Equifax 2008 Annual Report Download - page 29

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upon the securities markets and upon the value of financial Revenue Recognition
instruments, it may adversely affect the Company’s financial Revenue is recognized when persuasive evidence of an
position and profitability. arrangement exists, collectibility of arrangement considera-
A significant portion of the Company’s business is con- tion is reasonably assured, the arrangement fees are fixed
ducted in currencies other than the U.S. dollar, and or determinable and delivery of the product or service has
changes in foreign exchange rates relative to the U.S. dol- been completed.
lar can therefore affect the value of non-U.S. dollar net If at the outset of an arrangement, we determine that col-
assets, revenues and expenses. Potential exposures as a lectibility is not reasonably assured, revenue is deferred
result of these fluctuations in currencies are closely moni- until the earlier of when collectibility becomes probable or
tored. Although the Company historically has not adopted the receipt of payment. If there is uncertainty as to the
strategies designed to reduce the impact of these fluctua- customer’s acceptance of our deliverables, revenue is not
tions on the Company’s financial performance, where recognized until the earlier of receipt of customer accept-
cost-justified the Company may elect to do so in the ance or expiration of the acceptance period. If at the out-
future. set of an arrangement, we determine that the arrangement
fee is not fixed or determinable, revenue is deferred until
RECENT ACCOUNTING PRONOUNCEMENTS the arrangement fee becomes estimable, assuming all
other revenue recognition criteria have been met.
For information about new accounting pronouncements
and the potential impact on our Consolidated Financial We have certain information solution offerings that are sold
Statements, see Note 1 of the Notes to Consolidated as multiple element arrangements. To account for each of
Financial Statements in this Annual Report. these elements separately, the delivered elements must
have stand-alone value to our customer, and there must
APPLICATION OF CRITICAL ACCOUNTING exist objective and reliable evidence of the fair value for any
POLICIES AND ESTIMATES undelivered elements.
The Company’s Consolidated Financial Statements are pre- Judgments and uncertainties — Each element of a multiple
pared in conformity with U.S. GAAP. This requires our man- element arrangement must be considered separately to
agement to make estimates and assumptions that affect ensure that appropriate accounting is performed for these
the reported amounts of assets and liabilities, revenues and deliverables. These considerations include assessing the
expenses and related disclosures of contingent assets and price at which the element is sold compared to its relative
liabilities in our Consolidated Financial Statements and the fair value; concluding when the element will be delivered;
Notes to Consolidated Financial Statements. The following and determining whether any contingencies exist in the
accounting policies involve a critical accounting estimate related customer contract that impact the prices paid to us
because they are particularly dependent on estimates and for the services.
assumptions made by management about matters that are
For certain contracts containing multiple elements, the total
uncertain at the time the accounting estimates are made.
arrangement fee is allocated to the undelivered elements
In addition, while we have used our best estimates based
based on their relative fair values and to the initial delivered
on facts and circumstances available to us at the time,
elements using the residual method. If we are unable to
different estimates reasonably could have been used in the
unbundle the arrangement into separate elements for
current period, or changes in the accounting estimates that
accounting or fair value is not known for any undelivered
we used are reasonably likely to occur from period to
elements, arrangement consideration may only be recog-
period, either of which may have a material impact on the
nized as the final contract element is delivered to our
presentation of our Consolidated Balance Sheets and
customer.
Statements of Income. We also have other significant
accounting policies which involve the use of estimates, In addition, the determination of certain of our marketing
judgments and assumptions that are relevant to under- information services and tax management services revenue
standing our results. For additional information about these requires the use of estimates, principally related to transac-
policies, see Note 1 of the Notes to Consolidated Financial tion volumes in instances where these volumes are
Statements in this Annual Report. Although we believe that reported to us by our clients on a monthly basis in arrears.
our estimates, assumptions and judgments are reasonable, In these instances, we estimate transaction volumes based
they are based upon information available at the time. on average actual volumes reported in the past. Differences
Actual results may differ significantly from these estimates between our estimates and actual final volumes reported
under different assumptions, judgments or conditions. are recorded in the period in which actual volumes are
reported.
2008 ANNUAL REPORT 27