TeleNav 2010 Annual Report Download - page 84

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TELENAV, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
equivalents are considered to be Level 1. As of June 30, 2010 and 2009, we did not have any Level 2 or Level 3
financial instruments.
Property and equipment
Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is
computed using the straight-line method over the estimated useful lives of the respective assets. Computers,
automobiles and equipment have useful lives of three years and fixtures and furniture have useful lives of five
years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated
useful lives of the assets or the term of the related lease.
We review our property and equipment for impairment whenever events or changes in circumstances
indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by a
comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If
property and equipment are considered to be impaired, the impairment to be recognized equals the amount by
which the carrying value of the asset exceeds its fair market value. We have not recorded any impairment to our
long-lived assets in any of the periods presented.
Preferred stock warrants
Outstanding warrants to purchase our Series E convertible preferred stock have been classified as liabilities
on our consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and
any change in fair value is recognized as a component of other income (expense), net. As of December 31, 2009,
all remaining outstanding Series E preferred stock warrants had been exercised and the warrant liability was
reclassified to preferred stock.
Comprehensive income
Comprehensive income consists of net income and other comprehensive income (loss), which includes
cumulative foreign currency translation gains or losses. Foreign currency translation gains (losses) totaled
$(5,000), $156,000 and $49,000 for fiscal 2010, 2009 and 2008, respectively.
Stock-based compensation
We account for stock-based employee compensation arrangements under the fair value recognition method,
which requires us to measure the stock-based compensation costs of share-based compensation arrangements
based on the grant-date fair value, and recognize the costs in the financial statements over the employees’
requisite service period. We recognize compensation expense for the fair value of these awards with time-based
vesting on a straight-line basis over the employee’s requisite service period of each of these awards, net of
estimated forfeitures.
Equity instruments issued to nonemployees are recorded at their fair value on the measurement date and are
subject to periodic adjustment as the underlying equity instruments vest.
Income taxes
We utilize the asset and liability method of accounting for income taxes, whereby deferred tax assets or
liability account balances are calculated at the balance sheet date using current tax laws and rates in effect for the
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