Visa 2009 Annual Report Download - page 76

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2009
(in millions, except as noted)
protection and concierge services, cardholder services, and other services provided to customers. Other revenues are recognized in the same period the related
transactions occur or services are rendered.
Advertising, marketing and promotion—The Company expenses costs for the production of advertising as incurred. The cost of media advertising is
expensed when the advertising takes place. Sponsorship costs are recognized over the period in which the Company benefits from the sponsorship rights.
Promotional items are expensed as incurred, when the related services are received, or when the related event occurs.
Income taxes—The Company's income tax expense consists of two components: current and deferred. Current income tax expense represents taxes to
be paid for the current period. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between
the financial statement carrying amounts and the respective tax basis of existing assets and liabilities. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing
whether deferred tax assets are realizable, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not
be realized. A valuation allowance is recorded for the portions that are not expected to be realized based on the level of historical taxable income, projections
of future taxable income over the periods in which the temporary differences are deductible, and allowable tax planning strategies.
Where interpretation of the tax law may be uncertain, the Company recognizes, measures and discloses income tax uncertainties. The Company
accounts for interest expense and penalties related to uncertain tax positions in other income (expense) in the consolidated statement of operations.
The Company files a consolidated federal income tax return and, in certain states, combined state tax returns. Foreign taxes paid are generally deducted
to reduce federal income taxes payable.
Pension and other postretirement benefit plans—The Company's defined benefit pension and other postretirement benefit plans are actuarially
evaluated, incorporating various critical assumptions including the discount rate and the expected rate of return on plan assets (for qualified pension plans).
The discount rate is based on matching the duration of a pool of high quality corporate bonds to the expected benefit payment stream, and is used to determine
the present value of the Company's future benefit obligations. The expected rate of return on pension plan assets considers the current and expected asset
allocation, as well as historical and expected returns on each plan asset class. Any difference between actual and expected plan experience, including asset
return experience, in excess of a 10% corridor is recognized in the net periodic pension calculation over the expected average employee future service period,
approximately 8 years for United States plans. Other assumptions involve demographic factors such as retirement, mortality, attrition and the rate of
compensation increases. The Company evaluates assumptions annually and modifies them as appropriate.
The Company recognizes the funded status of its benefit plans in its consolidated balance sheet as a separate component of accumulated other
comprehensive income (loss) within stockholders' equity. The Company immediately recognizes settlement losses when it settles pension benefit obligations,
including making lump-sum cash payments to plan participants in exchange for their rights to receive specified pension benefits. See Note 11—Pension,
Postretirement and Other Benefits.
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