Incredimail 2013 Annual Report Download - page 109

PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
The Company accounts for income taxes in accordance with ASC 740, "Income Taxes". This Statement prescribes the use
of the liability method whereby deferred tax assets and liability account balances are determined based on differences
between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if
necessary, to reduce deferred tax assets to their estimated realizable value.
The Company accounts for uncertain tax positions in accordance with ASC 740, which contains a two-
step approach for
recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position taken or expected to be
taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an
evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or
litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be
realized upon ultimate settlement.
The Company accrued interest and penalties related to unrecognized tax benefits in its financial expenses.
Advertising costs are expensed as incurred and consist primarily of customer acquisition cost. Advertising costs for each
of the three years in the period ended December 31, 2013 amounted to $ 8,136, $ 22,270 and $ 32,561, respectively.
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and
cash equivalents, restricted cash and trade receivables.
The majority of the Company’
s cash and cash equivalents and restricted cash are invested in dollar instruments with major
banks in Israel and the U.S. deposits in the U.S. may be in excess of insured limits and are not insured in other
jurisdictions. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk.
The Company is subject to a low amount of credit risk with respect to sales of the Company’
s software products and
content database, as these sales are primarily obtained through credit card sales. The Company’
s major customers are
financially sound, and the Company believes low credit risk is associated with these customers. To date, the Company has
not experienced any material bad debt losses.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
l.
Income taxes:
m.
Advertising costs:
n.
Concentrations of credit risk:
F
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