Travelzoo 2009 Annual Report Download - page 73

(g) Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with remaining maturities of less than three months on
the date of purchase.
(h) Advertising Costs
Advertising production costs are expensed as incurred. Online advertising is expensed as incurred over the
period the advertising is displayed. Advertising costs amounted to $30.4 million, $25.8 million and $27.3 million
for the years ended December 31, 2009, 2008, and 2007, respectively. In the years ended December 31, 2009, 2008
and 2007, approximately $4.3 million, $2.4 million, and $410,000, respectively, of advertising services was
purchased from the Company’s clients under non-barter agreements and recorded in sales and marketing expense.
(i) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are recognized for
deductible temporary differences, along with net operating loss carryforwards and credit carryforwards, if it is more
likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the
preceding criteria, valuation allowances must be established. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled.
(j) Comprehensive Income (Loss)
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income
(loss). Other comprehensive income (loss) refers to gains and losses that under generally accepted accounting
principles are recorded as an element of stockholders’ equity but are excluded from net income (loss). The
Company’s other comprehensive income (loss) is comprised of foreign currency translation adjustments.
The following are components of comprehensive income (loss) (in thousands):
2009 2008 2007
Year Ended December 31,
Net income (loss) ....................................... $5,185 $(4,116) $9,109
Other comprehensive income (loss):
Foreign currency translation adjustments ..................... 215 (1,208) (202)
Total comprehensive income (loss) ........................... $5,400 $(5,324) $8,907
Accumulated other comprehensive loss, as reflected in the consolidated balance sheets, consists of cumulative
foreign currency translation adjustments.
(k) Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of the FASB accounting
standard relating to impairment of Long-Lived Assets, which requires an impairment loss to be recognized on assets
to be held and used if the carrying amount of a long-lived asset group is not recoverable from its undiscounted cash
flows. The amount of the impairment loss is measured as the difference between the carrying amount and the fair
value of the asset group. Assets to be disposed of are reported at the lower of the carrying amount or fair value less
costs to sell. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances
indicate the carrying value of an asset may not be recoverable. No impairment loss was recognized during the year
ended December 31, 2009.
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