| Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Business Description WEX Inc. (“Company”, “we” or “our”) is a provider of corporate card payment solutions. The Company provides products and services that meet the needs of businesses in various geographic regions including North and South America, Asia Pacific and Europe. The Company’s Fleet Solutions, Travel and Corporate Solutions, and Health and Employee Benefit Solutions segments provide their customers with security and control for complex payments across a wide spectrum of business sectors. The Company markets its products and services directly, as well as through strategic relationships which include major oil companies, fuel retailers, vehicle maintenance providers, online travel agencies and health partners. Basis of Presentation The accompanying consolidated financial statements for the years ended December 31, 2018 , 2017 and 2016 , include the accounts of the Company and its wholly and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company rounds amounts in the consolidated financial statements to thousands within tables and millions within text (unless otherwise specified), and calculates all percentages and per-share data from underlying whole-dollar amounts. Thus, certain amounts may not foot, crossfoot, or recalculate based on reported numbers due to rounding. Revision of Prior Period Financial Statements for Correction of Immaterial Errors During the Company’s 2018 year-end close process, management identified immaterial errors in the financial statements of our Brazilian subsidiary that were consolidated into certain of our previously filed financial statements. These errors, which began to be made before 2015, are primarily related to accounts receivable and accounts payable in Brazil in our Fleet Solutions segment. Our financial statements have been revised to correct these errors. Additionally, because we are revising our financial statements to correct these errors, we determined to also revise the financial statements to correct other immaterial errors impacting prior years that were not previously recorded. Collectively, hereinafter these revisions to correct are referred to as the “Revised” financial statements and “Revision”. Management believes that the effects of this Revision are not material to our previously issued consolidated financial statements. The effects of the Revision on our consolidated statements of income were as follows: Year Ended December 31, 2017 (In thousands, except per share data) As Previously Reported Brazil Adjustments Other Immaterial Adjustments As Revised Total revenues $ 1,250,548 $ (3,325 ) $ 1,354 $ 1,248,577 Processing costs $ 279,497 $ (1,441 ) $ — $ 278,056 Provision for credit losses $ 61,148 $ 3,070 $ — $ 64,218 General and administrative $ 182,092 $ — $ 2,247 $ 184,339 Net foreign currency gain $ 29,919 $ — $ 1,568 $ 31,487 Income taxes $ 19,525 $ (2,023 ) $ (2,052 ) $ 15,450 Net income $ 159,170 $ (2,931 ) $ 2,727 $ 158,966 Net income attributable to shareholders $ 160,266 $ (2,931 ) $ 2,727 $ 160,062 Net income attributable to WEX Inc. per share Basic $ 3.73 $ (0.07 ) $ 0.06 $ 3.72 Diluted $ 3.72 $ (0.07 ) $ 0.06 $ 3.71 Year Ended December 31, 2016 (In thousands, except per share data) As Previously Reported Brazil Adjustments Other Immaterial Adjustments As Revised Total revenues $ 1,018,460 $ — $ (5,972 ) $ 1,012,488 Processing costs $ 240,196 $ 30,521 $ — $ 270,717 Provision for credit losses $ 33,348 $ 110 $ — $ 33,458 Net foreign currency loss $ (7,665 ) $ — $ (1,568 ) $ (9,233 ) Income taxes $ 29,625 $ — $ (1,033 ) $ 28,592 Net income $ 57,476 $ (30,631 ) $ (6,507 ) $ 20,338 Net income attributable to shareholders $ 60,637 $ (30,631 ) $ (6,507 ) $ 23,499 Net income attributable to WEX Inc. per share Basic $ 1.49 $ (0.75 ) $ (0.16 ) $ 0.58 Diluted $ 1.48 $ (0.75 ) $ (0.16 ) $ 0.57 The effects of the Revision on our consolidated balance sheets were as follows: December 31, 2017 (In thousands) As Previously Reported Brazil Adjustments Other Immaterial Adjustments As Revised Assets Cash and cash equivalents $ 508,072 $ — $ (4,553 ) $ 503,519 Accounts receivable, net of allowances $ 2,517,980 $ (56,393 ) $ (5,680 ) $ 2,455,907 Prepaid expenses and other current assets $ 69,413 $ — $ 8,119 $ 77,532 Deferred income taxes, net $ 7,752 $ 848 $ (879 ) $ 7,721 Other assets $ 253,088 $ — $ 4,553 $ 257,641 Liabilities Accounts payable $ 811,362 $ 29,570 $ 2,248 $ 843,180 Other current liabilities $ 24,795 $ (1,629 ) $ 9,957 $ 33,123 Deferred income taxes, net $ 119,283 $ 455 $ (3,490 ) $ 116,248 Other liabilities $ 32,683 $ — $ (638 ) $ 32,045 Stockholders' equity Retained earnings $ 1,404,683 $ (85,506 ) $ (6,517 ) $ 1,312,660 Accumulated other comprehensive loss $ (90,795 ) $ 1,565 $ — $ (89,230 ) The effects of the Revision on our consolidated statements of cash flows were as follows: Year Ended December 31, 2017 (In thousands) As Previously Reported Brazil Adjustments Other Immaterial Adjustments As Revised Net cash provided by operating activities $ 129,403 — 6,024 $ 135,427 Net cash used for investing