INTL FCStone 2012 Annual Report Download - page 78
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Please find page 78 of the 2012 INTL FCStone annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.INTL FCSTONE INC.Form10K62
PART II
ITEM 8 Financial Statements and Supplementary Data
the borrower indicates there is no longer any reasonable doubt as
to the timely payment of principal and interest. e Company
records a charge against earnings for notes receivable losses when
management believes that collectability of the principal is unlikely.
Physical Commodities Inventory
Physical commodities inventories are stated at the lower of cost
or market (“LCM”), using the weighted-average price and rst-in
rst-out costing method. Cost includes nished commodity or
raw material and processing costs related to the purchase and
processing of inventories.
Property and Equipment
Property and equipment is stated at cost, net of accumulated
depreciation and amortization and depreciated using the straight-
line method over the estimated useful lives of the assets. Leasehold
improvements are amortized on a straight-line basis over the
estimated useful life of the improvement or the term of the
lease, whichever is shorter. Certain costs of software developed or
obtained for internal use are capitalized and amortized over the
estimated useful life of the software. Expenditures for maintenance,
repairs, and minor replacements are charged against earnings,
as incurred. Expenditures that increase the value or productive
capacity of assets are capitalized. When property and equipment
are retired, sold, or otherwise disposed of, the asset’s carrying
amount and related accumulated depreciation are removed
from the accounts and any gain or loss is included in earnings.
Goodwill and Identifi able Intangible Assets
Goodwill is the cost of acquired companies in excess of the
fair value of identifiable net assets at acquisition date. In
accordance with the Intangibles – Goodwill and Other Topic
of the ASC, goodwill is tested for impairment on an annual basis
at the scal year-end, and between annual tests if indicators of
potential impairment exist, using a fair-value-based approach.
No impairment of goodwill has been identi ed during any of
the periods presented.
Identi able intangible assets subject to amortization are amortized
using the straight-line method over their estimated period of
bene t, ranging from two to twenty years. Identi able intangible
assets are tested for impairment whenever events or changes in
circumstances suggest that an asset’s or asset group’s carrying value
may not be fully recoverable in accordance with the Intangibles
– Goodwill and Other Topic of the ASC. Residual value is
presumed to be zero. Identi able intangible assets not subject to
amortization are reviewed at each reporting period to reevaluate
if the intangible asset’s useful life remains inde nite. Additionally,
intangible assets not subject to amortization are tested annually
for impairment at the scal year-end, and between annual tests
if indicators of potential impairment exist, using a fair-value-
based approach. See Note 9 for discussion of impairments of
intangible assets that have been identi ed during the scal year
ended September30, 2012.
Financial Instruments and Derivatives
Financial instruments owned and sold, not yet purchased, at
fair value consist of nancial instruments carried at fair value
or amounts that approximate fair value, with related unrealized
changes in gains or losses recognized in earnings, except for
securities classi ed as available-for-sale. e fair value of a
nancial instrument is the amount at which the instrument
could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale.
e Company accounts for its securities pledged on behalf of
customers and proprietary securities in accordance with the
Investments - Debt and Equity Securities Topic in the ASC. In
accordance with this guidance, the Company determines the
appropriate classi cation of its investments as trading, available-
for-sale, or held-to-maturity at the time of purchase and reevaluates
the designation as of each reporting period.
e Company has classi ed certain U.S. government obligations,
corporate debt securities and exchange rm common stock
not pledged for clearing purposes as available-for-sale, which
are carried at fair value based on observable or quoted market
prices and associated unrealized gains or losses are recorded as a
component of OCI, net of tax, until realized, unless an unrealized
loss is determined to be other than temporary, in which case
such loss is charged to earnings. e Company classi es those
securities as available-for-sale because it would consider selling
them prior to maturity to meet liquidity needs or as part of the
Company’s risk management program.
e Company computes the cost of its securities on a speci c
identi cation basis. Such cost includes the direct costs to acquire
securities, adjusted for the amortization of any discount or
premium. e amortized cost of securities is computed under
the e ective-interest method and is included in interest income.
Realized gains and losses, declines in value judged to be other
than temporary and interest on available-for-sale securities are
included in earnings.
Investment in managed funds, at fair value represents investments
in funds managed by the Company’s fund managers. e
investments are valued at period-end at the net asset value
provided by the fund’s administrator.
Commodities warehouse receipts are valued at the cash price
for the commodity based on published market quotes. For
commodities warehouse receipts, the change in fair value is
o set against the payable to customers with no impact on the
consolidated income statements.
e Company utilizes derivative instruments to manage exposures
to foreign currency, commodity price and interest rate risks for
the Company and its customers. e Company’s objectives for