Intel 2012 Annual Report Download - page 56
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INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Basis of Presentation
We have a 52- or 53-week fiscal year that ends on the last Saturday in December. Fiscal years 2012 and 2010 were
52-week years. Fiscal year 2011 was a 53-week year. The next 53-week year will end on December 31, 2016. Our
consolidated financial statements include the accounts of Intel Corporation and our subsidiaries. We have eliminated
intercompany accounts and transactions. We use the equity method to account for equity investments in instances in
which we own common stock or similar interests and have the ability to exercise significant influence, but not control, over
the investee.
In the first quarter of 2011, we completed the acquisition of McAfee, Inc. For further information, see “Note 13:
Acquisitions.” Certain of the operations acquired from McAfee have a functional currency other than the U.S. dollar. As a
result, we have recorded translation adjustments through accumulated other comprehensive income (loss) beginning in
2011. Prior to the acquisition of McAfee, the U.S. dollar was the functional currency for our company and all of our
subsidiaries; therefore, we did not record a translation adjustment through accumulated other comprehensive income
(loss) for fiscal year 2010.
Note 2: Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles
requires us to make estimates and judgments that affect the amounts reported in our consolidated financial statements
and the accompanying notes. The accounting estimates that require our most significant, difficult, and subjective
judgments include:
• the valuation of non-marketable equity investments and the determination of other-than-temporary impairments;
• the assessment of recoverability of long-lived assets (property, plant and equipment; goodwill; and identified
intangibles);
• the recognition and measurement of current and deferred income taxes (including the measurement of uncertain
tax positions);
• the valuation of inventory; and
• the recognition and measurement of loss contingencies.
The actual results that we experience may differ materially from our estimates.
Fair Value
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining fair value, we consider the principal or most
advantageous market in which we would transact, and we consider assumptions that market participants would use when
pricing the asset or liability. Our financial assets and liabilities are measured and recorded at fair value, except for equity
method investments, cost method investments, cost method loans receivable, reverse repurchase agreements with
original maturities greater than approximately three months, and most of our liabilities.
Fair Value Hierarchy
The three levels of inputs that may be used to measure fair value are as follows:
Level 1. Quoted prices in active markets for identical assets or liabilities.
Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices
in less active markets, or model-derived valuations in which all significant inputs are observable or can be derived
principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level
2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well
as quoted prices that were adjusted for security-specific restrictions.
Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of
assets or liabilities. Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that we
were unable to corroborate with observable market data.
For further discussion of fair value, see “Note 4: Fair Value” and “Note 20: Retirement Benefit Plans.”