Amazon.com (AMZN)

Equity-method Investment Activity

Investments are accounted for using the equity method of accounting if the investment gives us the ability to exercise significant influence, but not control, over an investee. We classify our investments in equity-method investees on our consolidated balance sheets as “Other assets” and our share of the investees’ earnings or losses along with amortization of the related intangible assets, if any, as “Equity-method investment activity, net of tax” on our consolidated statements of operations.

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We periodically evaluate whether declines in fair values of our equity-method investments below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of such declines. To the extent any impairment is considered other-than-temporary, the investment is written down to its fair value.

In Q2 2008, we sold our European DVD rental assets in exchange for a partial ownership in the acquiring company’s business. Our investment was recorded based on the fair value of the assets received and is accounted for under the equity method of accounting. As a result of this transaction, we recorded a $53 million non-cash gain included in “Other operating expense (income), net” on our consolidated statements of operations.

Equity-method Investment Activity

Investments are accounted for using the equity method of accounting if the investment gives us the ability to exercise significant influence, but not control, over an investee. We classify our investments in equity-method investees on our consolidated balance sheets as “Other assets” and our share of the investees’ earnings or losses along with amortization of the related intangible assets, if any, as “Equity-method investment activity, net of tax” on our consolidated statements of operations.

In Q2 2008, we sold our European DVD rental assets in exchange for a partial ownership in the acquiring company’s business. Our investment was recorded based on the fair value of the assets received and is accounted

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for under the equity method of accounting. As a result of this transaction, we recorded a $53 million noncash gain included in “Other operating expense (income), net” on our consolidated statements of operations.

Equity-method Investment Activity

Investments are accounted for using the equity method of accounting if the investment gives us the ability to exercise significant influence, but not control, over an investee. We classify our investments in equity-method investees on our consolidated balance sheets as “Other assets” and our share of the investees’ earnings or losses along with amortization of the related intangible assets, if any, as “Equity-method investment activity, net of tax” on our consolidated statements of operations.