How we will account for the EC fine in our Q2 results

On June 27, 2017, the European Commission (EC) announced it was imposing a EUR 2.42 billion ($2.74 billion*) fine on Google. For our response to the EC ruling, please see this blog post. We will review the EC’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.

As we disclosed in our 8-K, in accordance with the accounting rules, we plan to accrue the fine, resulting in a charge of approximately $2.74 billion in our Q2 results.

Here’s how we expect to account for the fine in our Q2 results:

• We will report a separate operating expense line for the $2.74 billion charge on the income statement.
• The fine is not tax deductible.
• Therefore, the charge will reduce our GAAP net income and GAAP EPS by the full amount.

As a reminder, beginning with the first quarter of 2017, we no longer provide non-GAAP results excluding stock-based compensation expense.

Posted by Amie Thuener, Chief Accountant

*Based on the exchange rate on June 27, 2017