This excerpt taken from the ATVI 10-Q filed May 8, 2009.
Critical Accounting Policies and Estimates
Our Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:
· Revenue Recognition
· Allowances for Returns, Price Protection, Doubtful Accounts, and Inventory Obsolescence
· Software Development Costs and Intellectual Property Licenses
· Accounting for Income Taxes
· Fair Value Estimates
· Business Combinations
· Goodwill and Intangible Assets Impairment Assessments
· Stock-Based Compensation
During the three months ended March 31, 2009, there were no significant changes in our critical accounting policies and estimates. You should refer to Managements Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2008 for a more complete discussion of our critical accounting policies and estimates.