Public Storage 2011 Annual Report Download - page 91

PUBLIC STORAGE
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
F-11
Accrued and Other Liabilities
Accrued and other liabilities consist primarily of trade payables, property tax accruals, tenant
prepayments of rents, accrued interest payable, accrued payroll, accrued tenant reinsurance losses, casualty
losses, and contingent loss accruals which are accrued when probable and estimable. When it is reasonably
possible that a significant unaccrued contingent loss has occurred, we disclose the nature of the potential loss
and, if estimable, a range of exposure.
Cash Equivalents and Marketable Securities
We classify as cash equivalents all highly liquid financial instruments such as money market funds
with daily liquidity and a rating of at least AAA by Standard and Poor’s, or investment grade (rated A1 by
Standard and Poor’s) short-term commercial paper or treasury securities with remaining maturities of three
months or less at the date of acquisition. Cash and cash equivalents which are restricted from general corporate
use are included in other assets.
Commercial paper with a remaining maturity of more than three months when acquired is included in
marketable securities. When at acquisition we have the positive intent and ability to hold these securities to
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recorded using the effective interest method.
Fair Value Accounting
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transfer a liability in an orderly transaction between market participants. We prioritize the inputs used in
measuring fair value based upon a three-tier fair value hierarchy described in Codification Section 820-10-35.
We believe that, during all periods presented, the carrying values approximate the fair values of our
cash and cash equivalents, marketable securities, other assets, and accrued and other liabilities, based upon our
evaluation of the underlying characteristics, market data, and short maturity of these financial instruments,
which involved considerable judgment. The estimated fair values are not necessarily indicative of the amounts
that could be realized in current market exchanges. The characteristics of these financial instruments, market
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defined in Codification Section 820-10-35-47.
Significant judgment is used to estimate fair values in recording our business combinations, in
evaluating real estate, goodwill, and other intangible assets for impairment, and determining fair values of our
notes payable and noncontrolling interests in subsidiaries. In estimating fair values, we consider significant
unobservable inputs such as market prices of land, capitalization rates for real estate facilities, earnings
multiples, projected levels of earnings, costs of construction, functional depreciation, and estimated market
interest rates for debt securiWLHVZLWKDVLPLODUWLPHWRPDWXULW\DQGFUHGLWTXDOLW\ZKLFKDUH³/HYHO ´LQSXWVDV
the term is defined in Codification Section 820-10-35-52.
Currency and Credit Risk
Financial assets that are exposed to credit risk consist primarily of cash and cash equivalents, accounts
receivable, loans receivable, and restricted cash. At December 31, 2011, due primarily to our investment in and
loan receivable from Shurgard Europe, our operations and financial position are affected by fluctuations in
currency exchange rates between the Euro, and to a lesser extent, other European currencies, against the U.S.
Dollar.