Visa 2011 Annual Report Download - page 83

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2011
(in millions, except as noted)
Property, equipment and technology, net. Property, equipment and technology, net are recorded at historical cost less accumulated depreciation and
amortization, which are computed on a straight-line basis over the asset's estimated useful life. Depreciation and amortization of technology, furniture,
fixtures and equipment are computed over estimated useful lives ranging from 2 to 7 years. Capital leases are amortized over the lease term and leasehold
improvements are amortized over the shorter of the useful life of the asset or lease term. Building improvements are depreciated between 3 and 40 years, and
buildings are depreciated over 40 years. Improvements that increase functionality of the asset are capitalized and depreciated over the asset's remaining useful
life. Land and construction-in-progress are not depreciated. Fully depreciated assets are retained in property, equipment and technology, net, until removed
from service.
Technology includes purchased and internally developed software, including technology assets obtained through acquisitions. 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.
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 to the extent that the carrying amount of the asset or asset group exceeds its fair value.
Leases. The Company enters into operating and capital leases for the use of premises, software and equipment. Rent expense related to operating lease
agreements which may or may not contain lease incentives is recorded on a straight-line basis over the lease term.
Intangible assets, net. The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each
asset. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability whenever events or changes in circumstances
indicate that their carrying amounts may not be recoverable. Intangible assets with indefinite useful lives are not amortized but are evaluated for impairment
annually or whenever events or changes in circumstances indicate that impairment may exist.
Indefinite-lived intangible assets consist of tradename, customer relationships and Visa Europe franchise right acquired in the October 2007
reorganization. The Company tests each category of indefinite-lived 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 assessments, including a review of discounted future cash
flows, business plans and use of present value techniques.
The Company has historically performed its annual impairment testing of goodwill and indefinite-lived intangible assets as of July 1 of each year.
During the second quarter of fiscal 2011, the Company changed the annual impairment testing date from July 1 to February 1. The Company believes this
change, which represents a change in the method of applying an accounting principle, is
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