activities $ (163,501 ) — (4,553 ) $ (168,054 ) Effect of exchange rates on cash, cash equivalents and restricted cash $ (11,691 ) — (6,024 ) $ (17,715 ) Cash, cash equivalents and restricted cash, end of year $ 526,938 — (4,553 ) $ 522,385 Year Ended December 31, 2016 (In thousands) As Previously Reported Brazil Adjustments Other Immaterial Adjustments As Revised Net cash used for operating activities $ (146,656 ) $ 1,831 $ 3,639 $ (141,186 ) Effect of exchange rates on cash, cash equivalents and restricted cash $ 6,430 $ — $ (3,639 ) $ 2,791 Cash, cash equivalents and restricted cash, beginning of year $ 297,926 $ (1,831 ) $ — $ 296,095 The following table presents the effects of the Revision on our retained earnings and accumulated other comprehensive loss as of January 1, 2016: January 1, 2016 (In thousands) As Previously Reported Brazil Adjustments Other Immaterial Adjustments As Revised Retained earnings $ 1,183,634 $ (51,943 ) $ (2,738 ) $ 1,128,953 Accumulated other comprehensive loss $ (103,451 ) $ 9,518 $ — $ (93,933 ) The following table presents the increase (decrease) of the effects of the Revision on Note 26 - Quarterly Financial Results (Unaudited): (Unaudited) Three Months Ended (In thousands, except per share data) March 31 June 30 September 30 December 31 2018 Total revenues $ (801 ) $ (78 ) $ 3,927 $ (43 ) Operating income $ 5,497 $ (2,487 ) $ 1,876 $ 574 Net income attributable to shareholders $ 3,337 $ (874 ) $ (678 ) $ 3,972 Earnings per share: Basic $ 0.08 $ (0.02 ) $ (0.02 ) $ 0.09 Diluted $ 0.08 $ (0.02 ) $ (0.01 ) $ 0.09 2017 Total revenues $ 1,096 $ (16 ) $ (3,325 ) $ 274 Operating income $ (4,051 ) $ 4,866 $ (12,904 ) $ 6,242 Net income attributable to shareholders $ (2,522 ) $ 2,680 $ (7,739 ) $ 7,377 Earnings per share: Basic $ (0.06 ) $ 0.06 $ (0.18 ) $ 0.17 Diluted $ (0.06 ) $ 0.06 $ (0.18 ) $ 0.17 Other Reclassification Changes to Prior Year Financial Statement Presentation Effective January 1, 2018, the Company modified the presentation of the balance sheets and statements of income and changed how it allocates certain costs to its segments. These changes enhance the information reported to the users of our financial statements. Prior period amounts have been recast to conform with this presentation. The Company now classifies assets and liabilities as current and non-current within our consolidated balance sheets according to the normal twelve month operating cycle of our business. As a result of this change, total assets and total liabilities have increased by $3.7 million compared to what was reported within our Annual Report on Form 10–K for the year ended December 31, 2017 due to a gross-up of interest rate swap arrangements to reflect their corresponding short and long-term portions. See Note 18 , Fair Value , for more information on the fair value of our interest rate swap arrangements. Additionally, the Company has modified the presentation of certain line items in the consolidated statements of income. Under the modified presentation, costs of services are segregated from other operating expenses. Operating expenses have been reclassified into functional categories in order to provide additional detail into the underlying drivers of changes in operating expenses and align presentation with industry practice. The revised presentation did not result in a change to previously reported revenues, operating income, income before income taxes or net income. Effective with the change in financial statement presentation noted above, the Company now reports expenses in the categories noted below. No changes have been made to non-operating expenses. Cost of Services • Processing costs - The Company’s processing costs consist of expenses related to processing transactions, servicing customers and merchants and cost of goods sold related to hardware and other product sales. • Service fees - The Company incurs costs from third-party networks utilized to deliver payment solutions. Additionally, other third-parties are utilized in performing services directly related to generating revenue. With the adoption of Topic 606, effective January 1, 2018 fees paid to third-party networks are no longer recorded as service fees and are now prospectively presented as a reduction of revenues. • Provision for credit losses - Changes in the reserve for credit loss are the result of changes in management’s estimate of the losses in the Company’s outstanding portfolio of receivables, including losses from fraud. • Operating interest - The Company incurs interest expense on the operating debt obtained to provide liquidity for its short-term receivables. • Depreciation and amortization - The Company has identified those tangible and intangible assets directly associated with providing a service that generates revenue and records the depreciation and amortization associated with those assets under this category. Such assets include processing platforms and related infrastructure, acquired developed technology intangible assets and other similar asset types. Other Operating Expenses • General and administrative - General and