MasterCard 2011 Annual Report Download - page 72

Download and view the complete annual report

Please find page 72 of the 2011 MasterCard 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.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

Financial Statement Caption/
Critical Accounting Estimate Assumptions/Approach Used
Effect if Actual Results Differ
from Assumptions
Legal and Regulatory Matters
We are party to legal and regulatory
proceedings with respect to a
variety of matters. Except as
described in Note 18 (Obligations
Under Litigation Settlements) and
Note 20 (Legal and Regulatory
Proceedings) to the consolidated
financial statements in Part II,
Item 8 of this Report, MasterCard
does not believe that any legal or
regulatory proceedings to which it is
a party would have a material
adverse impact on its business or
prospects.
We evaluate the likelihood of an
unfavorable outcome of the legal
or regulatory proceedings to which
we are party. Our judgments are
subjective based on the status of
the legal or regulatory
proceedings, the merits of our
defenses and consultation with in-
house and outside legal counsel.
Due to the inherent uncertainties of
the legal and regulatory process in
the multiple jurisdictions in which
we operate, our judgments may be
materially different than the actual
outcomes.
Income Taxes
In calculating our effective tax rate,
we need to make estimates
regarding the timing and amount of
taxable and deductible items which
will adjust the pretax income earned
in various tax jurisdictions.
Through our interpretation of local
tax regulations, adjustments to
pretax income for income earned
in various tax jurisdictions are
reflected within various tax filings.
Although we believe that our
estimates and judgments discussed
herein are reasonable, actual results
may be materially different than the
estimated amounts.
We record a valuation allowance to
reduce our deferred tax assets to the
amount that is more likely than not
to be realized.
We consider projected future
taxable income and ongoing tax
planning strategies in assessing the
need for the valuation allowance.
If it is determined that we are able
to realize deferred tax assets in
excess of the net carrying value or
to the extent we are unable to
realize a deferred tax asset, we
would adjust the valuation
allowance with a corresponding
increase or decrease to earnings.
We record tax liabilities for
uncertain tax positions taken, or
expected to be taken, which may not
be sustained or may only be
partially sustained, upon
examination by the relevant taxing
authorities.
We consider all relevant facts and
current authorities in the tax law in
assessing whether any benefit
resulting from an uncertain tax
position was more likely than not
to be sustained and, if so, how
current law impacts the amount
reflected within these financial
statements.
If upon examination, we realize a
tax benefit which is not fully
sustained or is more favorably
sustained, this would decrease or
increase earnings in the period. In
certain situations, the Company will
have offsetting tax credits or taxes
in other jurisdictions.
We do not record U.S. income tax
expense for foreign earnings which
we intend to reinvest indefinitely to
expand our international operations.
We consider business plans,
planning opportunities, and
expected future outcomes in
assessing the needs for future
expansion and support of our
international operations.
If our business plans change or our
future outcomes differ from our
expectations, U.S. income tax
expense and our effective tax rate
could increase or decrease in that
period.
68