Visa 2007 Annual Report Download - page 118

Table of Contents
VISA U.S.A. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Investments in Joint Ventures, Affiliates and Subsidiaries
Investments resulting in ownership of approximately 20% to 50%, or in excess of 5% of a flow-through entity (e.g., limited partnerships, limited
liability companies), are accounted for using the equity method. Investments in business entities over which the Company does not have control, but has the
ability to exercise significant influence over operating and financial policies, are accounted for using the equity method. Under the equity method, the
Company's share of each entity's profit or loss is reflected currently in the Company's consolidated statements of operations rather than when realized through
dividends or distributions. Other non-marketable investments, resulting in ownership interests of less than these percentages, are accounted for using the cost
method.
The Company has interests in certain limited partnerships and limited liability companies and has evaluated these entities for consolidation using the
framework established by Financial Interpretation No. 46 (revised), "Consolidation-Variable Interest Entities: Guidance on Applying FASB Interpretation
No. 46 (revised 2003), Consolidation of Variable Interest Entities" (FIN 46R). The Company has determined that its ownership in these entities does not
constitute ownership of Variable Interest Entities as defined in FIN 46R. The Company is not the primary beneficiary of these entities and has accounted for
these investments under the equity method.
Facilities, Equipment and Software
Facilities, equipment and software are recorded at historical cost and are depreciated on a straight-line basis over their estimated useful lives, which
range from three to forty years, except for land and construction-in-progress, which are not depreciated. The estimated useful lives of the respective classes of
assets are as follows:
Facilities
Buildings 40 years
Building improvements 3 to 40 years
Leasehold improvements Shorter of useful life of the asset or lease term
Furniture and fixtures 5 to 7 years
Equipment 3 to 5 years
Software 3 to 5 years
Pursuant to the American Institute of Certified Public Accountants' Statement of Position No. 98-1, "Accounting for Costs of Computer Software
Developed or Obtained for Internal Use," (SOP 98-1) computer software development expense incurred during the development stage of projects is
capitalized. Under SOP 98-1, costs incurred prior to reaching the development stage of projects and other research and development costs are expensed as
incurred.
The Company capitalizes purchased software. Capitalized software costs included in facilities, equipment and software, net on the Company's
consolidated balance sheets are amortized on a straight-line basis over their estimated useful lives of up to five years.
Costs for maintenance and repairs are charged to expense as incurred, while major improvements that increase the functionality of the asset are
capitalized and depreciated ratably to expense over the identified useful life.
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