Equifax 2015 Annual Report Download - page 46

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Use of Estimates. The preparation of our Consolidated Financial Statements requires us to make estimates and
assumptions in accordance with GAAP. Accordingly, we make these estimates and assumptions after exercising judgment. We
believe that the estimates and assumptions inherent in our Consolidated Financial Statements are reasonable, based upon
information available to us at the time they are made including the consideration of events that have occurred up until the point
these Consolidated Financial Statements have been filed. These estimates and assumptions affect the reported amounts of
assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial
statements, as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ
materially from these estimates.
Revenue Recognition and Deferred Revenue. Revenue is recognized when persuasive evidence of an arrangement
exists, collectibility of arrangement consideration is reasonably assured, the arrangement fees are fixed or determinable and
delivery of the product or service has been completed. A significant portion of our revenue is derived from the provision of
information services to our customers on a transaction basis, in which case revenue is recognized, assuming all other revenue
recognition criteria are met, when the services are provided. A smaller portion of our revenues relates to subscription-based
contracts under which a customer pays a preset fee for a predetermined or unlimited number of transactions or services
provided during the subscription period, generally one year. Revenue related to subscription-based contracts having a preset
number of transactions is recognized as the services are provided, using an effective transaction rate as the actual transactions
are completed. Any remaining revenue related to unfulfilled units is not recognized until the end of the related contract’s
subscription period. Revenue related to subscription-based contracts having an unlimited volume is recognized ratably during
the contract term. Revenue is recorded net of sales taxes.
If at the outset of an arrangement, we determine that collectibility is not reasonably assured, revenue is deferred until
the earlier of when collectibility becomes probable or the receipt of payment. If there is uncertainty as to the customer’s
acceptance of our deliverables, revenue is not recognized until the earlier of receipt of customer acceptance or expiration of the
acceptance period. If at the outset of an arrangement, we determine that the arrangement fee is not fixed or determinable,
revenue is deferred until the arrangement fee becomes fixed or determinable, assuming all other revenue recognition criteria
have been met.
The determination of certain of our tax management services revenue requires the use of estimates, principally related
to transaction volumes in instances where these volumes are reported to us by our clients on a monthly basis in arrears. In these
instances, we estimate transaction volumes based on average actual volumes reported in the past. Differences between our
estimates and actual final volumes reported are recorded in the period in which actual volumes are reported. We have not
experienced significant variances between our estimates and actual reported volumes in the past. We monitor actual volumes to
ensure that we will continue to make reasonable estimates in the future. If we determine that we are unable to make reasonable
future estimates, revenue may be deferred until actual customer data is obtained. Also within our Workforce Solutions operating
segment, the fees for certain of our tax credits and incentives revenue are based on a portion of the credit delivered to our
clients. Revenue for these arrangements is recognized based on the achievement of milestones, upon calculation of the credit,
or when the credit is utilized by our client, depending on the provisions of the client contract.
We have certain offerings that are sold as multiple element arrangements. The multiple elements may include
consumer or commercial information, file updates for certain solutions, services provided by our decisioning technologies
personnel, training services, statistical models and other services. To account for each of these elements separately, the
delivered elements must have stand-alone value to our customer. For certain customer contracts, the total arrangement fee is
allocated to the undelivered elements. If we are unable to unbundle the arrangement into separate units of accounting, we apply
one of the accounting policies described above. This may lead to the arrangement consideration being recognized as the final
contract element is delivered to our customer or ratably over the contract.
Many of our multiple element arrangements involve the delivery of services generated by a combination of services
provided by one or more of our operating segments. No individual information service impacts the value or usage of other
information services included in an arrangement and each service can be sold alone or, in most cases, purchased from another
vendor without affecting the quality of use or value to the customer of the other information services included in the
arrangement. Some of our products require the development of interfaces or platforms by our decisioning technologies
personnel that allow our customers to interact with our proprietary information databases. These development services do not
meet the requirement for having stand-alone value, thus any related development fees are deferred when billed and are
recognized over the expected period that the customer will benefit from the related decisioning technologies service. Revenue
from the provision of statistical models is recognized as the service is provided and accepted, assuming all other revenue
recognition criteria are met. The direct costs of set up of a customer are capitalized and amortized as a cost of service during the
term of the related customer contract.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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