Visa 2011 Annual Report Download - page 64

Table of Contents
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. We allocate goodwill to reporting units based on the
reporting unit expected to benefit from the acquisition. We rely 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. We evaluated our goodwill for impairment on February 1, 2011, our annual
impairment review date, and concluded there was no impairment as of that date. Subsequent to this annual assessment, we acquired Fundamo and PlaySpan,
which resulted in additional goodwill. No recent events or changes in circumstances indicate that impairment exists as reflected by the business performance
of our reporting units and overall market capitalization as of September 30, 2011.
Impact if Actual Results Differ from Assumptions. If actual results are not consistent with our assumptions and estimates, we may be exposed to
impairment charges. The carrying values of goodwill and intangible assets, net were $11.7 billion and $11.4 billion, respectively, including $10.9 billion of
indefinite-lived intangible assets and $553 million of finite-lived intangible assets, net at September 30, 2011.
Legal and Regulatory Matters
Critical Estimates. We are currently involved in various legal proceedings, the outcomes of which are not within our complete control or may not be
known for prolonged periods of time. Management is required to assess the probability of loss and amount of such loss, if any, in preparing our financial
statements.
Assumptions and Judgment. We evaluate the likelihood of a potential loss from legal or regulatory proceedings to which we are a party. We record a
liability for such claims when a loss is considered probable and the amount can be reasonably estimated. Significant judgment may be required in the
determination of both probability and whether an exposure is reasonably estimable. 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. As additional information becomes available, we reassess
the potential liability related to pending claims and may revise our estimates.
Our retrospective responsibility plan only addresses monetary liabilities from settlements of, or final judgments in, the covered litigation. The plan's
mechanisms include the use of the litigation escrow account. The accrual related to covered litigation could be either higher or lower than the escrow account
balance. We did not record an additional accrual for covered litigation during fiscal 2011. See Note 3—Retrospective Responsibility Plan to our consolidated
financial statements.
Impact if Actual Results Differ from Assumptions. Due to the inherent uncertainties of the legal and regulatory processes in the multiple jurisdictions in
which we operate, our judgments may be materially different than the actual outcomes, which could have material adverse effects on our business, financial
conditions and results of operations. See Note 21—Legal Matters to our consolidated financial statements.
Income Taxes
Critical Estimates. In calculating our effective tax rate, we make judgments regarding certain tax positions, including the timing and amount of
deductions and allocations of income among various tax jurisdictions.
Assumptions and Judgment. We have various tax filing positions with regard to the timing and amount of deductions and credits, the establishment of
liabilities for uncertain tax positions and the
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