Visa 2009 Annual Report Download - page 73

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2009
(in millions, except as noted)
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 other 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, which generally involves 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.
Financial instruments—The Company considers the following to be financial instruments: cash and cash equivalents, restricted cash-litigation escrow,
trading and available-for sale investments, the Reserve Primary Fund (see Note 6—Prepaid Expenses and Other Assets), accounts receivable, non-marketable
equity investments, customer collateral, accounts payable, debt, settlement guarantees, derivative instruments, the Visa Europe put option, and settlement
receivable and payable. The estimated fair value of such instruments at September 30, 2009 approximates their carrying value as reported on the consolidated
balance sheets except as otherwise disclosed, or as deemed impracticable to estimate the fair value, such as for non marketable equity investments. See Note 5
—Investments and Fair Value Measurements.
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 days, resulting in amounts due to and from financial institution customers. These settlement receivables and
payables are stated at cost and are presented gross on the consolidated balance sheets.
Customer collateral—The Company holds cash deposits and other noncash assets from certain customers in order to ensure their performance of
settlement obligations arising from credit, debit and travelers cheque product clearings. The cash collateral assets are restricted and fully offset by
corresponding liabilities and both balances are presented on the consolidated balance sheets. Noncash collateral assets are held on behalf of the Company by a
third party and are not recorded on the consolidated balance sheets. See Note 12—Settlement Guarantee Management.
Property, equipment and technology, net—Property, equipment, and technology, net are recorded at historical cost less accumulated depreciation and
amortization, which are computed on a straight-line basis over the asset's estimated useful life. Depreciation and amortization of technology, furniture,
fixtures and equipment are computed over estimated useful lives ranging from 2 to 7 years. Capital leases are amortized over the lease term and leasehold
improvements are amortized over the shorter of the useful life of the asset or lease term. Building improvements are depreciated between 3 and 40 years, and
buildings are depreciated over 40 years. Improvements that increase functionality of the asset are capitalized and depreciated over the asset's remaining useful
life. Land and construction-in-progress are not depreciated. Fully depreciated assets are retained in property, equipment and technology, net, until removed
from service.
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