Google (GOOG)

Investment in Non-Marketable Equity Security

We review our investment in AOL for impairment in accordance with FSP 115-1. Based on our review, our investment in AOL is impaired. After consideration of the duration and severity of the impairment, as well as the reasons for the decline in value and the potential recovery period, we believe that such impairment is “other-than-temporary” at December 31, 2008. As a result, in the fourth quarter of 2008, we recorded a $726 million impairment charge. This amount is included under impairment of equity investments in the accompanying Consolidated Statement of Income. The fair value of AOL is determined primarily based on a market multiple approach valuation technique, which required us to make judgmental estimates including forecasted revenue and earnings. In addition, we used a selection of comparable companies to perform comparative risk analysis in determining the fair value.

We will continue to review this investment for impairment on a quarterly basis. There can be no assurance that additional impairment charges will not be required in the future, and any such amounts could be material to our Consolidated Statements of Income.

As we have initiated the formal process to liquidate this investment, and expect to complete this process and liquidate the investment by December 31, 2009, we have classified it as a current asset on the accompanying Consolidated Balance Sheet at December 31, 2008.

We enter into foreign currency contracts with financial institutions to reduce the risk that our cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. Our program is not designated for trading or speculative purposes.

In accordance with SFAS 133, we recognize derivative instruments as either assets or liabilities on the balance sheet at fair value. Changes in the fair value (i.e., gains or losses) of the derivatives are recorded in the accompanying Consolidated Statements of Income as interest income and other, net, or as part of revenues, or on the accompanying Consolidated Balance Sheets as accumulated other comprehensive income.

Investment in Non-Marketable Equity
Security

We review our investment in AOL for impairment in accordance with FSP 115-1. Based on our review, our investment in AOL is
impaired. After consideration of the duration and severity of the impairment, as well as the reasons for the decline in value and the potential recovery period, we believe that such impairment is “other-than-temporary” at December 31,
2008. As a result, in the fourth quarter of 2008, we recorded a $726 million impairment charge. This amount is included under impairment of equity investments in the accompanying Consolidated Statement of Income. The fair value of AOL is
determined primarily based on a market multiple approach valuation technique, which required us to make judgmental estimates including forecasted revenue and earnings. In addition, we used a selection of comparable companies to perform
comparative risk analysis in determining the fair value.

We will continue to review this investment for impairment on a quarterly basis.
There can be no assurance that additional impairment charges will not be required in the future, and any such amounts could be material to our Consolidated Statements of Income.