MasterCard 2012 Annual Report Download - page 96

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MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Refunding Revenue Bonds
The Company holds refunding revenue bonds with the same payment terms, and which contain the right of
set-off with a capital lease obligation related to the Company’s global technology and operations center located
in O’Fallon, Missouri. 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 7 (Property, Plant and Equipment) for further details.
Non-Financial Instruments
Certain assets and liabilities are measured at fair value on a nonrecurring basis for purposes of initial
recognition and impairment testing. The Company’s non-financial 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 value of its reporting unit, when
necessary. 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.
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 on the consolidated statement of
comprehensive income, and their respective amortized cost basis and fair values as of December 31, 2012 and
2011 were as follows:
December 31, 2012
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss1
Fair
Value
(in millions)
Municipal securities ........................... $ 522 $ 9 $— $ 531
U.S. Government and Agency securities ........... 582 — — 582
Taxable short-term bond funds .................. 209 1 — 210
Corporate securities ........................... 1,245 2 (1) 1,246
Asset-backed securities ........................ 316 — — 316
Auction rate securities2........................ 35 — (3) 32
Other ...................................... 66 — — 66
Total ....................................... $2,975 $ 12 $ (4) $2,983
92