LinkedIn 2015 Annual Report Download - page 94

foreign currency exchange rate fluctuations. The Company’s program is not designated for trading or
speculative purposes.
The foreign currency derivative contracts that were not settled as of December 31, 2015 and 2014
are recorded at fair value in the consolidated balance sheets. See Note 5, Derivative Instruments, for
additional information.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is
computed using the straight-line method over the estimated useful lives of the assets, which range from
two to five years. Buildings represent construction in progress related to the construction or
development of property that has not yet been placed in service for its intended use. Buildings will be
depreciated over a period of 40 years. Leasehold improvements are depreciated over the shorter of the
lease term or expected useful lives of the improvements. Depreciation expense totaled $285.8 million,
$202.3 million and $118.1 million for the years ended December 31, 2015, 2014 and 2013,
respectively. Land is not depreciated.
Website and Internal-Use Software Development Costs
The Company capitalizes certain costs to develop its website, mobile applications, and internal-use
software when planning stage efforts are successfully completed, management has committed project
resourcing, and it is probable that the project will be completed and the software will be used as
intended. Such costs are amortized on a straight-line basis over the estimated useful life of the related
asset, which is generally two years. Costs incurred prior to meeting these criteria, together with costs
incurred for training and maintenance, are expensed as incurred.
The Company capitalized website and internal-use software development costs of $97.4 million,
$55.7 million and $39.3 million for the years ended December 31, 2015, 2014 and 2013, respectively.
The Company’s capitalized website and internal-use software depreciation is included in depreciation
and amortization in the Company’s consolidated statements of operations, and totaled $51.8 million,
$40.7 million and $15.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.
The Company had unamortized capitalized website and internal-use software of $105.0 million and
$59.4 million in the consolidated balance sheets as of December 31, 2015 and 2014, respectively.
Goodwill, Intangible Assets, Long-Lived Assets, and Impairment Assessments
Goodwill. Goodwill represents the excess of the purchase price of an acquired business over the
fair value of the underlying net tangible and intangible assets. Goodwill is evaluated for impairment
annually in the third quarter of the Company’s fiscal year, and whenever events or changes in
circumstances indicate the carrying value of goodwill may not be recoverable. Triggering events that
may indicate impairment include, but are not limited to, a significant adverse change in member
engagement or business climate that could affect the value of goodwill or a significant decrease in
expected cash flows. Since inception through December 31, 2015, the Company did not have any
goodwill impairment.
Intangible assets. Intangible assets consist of identifiable intangible assets, primarily customer
relationships and developed technology as a result from the Company’s acquisitions. Intangible assets
acquired in a business combination are initially measured at fair value; other intangible assets are
initially measured at cost. Thereafter, intangible assets are amortized on a straight-line basis over their
estimated useful lives.
Long-lived assets. The Company evaluates its long-lived assets, including property and
equipment and intangible assets, for impairment whenever events or changes in circumstances indicate
that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held
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