Zynga 2014 Annual Report Download - page 83

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Table of Contents
Zynga Inc.
Notes to Consolidated Financial Statements
1. Overview and Summary of Significant Accounting Policies
Organization and Description of Business
Zynga Inc. (“Zynga,” “we” or “the Company”) develops, markets, and operates social games as live services played over the Internet and
on social networking sites and mobile platforms. We generate revenue through the in-game sale of virtual goods and through advertising. Our
operations are headquartered in San Francisco, California, and we have several operating locations in the U.S. as well as various international
office locations in North America, Asia and Europe.
We completed our initial public offering in December 2011 and our Class A common stock is listed on the NASDAQ Global Select
Market under the symbol “ZNGA.”
Basis of Presentation and Consolidation
The accompanying consolidated financial statements are presented in accordance with United States generally accepted accounting
principles (“U.S. GAAP”). The consolidated financial statements include the operations of us and our wholly-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in the consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts in the consolidated financial statements and notes thereto. Significant estimates and assumptions reflected in the financial
statements include, but are not limited to, the estimated lives of virtual goods that we use for revenue recognition, useful lives of property and
equipment and intangible assets, accrued liabilities, income taxes, accounting for business combinations, stock-based expense and evaluation of
goodwill, intangible assets, and long-lived assets for impairment. Actual results could differ materially from those estimates.
Segments
We have one operating segment with one business activity, developing and monetizing social games. Our Chief Operating Decision Maker
(“CODM”), our Chief Executive Officer, manages our operations on a consolidated basis for purposes of allocating resources. When evaluating
performance and allocating resources, the CODM reviews financial information presented on a consolidated basis, accompanied by
disaggregated bookings information for our games.
Revenue Recognition
We derive revenue from the sale of virtual goods associated with our online games and the sale of advertising.
Online Game
We operate our games as live services that allow players to play for free. Within these games, players can purchase virtual currency to
obtain virtual goods to enhance their game-playing experience. Players can pay for our virtual currency using Facebook local currency payments
when playing our games through the Facebook platform. On platforms other than Facebook, players purchase our virtual currency and/or virtual
goods through various widely accepted payment methods offered in the games, including PayPal, Apple iTunes accounts,
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