Rosetta Stone 2014 Annual Report Download - page 73

Table of Contents
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




Balance at beginning of period
$ 845
$ 845
Other comprehensive loss before reclassifications
(1,523)
(1,523)
Amounts reclassified from accumulated other comprehensive income
—
—
Net current period other comprehensive loss
(1,523)
(1,523)
Accumulated other comprehensive loss
$ (678)
$ (678)
During the year ended December 31, 2014, there were no reclassifications out of accumulated other comprehensive income.

The functional currency of the Company's foreign subsidiaries is their local currency. Accordingly, assets and liabilities of the foreign subsidiaries are
translated into U.S. dollars at exchange rates in effect on the balance sheet date. Income and expense items are translated at average rates for the period.
Translation adjustments are recorded as a component of other comprehensive income (loss) in stockholders' equity.
Cash flows of consolidated foreign subsidiaries, whose functional currency is the local currency, are translated to U.S. dollars using average exchange
rates for the period. The Company reports the effect of exchange rate changes on cash balances held in foreign currencies as a separate item in the
reconciliation of the changes in cash and cash equivalents during the period. The following table presents the effect of exchange rate changes and the net
unrealized gains and losses from the available-for-sale securities on total comprehensive income (loss) (dollars in thousands):
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




Net loss
$ (73,706)
$ (16,134)
$ (33,985)
Foreign currency translation (loss) gain
(1,523)
188
336
Unrealized gain on available-for-sale securities
—
—
23
Total comprehensive loss
$ (75,229)
$ (15,946)
$ (33,626)

Costs for advertising are expensed as incurred. Advertising expense for the years ended December 31, 2014, 2013, and 2012 were $79.6 million, $63.6
million and $66.2 million, respectively.

During 2014, the Company adopted the following recently issued Accounting Standard Updates (ASUs):
In July 2013, the Financial Accounting Standards Board ("FASB") issued ASU No. 2013-11
(“ASU 2013-11”), which requires that an
unrecognized tax benefit be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss,
or a tax credit carryforward, except for a situation in which some or all of such net operating loss carryforward, a similar loss, or a tax credit carryforward is not
available at the reporting date under the tax law of the applicable tax jurisdiction to settle any additional income taxes that would result from the
disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the
deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined
with deferred tax assets. The Company adopted this guidance beginning in fiscal year 2014 and the adoption of such guidance did not have a material impact
on the presentation of the Company’s reported results of operations or financial position.
The following ASUs were recently issued but have not yet been adopted by the Company:
F-16