TripAdvisor 2015 Annual Report Download - page 56

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revenueatthetimeofbookingandlaterrecognizedwhentheconsumerhascompletedthedestinationactivity.Wepaythedestinationactivityoperatorsafterthe
travelers’use.
Restaurants. Werecognizereservationrevenues(orperseateddinerfees)onatransaction-by-transactionbasisasdinersareseatedbyourrestaurant
customers.Subscription-basedrevenueisrecognizedratablyovertherelatedcontractualperiodoverwhichtheserviceisdelivered.
Vacation Rentals. Wegeneraterevenuefromcustomersforonlineadvertisingservicesrelatedtothelistingoftheirpropertiesforrentprimarilyoneithera
subscriptionbasisoverafixed-term,oronacommissionbasisfortransactionsthatarebookedonourplatform.Paymentsforterm-basedsubscriptionsreceivedin
advanceofservicesbeingrenderedarerecordedasdeferredrevenueandrecognizedratablytorevenueonastraight-linebasisoverthelistingperiod.Our
commissionrevenueisprimarilygeneratedonourfree-to-listoption,inlieuofapre-paidsubscriptionfee.Whenacommissionabletransactionisbookedonour
platform,wereceivecashfromthetravelerthatincludesbothourcommission,whichisrecordedasdeferredrevenue,andtheamountduetothepropertyowner,
whichisrecordedtodeferredmerchantpayablesonourconsolidatedbalancesheet.Wepaytheamountduetothepropertyownerandrecognizeourcommission
revenueatthetimeofthetraveler’sstay.Additionalrevenuesarederivedonapay-per-leadbasis,asweprovideleadsforrentalpropertiestopropertymanagers.
Pay-per-leadrevenueisbilledandrecognizedintheperiodwhentheleadsaredeliveredtothepropertymanagers.
New and Recently Adopted Accounting Pronouncements
New Accounting Pronouncements Not Yet Adopted
InSeptember2015,theFinancialAccountingStandardsBoard(“FASB”)issuednewaccountingguidancewhicheliminatestherequirementforanacquirer
inabusinesscombinationtoaccountformeasurement-periodadjustmentsretrospectively.Instead,acquirersmustrecognizemeasurement-periodadjustments
duringtheperiodinwhichtheydeterminetheamounts,includingtheeffectonearningsofanyamountsthatwouldhavebeenrecordedinpreviousperiodsifthe
accountinghadbeencompletedattheacquisitiondate.ThisupdateiseffectiveforinterimandannualperiodsbeginningafterDecember15,2015,withearly
adoptionpermitted.Theplannedadoptionofthisguidancein2016isnotexpectedtohaveamaterialimpactonourconsolidatedfinancialstatementsandrelated
disclosures.
InMay2014,theFASBissuednewaccountingguidanceonrevenuefromcontractswithcustomers.Thenewguidancerequiresanentitytorecognizethe
amountofrevenuetowhichitexpectstobeentitledforthetransferofpromisedgoodsorservicestocustomers.Theupdatedguidancewillreplacemostexisting
revenuerecognitionguidanceinGAAPwhenitbecomeseffectiveandpermitstheuseofeitherafullretrospectiveapproachoramodifiedretrospectiveapproach,
whichrequirestheinitialcumulativeeffecttoberecognizedatthedateofinitialapplication.Thisguidanceiseffectiveforfiscalyears,andinterimperiodswithin
thosefiscalyears,beginningafterDecember15,2017andearlyadoptionispermittedforfiscalyearsbeginningafterDecember15,2016.Wehavenotyetselected
atransitionmethodandwearecurrentlyevaluatingtheeffectthattheupdatedstandardwillhaveonourconsolidatedfinancialstatementsorrelateddisclosures.
Recently Adopted Accounting Pronouncements
InNovember2015,theFASBissuednewaccountingguidancewhichrequiresanentitytopresentdeferredtaxassetsanddeferredtaxliabilitiesas
noncurrentontheconsolidatedbalancesheet.ThisguidanceiseffectiveforfiscalyearsbeginningafterDecember15,2016,withearlyadoptionpermitted.The
Companyhasearlyadoptedthisguidanceandhasappliedtherequirementsretrospectivelytoallperiodspresented.Theadoptionofthisguidanceresultedinthe
reclassificationof$10millionfromcurrentdeferredincometaxassetstononcurrentdeferredincometaxliabilitiesontheconsolidatedbalancesheetasof
December31,2014.
InApril2015,theFASBissuednewaccountingguidancewhichrequiresdebtissuancecostsrelatedtoarecognizeddebtliabilitybepresentedinthe
balancesheetasadirectdeductionfromthecarryingamountoftherelateddebtliabilityinsteadofbeingpresentedasanasset.Debtdisclosureswillincludethe
faceamountofthedebtliabilityandtheeffectiveinterestrate.InAugust2015,additionalaccountingguidancewasissuedonthistopicthatclarifiestheApril2015
guidancefordebtissuancecostsassociatedwithline-of-creditarrangements,whichstatestheFASBwouldnotobjecttothecontinueddeferralandpresentationof
debtissuancecostsasanasset,whichwouldbesubsequentlyamortizedoverthetermofthearrangement.Thisguidanceiseffectiveforfiscalyears,andthe
interimperiodswithinthosefiscalyears,beginningafterDecember15,2015,withearlyapplicationpermitted.TheCompanyhasearlyadoptedthisguidance.The
retrospectiveapplicationofthisguidancedecreased“Otherlong-termassets”and“Long-termdebt”by$1millionontheconsolidatedbalancesheetasof
December31,2014.
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