ServiceMagic 2009 Annual Report Download - page 75

Table of Contents
IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
changed the accounting for and reporting of non-
controlling interests (previously referred to as minority interests) in the Company's consolidated
financial statements.
In connection with the acquisition of certain subsidiaries, management of these businesses has retained an ownership interest. The Company
is party to fair value put and call arrangements with respect to these interests. These put and call arrangements allow management of these
businesses to require the Company to purchase their interests or allow the Company to acquire such interests at fair value, respectively. These
put and call arrangements become exercisable by the Company and the counter-
party at various dates over the next seven years. During 2009 and
2008, none of these arrangements became exercisable. These put arrangements are exercisable by the counter-party outside the control of the
Company. Accordingly, to the extent that the fair value of these interests exceeds the value determined by normal noncontrolling interest
accounting, the value of such interests is adjusted to fair value with a corresponding adjustment to additional paid-in capital. At December 31,
2009 and 2008, the Company recorded adjustments of $1.0 million and $(4.7) million, respectively, to increase (reduce) these interests to fair
value. Upon adoption of ASC Topic 810, noncontrolling interests in the consolidated subsidiaries of the Company should be reported on the
consolidated balance sheet within shareholders' equity, separately from the Company's equity. However, in accordance with Accounting
Standards Update ("ASU") 2009-04, "Accounting for Redeemable Equity Investments-Amendment to ASC 480-10-599", securities that are
redeemable at the option of the holder and not solely within the control of the issuer, must be classified outside of shareholders' equity. Since the
redemption of the noncontrolling interests is outside the control of the Company, these interests are included in the mezzanine section of the
accompanying consolidated balance sheet, outside of shareholders' equity. Upon adoption of ASC Topic 810, certain prior year amounts have
been reclassified to conform to the current year presentation.
Accounting Estimates
Management of the Company is required to make certain estimates and assumptions during the preparation of the consolidated financial
statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These estimates and assumptions impact the
reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements.
They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates.
Significant estimates and assumptions used in the preparation of the accompanying consolidated financial statements include those related
to: the determination of the fair value of marketable securities; the assessment of marketable securities and long-term investments for other-than-
temporary impairment; the carrying value of accounts receivable, including the determination of the allowances for doubtful accounts and other
revenue related allowances; the assessment of long-lived assets, definite-lived intangible assets, indefinite-lived intangible assets and goodwill
for impairment; income taxes payable and deferred income taxes, including related reserves and valuation allowances; and the determination of
stock-based compensation.
Certain Risks and Concentrations
A significant portion of our revenue is derived from online advertising, the market for which is highly competitive and rapidly changing.
Significant changes in this industry or changes in customer
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