Visa 2008 Annual Report Download - page 112

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
current market or broker quotations. Unrealized gains and losses are reported in accumulated other comprehensive income on the consolidated balance sheets.
The carrying value of investments sold is determined using the specific identification method. The Company does not engage in trading activities.
The Company evaluates its investments for other-than-temporary impairment on an ongoing basis. A decline in the fair value of any available-for-sale
security below cost that is deemed to be other-than-temporary results in a new cost basis for the security which is equivalent to its fair value. In evaluating
other-than- temporary impairment, the Company considers the length of time and extent to which fair value has been less than cost, the Company's intent and
ability to hold the investment until recovery, and other relevant factors such as management's judgment about the issuer's financial condition and the
Company's investment horizon.
Premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield and decrease or
increase the carrying amount of the investment. Premiums and discounts are included in investment income, net on the Company's consolidated statements of
operations. Dividend and interest income are recognized when earned and are included in investment income, net on the Company's consolidated statements
of operations.
The Company uses the equity method of accounting for investments in other entities when it holds between 20% and 50% ownership in the entity or
when it exercises significant influence. 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. The equity method of accounting is also utilized for flow-
through entities such as limited partnerships and limited liability companies when the investment ownership percentage is equal to or greater than 5% of
outstanding ownership interests, regardless of whether the Company has significant influence over the investees.
The Company accounts for investments in entities under the historical cost method of accounting when it holds less than 20% ownership in the entity or
for flow-through entities when the investment ownership is less than 5%, and the Company does not exercise significant influence. These investments consist
of equity holdings in non-public companies and are recorded in other assets on the consolidated balance sheets.
The Company regularly reviews investments accounted for under the cost and equity methods for possible impairment. The Company estimates the fair
value of these investments if there have been events or changes in circumstance that may have had a significant adverse effect on the fair value of these
investments. The factors which the Company considers include, but are not limited to, a deterioration in the operating performance or business prospects of
the investee, an issuance of equity securities by the investee which indicates a decline in the enterprise value of the investee, or indications that the investee
will sell or liquidate its operations. The fair value estimate typically includes an analysis of the facts and circumstances influencing the investment,
expectations of the entity's cash flows and capital needs, and the viability of its business model.
Settlement receivable and payable—The Company operates systems for clearing and settling customer payment transactions. Net settlements are
generally cleared within one to two business
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