NVIDIA 2010 Annual Report Download - page 88

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 2010, 2009 and
2008 were $16.3 million, $28.5 million and $11.4 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
We measure stock-based compensation for equity awards exchanged for employee services 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. 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 U.S.GAAP. 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 2010, 2009 and 2008
was $0.9 million, $2.0 million and $1.7 million, respectively.
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Source: NVIDIA CORP, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