Visa 2009 Annual Report Download - page 74

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2009
(in millions, except as noted)
Technology includes both purchased and internally developed software. Internally developed software represents software primarily used by the
VisaNet electronic payment network. Internal and external costs incurred during the preliminary project stage are expensed as incurred. Qualifying costs
incurred during the application development stage are capitalized. Once the project is substantially complete and ready for its intended use these costs are
amortized on a straight-line basis over the technology's estimated useful life.
Leases—The Company enters into operating and capital leases for the use of premises, software and equipment. Rent expense related to lease
agreements which contain lease incentives are recorded on a straight-line basis.
Intangible assets—The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset.
Intangible assets with finite useful lives are amortized on a straight-line basis. Intangible assets with indefinite useful lives are not amortized but are evaluated
for impairment annually or whenever events and circumstances indicate that impairment may exist. Intangible assets consist of tradename, customer
relationships and Visa Europe franchise right, all of which have indefinite useful lives.
The Company tests each category of intangible assets for impairment on an aggregate basis, which may require the allocation of cash flows and/or an
estimate of fair value to those assets or asset group. Impairment exists if the fair value of the indefinite-lived intangible asset is less than the carrying value.
The Company relies on a number of factors when completing impairment assessment including a review of discounted future cash flows, business plans and
use of present value techniques. The Company evaluated its intangible assets for impairment as of July 1, 2009 and concluded there was no impairment as of
that date. No recent events or circumstances indicate that impairment may exist.
Goodwill—Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not
amortized but is evaluated for impairment at the reporting unit level annually or whenever events and circumstances indicate that impairment may exist. The
Company has only one reporting unit, which is the level in which discrete financial information is available and reviewed by the chief operating decision
maker.
Impairment is reviewed using a two-step process. The first step compares the fair value of the reporting unit to its carrying value. If the fair value
exceeds the carrying value, no impairment exists, and the second step is not performed. If the fair value is less than the carrying value, the second step is
performed to compute the amount of the impairment by comparing the implied fair value of reporting unit goodwill with the carrying amount of that goodwill.
The Company relies on a number of factors when completing impairment assessment including a review of discounted future cash flows, business plans and
use of present value techniques. The Company evaluated its goodwill for impairment as of July 1, 2009 and concluded there was no impairment as of that
date. No recent events or circumstances indicate that impairment may exist as reflected by the Company's overall business performance and market
capitalization.
Impairment of long-lived assets—The Company evaluates the recoverability of long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If the sum of expected undiscounted future cash flows is
less than the carrying amount of an asset or asset group, an impairment loss is recognized. The loss is measured as the amount by which the carrying amount
of the asset or asset group exceeds its fair value.
73