McKesson 2011 Annual Report Download - page 64

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McKESSON CORPORATION
FINANCIAL NOTES
58
1. Significant Accounting Policies
Nature of Operations: McKesson Corporation (“McKesson,” the “Company,” or “we” and other similar
pronouns) is a corporation that delivers medicines, pharmaceutical supplies, information and care management
products and services designed to reduce costs and improve quality across the healthcare industry. We conduct our
business through two operating segments, McKesson Distribution Solutions and McKesson Technology Solutions,
as further described in Financial Note 20, “Segments of Business.”
Basis of Presentation: The consolidated financial statements and accompanying notes are prepared in
accordance with U. S. generally accepted accounting principles (“GAAP”). The consolidated financial statements of
McKesson include the financial statements of all wholly-owned subsidiaries and majority-owned or controlled
companies. We evaluate our ownership, contractual and other interests in entities to determine if they are variable
interest entities (“VIEs”), if we have a variable interest in those entities and the nature and extent of those interests.
These evaluations are highly complex and involve judgment and the use of estimates and assumptions based on
available historical information and management’s judgment, among other factors. Intercompany transactions and
balances have been eliminated.
Fiscal Period: The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted,
all references to a particular year shall mean the Company’s fiscal year.
Reclassifications: Certain prior year amounts have been reclassified to conform to the current year
presentation.
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires that we
make estimates and assumptions that affect the reported amounts in the consolidated financial statements and
accompanying notes. Actual amounts could differ from those estimated amounts.
Cash and Cash Equivalents: All highly liquid debt instruments purchased with original maturity of three
months or less at the date of acquisition are included in cash and cash equivalents.
We maintain cash and cash equivalents with several financial institutions. Bank deposits may exceed the
amount of federal deposit insurance; however, domestic non-interest bearing deposit transaction amounts are fully
insured by the Federal Deposit Insurance Corporation regardless of the dollar amount. Cash equivalents may be
invested in money market funds. We mitigate the risk of our short-term investment portfolio by investing the
majority of funds in U.S. government securities, depositing funds with reputable financial institutions and
monitoring risk profiles and investment strategies of money market funds.
Restricted Cash: Cash that is subject to legal restrictions or is unavailable for general operating purposes is
classified as restricted cash and is included within prepaid expenses and other in the consolidated balance sheets. At
March 31, 2011 and 2010, restricted cash was not material.
Marketable Securities Available for Sale: We carry our marketable securities, which are available for sale, at
fair value and they are included in prepaid expenses and other in the consolidated balance sheets. The net unrealized
gains and losses, net of the related tax effect, computed in marking these securities to market have been reported
within stockholders’ equity. At March 31, 2011 and 2010, marketable securities were not material.