Visa 2011 Annual Report Download - page 85

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2011
(in millions, except as noted)
by costs incurred under client incentives. The Company recognizes revenue when the price is fixed or determinable, persuasive evidence of an arrangement
exists, the service is performed and collectability of the resulting receivable is reasonably assured.
Service revenues predominantly represent payments by clients with respect to their card programs carrying marks of the Visa brand, and are based
principally upon spending on Visa-branded cards for goods and services. Current quarter service revenues are primarily assessed using a calculation of pricing
applied to the prior quarter's payments volume. The Company also earns revenues from assessments designed to support ongoing acceptance and volume
growth initiatives. These revenues are recognized in the same period the related volume is transacted.
Data processing revenues represent revenues earned for authorization, clearing, settlement, transaction processing services and other maintenance and
support services that facilitate transaction and information processing among the Company's clients globally and Visa Europe. These revenues are recognized
in the same period the related transactions occur or services are rendered. Data processing revenues also include revenues earned for transactions processed by
CyberSource's online payment gateway and PlaySpan's virtual goods payment platform.
International transaction revenues are assessed to clients on cardholder transactions where the cardholder's issuer country is different from the
merchant's country. Revenues from these cross-border transactions are recognized in the same period the related transactions occur or services are rendered.
Other revenues primarily include revenues earned from Visa Europe in connection with the Visa Europe Framework Agreement (see Note 2—Visa
Europe), and fees from cardholder services and licensing and certification. Other revenues also include optional service or product enhancements, such as
extended cardholder protection and concierge services. Other revenues are recognized in the same period the related transactions occur or services are
rendered.
Effective fiscal 2011, the Company adopted ASU 2009-13, which addresses the accounting for multiple-deliverable revenue arrangements to enable
vendors to account for products or services (deliverables) separately rather than as a combined unit. The adoption did not have a material impact on the
consolidated financial statements.
Marketing. The Company expenses costs for the production of advertising as incurred. The cost of media advertising is expensed when the advertising
takes place. Sponsorship costs are recognized over the period in which the Company benefits from the sponsorship rights. Promotional items are expensed as
incurred, when the related services are received, or when the related event occurs.
Income taxes. The Company's income tax expense consists of two components: current and deferred. Current income tax expense represents taxes to be
paid for the current period. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the
financial statement carrying amounts and the respective tax basis of existing assets and liabilities, and operating loss and credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not that some portion
or all of the deferred tax assets will not be realized. A valuation allowance is recorded for the portions that
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