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Table of Contents Alphabet Inc. and Google Inc.
58
Alphabet Inc. and Google Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
We were incorporated in California in September 1998 and re-incorporated in the State of Delaware in August
2003. We generate revenues primarily by delivering relevant, cost-effective online advertising.
On April 17, 2013, we sold the Motorola Home business (Motorola Home) to Arris Group, Inc. (Arris). The financial
results of Motorola Home are presented as net income (loss) from discontinued operations on the Consolidated
Statements of Income for the year ended December 31, 2013. See Note 9 for further discussion of the sale.
On April 2, 2014, we completed a two-for-one stock split effected in the form of a stock dividend (the Stock Split).
All references made to share or per share amounts in the accompanying consolidated financial statements and
applicable disclosures have been retroactively adjusted to reflect the Stock Split. See Note 12 for additional information
about the Stock Split.
On October 29, 2014, we sold the Motorola Mobile business (Motorola Mobile) to Lenovo Group Limited (Lenovo).
The financial results of Motorola Mobile are presented as net income (loss) from discontinued operations on the
Consolidated Statements of Income for the years ended December 31, 2013 and 2014. See Note 9 for further discussion
of the sale.
On August 10, 2015, we announced plans to create a new public holding company, Alphabet Inc. (Alphabet), and
a new operating structure. On October 2, 2015, we implemented the holding company reorganization, and as a result,
Alphabet became the successor issuer to Google Inc. (Google).
The implementation of the holding company reorganization on October 2, 2015 was accounted for as a merger
under common control. Alphabet has recognized the assets and liabilities of Google at carryover basis. The consolidated
financial statements of Alphabet present comparative information for prior years on a combined basis, as if both
Alphabet and Google were under common control for all periods presented.
The consolidated financial statements and notes thereto are being presented in a combined report being filed by
two separate registrants: Alphabet and Google. The Consolidated Statements of Stockholders’ Equity and Consolidated
Statements of Cash Flows are the only statements with differences between Alphabet and Google. The differences
relate to transactions between Alphabet and Google which are accounted for as capital transactions. Refer to Note
13 for additional information.
Basis of Consolidation
The consolidated financial statements of Alphabet and Google include the accounts of Alphabet and Google,
respectively, and all wholly owned subsidiaries as well as all variable interest entities where we are the primary
beneficiary. All intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting
Principles (GAAP) requires us to make estimates and assumptions that affect the amounts reported and disclosed in
the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On
an ongoing basis, we evaluate our estimates, including those related to the accounts receivable and sales allowances,
fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets and property and
equipment, income taxes, and contingent liabilities, among others. We base our estimates on historical experience
and on various other assumptions that are believed to be reasonable, the results of which form the basis for making
judgments about the carrying values of assets and liabilities.