administrative includes compensation and related expenses for executive, finance and accounting, other information technology, human resources, legal and other corporate functions. Also included are corporate facilities expenses, certain third-party professional service fees and other corporate expenses. • Sales and marketing - The Company’s sales and marketing expenses relate primarily to compensation, benefits, sales commissions and related expenses for sales, marketing and other related activities. With the adoption of Topic 606, effective January 1, 2018 certain payments to partners are now prospectively classified as sales and marketing expenses . • Depreciation and amortization - The depreciation and amortization associated with tangible and intangible assets that are not considered to be directly associated with providing a service that generates revenue are recorded as other operating expenses. Such assets include corporate facilities and information technology assets and acquired intangible assets other than those included in cost of services. Use of Estimates and Assumptions The Company prepares its consolidated financial statements in conformity with GAAP and with the Rules and Regulations of the SEC, specifically Regulation S – X and the instructions to Form 10 – K. These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates and those differences may be material. Cash and Cash Equivalents Highly liquid investments with remaining maturities at the time of purchase of three months or less (that are readily convertible to cash) are considered to be cash equivalents and are stated at cost, which approximates fair value. Cash and cash equivalents include amounts held in Eurodollar time deposits and money market funds, which are unsecured short-term investments entered into with financial institutions. Restricted Cash Restricted cash represents funds collected from individuals or employers on behalf of our customers that are to be remitted to third parties or funds required to be maintained on hand under certain vendor agreements. This restricted cash, which is not available to fund the Company’s operations, totaled $13.5 million and $18.9 million as of December 31, 2018 and 2017 , respectively. We maintain an offsetting liability against restricted cash collected and remitted on behalf of our customers. Accounts Receivable, Net of Allowances Accounts receivable, net of allowances consist of amounts billed and due from third parties. We often extend short-term credit to cardholders and pay the merchant for the purchase price, less the fees we retain and record as revenue. We subsequently collect the total purchase price from the cardholder. The amounts due are stated at their net realizable value. The receivables portfolio consists of a large group of homogeneous smaller balances across a wide range of industries, which are collectively evaluated for impairment. The allowance for credit losses reflects management’s estimate of uncollectable balances resulting from credit and fraud losses and is based on the determination of the amount of expected credit losses inherent in the accounts receivable as of the reporting date. Management reviews delinquency reports, historical collection rates, changes in customer payment patterns, economic trends, geography and other information in order to make judgments as to probable credit losses. Management also uses historical charge-off experience to determine the amount of losses inherent in accounts receivable at the reporting date. Assumptions regarding probable credit losses are reviewed periodically and may be impacted by actual performance of accounts receivable and changes in any of the factors discussed above. The balance also includes a reserve for waived finance fees, which is used to maintain customer goodwill and recorded against the late fee revenue recognized. Investment Securities As a result of adopting ASU 2016 – 01, effective January 1, 2018, changes in the fair value of investment securities are included in net unrealized gain on financial instruments within our consolidated statements of income. Prior to adoption, unrealized gains and losses, net of tax, were reported on the consolidated balance sheets in accumulated other comprehensive loss. Realized gains and losses and declines in fair value determined to be other-than-temporary are included in non-operating expenses. The cost basis of securities is based on the specific identification method. Interest and dividends earned on investment securities are included in other revenue. Investment securities held by the Company were purchased and are held by WEX Bank primarily in order to meet the requirements of the Community Reinvestment Act. Derivatives From time to time, the Company utilizes derivative instruments as part of its overall strategy to manage its exposure to fluctuations in fuel prices and to reduce the impact of interest and foreign currency exchange rate volatility. The Company’s derivative instruments are recorded at fair value on the consolidated balance sheets . The Company’s derivative instruments have not been designated as hedges; therefore, both realized and unrealized gains and losses are recognized in earnings. For the purposes of cash flow presentation, realized and unrealized gains or losses are included within cash flows from operating activities. