MasterCard 2011 Annual Report Download - page 94

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
significant purchases and sales of financing receivables, aging information and credit quality indicators. The
Company adopted this accounting standard effective January 1, 2011, and the adoption did not have an impact on
the Company’s financial position or results of operations.
Impairment testing for goodwill—In December 2010, a new accounting standard was issued that requires
Step 2 of the goodwill impairment test to be performed for reporting units with zero or negative carrying amounts
if qualitative factors indicate that it is more likely than not that a goodwill impairment exists. The provisions for
this pronouncement are effective for fiscal years beginning after December 15, 2010, with no early adoption
permitted. The Company adopted this accounting standard on January 1, 2011, and the adoption did not have an
impact on the Company’s financial position or results of operations.
In September 2011, a new accounting standard was issued that is intended to simplify how an entity tests
goodwill for impairment. Entities are permitted to perform a qualitative assessment of goodwill impairment to
determine whether it is necessary to perform the two-step quantitative goodwill impairment test. This standard is
effective for goodwill impairment tests performed in interim and annual periods for fiscal years beginning after
December 15, 2011, with early adoption permitted. The Company adopted the revised accounting standard
effective October 1, 2011. The adoption did not have an impact on the Company’s financial position or results of
operations.
Business combinations—In December 2010, a new accounting standard was issued that requires a company
to disclose revenue and earnings of the combined entity as though the business combination that occurred during
the current year had occurred as of the beginning of the comparable prior annual reporting period, only when
comparative financial statements are presented. The disclosure provisions are effective prospectively for business
combinations for which the acquisition date is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2010, with early adoption permitted. The Company adopted this accounting
standard on January 1, 2011, and the adoption did not have an impact on the Company’s financial position or
results of operations.
Comprehensive income—In June 2011, a new accounting standard was issued that amends existing guidance
by allowing only two options for presenting the components of net income and other comprehensive income:
(1) in a single continuous statement of comprehensive income or (2) in two separate but consecutive financial
statements, consisting of an income statement followed by a separate statement of other comprehensive income.
Also, items that are reclassified from other comprehensive income to net income must be presented on the face of
the financial statements. In December 2011, a new accounting standard was issued that indefinitely defers the
effective date for the requirement to present the reclassification of items from comprehensive income to net
income. Both standards require retrospective application, and are effective for fiscal years, and interim periods
within those years, beginning after December 15, 2011, with early adoption permitted. The Company will adopt
the revised accounting standards effective January 1, 2012, and does not anticipate that this adoption will have an
impact on the Company’s financial position or results of operations.
Note 2. Acquisitions
Acquisition of Card Program Management Operations
On December 9, 2010, MasterCard entered into an agreement to acquire the prepaid card program
management operations of Travelex Holdings Ltd., since renamed Access Prepaid Worldwide (“Access”).
Pursuant to the terms of the acquisition agreement, the Company acquired Access on April 15, 2011, at a
purchase price of 295 million U.K. pound sterling, or $481 million, including adjustments for working capital,
and contingent consideration (an “earn-out”) of up to an additional 35 million U.K. pound sterling, or
approximately $57 million, if certain performance targets were met.
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