Visa 2014 Annual Report Download - page 93

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2014
The Company evaluates the recoverability of long-lived assets for impairment annually or more
frequently if 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 net 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. See Note 6—Property, Equipment
and Technology, Net.
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 primarily 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 primarily consist of customer relationships, reacquired rights, reseller
relationships and tradenames obtained through acquisitions. Finite-lived intangible assets are
amortized on a straight-line basis and are tested for recoverability if events or changes in
circumstances indicate that their carrying amounts may not be recoverable. These intangibles have
useful lives ranging from 3 to 15 years. No events or changes in circumstances indicate that
impairment existed as of September 30, 2014. See Note 7—Intangible Assets and Goodwill.
Indefinite-lived intangible assets consist of tradename, customer relationships and the Visa
Europe franchise right acquired in the October 2007 reorganization. Intangible assets with indefinite
useful lives are not amortized but are evaluated for impairment annually or more frequently if events or
changes in circumstances indicate that impairment may exist. The Company first assesses qualitative
factors to determine whether it is necessary to perform a quantitative impairment test for indefinite-lived
intangible assets. The Company assesses 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 the 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 net future cash flows, business
plans and the use of present value techniques.
The Company completed its annual impairment review of indefinite-lived intangible assets as of
February 1, 2014, and concluded there was no impairment as of that date. No recent events or
changes in circumstances indicate that impairment of the Company’s indefinite-lived intangible assets
existed as of September 30, 2014.
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 as of February 1, or more frequently if events or changes in
circumstances indicate that impairment may exist.
The Company evaluated its goodwill for impairment on February 1, 2014, and concluded there
was no impairment as of that date. No recent events or changes in circumstances indicate that
impairment existed as of September 30, 2014.
Accrued litigation. The Company evaluates the likelihood of an unfavorable outcome in legal or
regulatory proceedings to which it is a party and records a loss contingency when it is probable that a
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