Priceline 2014 Annual Report Download - page 51

the fair value of the assets and liabilities assumed in order to properly allocate the purchase price consideration between
identifiable intangible assets from goodwill. Our estimates of the fair value of assets and liabilities assumed are based upon
assumptions that we believe are reasonable and, when appropriate, include assistance from a third party valuation firm.
Goodwill is reviewed at least annually for impairment. Excluding OpenTable, which was acquired in July 2014, the estimated
fair value of our other reporting units substantially exceed their respective carrying values. Since the annual impairment test in
September 2014, there have been no events or changes in circumstances to indicate a potential impairment.
Additionally, we evaluate whether events or circumstances have occurred which indicate that the carrying amounts of
long-lived assets and intangibles may be impaired. The significant factors that are considered that could trigger an impairment
review include changes in business strategies, market conditions, or the manner of use of an asset; under performance relative
to historical or expected future operating results; and negative industry or economic trends. In evaluating an asset for possible
impairment, management estimates that asset's future undiscounted cash flows to measure whether the carrying value of the
asset is recoverable. If it is determined that the asset is not recoverable, we measure the impairment based upon the fair value
of the asset compared to its carrying value. The fair value represents the projected discounted cash flows of the asset over its
remaining life.
As a result of our recent acquisitions of OpenTable and KAYAK in July 2014 and May 2013, respectively, we have recorded a
significant amount of goodwill and identifiable intangible assets. Refer to Note 20 in the Consolidated Financial Statements for
additional information. In 2015, we intend to invest in OpenTable to accelerate its global expansion, increase the value offered
to its restaurant partners and enhance the end-to-end experience for customers across desktop and mobile devices. As a result,
we expect OpenTable's profitability in 2015 to decline year-over-year as we invest for future growth. If the investments we
intend to make in 2015 and beyond, in particular internationally, are unsuccessful in growing OpenTable's global online
restaurant reservation business or OpenTable experiences a significant reduction in revenues or profitability due to factors such
as competition, increased capital expenditures or investments in its business, we may incur an impairment. Likewise, if
KAYAK is unsuccessful in profitably growing its global online travel brand or it experiences a significant reduction in
advertising revenues on its websites or mobile apps or profitability due to factors such as a loss of continued access to travel
services information provided by other OTAs or travel service providers, we may incur an impairment charge.
We are subject to ongoing tax examinations and assessments in various jurisdictions. To date, we have been audited in several
taxing jurisdictions with no significant impact on our financial condition, results of operations or cash flows. Although we
believe that our tax filing positions are reasonable, the final determination of tax audits or tax disputes may be different from
what is reflected in our historical income tax provisions and accruals. Accordingly, we may incur additional tax expense based
upon our assessment of the more likely than not outcomes or we may adjust previously recorded tax expense to reflect
examination results.
We intend to reinvest our foreign earnings in our non-U.S. operations. At December 31, 2014 and 2013 , we had
approximately $7.3 billion and $4.9 billion, respectively, of foreign earnings indefinitely reinvested. It is not practicable to
determine the U.S. federal income tax liability that would be payable if such earnings were not indefinitely reinvested.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") and the International Accounting Standards Board ("IASB") issued
a new accounting standard on the recognition of revenue from contracts with customers that is designed to create greater comparability for
financial statement users across industries and jurisdictions. The core principle of the standard is that an "entity recognizes revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services." Additionally, the new
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Income Taxes.
We determine our tax expense based on our income and statutory tax rates applicable in the various
jurisdictions in which we operate. Due to the complex nature of tax legislation and frequent changes with such associated
legislation, significant judgment is required in computing our tax expense and determining our tax positions. We regularly
review our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the
expected timing of the reversals of temporary differences, and tax planning strategies and record valuation allowances as
required.