Visa 2008 Annual Report Download - page 114

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
Impairment of long-lived assets—In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company
evaluates the recoverability of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. If the sum of expected undiscounted future cash flows is less than the carrying amount of the asset, an impairment loss is recognized.
The loss is measured as the amount by which the carrying amount of the asset exceeds its fair value calculated using the present value of estimated net future
cash flows.
Intangible assets—The Company initially records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of
each asset based on the guidance in SFAS No. 142, Goodwill and Other Intangible Assets. Intangible assets with finite useful lives are amortized on a
straight-line basis. Intangible assets with indefinite useful lives are not amortized but are evaluated for impairment annually or whenever events and
circumstances indicate that impairment may exist.
Intangible assets consist of tradename, customer relationships and Visa Europe franchise right, all of which have an indefinite useful life.
The Company tests each category of intangible assets for impairment on an aggregate basis, in accordance with Emerging Issues Task Force ("EITF")
Issue No. 02-7, "Unit of Accounting for Testing Impairment of Indefinite-Lived Intangible Assets." Impairment exists if the fair value of the indefinite-lived
intangible asset is less than the carrying value. The Company evaluated its intangible assets for impairment as of July 1, 2008 and concluded there was no
impairment as of that date. No recent events or circumstances indicate that impairment may exist.
Goodwill—Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination and is
accounted for in accordance with SFAS No. 142. Goodwill is not amortized but is evaluated for impairment at the reporting unit level annually or whenever
events and circumstances indicate that impairment may exist. Goodwill is reviewed for impairment utilizing a two-step process. The first step compares the
fair value of the reporting unit to its carrying value. If the fair value exceeds the carrying value, no impairment exists, and the second step is not performed. If
the fair value is less than the carrying value, there is an indication that impairment may exist and the second step is performed in order to compute the amount
of the impairment. In the second step, the impairment is computed by comparing the implied fair value of reporting unit goodwill with the carrying amount of
that goodwill. The Company evaluated its goodwill for impairment as of July 1, 2008 and concluded there was no impairment as of that date. No recent events
or circumstances indicate that impairment may exist.
Volume and support incentives—The Company enters into incentive agreements with financial institution customers, merchants, and other business
partners designed to build payments volume and to increase product acceptance. The Company capitalizes certain incentive payments under these agreements
related to signing or renewing long-term contracts in instances where the Company receives a performance commitment, from the customer, to generate a
substantial portion of its credit or debit card payments volume on Visa branded products for an agreed upon period of time. Incentives are accrued based on
management's estimate of the customers' performance according to the provisions in the related agreements. These accruals are regularly reviewed and
estimates of performance are adjusted as appropriate. Capitalized amounts are amortized and the Company's
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