ServiceMagic 2010 Annual Report Download - page 65

Table of Contents
IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
service professional. Deferred activation revenue totaled $5.0 million and $5.2 million at December 31, 2010 and 2009, respectively.
Media & Other
Shoebuy's revenue consists of merchandise sales, reduced by incentive discounts and sales returns, and is recognized when delivery to the
customer has occurred. Delivery is considered to have occurred when the customer takes title and assumes the risks and rewards of ownership,
which is on the date of shipment. Allowances for returned merchandise are based on historical experience. Shipping and handling fees billed to
customers are recorded as revenue. The costs associated with shipping goods to customers are recorded as cost of revenue. Revenue of media
businesses included in this segment is derived primarily from online advertising, media production and subscriptions. Online advertising revenue
is recognized each time a graphic ad is displayed or over the period earned, media production revenue is recognized based on delivery and
acceptance and subscription revenue is recognized ratably over the term of the subscription.
Cash and Cash Equivalents
Cash and cash equivalents include cash and short-term investments, with maturities of less than 91 days from the date of purchase.
Domestically, short-term investments are primarily comprised of commercial paper rated A1/P1 or better, AAA rated treasury and government
agency money market funds and treasury discount notes. Internationally, short-term investments are primarily comprised of AAA prime and
government money market funds and time deposits.
Marketable Securities
The Company invests in certain marketable securities, which consist primarily of short-to-intermediate-term debt securities issued by the
U.S. government, U.S. government agencies, states of the U.S. and subdivisions thereof and investment grade corporate issuers. The Company
only invests in marketable securities with active secondary or resale markets to ensure portfolio liquidity and the ability to readily convert
investments into cash to fund current operations, or satisfy other cash requirements as needed. From time to time, the Company may invest in
marketable equity securities. It is not customary for the Company to make significant investments in equity securities as part of its marketable
securities investment strategy. All marketable securities are classified as available-for-sale and are reported at fair value. The unrealized gains
and losses on marketable securities, net of tax, are included in accumulated other comprehensive income as a separate component of
shareholders' equity. The specific-identification method is used to determine the cost of a security sold or the amount of unrealized gains and
losses reclassified from accumulated other comprehensive income into earnings.
The Company employs a methodology that considers available evidence in evaluating potential other-than-temporary impairments of its
investments. Investments are considered to be impaired when a decline in fair value below the amortized cost basis is determined to be other-
than-temporary. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair
value has been less than the amortized cost basis, the financial condition and near-term prospects of the issuer, and whether it is not more likely
than not that the Company will be required to sell the security before the recovery of the amortized cost basis, which may be maturity. If a
decline in
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