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Accounting Policies (Tables) | 12 Months Ended
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Dec. 31, 2013
Deferred Revenue and Customer Advances | As of December 31, 2013 and 2012, deferred revenue and customer advances consisted of the following and are included in the short and long-term deferred revenue and customer advances:
|  | 2013 |  |  | 2012 |
|  | (in thousands) |
Customer advances |  | $ | 4,825 |  |  | $ | 39,613 |
Equipment maintenance, training and extended warranty |  |  | 56,914 |  |  |  | 51,198 |
Undelivered elements |  |  | 6,971 |  |  |  | 6,773 |
Total deferred revenue and customer advances |  | $ | 68,710 |  |  | $ | 97,584 |
Warranty Accrual Included in Other Accrued Liabilities | The balance below is included in other accrued liabilities.
|  | Amount |
|  | (in thousands) |
Balance at December 31, 2010 |  | $ | 9,886 |
Acquisition |  |  | 327 |
Accruals for warranties issued during the period |  |  | 13,167 |
Accruals related to pre-existing warranties |  |  | (2,689 | )
Settlements made during the period |  |  | (12,538 | )
Balance at December 31, 2011 |  |  | 8,153 |
Accruals for warranties issued during the period |  |  | 14,704 |
Accruals related to pre-existing warranties |  |  | 877 |
Settlements made during the period |  |  | (13,948 | )
Balance at December 31, 2012 |  |  | 9,786 |
Accruals for warranties issued during the period |  |  | 10,574 |
Accruals related to pre-existing warranties |  |  | (3,534 | )
Settlements made during the period |  |  | (10,166 | )
Balance at December 31, 2013 |  | $ | 6,660 |
Extended Product Warranty Included in Short and Long-Term Deferred Revenue and Customer Advances | The balance below is included in short and long-term deferred revenue and customer advances.
|  | Amount |
|  | (in thousands) |
Balance at December 31, 2010 |  | $ | 8,972 |
Acquisition |  |  | 3,151 |
Deferral of new extended warranty revenue |  |  | 8,659 |
Recognition of extended warranty deferred revenue |  |  | (8,040 | )
Balance at December 31, 2011 |  |  | 12,742 |
Deferral of new extended warranty revenue |  |  | 22,344 |
Recognition of extended warranty deferred revenue |  |  | (8,099 | )
Balance at December 31, 2012 |  |  | 26,987 |
Deferral of new extended warranty revenue |  |  | 20,191 |
Recognition of extended warranty deferred revenue |  |  | (12,789 | )
Balance at December 31, 2013 |  | $ | 34,389 |
Useful Lives of Assets | Teradyne provides for depreciation of its assets principally on the straight-line method with the cost of the assets being charged to expense over their useful lives as follows:
Buildings |  | 40 years
Building improvements |  | 5 to 10 years
Leasehold improvements |  | Lesser of lease term or useful life
Furniture and fixtures |  | 10 years
Test systems manufactured internally |  | 6 years
Machinery and equipment |  | 3 to 5 years
Software |  | 3 to 5 years
Effect to Income (Loss) from Continuing Operations for Recording Stock-Based Compensation | The effect to income from continuing operations for recording stock-based compensation for the years ended December 31 was as follows:
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (in thousands) |
Cost of revenue |  | $ | 4,338 |  |  | $ | 6,604 |  |  | $ | 7,097 |
Engineering and development |  |  | 12,452 |  |  |  | 13,589 |  |  |  | 10,001 |
Selling and administrative |  |  | 19,822 |  |  |  | 19,727 |  |  |  | 15,239 |
Stock-based compensation |  |  | 36,612 |  |  |  | 39,920 |  |  |  | 32,337 |
Income tax benefit |  |  | (9,762 | ) |  |  | (9,548 | ) |  |  | (8,509 | )
Total stock-based compensation expense after income taxes |  | $ | 26,850 |  |  | $ | 30,372 |  |  | $ | 23,828 |
Stock Option |
Fair Value of Stock Options Estimated Using Weighted Average Assumptions | The fair value of the stock options at grant date was estimated using the Black-Scholes option-pricing model with the following assumptions:
|  | 2013 |  |  | 2012 |  |  | 2011 |
Expected life (years) |  |  | 4.00 |  |  |  | 3.50 |  |  |  | 4.00 |
Interest rate |  |  | 0.6 | % |  |  | 0.4 | % |  |  | 1.5 | %
Volatility-historical |  |  | 46.8 | % |  |  | 56.0 | % |  |  | 52.1 | %
Dividend yield |  |  | 0.0 | % |  |  | 0.0 | % |  |  | 0.0 | %
Stock Purchase Rights |
Fair Value of Stock Options Estimated Using Weighted Average Assumptions | The fair value of the employees’ purchase rights was estimated using the Black-Scholes option-pricing model with the following assumptions:
|  | 2012 |  |  | 2011 |
Expected life (years) |  |  | 0.5 |  |  |  | 0.5 |
Interest rate |  |  | 0.1 | % |  |  | 0.1 | %
Volatility-historical |  |  | 42.7 | % |  |  | 41.0 | %
Dividend yield |  |  | 0.0 | % |  |  | 0.0 | %
Litepoint Corporation |
Fair Value of Stock Options Estimated Using Weighted Average Assumptions | The fair value of stock options was estimated using the following weighted average assumptions:
Expected life (years) |  |  | 6.2 |
Expected volatility |  |  | 49.1 | %
Risk-free interest rate |  |  | 1.3 | %
Dividend yield |  |  | 0.0 | %

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- Definition Tabular disclosure of the changes in the guarantor's aggregate product warranty liability, including the beginning balance of the aggregate product warranty liability, the aggregate reductions in that liability for payments made (in cash or in kind) under the warranty, the aggregate changes in the liability for accruals related to product warranties issued during the reporting period, the aggregate changes in the liability for accruals related to preexisting warranties (including adjustments related to changes in estimates), and the ending balance of the aggregate product warranty liability. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -SubTopic 10 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249 + Details
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