Travelzoo 2010 Annual Report Download - page 75

The expected amortization expense is an estimate. Actual amounts of amortization expense may differ from
estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets, accelerated
amortization of intangible assets and other events.
(g) Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with remaining maturities of less than three months on
the date of purchase.
(h) Advertising Costs
Advertising production costs are expensed as incurred. Online advertising is expensed as incurred over the
period the advertising is displayed. Advertising costs amounted to $31.6 million, $30.4 million and $25.8 million
for the years ended December 31, 2010, 2009, and 2008, respectively. In the years ended December 31, 2010, 2009
and 2008, approximately $2.6 million, $4.3 million, and $2.4 million, respectively, of advertising services was
purchased from the Company’s advertisers under non-barter agreements and recorded in sales and marketing
expense.
(i) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for
deductible temporary differences, along with net operating loss carryforwards and credit carryforwards, if it is more
likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the
preceding criteria, valuation allowances must be established. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled.
(j) Comprehensive Income (Loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income
(loss). Other comprehensive income (loss) refers to gains and losses that under generally accepted accounting
principles are recorded as an element of stockholders’ equity but are excluded from net income (loss). The
Company’s other comprehensive income (loss) is comprised of foreign currency translation adjustments.
The following are components of comprehensive income (loss) (in thousands):
2010 2009 2008
Year Ended December 31,
Net income (loss)....................................... $13,157 $5,185 $(4,116)
Other comprehensive income (loss):
Foreign currency translation adjustments . . . ................... 135 215 (1,208)
Total comprehensive income (loss) .......................... $13,292 $5,400 $(5,324)
Accumulated other comprehensive loss, as reflected in the consolidated balance sheets, consists of cumulative
foreign currency translation adjustments.
(k) Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of the FASB accounting
standard relating to impairment of long-lived assets, which requires an impairment loss to be recognized on assets to
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TRAVELZOO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)