TeleNav 2011 Annual Report Download - page 90

Table of Contents
TELENAV, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
these costs, which has been recorded in cost of revenue, totaled $2.0 million, $939,000 and $418,000 for fiscal 2011, 2010 and 2009,
respectively. In addition, we wrote off $714,000 of capitalized software development costs in fiscal 2011 due to impairment. As of June 30, 2011
and 2010 unamortized capitalized software development costs, which were included in deposits and other assets, were $1.8 million and $3.2
million, respectively.
We also account for the costs of computer software we develop for customers requiring significant modification or customization by
deferring qualifying costs under the completed contract method. All such development costs incurred are deferred until the related revenue is
recognized. We deferred $2.1 million, $1.3 million and $828,000 of software development costs during fiscal 2011, 2010 and 2009, respectively.
Development costs expensed to cost of revenue totaled $1.8 million, $165,000 and $7,000 for fiscal 2011, 2010 and 2009, respectively. As of
June 30, 2011 and 2010 deferred capitalized software development costs, which were included in prepaid expenses and other current assets, and
deposits and other assets, were $2.2 million and $1.9 million, respectively.
Advertising expense
Advertising costs are expensed as incurred. Advertising expense was $526,000, $182,000 and $662,000 for fiscal 2011, 2010 and 2009,
respectively.
Recent accounting pronouncements
In January 2010, the FASB issued revised guidance intended to improve disclosures related to fair value measurements. This guidance
requires new disclosures as well as clarifies certain existing disclosure requirements. New disclosures under this guidance require separate
information about significant transfers in and out of Level 1 and Level 2 of the fair value hierarchy and the reason for such transfers, and also
require purchases, sales, issuances, and settlements information for Level 3 measurement to be included in the rollforward of activity on a gross
basis. The guidance also clarifies the requirement to determine the level of disaggregation for fair value measurement disclosures and the
requirement to disclose valuation techniques and inputs used for both recurring and nonrecurring fair value measurements in either Level 2 or
Level 3. The revised guidance was effective for interim and annual fiscal years beginning after December 15, 2009, except for disclosure
requirements related to Level 3 measurement. We adopted the revised guidance during fiscal 2010 and the adoption did not have a material
impact on our consolidated financial statements. The revised accounting guidance for the rollforward of activity on a gross basis for Level 3 fair
value measurement will be effective for us in the first quarter of our fiscal 2012, which commences on July 1, 2011. We do not expect the
revised guidance to have a material impact on our consolidated financial statements.
In May 2011, the FASB amended fair value measurement and disclosure guidance to achieve convergence with International Financial
Reporting Standards or IFRS. The amended guidance clarified existing fair value measurement guidance, revised certain measurement guidance
and expanded the disclosure requirements concerning Level 3 fair value measurements. The guidance is effective for interim and annual periods
beginning after December 15, 2011. Adoption of this guidance is not expected to have a material effect on our consolidated financial statements.
In fiscal 2011, we adopted revised standard which supersedes certain guidance with respect to accounting for revenue arrangements with
multiple deliverables. The revised standard changes the determination of when individual deliverables in a multiple element arrangement may be
treated as separate units of accounting and modifies the manner in which the transaction consideration is allocated across separately identifiable
deliveries. The revised standard was effective for our fiscal year beginning July 1, 2010. The adoption of the revised guidance did not have a
material impact on our consolidated financial statements.
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