Expedia 2011 Annual Report Download - page 86

Agency and Merchant Air. We record revenue on air transactions when the traveler books the transaction, as
we have no significant post-delivery obligations. We record a reserve for chargebacks and cancellations at the
time of the transaction based on historical experience.
Agency Hotel, Car and Cruise. In addition to air tickets, our agency revenue comes from certain hotel
transactions as well as cruise and car rental reservations. We generally record agency revenue from hotel, cruise
and car reservations on an accrual basis when the travel occurs. We record an allowance for cancellations on this
revenue based on historical experience.
Packages. Packages assembled by travelers through the packaging model on our websites include a
merchant hotel component and some combination of an air, car or destination services component. The
individual package components are recognized in accordance with our revenue recognition policies stated above.
Advertising. We record advertising revenue ratably over the advertising period or upon delivery of
advertising impressions, depending on the terms of the advertising contract. We record revenue from click-
through fees charged to our travel partners for traveler leads sent to the travel partners’ websites. We record
revenue from click-through fees after the traveler makes the click-through to the related travel partners’ websites.
Other. We record revenue from all other sources either upon delivery or when we provide the service.
Cash and Cash Equivalents
Our cash and cash equivalents include cash and liquid financial instruments, including money market funds
and time deposit investments, with maturities of 90 days or less when purchased.
Short-term and Long-term Investments
We determine the appropriate classification of our investments in marketable securities at the time of
purchase and reevaluate such designation at each balance sheet date. Based on our intent and ability to hold
certain assets until maturity, we may classify certain debt securities as held to maturity and measure them at
amortized cost. Investments classified as available for sale are recorded at fair value with unrealized holding
gains and losses recorded, net of tax, as a component of accumulated other comprehensive income. Realized
gains and losses from the sale of available for sale investments, if any, are determined on a specific identification
basis. Investments with remaining maturities of less than one year are classified within short-term investments.
All other investments with remaining maturities ranging from one year to four years are classified within long-
term investments and other assets.
We record investments using the equity method when we have the ability to exercise significant influence
over the investee, including our investment in the AirAsia joint venture that launched in July 2011, of which we
owned 50% as of December 31, 2011.
We periodically evaluate the recoverability of investments and record a write-down to fair value if a decline
in value is determined to be other-than-temporary.
Accounts Receivable
Accounts receivable are generally due within thirty days and are recorded net of an allowance for doubtful
accounts. We consider accounts outstanding longer than the contractual payment terms as past due. We
determine our allowance by considering a number of factors, including the length of time trade accounts
receivable are past due, previous loss history, a specific customer’s ability to pay its obligations to us, and the
condition of the general economy and industry as a whole.
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