TripAdvisor 2013 Annual Report Download - page 88

with the effects of changes in spot rates reported in Other, net on our consolidated and combined statements of
operations. Accordingly, fair value changes in the forward contracts help mitigate the changes in the value of the
remeasured assets and liabilities attributable to changes in foreign currency exchange rates, except to the extent
of the spot-forward differences. These differences are not expected to be significant due to the short-term nature
of the contracts, which typically have average maturities at inception of less than one year.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are generally due within 30 days and are recorded net of an allowance for doubtful
accounts. We record accounts receivable at the invoiced amount and do not charge interest. Collateral is not
required for accounts receivable. We consider accounts outstanding longer than the contractual payment terms as
past due. We determine our allowance by considering a number of factors, including the length of time trade
accounts receivable are past due, previous loss history, a specific customer’s ability to pay its obligations to us,
and the condition of the general economy and industry as a whole.
The following table presents the changes in the allowance for doubtful accounts for the periods presented:
December 31,
2013 2012 2011
(in thousands)
Allowance for doubtful accounts:
Balance, beginning of period ..................... $2,818 $ 5,370 $5,184
Charges (recoveries) to earnings .................. 1,485 (1,050) 909
Write-offs, net of recoveries and other adjustments . . . (1,003) (1,502) (723)
Balance, end of period .......................... $3,300 $ 2,818 $5,370
Property and Equipment, Including Website and Software Development Costs
We record property and equipment at cost, net of accumulated depreciation. We capitalize certain costs
incurred during the application development stage related to the development of websites and internal use
software when it is probable the project will be completed and the software will be used as intended. Capitalized
costs include internal and external costs, if direct and incremental, and deemed by management to be significant.
We expense costs related to the planning and post-implementation phases of software and website development
as these costs are incurred. Maintenance and enhancement costs (including those costs in the post-
implementation stages) are typically expensed as incurred, unless such costs relate to substantial upgrades and
enhancements to the website or software resulting in added functionality, in which case the costs are capitalized.
We compute depreciation using the straight-line method over the estimated useful lives of the assets, which
is three to five years for computer equipment and purchased software, capitalized software and website
development and furniture and other equipment. We depreciate leasehold improvements using the straight-line
method, over the shorter of the estimated useful life of the improvement or the remaining term of the lease.
Leases
We lease office space in several countries around the world under non-cancelable lease agreements. We
generally lease our office facilities under operating lease agreements. Office facilities subject to an operating
lease and the related lease payments are not recorded on our balance sheet. The terms of certain lease agreements
provide for rental payments on a graduated basis, however, we recognize rent expense on a straight-line basis
over the lease period in accordance with authoritative accounting guidance. Any lease incentives are recognized
as reductions of rental expense on a straight-line basis over the term of the lease. The lease term begins on the
date we become legally obligated for the rent payments or when we take possession of the office space,
whichever is earlier.
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