TripAdvisor 2012 Annual Report Download - page 66

Definite-Lived Intangible Assets. Intangible assets with definite lives and other long-lived assets are carried
at cost and are amortized on a straight-line basis over their estimated useful lives of two to ten years. We review
the carrying value of long-lived assets or asset groups, including property and equipment, to be used in
operations whenever events or changes in circumstances indicate that the carrying amount of the assets might not
be recoverable.
Factors that would necessitate an impairment assessment include a significant adverse change in the extent
or manner in which an asset is used, a significant adverse change in legal factors or the business climate that
could affect the value of the asset, or a significant decline in the observable market value of an asset, among
others. If such facts indicate a potential impairment, we assess the recoverability of the asset by determining if
the carrying value of the asset exceeds the sum of the projected undiscounted cash flows expected to result from
the use and eventual disposition of the asset over the remaining economic life of the asset. If the recoverability
test indicates that the carrying value of the asset is not recoverable, we will estimate the fair value of the asset
using appropriate valuation methodologies which would typically include an estimate of discounted cash flows.
Any impairment would be measured as the difference between the asset’s carrying amount and its estimated fair
value. We have not identified any circumstances that would warrant an impairment assessment as of
December 31, 2012.
For additional information on our goodwill, indefinite-lived intangibles and definite-lived intangibles refer
to “Note 7—Goodwill and Intangible Assets, net” in the notes to our consolidated and combined financial
statements.
Revenue Recognition
We recognize revenue from the advertising services rendered when the following four revenue recognition
criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the price is fixed or
determinable, and collectability is reasonably assured.
Click-based Advertising. Revenue is derived primarily from click-through fees charged to our travel partners
for traveler leads sent to the travel partners’ website. We record revenue from click-through fees after the traveler
makes the click-through to the travel partners’ websites.
Display and Other Advertising. We recognize display advertising revenue ratably over the advertising
period or upon delivery of advertising impressions, depending on the terms of the advertising contract.
Subscription-based revenue is recognized ratably over the related subscription period. We recognize revenue
from all other sources either upon delivery or when we provide the service.
Deferred revenue, which primarily relates to our subscription-based programs, is recorded when payments
are received in advance of our performance as required by the underlying agreements.
Income Taxes
We compute and account for our income taxes on a separate tax return basis. We record income taxes under
the liability method. Deferred tax assets and liabilities reflect our estimation of the future tax consequences of
temporary differences between the carrying amounts of assets and liabilities for book and tax purposes. We
determine deferred income taxes based on the differences in accounting methods and timing between financial
statement and income tax reporting. Accordingly, we determine the deferred tax asset or liability for each
temporary difference based on the enacted tax rates expected to be in effect when we realize the underlying items
of income and expense. We consider all relevant factors when assessing the likelihood of future realization of our
deferred tax assets, including our recent earnings experience by jurisdiction, expectations of future taxable
income and the carryforward periods available to us for tax reporting purposes, as well as assessing available tax
planning strategies. We may establish a valuation allowance to reduce deferred tax assets to the amount we
believe is more likely than not to be realized. Due to inherent complexities arising from the nature of our
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