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation. Replacements, renewals and improvements are capitalized and costs for repair and maintenance are expensed as incurred. Depreciation is primarily computed using the straight-line method over the estimated useful lives shown below. Below are the estimated useful lives for assets in service during 2018 : Estimated Useful Lives Furniture, fixtures and equipment 3 to 5 years Internal-use computer software 1.5 to 7 years Computer software 3 years Leasehold improvements are depreciated using the straight-line method over the lesser of the remaining lease term or the useful life of the asset. Capitalized Software The Company develops software that is used to provide processing and information management services to customers. A significant portion of the Company’s capital expenditures is devoted to the development of such internal-use computer software. Costs incurred during the preliminary project stage are expensed as incurred. Software development costs are capitalized during the application development stage. Capitalization begins when the preliminary project stage is complete, as well as when management authorizes and commits to the funding of the project. Capitalization of costs ceases when the software is ready for its intended use. Costs related to maintenance of internal-use software are expensed as incurred. Software development costs are amortized using the straight-line method over the estimated useful life of the software. Below are the amounts of internal-use software capitalized and amortized: Year ended December 31, (in thousands) 2018 2017 2016 Amounts capitalized for internal-use computer software (including work-in-process) $ 46,382 $ 50,682 $ 55,379 Amounts expensed for amortization of internal-use computer software $ 38,632 $ 32,582 $ 27,581 Acquisitions For acquisitions that meet the definition of a business combination, the Company applies the acquisition method of accounting where assets acquired and liabilities assumed are recorded at fair value at the date of each acquisition. Acquiree results of operations are included in consolidated results of the Company from the date of the respective acquisition. Any excess of the purchase price paid by the Company over the amounts recognized for assets acquired and liabilities assumed is recorded as goodwill. The Company continues to evaluate acquisitions for a period not to exceed one year after the applicable acquisition date of each transaction to determine whether any additional adjustments are needed to the allocation of the purchase price paid for the assets acquired and liabilities assumed. All other acquisitions are accounted for as asset acquisitions and the purchase price is allocated to the net assets acquired with no recognition of goodwill. Following the acquisition date, the purchase price is not subsequently adjusted. The fair value of assets acquired and liabilities assumed is typically determined using a discounted cash flow valuation method, though the Company utilizes alternative valuation methods when deemed appropriate. Significant acquisition valuation assumptions typically include estimated asset useful lives, timing and amount of future cash flows, applicable discount rates and customer attrition rates. Goodwill and Other Intangible Assets The Company classifies intangible assets in the following three categories: (1) intangible assets with definite lives subject to amortization, (2) intangible assets with indefinite lives not subject to amortization and (3) goodwill. The Company tests intangible assets with definite lives for impairment if conditions exist that indicate the carrying value may not be recoverable. Such conditions may include a reduction in operating cash flow or a dramatic change in the manner in which the asset is intended to be used. The Company records an impairment charge when the carrying value of the definite-lived intangible asset is not recoverable from the undiscounted cash flows generated from the use of the asset. Intangible assets with indefinite lives and goodwill are not amortized. The Company tests these intangible assets and goodwill for impairment at least annually or more frequently if facts or circumstances indicate that such intangible assets or goodwill might be impaired. All goodwill and intangible assets are assigned to reporting units, which are one level below the Company’s operating segments. The Company performs impairment tests at the reporting unit level. Such impairment tests include comparing the fair value of the respective reporting unit with its carrying value, including goodwill. The Company uses both discounted cash flow analyses and comparable company pricing multiples to determine the fair value of our reporting units. Such analyses are corroborated using market analytics. Certain