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51GOOGLE INC. |Form10-K
PART II
ITEM8.Notes to Consolidated Financial Statements
Google Inc.
Notes to Consolidated Financial Statements
NOTE1. Google Inc. and Summary of Signifi cant Accounting Policies
Nature of Operations
We were incorporated in California in September1998. We were re-incorporated in the State of Delaware in August2003. We
generate revenues primarily by delivering relevant, cost-eff ective online advertising in our Google segment. In addition, as a result of
our acquisition of Motorola Mobility Holdings, Inc. (Motorola) on May22, 2012, we generate revenues from sales of mobile devices
in our Motorola Mobile (Mobile) segment and digital set-top boxes in our Motorola Home (Home) segment. In December2012,
we entered into an agreement to dispose Home, and the related fi nancial results are presented as net loss from discontinued
operations on the Consolidated Statements of Income. Assets and liabilities of Motorola Home are not presented as held for sale
on the Consolidated Balance Sheets because they are not material.
Basis of Consolidation
The consolidated fi nancial 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 fi nancial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP)
requires us to make estimates and assumptions that aff ect the amounts reported and disclosed in the fi nancial statements
and the accompanying notes. Actual results could diff er 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 fi nancial instruments, intangible
assets and goodwill, useful lives of intangible assets and property and equipment, fair values of stock-based awards, inventory
valuations, 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 December31,
2010 2011 2012
Google:
Advertising revenues:
Google websites $19,444 $26,145 $31,221
Google Network Members’ websites 8,792 10,386 12,465
Total advertising revenues 28,236 36,531 43,686
Other revenues 1,085 1,374 2,353
Motorola Mobile:
Total Motorola Mobile revenues (hardware and other) 0 0 4,136
Total revenues $29,321 $37,905 $50,175
We recognize revenues when the services or products have been provided or delivered, the fees we charge are fi xed or determinable,
we and our advertisers or other customers understand the specifi c nature and terms of the agreed upon transactions, and
collectability is reasonably assured.
Google
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
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