MasterCard 2009 Annual Report Download - page 90

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except percent and per share data)
Note 1. Summary of Significant Accounting Policies
Organization—MasterCard Incorporated and its consolidated subsidiaries, including MasterCard
International Incorporated (“MasterCard International”) and MasterCard Europe sprl (“MasterCard Europe”)
(together, “MasterCard” or the “Company”), provide payment solutions, including transaction processing and
related services to customers principally in support of their credit, deposit access (debit), electronic cash and
Automated Teller Machine (“ATM”) payment card programs, and travelers cheque programs. Our financial
institution customers are generally either principal members (“principal members”) of MasterCard International,
which participate directly in MasterCard International’s business, or affiliate members (“affiliate members”) of
MasterCard International, which participate indirectly in MasterCard International’s business through a principal
member.
Codification of accounting pronouncements—On July 1, 2009, the Financial Accounting Standards Board
(the “FASB”) implemented the FASB accounting standards codification and hierarchy of generally accepted
accounting principles as the sole source of authoritative accounting principles generally accepted in the United
States of America (“GAAP”). Pursuant to these provisions, the Company has eliminated its references to the
former GAAP authoritative pronouncements in its consolidated financial statements issued as of, for the period
ended, and for periods subsequent to September 30, 2009. As the FASB’s codification was not intended to
change existing authoritative guidance, this referencing methodology has not had and will not have any impact
on the Company’s financial position or results of operations.
Consolidation and basis of presentation—The consolidated financial statements include the accounts of
MasterCard and its majority-owned and controlled entities, including any consolidated variable interest entities.
See Note 15 (Consolidation of Variable Interest Entity) for further discussion. Intercompany transactions and
balances are eliminated in consolidation. The Company follows GAAP.
Effective January 1, 2009, the Company adopted the new accounting standard for business combinations.
The new standard establishes principles and requirements for how an acquirer of a business recognizes and
measures in its financial statements the identifiable assets acquired, the liabilities assumed and any
non-controlling interest in the acquiree; how the acquirer recognizes and measures the goodwill acquired in a
business combination; and how the acquirer determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the business combination. The adoption did not
have a material impact on the Company’s financial position or results of operations as of or for the year ended
December 31, 2009.
Non-controlling interest, previously referred to as minority interest, represents the equity interest not owned
by the Company and is recorded for consolidated entities in which the Company owns less than 100% of the
interests. In December 2007, an accounting and reporting standard was established that requires non-controlling
interests to be reported as a component of equity. In addition, changes in a parent’s ownership interest while the
parent retains its controlling interest are accounted for as equity transactions, and upon a gain or loss of control,
retained ownership interests are remeasured at fair value, with any gain or loss recognized in earnings. Effective
January 1, 2009, the Company applied the provisions of the new standard retrospectively in the consolidated
financial statements. The adoption of the new standard did not have a material impact on the Company’s
financial position or results of operations for any periods presented.
The Company accounts for investments in affiliates under the equity method of accounting when it holds
between 20% and 50% of the common stock in the entity and when it exercises significant influence.
MasterCard’s share of net earnings or losses of entities accounted for under the equity method of accounting is
included in other income (expense) on the consolidated statements of operations.
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