TripAdvisor 2013 Annual Report Download - page 70

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, 2013.
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.
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
businesses, future changes in income tax law, tax sharing agreements or variances between our actual and
anticipated operating results, we make certain judgments and estimates. Therefore, actual income taxes could
materially vary from these estimates.
We record liabilities to address uncertain tax positions we have taken in previously filed tax returns or that
we expect to take in a future tax return. The determination for required liabilities is based upon an analysis of
each individual tax position, taking into consideration whether it is more likely than not that our tax position,
based on technical merits, will be sustained upon examination. For those positions for which we conclude it is
more likely than not it will be sustained, we recognize the largest amount of tax benefit that is greater than 50%
likely of being realized upon ultimate settlement with the taxing authority. The difference between the amount
recognized and the total tax position is recorded as a liability. The ultimate resolution of these tax positions may
be greater or less than the liabilities recorded.
We have not provided for deferred U.S. income taxes on undistributed earnings of certain foreign
subsidiaries that we intend to reinvest permanently outside the United States. Should we distribute earnings of
foreign subsidiaries in the form of dividends or otherwise, we may be subject to U.S. income taxes. Due to
complexities in tax laws and various assumptions that would have to be made, it is not practicable, at this time, to
estimate the amount of unrecognized deferred U.S. taxes on these earnings.
See “Note 9—Income Taxes” in the notes to our consolidated and combined financial statements for further
information on income taxes.
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