TripAdvisor 2015 Annual Report Download - page 55

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Restricted Stock Units (RSUs)
RSUsarestockawardsthataregrantedtoemployeesentitlingtheholdertosharesofourcommonstockastheawardvests.Duringtheyearended
December31,2015,weissued1,016,626ofprimarilyservicebasedRSUsunderthe2011IncentivePlanwithaweightedaveragegrantdatefairvalueperoptionof
$82.95.RSUsaremeasuredatfairvaluebasedonthenumberofsharesgrantedandthequotedpriceofourcommonstockatthedateofgrant.Weamortizethefair
value,netofestimatedforfeitures,asstock-basedcompensationexpenseoverthevestingterm(generallyafour-yearrequisiteserviceperiod)onastraight-line
basis,withtheamountofcompensationexpenserecognizedatanydateatleastequalingtheportionofthegrant-datefairvalueoftheawardthatisvestedatthat
date.Estimatedforfeituresarecalculatedconsistentwiththemethodologyusedforourstockoptionsusinghistoricaldatatoestimatepre-vestingRSUforfeitures.
Estimatesoffairvaluearenotintendedtopredictactualfutureeventsorthevalueultimatelyrealizedbyemployeeswhoreceivetheseawards,and
subsequenteventsarenotindicativeofthereasonablenessofouroriginalestimatesoffairvalue.Werecordshare-basedcompensationexpenseonlyforthose
awardsthatareexpectedtovest.Changesinestimatedforfeituresarerecognizedthroughacumulativecatch-upadjustmentintheperiodofchangewhichalso
impactstheamountofstockcompensationexpensetoberecognizedinfutureperiods.
Referto“Note4—Stock Based Awards and Other Equity Instruments ”inthenotestoourconsolidatedfinancialstatementsinItem8forfurther
informationonourequityawardactivity.
Websites and Internal Use Software Development Costs
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.Suchcostsareamortizedonastraight-linebasisovertheestimatedusefullifeof
therelatedasset,generallyestimatedtobethreeyears.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.Totheextentthatwe
changethemannerinwhichwedevelopandtestnewfeaturesandfunctionalitiesrelatedtoourwebsitesandinternalusesoftware,assesstheongoingvalueof
capitalizedassetsordeterminetheestimatedusefullivesoverwhichthecostsareamortized,theamountofwebsiteandinternalusesoftwaredevelopmentcostswe
capitalizeandamortizecouldchangeinfutureperiods.
Referto“Note6—Property and Equipment, Net ”inthenotestoourconsolidatedfinancialstatementsinItem8forfurtherinformationonour
developmentofwebsitesandinternalusesoftware.
Revenue Recognition
Werecognizerevenuefromour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.Deferredrevenue,whichprimarilyrelatestoour
subscription-basedandcommissionbasedarrangements,isrecordedwhenpaymentsarereceivedinadvanceofourperformanceasrequiredbytheunderlying
agreements.
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.
Instantbookingcommissionrevenueisalsoincludedinclick-basedadvertisingrevenueandisrecordedatthetimeatravelerbooksahoteltransactionon
oursitewherewedonotassumecancellationrisk,orthetransactionmodel.Intransactionsinwhichweassumecancellationrisk,werecordrevenueinthemonth
inwhichthetraveler’sstayatahoteloccurs,ortheconsumptionmodel.Wehavenopost-bookingserviceobligationsforinstantbookingtransactions.
Display-based 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contractualperiodoverwhichserviceis
delivered.
Attractions .Wereceivecashfromtheconsumeratthetimeofbookingofthedestinationactivityandrecordtheseamounts,netofcommissions,asdeferred
merchantpayablesonourconsolidatedbalancesheet.Commissionrevenueisrecordedasdeferred
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