Google 2013 Annual Report Download - page 56

50 GOOGLE INC.
PART II
ITEM8.NotestoConsolidatedFinancialStatements

Notes to Consolidated Financial Statements
 
Nature of Operations
WewereincorporatedinCaliforniainSeptember1998andre-incorporatedintheStateofDelawareinAugust2003.Wegenerate
revenuesprimarilybydeliveringrelevant,cost-eectiveonlineadvertisinginourGooglesegment.Toalesserextent,wegenerate
revenuesprimarilyfromsalesofmobiledevicesinourMotorolaMobilesegment.
InApril2013,wecompletedthedispositionoftheMotorolaHomesegmenttoArrisGroup,Inc.(Arris)andcertainotherpersons.
SeeNote8forfurtherdiscussionofthedispositionoftheMotorolaHomesegment.
Basis of Consolidation
Theconsolidated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nancialstatementsinconformitywithU.S.GenerallyAcceptedAccountingPrinciples(GAAP)
requiresustomakeestimatesandassumptionsthataecttheamountsreportedanddisclosedinthenancialstatements
andtheaccompanyingnotes.Actualresultscoulddi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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.
Inthesecondquarterof2013,werevisedtheestimatedusefullivesofcertaintypesofpropertyandequipmentwhichresulted
inanadditionaldepreciationexpenseof$207millionduringtheyearendedDecember31,2013.
Revenue Recognition
Thefollowingtablepresentsourrevenuesbyrevenuesource(inmillions):
Year Ended December31,
2011 2012 2013
Google:
Advertisingrevenues:
Googlewebsites $26,145 $31,221 $37,422
GoogleNetworkMembers’websites 10,386 12,465 13,125
Totaladvertisingrevenues 36,531 43,686 50,547
Other revenues 1,374 2,353 4,972
TotalGooglerevenues(advertisingandother) $ 37,905 $46,039 $ 55,519
Motorola Mobile:
TotalMotorolaMobilerevenues(hardwareandother) 0 4,136 4,306
Totalrevenues $37,905 $50,175 $59,825
Werecognizerevenueswhentheservicesorproductshavebeenprovidedordelivered,thefeeswechargearexedordeterminable,
weandouradvertisersorothercustomersunderstandthespecicnatureandtermsoftheagreedupontransactions,and
collectabilityisreasonablyassured.
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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