NVIDIA 2008 Annual Report Download - page 76

NVIDIA CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Advertising Expenses
We expense advertising costs in the period in which they are incurred. Advertising expenses for fiscal years 2009, 2008 and 2007 were $28.5 million, $11.4
million and $14.8 million, respectively.
Rent Expense
We recognize rent expense on a straight
- line basis over the lease period and accrue for rent expense incurred, but not paid.
Product Warranties
We generally offer limited warranty to end
- users that ranges from one to three years for products in order to repair or replace products for any
manufacturing defects or hardware component failures. Cost of revenue includes the estimated cost of product warranties that are calculated at the point of
revenue recognition. Under limited circumstances, we may offer an extended limited warranty to customers for certain products. We also accrue for known
warranty and indemnification issues if a loss is probable and can be reasonably estimated.
Stock
- based Compensation
Effective January 30, 2006, we adopted the provisions of Statement of Financial Accounting Standards No. 123(R), or SFAS No. 123(R), Share
- Based
Payment. SFAS No. 123(R) establishes accounting for stock
- based awards exchanged for employee services. Accordingly, we measure stock - based compensation
at grant date, based on the fair value of the awards, and we recognize that compensation as expense using the straight
- line attribution method over the requisite
employee service period, which is typically the vesting period of each award. We elected to adopt the modified prospective application method provided by SFAS
No. 123(R). Our estimates of the fair values of employee stock options are calculated using a binomial model.
Litigation, Investigation and Settlement Costs
From time to time, we are involved in legal actions and/or investigations by regulatory bodies. We are aggressively defending our current litigation matters
for which we are responsible. However, there are many uncertainties associated with any litigation or investigation, and we cannot be certain that these actions or
other third
- party claims against us will be resolved without costly litigation, fines and/or substantial settlement payments. If that occurs, our business, financial
condition and results of operations could be materially and adversely affected. If information becomes available that causes us to determine that a loss in any of
our pending litigation, investigations or settlements is probable, and we can reasonably estimate the loss associated with such events, we will record the loss in
accordance with accounting principles generally accepted in the United States. However, the actual liability in any such litigation or investigations may be
materially different from our estimates, which could require us to record additional costs.
Foreign Currency Translation
We use the United States dollar as our functional currency for all of our subsidiaries. Foreign currency monetary assets and liabilities are remeasured into
United States dollars at end
- of - period exchange rates. Non - monetary assets and liabilities such as property and equipment, and equity, are remeasured at historical
exchange rates. Revenue and expenses are remeasured at average exchange rates in effect during each period, except for those expenses related to the previously
noted balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in “Other
income (expense), net” in our Consolidated Financial Statements and to date have not been significant.
The impact of foreign currency transaction loss included in determining net income (loss) for fiscal years 2009, 2008 and 2007 was $2.0 million, $1.7 million
and $0.5 million, respectively.
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