McKesson 2016 Annual Report Download - page 74

McKESSON CORPORATION
FINANCIAL NOTES
1. Significant Accounting Policies
Nature of Operations: McKesson Corporation (“McKesson,” the “Company,” the “Registrant” or “we” and
other similar pronouns) delivers a comprehensive offering of pharmaceuticals and medical supplies and provides
services to help our customers improve the efficiency and effectiveness of their healthcare operations. We
manage our business through two operating segments, McKesson Distribution Solutions and McKesson
Technology Solutions, as further described in Financial Note 27, “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. For those consolidated subsidiaries where our ownership is less than 100%, the portion of the net
income or loss allocable to the noncontrolling interests is reported as “Net Income Attributable to Noncontrolling
Interests” on the consolidated statements of operations. All significant intercompany balances and transactions
have been eliminated in consolidation.
We consider ourselves to control an entity if we are the majority owner of and have voting control over such
entity. We also assess control through means other than voting rights (“variable interest entities” or “VIEs”) and
determine which business entity is the primary beneficiary of the VIE. We consolidate VIEs when it is
determined that we are the primary beneficiary of the VIE. Investments in business entities in which we do not
have control, but have the ability to exercise significant influence over operating and financial policies, are
accounted for using the equity method and our proportionate share of income or loss is recorded in other income,
net. Equity investments in non-publicly traded entities are primarily accounted for using the cost method.
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 and money market instruments purchased with original
maturity of three months or less at the date of acquisition are included in cash and cash equivalents.
Cash equivalents, which are available-for-sale, are carried at fair value. Cash equivalents are primarily
invested in AAA rated prime and U.S. government money market funds denominated in U.S. dollars, AAA rated
prime money market funds denominated in Euros, overnight repurchase agreements collateralized by U.S.
government securities, Canadian government securities and/or securities that are guaranteed or sponsored by the
U.S. government and an AAA rated prime money market fund denominated in British pound sterling.
The remaining cash and cash equivalents are deposited with several financial institutions. Deposits may
exceed the amounts insured by the Federal Deposit Insurance Corporation in the U.S. and similar deposit
insurance programs in other jurisdictions. We mitigate the risk of our short-term investment portfolio by
depositing funds with reputable financial institutions and monitoring risk profiles and investment strategies of
money market funds.
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