Google 2013 Annual Report Download - page 59

53
PART II
ITEM8.NotestoConsolidatedFinancialStatements
Wemayormaynotholdsecuritieswithstatedmaturitiesgreaterthan12monthsuntilmaturity.Afterconsiderationofourrisk
versusrewardobjectives,aswellasourliquidityrequirements,wemaysellthesesecuritiespriortotheirstatedmaturities.Aswe
viewthesesecuritiesasavailabletosupportcurrentoperations,weclassifysecuritieswithmaturitiesbeyond12monthsascurrent
assetsunderthecaptionmarketablesecuritiesintheaccompanyingConsolidatedBalanceSheets.Wecarrythesesecuritiesat
fairvalue,andreporttheunrealizedgainsandlosses,netoftaxes,asacomponentofstockholders’equity,exceptforunrealized
lossesdeterminedtobeother-than-temporary,whichwerecordasinterestandotherincome,net.Wedetermineanyrealized
gainsorlossesonthesaleofmarketablesecuritiesonaspecicidenticationmethod,andwerecordsuchgainsandlossesas
acomponentofinterestandotherincome,net.
Non-Marketable Equity Securities
Wehaveaccountedfornon-marketableequitysecuritieseitherundertheequityorcostmethod.Investmentsthroughwhichwe
exercisesignicantinuencebutdonothavecontrolovertheinvesteeareaccountedforundertheequitymethod.Investments
throughwhichwearenotabletoexercisesignicantinuenceovertheinvesteeareaccountedforunderthecostmethod.
Impairment of Marketable and Non-Marketable Securities
Weperiodicallyreviewourmarketableandnon-marketablesecuritiesforimpairment.Ifweconcludethatanyoftheseinvestments
areimpaired,wedeterminewhethersuchimpairmentisother-than-temporary.Factorsweconsidertomakesuchdetermination
includethedurationandseverityoftheimpairment,thereasonforthedeclineinvalueandthepotentialrecoveryperiodand
ourintenttosell.Formarketabledebtsecurities,wealsoconsiderwhether(1)itismorelikelythannotthatwewillberequired
tosellthesecuritybeforerecoveryofitsamortizedcostbasis,and(2)theamortizedcostbasiscannotberecoveredasaresult
ofcreditlosses.Ifanyimpairmentisconsideredother-than-temporary,wewillwritedowntheassettoitsfairvalueandrecord
thecorrespondingchargeasinterestandotherincome,net.
Accounts Receivable
Werecordaccountsreceivableattheinvoicedamountandwedonotchargeinterest.Wemaintainanallowancefordoubtful
accountstoreserveforpotentiallyuncollectiblereceivables.Wereviewtheaccountsreceivablebyamountsduebycustomers
whicharepastduetoidentifyspeciccustomerswithknowndisputesorcollectabilityissues.Indeterminingtheamountofthe
reserve,wemakejudgmentsaboutthecreditworthinessofsignicantcustomersbasedonongoingcreditevaluations.Wealso
maintainasalesallowancetoreserveforpotentialcreditsissuedtocustomers.Wedeterminetheamountofthereservebased
onhistoricalcreditsissued.
Inventories
Inventoriesarestatedatthelowerofcostormarket,computedusingtherst-in,rst-outmethod.
Property and Equipment
Weaccountforpropertyandequipmentatcostlessaccumulateddepreciationandamortization.Wecomputedepreciation
usingthestraight-linemethodovertheestimatedusefullivesoftheassets,generallytwotoveyears.Wedepreciatebuildings
overperiodsupto25years.Weamortizeleaseholdimprovementsovertheshorteroftheremaining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our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ourintended
use.Landisnotdepreciated.
Software Development Costs
Weexpensesoftwaredevelopmentcosts,includingcoststodevelopsoftwareproductsorthesoftwarecomponentofproductsto
bemarketedtoexternalusers,beforetechnologicalfeasibilityofsuchproductsisreached.Wehavedeterminedthattechnological
feasibilitywasreachedshortlybeforethereleaseofthoseproductsand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.Softwaredevelopmentcostsalsoincludecoststodevelopsoftwareprogramstobeusedsolelytomeet
ourinternalneedsandcloudbasedapplicationsusedtodeliverourservices.
Business Combinations
Weincludetheresultsofoperationsofthebusinessesthatweacquireasoftherespectivedatesofacquisition.Weallocatethefair
valueofthepurchasepriceofouracquisitionstotheassetsacquiredandliabilitiesassumedbasedontheirestimatedfairvalues.
Theexcessofthefairvalueofpurchasepriceoverthefairvaluesoftheseidentiableassetsandliabilitiesisrecordedasgoodwill.
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