First Data 2010 Annual Report Download - page 77

Table of Contents
FIRST DATA CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
in the above noted investments, except cost method investments, were classified as available-for-sale. Unrealized gains and losses on these investments are
included as a separate component of OCI, net of any related tax effect. The Company assesses marketable securities for impairment quarterly. Cost method
investments are also evaluated quarterly to determine whether an event or change in circumstance has occurred in that period that may have a significant
adverse effect on the fair value and, if practicable to do so, the fair value is estimated.
For equity securities, declines in value that are judged to be other than temporary in nature are recognized in the Consolidated Statements of Operations.
For public company equity securities, the Company's policy is to treat a decline in the investment's quoted market value that has lasted for more than six
months as an other than temporary decline in value. For debt securities, when the Company intends to sell an impaired debt security or it is more likely than
not it will be required to sell prior to recovery of its amortized cost basis, an other-than-temporary-impairment ("OTTI") has occurred. The impairment is
recognized in earnings equal to the entire difference between the debt security's amortized cost basis and its fair value. When the Company does not intend to
sell an impaired debt security and it is not more likely than not it will be required to sell prior to recovery of its amortized cost basis, the Company assesses
whether it will recover its amortized cost basis. If the entire amortized cost will not be recovered, a credit loss exists resulting in the credit loss portion of the
OTTI being recognized in earnings and the amount related to all other factors recognized in OCI. The Company adopted this accounting for OTTI effective
April 1, 2009 in accordance with new accounting guidance and the cumulative effect is reported as "Adjustment resulting from adoption of new accounting
guidance" on the accompanying Consolidated Statements of Equity. Refer to Note 7 for a detailed discussion regarding the fair value of the Company's
investments.
New Accounting Guidance
In October 2009, the FASB revised its guidance on Revenue Recognition for Multiple-Deliverable Revenue Arrangements. The amendments in this
update enable companies to separately account for multiple revenue-generating activities (deliverables) that they perform for their customers. Existing U.S.
GAAP requires a company to use vendor-specific objective evidence ("VSOE") or third-party evidence of selling price to separate deliverables in a multiple-
deliverable arrangement. The update does allow for the use of an estimated selling price if neither VSOE nor third-party evidence is available. The update
requires additional disclosures of information about an entity's multiple-deliverable arrangements. The requirements of the update apply prospectively for
revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, although early adoption is permitted. The
Company adopted the new guidance on January 1, 2010 and has no arrangements for which this adoption will have a material impact on its financial position
and results of operations.
Note 2: Restructuring, Impairments, and Litigation and Regulatory Settlements
The Company recorded restructuring charges, impairment charges, and litigation and regulatory settlements during the three years ended December 31,
2010. Restructuring accruals are reviewed each period and balances in excess of anticipated requirements are reversed through the same Consolidated
Statements of Operations caption in which they were originally recorded. Such reversals resulted from the favorable resolution of contingencies and changes
in facts and circumstances.
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