Yahoo 2011 Annual Report Download - page 72

Yahoo! Inc.
Notes to Consolidated Financial Statements
Note 1 T HE C OMPANY A ND S UMMARY O F S IGNIFICANT A CCOUNTING P OLICIES
The Company. Yahoo! Inc., together with its consolidated subsidiaries (“Yahoo!,” the “Company,” “we,” or
“us”), is a premier digital media company. Through its proprietary technology and insights, Yahoo! delivers
personalized digital content and experiences, across devices and around the globe, to vast audiences. The
Company provides engaging and innovative canvases for advertisers to connect with their target audiences using
its unique blend of Science + Art + Scale. The Company provides online properties and services (“Yahoo!
Properties”) to users as well as a range of marketing services designed to reach and connect with those users on
Yahoo! and through a distribution network of third-party entities (“Affiliates”). These Affiliates integrate the
Company’s advertising offerings into their Websites or other offerings (those Websites and other offerings,
“Affiliate sites”).
Basis of Presentation. The consolidated financial statements include the accounts of Yahoo! Inc. and its
majority-owned or otherwise controlled subsidiaries. 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.
The preparation of consolidated financial statements in conformity with generally accepted accounting principles
(“GAAP”) in the United States (“U.S.”) requires management to make estimates, judgments, and assumptions
that affect the reported amounts of assets, liabilities, revenue, and expenses and the related disclosure of
contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those
related to revenue, the useful lives of long-lived assets including property and equipment and intangible assets,
investment fair values, stock-based compensation, goodwill, 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. In October 2009, the Financial Accounting Standards Board (“FASB”) amended the
accounting standard for multiple deliverable revenue arrangements, which provided updated guidance on whether
multiple deliverables exist, how deliverables in an arrangement should be separated, and how consideration
should be allocated. This standard eliminates the use of the residual method and requires arrangement
consideration to be allocated based on the relative selling price for each deliverable. The selling price for each
arrangement deliverable can be established based on vendor specific objective evidence (“VSOE”) or third-party
evidence (“TPE”) if VSOE is not available. The new standard provides additional flexibility to utilize an estimate
of selling price (“ESP”) if neither VSOE nor TPE is available.
The Company elected to early adopt this accounting standard on January 1, 2010 on a prospective basis for
applicable transactions originating or materially modified after December 31, 2009. The adoption of this standard
did not have a significant impact on the Company’s revenue recognition for multiple deliverable arrangements.
Upon adoption, the selling prices for certain custom advertising solutions may use the best estimate of selling price
as provided under the new standard. The adoption of this standard did not have a material impact on the Company’s
consolidated financial position, cash flows, or results of operations for the year ended December 31, 2010.
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’s arrangements generally do not include a provision for cancellation, termination, or refunds that
would significantly impact revenue recognition.
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