assumptions are used in determining the fair value, including assumptions about future cash flows and terminal values. When appropriate, the Company considers the assumptions that it believes hypothetical marketplace participants would use in estimating future cash flows. In addition, an appropriate discount rate is used, based on the Company’s cost of capital or reporting unit-specific economic factors. When the fair value is less than the carrying value of the intangible assets or the reporting unit, the Company records an impairment charge to reduce the carrying value of the assets to the reporting unit’s implied fair value. Effective October 1, 2018, the Company adopted ASU 2017 – 04, which simplified the subsequent measurement of goodwill, eliminating Step 2 from the goodwill impairment test (See Note 2 , Recent Accounting Pronouncements , for further information regarding ASU 2017 – 04). Following adoption, the Company performs its annual goodwill impairment tests by comparing the fair value of a reporting unit with its carrying amount and, if necessary, recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. The Company’s annual goodwill impairment test performed as of October 1, 2018 identified a $3.2 million impairment related to our Brazil fleet reporting unit. No other impairment charges were identified. See Note 9 , Goodwill and Other Intangible Assets , for further information. The Company’s annual goodwill and intangible asset impairment tests performed as of October 1, 2017 and 2016 did not identify any impairment. Our European fleet and Brazil benefits reporting units had negative carrying values as of October 1, 2018. Our 2018 annual goodwill impairment test indicated an excess of estimated fair value greater than the carrying values of these reporting units of approximately $180 million and $250 million , respectively. As of December 31, 2018, goodwill assigned to these reporting units totaled approximately $35.8 million and $14.3 million , respectively. Such amounts are included in our Fleet Solutions and Health and Employee Benefit Solutions segments, respectively. Intangible assets that are deemed to have definite lives are amortized over their useful lives, which is the period of time that the asset is expected to contribute directly or indirectly to future cash flows. The Company determines the useful lives of its identifiable intangible assets after considering the specific facts and circumstances related to each intangible asset. The factors that management considers when determining useful lives include the contractual term of agreements, the history of the asset, the Company’s long-term strategy for the use of the asset, any laws or other local regulations which could impact the useful life of the asset and other economic factors, including competition and specific market conditions. An evaluation of the remaining useful lives of the definite-lived intangible assets is performed periodically to determine if any change is warranted. Impairment and Disposals of Assets Long-lived assets are tested for impairment whenever facts or circumstances, such as a reduction in operating cash flow or a significant adverse change in the manner the asset is being used, indicate the carrying amount of the asset may not be recoverable. The Company compares the estimated undiscounted future cash flows associated with these assets or operations to their carrying value to determine if a write-down to fair value is required. See Note 22 , Impairment and Restructuring Activities , for further discussion on impairments and asset write-offs. Fair Value of Financial Instruments The Company holds mortgage-backed securities, fixed-income securities, money market funds, derivatives (see Note 12 , Derivative Instruments ) and certain other financial instruments that are carried at fair value. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches, such as model pricing, when market quotes are not readily accessible or available. Various factors are considered in determining the fair value of the Company’s obligations, including: closing exchange or over-the-counter market price quotations; time value and volatility factors underlying options and derivatives; price activity for equivalent instruments; and the Company’s own-credit standing. These valuation techniques may be based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy: • Level 1 – Quoted prices for identical instruments in active markets. • Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. • Level 3 – Instruments whose significant value drivers are unobservable. