by comparing the 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 addition, 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 goodwill impairment in any of the years presented.
Intangible assets with definite lives are amortized over their estimated useful lives. We amortize our acquired
intangible assets on a straight-line basis with definite lives over periods ranging from one to 12 years.
Income Taxes
We recognize income taxes under the liability method. We recognize deferred income taxes 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. We recognize the effect on deferred taxes of a change in tax
rates in income in the period that includes the enactment date.
Foreign Currency
Generally, the functional currency of our international subsidiaries is the local currency. We translate the
financial statements of these subsidiaries to U.S. dollars using month-end rates of exchange for assets and
liabilities, and average rates of exchange for revenues, costs, and expenses. We record translation gains and losses
in accumulated other comprehensive income as a component of stockholders’ equity. We recorded $77 million of
net translation gains in 2009, $124 million of net translation losses in 2010, and $107 million of net translation
losses in 2011. We record net gains and losses resulting from foreign exchange transactions as a component of
interest and other income, net. These gains and losses are net of those realized on foreign exchange contracts. We
recorded $8 million of net gains in 2009, $29 million of net losses in 2010, and $38 million of net losses in 2011.
Advertising and Promotional Expenses
We expense advertising and promotional costs in the period in which they are incurred. For the years ended
December 31, 2009, December 31, 2010, and December 31, 2011, advertising and promotional expenses totaled
approximately $353 million, $772 million, and $1,544 million.
Recent Accounting Pronouncements
In June 2011, the FASB issued an amendment to an existing accounting standard which requires companies
to present net income and other comprehensive income in one continuous statement or in two separate, but
consecutive, statements. In addition, in December 2011, the FASB issued an amendment to an existing accounting
standard which defers the requirement to present components of reclassifications of other comprehensive income
on the face of the income statement. We adopted both standards in the fourth quarter of 2011.
In September 2011, the FASB issued an amendment to an existing accounting standard, which provides
entities an option to perform a qualitative assessment to determine whether further impairment testing on goodwill
is necessary. Specifically, an entity has the option to first assess qualitative factors to determine whether it
is necessary to perform the current two-step test. If an entity believes, as a result of its qualitative assessment, that
it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative
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