First Data 2009 Annual Report Download - page 232

Chase Paymentech
NOTES TO COMBINED FINANCIAL STATEMENTS
For the years ended December 31, 2007 and 2006 and
the year ended December 31, 2005 (unaudited) (Continued)
classification to non-current reflects the long-term nature of the respective asset or liability. As a result, total
current assets and total current liabilities differ from previously filed documents. These reclassifications did not
impact total assets, total liabilities or the combined statements of income and comprehensive income.
Management does not believe that these reclassifications are material to the combined financial statements.
Use of Estimates
The preparation of combined financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the amounts reported on the combined financial statements and
accompanying notes. Actual results could differ from those estimates.
Foreign Currency Translation
The Company’s Canadian operation uses its local currency, the Canadian dollar (CAD), as its functional
currency. The assets and liabilities related to the Canadian operations in the accompanying combined balance
sheets are translated at period end exchange rates. Resulting translation adjustments are reported as a separate
component of owners’ equity in accumulated other comprehensive income. All income and expense items are
translated using the average exchange rate for the period. Net transaction gains and losses are included in
earnings. Unless otherwise stated, amounts presented herein related to the Canadian operations are in U.S.
dollars.
Cash and Cash Equivalents
The Company considers cash, certificates of deposit, money market funds, and all highly liquid investments
with original maturities of three months or less when purchased to be cash equivalents.
Receivables Related to Merchant Processing
Receivables related to merchant processing represent amounts due from card brands for transactions that
have been processed.
Marketable and other securities
The Company has investments in marketable securities, as well as investments in non-marketable equity
securities. Investments in marketable securities are classified as available-for-sale and consist of government,
government-backed, corporate debt securities, and short term bond mutual funds. Available-for-sale securities
are stated at fair value based on quoted market prices, with unrealized gains or losses on the securities, net of any
related tax effects, recorded as a separate component of comprehensive income. The cost basis of debt securities
is adjusted for the amortization of premiums and accretion of discounts to maturity. Amortization and accretion,
as well as interest and dividend income earned, and realized gains and losses on sales of securities are recorded in
interest and other income. Realized gains and losses are derived using the average cost method for determining
the cost of securities sold. A decline in market value of any available-for-sale security below cost that is deemed
to be other-than-temporary results in an impairment charge to earnings, and a new cost basis for the security is
established.
Investments in non-marketable equity securities are accounted for under the cost method as such
investments do not meet the equity method criteria. The Company assesses the potential for impairments to cost
method investments when impairment indicators are present. Any resulting impairment that is deemed other-
than-temporary is charged to earnings.
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