First Data 2014 Annual Report Download - page 59

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deferred tax assets will not be realized. To the extent the Company determines that it will not realize the benefit of some or all of its deferred tax assets, then
these deferred tax assets will be adjusted through the Company’s provision for income taxes in the period in which this determination is made.
The Company recognizes the tax benefits from uncertain tax positions only when it is more likely than not, based on the technical merits of the position, that
the tax position will be sustained upon examination, including the resolution of any related appeals or litigation. The tax benefits recognized in the
consolidated financial statements from such a position are measured as the largest benefit that has a greater than fifty percent likelihood of being realized
upon ultimate resolution.
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Investments (other than those included in settlement assets) with original maturities of three months or less (that are readily convertible to cash) are
considered to be cash equivalents and are stated at cost, which approximates market value. Cash and cash equivalents that were restricted from use due to
regulatory requirements are included in “Other long-term assets” in the Consolidated Balance Sheets and were immaterial as of December 31, 2014 and 2013.
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Accounts receivable balances are stated net of allowance for doubtful accounts. Historically, the Company has infrequently incurred significant write-offs.
The Company records allowances for doubtful accounts when it is probable that the accounts receivable balance will not be collected. Long-term accounts
receivable balances are included in “Other long-term assets” in the Consolidated Balance Sheets.
The Company has receivables associated with its POS terminal leasing businesses. Leasing receivables are included in “Accounts receivable” and “Other
long-term assets” in the Consolidated Balance Sheets. The Company recognizes interest income on its leasing receivables using the effective interest method.
Interest income from leasing receivables is included in “Product sales and other” in the Consolidated Statements of Operations. For direct financing leases,
the interest rate used incorporates initial direct costs included in the net investment in the lease. For sales type leases, initial direct costs are expensed as
incurred.
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Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over the lesser of
the estimated useful life of the related assets (generally three to 10 years for equipment, furniture, and leasehold improvements, and 30 years for buildings) or
the lease term. Maintenance and repairs which do not extend the useful life of the respective assets are charged to expense as incurred. The following table
presents the amounts charged to expense for the depreciation and amortization of property and equipment, including equipment under capital lease:
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2014 $ 286.7
2013 288.4
2012 284.5
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Goodwill represents the excess of purchase price over tangible and intangible assets acquired less liabilities assumed arising from business combinations.
Goodwill is generally allocated to reporting units based upon relative fair value (taking into consideration other factors such as synergies) when an acquired
business is integrated into multiple reporting units. The Company’s reporting units are at the operating segment level or businesses one level below the
operating segment level for which discrete financial information is prepared and regularly reviewed by management. When a business within a reporting unit
is disposed of, goodwill is allocated to the disposed business using the relative fair value method. Relative fair value is estimated using a discounted cash
flow analysis.
The Company tests goodwill annually for impairment, as well as upon an indicator of impairment, using a fair value approach at the reporting unit level. The
Company estimates the fair value of each reporting unit using a discounted cash flow analysis. The Company performed its annual goodwill impairment test
in the fourth quarters of 2014 and 2013. As of October 1, 2014,
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