Yahoo 2014 Annual Report Download - page 98

governments and their agencies, U.S. municipalities, and high-credit corporate issuers which are
classified as marketable securities and cash equivalents. All investments in debt securities with an
original maturity of three months or less are considered cash equivalents. Investments in debt
securities with remaining maturities of less than 12 months from the balance sheet date are classified
as current assets, which are available for use to fund current operations. Investments with remaining
maturities greater than 12 months from the balance sheet date are classified as long-term assets.
Operating cash deposits held with banks may exceed the amount of insurance provided on such
deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial
institutions with reputable credit and therefore bear minimal credit risk. The Company seeks to
mitigate its credit risk by spreading such risk across multiple counterparties and monitoring the risk
profiles of these counterparties.
The Company’s marketable equity securities, including Alibaba Group and Hortonworks, are classified
as available-for-sale and are reported at fair value, with unrealized gains and losses, net of tax,
recorded in accumulated other comprehensive income (loss). The change in the classification of the
Company’s investments in Alibaba Group and Hortonworks to available-for-sale marketable securities
exposes our investment portfolio to increased equity price risk. The Company evaluates the
marketable equity securities periodically for possible other-than-temporary impairment. A decline of
fair value below cost basis is considered an other-than-temporary impairment if the Company has the
intent to sell the security or it is more likely than not that the Company will be required to sell the
security before recovery of the entire cost basis. In those instances, an impairment charge equal to
the difference between the fair value and the cost basis is recognized in earnings. Regardless of the
Company’s intent or requirement to sell the marketable equity securities, an impairment is considered
other-than-temporary if the Company does not expect to recover the entire cost basis; in those
instances, a loss equal to the difference between fair value and the cost basis of the marketable
equity security is recognized in earnings.
Realized gains or losses and declines in value judged to be other-than-temporary, if any, on available-
for-sale securities are reported in other income, net. The Company evaluates its marketable debt
investments periodically for possible other-than-temporary impairment. A decline of fair value below
amortized costs of debt securities is considered an other-than-temporary impairment if the Company
has the intent to sell the security or it is more likely than not that the Company will be required to sell
the security before recovery of the entire amortized cost basis. In those instances, an impairment
charge equal to the difference between the fair value and the amortized cost basis is recognized in
earnings. Regardless of the Company’s intent or requirement to sell a debt security, an impairment is
considered other-than-temporary if the Company does not expect to recover the entire amortized
cost basis; in those instances, a credit loss equal to the difference between the present value of the
cash flows expected to be collected based on credit risk and the amortized cost basis of the debt
security is recognized in earnings. The Company has no current requirement or intent to sell a
material portion of debt securities as of December 31, 2014. The Company expects to recover up to
(or beyond) the initial cost of investment for securities held. In computing realized gains and losses
on available-for-sale securities, the Company determines cost based on amounts paid, including
direct costs such as commissions to acquire the security, using the specific identification method.
During the years ended December 31, 2012, 2013 and 2014, gross realized gains and losses on
available-for-sale marketable debt and equity securities were not material.
Allowance for Doubtful Accounts. The Company records its allowance for doubtful accounts based
upon its assessment of various factors. The Company considers historical experience, the age of the
accounts receivable balances, the credit quality of its customers, current economic conditions, and
other factors that may affect customers’ ability to pay to determine the level of allowance required.
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