MasterCard 2010 Annual Report Download - page 110
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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
Note 7. Prepaid Expenses
Prepaid expenses consisted of the following at December 31:
2010 2009
(in millions)
Customer and merchant incentives $ 497 $ 445
Advertising 69 56
Income taxes 50 93
Data processing 31 29
Other 33 18
Total prepaid expenses 680 641
Prepaid expenses, current (315) (313)
Prepaid expenses, long-term $ 365 $ 328
Prepaid customer and merchant incentives represent payments made to customers and merchants under
business agreements.
Note 8. Other Assets
Other assets consisted of the following at December 31:
2010 2009
(in millions)
Nonmarketable equity investments $107 $ 35
Customer and merchant incentives 104 216
Income tax receivable 50 —
Cash surrender value of keyman life insurance 24 23
Other 25 36
Total other assets 310 310
Other assets, current (85) (126)
Other assets, long-term $225 $ 184
Certain customer and merchant business agreements provide incentives upon entering into the agreement.
As of December 31, 2010 and 2009, other assets included amounts to be paid for these incentives and the related
liability was included in accrued expenses and other liabilities. Once the payment is made, the liability is relieved
and the other asset is reclassified to a prepaid expense.
The Company accounts for investments in common stock or in-substance common stock under the equity
method of accounting when it has the ability to exercise significant influence over the investee, generally when it
holds 20% or more of the common stock in the entity. 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
statement of operations. The Company accounts for investments under the historical cost method of accounting
when it does not exercise significant influence, generally when it holds less than 20% ownership in the common
stock of the entity. Investments for which the equity method or historical cost method of accounting are used are
recorded in other assets on the consolidated balance sheet.
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