Equifax 2009 Annual Report Download - page 31

RECENT ACCOUNTING PRONOUNCEMENTS We have certain information solution offerings that are sold as multi-
For information about new accounting pronouncements and the ple element arrangements. To account for each of these elements
potential impact on our Consolidated Financial Statements, see separately, the delivered elements must have stand-alone value to
Note 1 of the Notes to Consolidated Financial Statements in this our customer, and there must exist objective and reliable evidence
report. of the fair value for any undelivered elements.
APPLICATION OF CRITICAL ACCOUNTING Judgments and uncertainties — Each element of a multiple element
POLICIES AND ESTIMATES arrangement must be considered separately to ensure that appro-
The Company’s Consolidated Financial Statements are prepared in priate accounting is performed for these deliverables. These consid-
conformity with U.S. GAAP. This requires our management to make erations include assessing the price at which the element is sold
estimates and assumptions that affect the reported amounts of compared to its relative fair value; concluding when the element will
assets and liabilities, revenues and expenses and related disclosures be delivered; and determining whether any contingencies exist in
of contingent assets and liabilities in our Consolidated Financial the related customer contract that impact the prices paid to us for
Statements and the Notes to Consolidated Financial Statements. the services.
The following accounting policies involve a critical accounting esti-
mate because they are particularly dependent on estimates and For certain contracts containing multiple elements, the total arrange-
assumptions made by management about matters that are uncer- ment fee is allocated to the undelivered elements based on their
tain at the time the accounting estimates are made. In addition, relative fair values and to the initial delivered elements using the
while we have used our best estimates based on facts and circum- residual method. If we are unable to unbundle the arrangement into
stances available to us at the time, different estimates reasonably separate units of accounting or fair value is not known for any
could have been used in the current period, or changes in the undelivered elements, arrangement consideration may only be rec-
accounting estimates that we used are reasonably likely to occur ognized as the final contract element is delivered to our customer.
from period to period, either of which may have a material impact
on the presentation of our Consolidated Balance Sheets and State- In addition, the determination of certain of our marketing information
ments of Income. We also have other significant accounting policies services and tax management services revenue requires the use of
which involve the use of estimates, judgments and assumptions that estimates, principally related to transaction volumes in instances
are relevant to understanding our results. For additional information where these volumes are reported to us by our clients on a monthly
about these policies, see Note 1 of the Notes to Consolidated basis in arrears. In these instances, we estimate transaction
Financial Statements in this report. Although we believe that our volumes based on average actual volumes reported in the past.
estimates, assumptions and judgments are reasonable, they are Differences between our estimates and actual final volumes reported
based upon information available at the time. Actual results may are recorded in the period in which actual volumes are reported.
differ significantly from these estimates under different assumptions,
judgments or conditions.
Effects if actual results differ from assumptions — We have not
experienced significant variances between our estimates of market-
Revenue Recognition ing information services and tax management services revenues
Revenue is recognized when persuasive evidence of an arrange- reported to us by our customers and actual reported volumes in the
ment exists, collectibility of arrangement consideration is reasonably past. We monitor actual volumes to ensure that we will continue to
assured, the arrangement fees are fixed or determinable and deliv- make reasonable estimates in the future. If we determine that we
ery of the product or service has been completed. are unable to make reasonable future estimates, revenue may be
deferred until actual customer data is obtained. However, if actual
If at the outset of an arrangement, we determine that collectibility is results are not consistent with our estimates and assumptions, or if
not reasonably assured, revenue is deferred until the earlier of when our customer arrangements become more complex or include more
collectibility becomes probable or the receipt of payment. If there is bundled offerings in the future, we may be required to recognize
uncertainty as to the customer’s acceptance of our deliverables, revenue differently in the future to account for these changes. We
revenue is not recognized until the earlier of receipt of customer do not believe there is a reasonable likelihood that there will be a
acceptance or expiration of the acceptance period. If at the outset material change in the future estimates or assumptions we use to
of an arrangement, we determine that the arrangement fee is not recognize revenue.
fixed or determinable, revenue is deferred until the arrangement fee
becomes estimable, assuming all other revenue recognition criteria
have been met.
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