Support.com 2014 Annual Report Download - page 50

Table of Contents
Warranties and Indemnifications
We generally provide a refund period on sales, during which refunds may be granted to consumers under certain circumstances, including our inability to resolve certain support issues. For our partnerships, the
refund period varies by partner, but is generally between 5-14 days. For referral programs and direct transactions, the refund period is generally 5 days. For the majority of our end-user software products, we provide
a 30-day money back guarantee. For all channels, we recognize revenue net of refunds and cancellations during the period. Refunds and cancellations have not been material to date.
We generally agree to indemnify our customers against legal claims that our end-user software products infringe certain third-party intellectual property rights. As of December 31, 2014, we were not required to
make any payment resulting from infringement claims asserted against our customers and have not recorded any related accruals.
Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair
value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value ASC 820 must maximize the use of observable inputs and minimize
the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure
fair value, which are the following:
• Level 1 - Quoted prices in active markets for identical assets or liabilities.
• Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
• Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
In accordance with ASC 820, the following table represents our fair value hierarchy for our financial assets (cash equivalents and investments) measured at fair value on a recurring basis as of December 31,
2014 and 2013 (in thousands):
As of December 31, 2014 Level 1 Level 2 Level 3 Total
Money market funds $ 9,859 $ — $ — $ 9,859
Certificates of deposits — 3,595 — 3,595
Commercial paper — 2,996 — 2,996
Corporate notes and bonds — 45,771 — 45,771
U.S. government agency securities — 2,000 — 2,000
Total $ 9,859 $ 54,362 $ — $ 64,221
As
of December
31, 2013 Level 1 Level 2 Level 3 Total
Money market
funds $ 11,771 $ — $ — $
Certificates of
deposits 4,256 — —
Commercial
paper — 7,298 —
Corporate
notes and
bonds — 33,372 —
Total $ 16,027 $ 40,670 $ — $
For short-term investments, measured at fair value using Level 2 inputs, we review trading activity and pricing for these investments as of the measurement date. When sufficient quoted pricing for identical
securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third party data providers. These inputs either represent quoted prices for similar
assets in active markets or have been derived from observable market data. We transferred our investments in certificates of deposits from Level 1 to Level 2 during the three months ended March 31, 2014 as a
result of a decrease in availability and reliability of the observable inputs utilized in the respective instruments’ fair value measurement. Our policy is that the end of our quarterly reporting period determines when
transfers of financial instruments between levels are recognized.
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