Chegg 2015 Annual Report Download - page 104

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approximately $0.5 million and $1.5 million as of December 31, 2015 and 2014, respectively, are classified in other assets in
our consolidated balance sheets as these amounts are restricted for periods that exceed one year from the balance sheet dates.
Investments
We hold investments in marketable securities, consisting of corporate securities, commercial paper and agency bonds.
We classify our marketable securities as available-for-sale investments that are either short or long-term based on the nature of
each security based on the contractual maturity of the investment when purchased. Our available-for-sale investments are
carried at estimated fair value with any unrealized gains and losses, net of taxes, included in accumulated other comprehensive
loss in stockholders’ equity. Unrealized losses are charged against other income (expense), net when a decline in fair value is
determined to be other-than-temporary. We have not recorded any such impairment charges in the periods presented. We
determine realized gains or losses on the sale of marketable securities on a specific identification method, and record such gains
or losses as other income (expense), net. For the years ended December 31, 2015, 2014 and 2013, the Company's gross realized
gains and losses on short-term investments were not
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and are non-interest bearing. We generally grant
uncollateralized credit terms to our customers, which include textbook wholesalers, and marketing services customers, and
maintain an allowance for doubtful accounts to account for potentially uncollectible
Allowance for Doubtful Accounts
We assess the creditworthiness of our customers based on multiple sources of information, and analyze such factors as
our historical bad debt experience, industry and geographic concentrations of credit risk, economic trends, and customer
payment history. This assessment requires significant judgment. Because of this assessment, we maintain an allowance for
doubtful accounts for estimated losses resulting from the inability of certain customers to make all of their required payments.
In making this estimate, we analyze historical payment performance and current economic trends when evaluating the adequacy
of the allowance for doubtful accounts. Accounts receivable are written off as a decrease to the allowance for doubtful accounts
when all collection efforts have been exhausted and an account is deemed uncollectible.
Concentration of Credit
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash
equivalents, restricted cash, and marketable securities invested in highly liquid instruments in accordance with our investment
policy. We place the majority of our cash and cash equivalents and restricted cash with financial institutions in the United States
that we believe to be of high credit quality, and accordingly minimal credit risk exists with respect to these instruments. Certain
of our cash balances held with financial institutions are in excess of Federal Deposit Insurance Corporation limits. Our
investment portfolio consists of investment-grade securities diversified among security types, industries and issuers. Our
investments are held and managed by recognized financial institutions that follow our investment policy with the main
objective of preserving capital and maintaining liquidity
Concentrations of credit risk with respect to trade receivables exist to the full extent of amounts presented in the financial
statements. We had two textbook wholesalers that represented 16% and 11% of our net accounts receivable balance as
of December 31, 2015 and two textbook wholesalers that represented 16% and 12% of our net accounts receivable balance as
of December 31, 2014, respectively. No customers represented over 10% of net revenues in 2015, 2014 or 2013
Textbook
We consider our print textbook library to be a long-term productive asset and, as such, classify it as a non-current asset in
our consolidated balance sheets. Cash outflows for the acquisition of our print textbook library, net of changes in related
accounts payable and accrued liabilities historically was classified as cash flows from investing activities in our consolidated
statements of cash flows. As a result of our strategic partnership with Ingram, since May 1, 2015, Ingram has made all new
investments in the print textbook library and we will also provide Ingram with extended payment terms through 2016 for the
purchase of textbooks, before moving to normal payment terms in 2017. As such, we have recorded any cash outflows as a
result of this partnership as an operating activity in our consolidated statements of cash flows as we are no longer purchasing
print textbooks but rather providing extended payments terms to Ingram to facilitate their purchase of new textbooks. Cash
inflows received from the liquidation of print textbooks are classified as cash flows from investing activities in our consolidated
statements of cash flows, consistent with other long-term asset classification of our existing print textbook library. The gain or