Yahoo 2009 Annual Report Download - page 71

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Yahoo! Inc.
Notes to Consolidated Financial Statements
Note 1 T
HE
C
OMPANY AND
S
UMMARY OF
S
IGNIFICANT
A
CCOUNTING
P
OLICIES
The Company. Yahoo! Inc., together with its consolidated subsidiaries (“Yahoo!” or the “Company”), attracts
hundreds of millions of users every month through its engaging content and services and innovative technology,
making it one of the most trafficked Internet destinations and a world class online media company. Yahoo!’s
vision is to be the center of people’s online lives by delivering personally relevant, meaningful Internet
experiences. To users, the Company provides online properties and services (“Yahoo! Properties” or our “Owned
and Operated sites”). To advertisers, the Company provides a range of marketing services designed to reach and
connect with users of its Owned and Operated sites, as well as with Internet users beyond Yahoo! Properties,
through a distribution network of third-party entities (“Affiliates”) that have integrated its advertising offerings
into their Websites, referred to as Affiliate sites, or their other offerings. The Company believes that its
marketing services enable advertisers to deliver highly relevant marketing messages to their target audiences.
The Company generates revenues by providing marketing services to advertisers across a majority of Yahoo!
Properties and Affiliate sites. Additionally, although many of the services the Company provides to users are
free, Yahoo! does charge fees for a range of premium services.
Basis of Presentation. The consolidated financial statements include the accounts of Yahoo! Inc. and its
majority-owned or otherwise controlled subsidiaries. Effective January 1, 2009, the Company adopted Financial
Accounting Standards Board (“FASB”) authoritative guidance requiring that a noncontrolling interest held by
others in a subsidiary be part of the equity of the controlling group and reported on the balance sheet within the
equity section as a distinct item separate from the Company’s equity. In accordance with this guidance, minority
interests have been re-captioned to noncontrolling interests and reported separately in equity for 2009 and prior
periods. All significant intercompany accounts and transactions have been eliminated. Investments in entities in
which the Company can exercise significant influence, but does not own a majority equity interest or otherwise
control, are accounted for using the equity method and are included as investments in equity interests on the
consolidated balance sheets. The Company has included the results of operations of acquired companies from the
date of acquisition. Certain prior year amounts have been reclassified to conform to the current year presentation.
Effective July 1, 2009, the Company adopted the Accounting Standards CodificationTM (the “Codification”), as
issued by the FASB. The Codification became the single source of authoritative generally accepted accounting
principles (“GAAP”) in the U.S.
The preparation of consolidated financial statements in conformity with GAAP in the U.S. requires management
to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues,
and expenses and the related disclosure of contingent assets and liabilities. On an on-going basis, the Company
evaluates its estimates, including those related to uncollectible receivables, the useful lives of long-lived assets
including property and equipment, investment fair values, stock-based compensation, goodwill and other
intangible assets, income taxes, contingencies, and restructuring charges. The Company bases its estimates of the
carrying value of certain assets and liabilities on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, when these carrying values are not readily available from
other sources. Actual results may differ from these estimates.
Revenue Recognition. The Company’s revenues are derived principally from services, which comprise marketing
services for advertisers and publishers and offerings to users. The Company classifies these revenues as
marketing services and fees.
In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an
arrangement exists, the service is performed and collectability of the related fee is reasonably assured. The
Company accounts for cash consideration given to customers, for which it does not receive a separately
identifiable benefit or cannot reasonably estimate fair value, as a reduction of revenue rather than as an expense.
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