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Revenue Recognition The Company adopted ASU 2014–09 (“Topic 606”) on January 1, 2018, utilizing the modified retrospective method. Under the modified retrospective method, prior period comparable financial information continues to be presented under the guidance of ASC 605, Revenue Recognition. See Note 2 , Recent Accounting Pronouncements , for further information regarding the adoption impact. Topic 606 does not apply to rights or obligations associated with financial instruments, which continue to be within the scope of Topic 310, Receivables. In addition, gains on the sale of WEX Latin America receivables are included in other revenue and are within the scope of ASC 860, Transfers and Servicing . The vast majority of the Company’s Topic 606 revenue is derived from stand-ready obligations to provide payment processing, transaction processing and SaaS services and support. The transaction-based fees are generally calculated based on measures such as (i) percentage of dollar value of volume processed; (ii) number of transactions processed; or (iii) some combination thereof. The Company has entered into agreements with major oil companies, fuel retailers, vehicle maintenance providers, online travel agencies and health partners which provide products and/or services to the Company’s customers. These agreements specify that a transaction is deemed to be captured when the Company has validated that the transaction has no errors and has accepted and posted the data to the Company’s records. Prior to adoption of Topic 606, the Company recognized revenues when persuasive evidence of an arrangement existed, the products and services had been provided to the client, the sales price was fixed or determinable and collectability was reasonably assured. Subsequent to adoption of Topic 606, revenue is recognized based on the value of services transferred to date using a time elapsed output method. The change in accounting guidance did not result in a change in the pattern or timing of our revenue recognition. Point-in-time revenue recognized during the year ended December 31, 2018 was not material. See Note 3 , Revenue , for further information regarding accounting policies applied before and after the Company's adoption of Topic 606 as well as for a description of the major components of revenue. The Company generally records revenue net of consideration retained based upon its conclusion that the Company is the agent in its principal versus agent relationships. Prior to the adoption of Topic 606, this conclusion was based on the following criteria: (i) the Company is not the primary obligor in the arrangement; (ii) the Company has no inventory risk; (iii) the Company does not have reasonable latitude with respect to establishing the price for the product; (iv) the Company does not make any changes to the product or have any involvement in the product specifications; and, (v) the amount the Company earns for its services is fixed, within a limited range. Under Topic 606, the Company evaluated the nature of its promise to the customer and determined that it does not control a promised good or service before transferring that good or service to the customer, but rather arranges for another entity to provide the goods or services. The Company enters into contracts with certain large customers or partners that provide for fee rebates tied to performance milestones. Rebates and incentives are calculated based on estimated performance and the terms of the related business agreements. Prior to the adoption of Topic 606, certain amounts paid to partners in our Fleet Solutions and Travel and Corporate Solutions segments were recorded as a reduction in revenue in the same period that revenue was earned or performance occurs. Subsequent to the adoption of Topic 606, these amounts are now reflected within sales and marketing expense on our consolidated statements of income. See Note 2 , Recent Accounting Pronouncements , for further information regarding the adoption impact. Stock-Based Compensation The Company recognizes the fair value of all stock-based payments to employees in its financial statements. The Company estimates the fair value of service-based stock option awards and market performance-based stock option awards on the grant date using a Black-Scholes-Merton valuation model and a Monte Carlo simulation model, respectively. The fair value of Restricted Stock Units (“RSUs”), including Performance Based Restricted Stock Units (“PBRSUs”), is determined and fixed on the grant date based on the closing price of the Company’s stock price. Stock-based compensation expense is net of estimated forfeitures and is recorded over each award’s requisite service period. The Company uses the straight-line methodology for recognizing the expense associated with service-based stock options and RSU grants and a graded-vesting methodology for the expense recognition of market performance-based stock options and PBRSUs. Advertising Costs Advertising and marketing costs are expensed in the period incurred. During the years ended December 31, 2018 , 2017 and 2016 , advertising expense was $16.3 million , $17.1 million and $14.9 million , respectively. Income Taxes Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the associated temporary differences became deductible. A valuation allowance is established for those jurisdictions in which deferred tax assets realization is deemed less than more likely than not. Accounting guidance prescribes a recognition threshold and measurement attribute for the finan |
