TripAdvisor 2015 Annual Report Download - page 71
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excepttotheextentofthespot-forwarddifferences.Thesedifferencesarenotexpectedtobesignificantduetotheshort-termnatureofthecontracts,whichto
date,havegenerallyhadmaturitiesatinceptionof90daysorless.Thenetcashreceivedorpaidrelatedtoourderivativeinstrumentsareclassifiedasanoperating
activityinourconsolidatedstatementsofcashflow,whichisbasedontheobjectiveofthederivativeinstruments.Thesenetcashflowshavenotbeenmaterialin
anyreportingperiodtodate.
Wehavenotenteredintoanycashflow,fairvalueornetinvestmenthedgestodateasofDecember31,2015.
Accounts Receivable and Allowance for Doubtful Accounts
Accountsreceivablearegenerallyduewithin30daysandarerecordednetofanallowancefordoubtfulaccounts.Werecordaccountsreceivableatthe
invoicedamount.Collateralisnotrequiredforaccountsreceivable.Weconsideraccountsoutstandinglongerthanthecontractualpaymenttermsaspastdue.We
determineourallowancebyconsideringanumberoffactors,includingthelengthoftimetradeaccountsreceivablearepastdue,previouslosshistory,aspecific
customer’sabilitytopayitsobligationstous,andtheconditionofthegeneraleconomyandindustryasawhole.
Thefollowingtablepresentsthechangesintheallowancefordoubtfulaccountsfortheperiodspresented:
December 31,
2015 2014 2013
(in millions)
Allowancefordoubtfulaccounts:
Balance,beginningofperiod $ 7 $ 3 $ 3
Charges(recoveries)toearnings 3 3 1
Write-offs,netofrecoveriesandotheradjustments (4) 1 (1)
Balance,endofperiod $ 6 $ 7 $ 3
Property and Equipment, Including Website and Software Development Costs
Werecordpropertyandequipmentatcost,netofaccumulateddepreciation.Wecapitalizecertaincostsincurredduringtheapplicationdevelopmentstage
relatedtothedevelopmentofwebsitesandinternalusesoftwarewhenitisprobabletheprojectwillbecompletedandthesoftwarewillbeusedasintended.
Capitalizedcostsincludeinternalandexternalcosts,ifdirectandincremental,anddeemedbymanagementtobesignificant.Weexpensecostsrelatedtothe
planningandpost-implementationphasesofsoftwareandwebsitedevelopmentasthesecostsareincurred.Maintenanceandenhancementcosts(includingthose
costsinthepost-implementationstages)aretypicallyexpensedasincurred,unlesssuchcostsrelatetosubstantialupgradesandenhancementstothewebsiteor
softwareresultinginaddedfunctionality,inwhichcasethecostsarecapitalized.
Wecomputedepreciationusingthestraight-linemethodovertheestimatedusefullivesoftheassets,whichisthreetofiveyearsforcomputerequipment,
capitalizedsoftwareandwebsitedevelopment,officefurnitureandotherequipment.Wedepreciateleaseholdimprovementsusingthestraight-linemethod,over
theshorteroftheestimatedusefullifeoftheimprovementortheremainingtermofthelease.Wedepreciateourcorporateheadquarterbuilding,whichis
consideredanassetforaccountingpurposesasthebuildingleaseisconsideredafinancingobligationunderGAAP,overitsestimatedusefullifeof40years.
Leases
Weleaseofficespaceinseveralcountriesaroundtheworldundernon-cancelableleaseagreements.Wegenerallyleaseourofficefacilitiesunderoperating
leaseagreements.Officefacilitiessubjecttoanoperatingleaseandtherelatedleasepaymentsarenotrecordedonourbalancesheet.Thetermsofcertainlease
agreementsprovideforrentalpaymentsonagraduatedbasis,however,werecognizerentexpenseonastraight-linebasisovertheleaseperiodinaccordancewith
GAAP.Anyleaseincentivesarerecognizedasreductionsofrentalexpenseonastraight-linebasisoverthetermofthelease.Theleasetermbeginsonthedatewe
becomelegallyobligatedfortherentpaymentsorwhenwetakepossessionoftheofficespace,whicheverisearlier.
Weestablishassetsandliabilitiesfortheestimatedconstructioncostsincurredunderleasearrangementswhereweareconsideredtheownerforaccounting
purposesonly,orbuild-to-suitleases,totheextentweareinvolvedintheconstructionofstructuralimprovementsortakeconstructionriskpriortocommencement
ofalease.Uponoccupancyoffacilitiesunderbuild-to-suitleases,weassesswhetherthesearrangementsqualifyforsalesrecognitionunderthesale-leaseback
accountingguidanceunderGAAP.Ifwecontinuetobethedeemedowner,foraccountingpurposes,thefacilitiesareaccountedforasfinancingobligations.
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