Amazon.com 2015 Annual Report Download - page 59

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on our consolidated balance sheets. Our share of the earnings or losses as reported by equity-method investees, amortization of
basis differences, and related gains or losses, if any, are classified as “Equity-method investment activity, net of tax” on our
consolidated statements of operations.
Equity investments without readily determinable fair values and for which we do not have the ability to exercise
significant influence are accounted for using the cost method of accounting and classified as “Other assets” on our consolidated
balance sheets. Under the cost method, investments are carried at cost and are adjusted only for other-than-temporary declines
in fair value, certain distributions, and additional investments.
Equity investments that have readily determinable fair values are classified as available-for-sale and are included in
“Marketable securities” on our consolidated balance sheets and are recorded at fair value with unrealized gains and losses, net
of tax, included in “Accumulated other comprehensive loss.”
We periodically evaluate whether declines in fair values of our investments below their book value are other-than-
temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the
unrealized loss as well as our ability and intent to hold the investment until a forecasted recovery occurs. Additionally, we
assess whether we have plans to sell the security or it is more likely than not we will be required to sell any investment before
recovery of its amortized cost basis. Factors considered include quoted market prices; recent financial results and operating
trends; implied values from any recent transactions or offers of investee securities; credit quality of debt instrument issuers;
other publicly available information that may affect the value of our investments; duration and severity of the decline in value;
and our strategy and intentions for holding the investment.
Long-Lived Assets
Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitate an impairment
assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner
in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or
group of assets may not be recoverable.
For long-lived assets used in operations, impairment losses are only recorded if the asset’s carrying amount is not
recoverable through its undiscounted, probability-weighted future cash flows. We measure the impairment loss based on the
difference between the carrying amount and estimated fair value. Long-lived assets are considered held for sale when certain
criteria are met, including when management has committed to a plan to sell the asset, the asset is available for sale in its
immediate condition, and the sale is probable within one year of the reporting date. Assets held for sale are reported at the
lower of cost or fair value less costs to sell. Assets held for sale were not significant as of December 31, 2015 or 2014.
Accrued Expenses and Other
Included in “Accrued expenses and other” on our consolidated balance sheets are liabilities primarily related to
unredeemed gift cards, leases and asset retirement obligations, current debt, acquired digital media content, and other operating
expenses.
As of December 31, 2015 and 2014, our liabilities for unredeemed gift cards was $2.0 billion and $1.7 billion. We reduce
the liability for a gift card when redeemed by a customer. If a gift card is not redeemed, we recognize revenue when it expires
or when the likelihood of its redemption becomes remote, generally two years from the date of issuance.
Unearned Revenue
Unearned revenue is recorded when payments are received in advance of performing our service obligations and is
recognized over the service period. Unearned revenue primarily relates to prepayments of Amazon Prime memberships and
AWS services.