MasterCard 2010 Annual Report Download - page 106

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
in O’Fallon, Missouri, called Winghaven. The Company has netted the refunding revenue bonds and the
corresponding capital lease obligation in the consolidated balance sheet and estimates that the carrying value
approximates the fair value for these bonds. See Note 9 (Property, Plant and Equipment) for further details.
Non-Financial Instruments
Certain assets and liabilities are measured at fair value on a nonrecurring basis. The Company’s
nonfinancial assets and liabilities measured at fair value on a nonrecurring basis include property, plant and
equipment, goodwill and other intangible assets. These assets are not measured at fair value on an ongoing basis;
however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of
impairment.
The valuation methods for goodwill and other intangible assets involve assumptions concerning comparable
company multiples, discount rates, growth projections and other assumptions of future business conditions. The
Company uses a weighted income and market approach for estimating the fair values of its reporting units. As
the assumptions employed to measure these assets on a nonrecurring basis are based on management’s judgment
using internal and external data, these fair value determinations are classified in Level 3 of the Valuation
Hierarchy.
Note 6. Investment Securities
Amortized Costs and Fair Values—Available-for-Sale Investment Securities:
The major classes of the Company’s available-for-sale investment securities, for which unrealized gains and
losses are recorded as a separate component of other comprehensive income (loss) on the consolidated statement
of comprehensive income (loss), and their respective cost bases and fair values as of December 31, 2010 and
2009 were as follows:
December 31, 2010
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss1
Fair
Value
(in millions)
Municipal bonds $ 305 $ 10 $— $ 315
Taxable short-term bond funds 511 5 — 516
Auction rate securities 118 — (12) 106
Total $ 934 $ 15 $ (12) $ 937
December 31, 2009
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss1
Fair
Value
(in millions)
Municipal bonds $ 492 $ 22 $— $ 514
Taxable short-term bond funds 306 4 — 310
Auction rate securities 212 — (32) 180
Total $1,010 $ 26 $ (32) $1,004
1The unrealized losses relate to ARS, which have been in an unrealized loss position longer than 12 months
but have not been deemed other-than-temporarily impaired.
96