McKesson 2012 Annual Report Download - page 62

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McKESSON CORPORATION
FINANCIAL NOTES
58
1. Significant Accounting Policies
Nature of Operations: McKesson Corporation (“McKesson,” the “Company,” the “Registrant” or “we” and
other similar pronouns) delivers pharmaceuticals, medical supplies and health care information technologies that
make health care safer while reducing costs. We conduct our business through two operating segments, McKesson
Distribution Solutions and McKesson Technology Solutions, as further described in Financial Note 22, “Segments
of Business.”
Basis of Presentation: The consolidated financial statements and accompanying notes are prepared in
accordance with U. S. generally accepted accounting principles (“GAAP”). The consolidated financial statements of
McKesson include the financial statements of all wholly-owned subsidiaries and majority-owned or controlled
companies. We also evaluate our ownership, contractual and other interests in entities to determine if they are
variable interest entities (“VIEs”), if we have a variable interest in those entities and the nature and extent of those
interests. These evaluations are highly complex and involve judgment and the use of estimates and assumptions
based on available historical information and management’s judgment, among other factors. Based on our
evaluations, if we determine we are the primary beneficiary of such VIEs we consolidate such entities into our
financial statements. The consolidated VIEs are not material to our consolidated financial statements.
Intercompany transactions and balances have been eliminated.
Fiscal Period: The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, all
references to a particular year shall mean the Company’s fiscal year.
Reclassifications: Certain prior year amounts have been reclassified to conform to the current year presentation.
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires that we make
estimates and assumptions that affect the reported amounts in the consolidated financial statements and
accompanying notes. Actual amounts could differ from those estimated amounts.
Cash and Cash Equivalents: All highly liquid debt instruments purchased with original maturity of three
months or less at the date of acquisition are included in cash and cash equivalents.
Cash is primarily held in non-interest bearing accounts and is fully insured by the Federal Deposit Insurance
Corporation regardless of the dollar amount. Cash equivalents are primarily invested in AAA rated prime money
market funds denominated in US dollars, Canadian government securities and a AAA rated prime money market
fund denominated in British pound sterling.
The remaining cash and cash equivalents are deposited with several financial institutions. We mitigate the risk
of our short-term investment portfolio by depositing funds with reputable financial institutions and monitoring risk
profiles and investment strategies of money market funds.
Restricted Cash: Cash that is subject to legal restrictions or is unavailable for general operating purposes is
classified as restricted cash and is included within prepaid expenses and other in the consolidated balance sheets. At
March 31, 2012 and 2011, restricted cash was not material.
Marketable Securities Available for Sale: We carry our marketable securities, which are available for sale, at
fair value and they are included in prepaid expenses and other in the consolidated balance sheets. The net unrealized
gains and losses, net of the related tax effect, computed in marking these securities to market have been reported
within stockholders’ equity. At March 31, 2012 and 2011, marketable securities were not material.