Enom 2010 Annual Report Download - page 105

Table of Contents
Demand Media, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(In thousands, except per share amounts)
2. Summary of Significant Accounting Policies (Continued)
released on a rolling basis are offset by reserves withheld from current credit card transactions, and therefore are not available to be used in current operations.
As of December 31, 2009 and 2010, restricted cash balances of $83 and $57, respectively, are included in other non-current assets.
Investments in Marketable Securities
Investments in marketable securities are recorded at fair value, with the unrealized gains and losses if any, net of taxes, reported as a component of
shareholders' deficit until realized or until a determination is made that an other-than-temporary decline in market value has occurred.
When the Company does not intend to sell a debt security, and it is more likely than not that the Company will not have to sell the security before
recovery of its cost basis, it recognizes the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion
in other comprehensive income. The credit loss component recognized in earnings is identified as the amount of principal cash flows not expected to be
received over the remaining term of the security as projected based on cash flow projections. The Company did not have any securities with other-than-
temporary impairment at December 31, 2009 and 2010.
In determining whether other-than-temporary impairment exists for equity securities, management considers: (1) the length of time and the extent to
which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer and (3) the intent and ability of the Company to
retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The Company has determined that there has
been no impairment of its equity marketable securities to date.
The cost of marketable securities sold is based upon the specific identification method and any realized gains or losses on the sale of investments are
reflected as a component of interest income or expense. The unrealized gains or losses on short-term marketable securities were not significant for the years
ended December 31, 2008, 2009 and 2010.
In addition, the Company classifies marketable securities as current or non-current based upon whether such assets are reasonably expected to be realized
in cash or sold or consumed during the normal operating cycle of the business.
Revenue Recognition
The Company recognizes revenue when four basic criteria are met: persuasive evidence of a sales arrangement exists; performance of services has
occurred, the sales price is fixed or determinable, and collectability is reasonably assured. The Company considers persuasive evidence of a sales arrangement
to be the receipt of a signed contract or insertion order. Collectability is assessed based on a number of factors, including transaction history with the customer
and the credit worthiness of the customer. If it is determined that the collection is not reasonably assured, revenue is not recognized until collection becomes
reasonably assured, which is generally upon receipt of cash. The Company records cash received in advance of revenue recognition as deferred revenue.
For arrangements with multiple elements, the Company allocates revenue to each element if all of the following three criteria have been met: (i) the
delivered item(s) has value to the customer on a
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