Visa 2010 Annual Report Download - page 79

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2010
(in millions, except as noted)
Available-for-sale securities include investments in debt and marketable equity securities. These securities are recorded at cost at the time of purchase
and are carried at fair value. The Company classifies its debt and marketable equity securities as available-for-sale to meet its operational needs. Investments
with original maturities greater than 90 days and stated maturities less than one year from the balance sheet date are current assets, while those with stated
maturities greater than one year from the balance sheet date are non-current assets. Unrealized gains and losses are reported in accumulated other
comprehensive income (loss) on the consolidated balance sheets. The specific identification method is used to determine realized gain or loss. Dividend and
interest income are recognized when earned and are included in investment income, net on the consolidated statements of operations.
The Company evaluates its debt securities for other-than-temporary impairment, or OTTI, on an ongoing basis. OTTI is assessed when fair value is
below amortized cost. OTTI can be triggered when a company has the intent to sell a security, is more likely than not required to sell the security before
recovery of the amortized cost basis, or does not expect to recover the entire amortized cost basis of the security. The Company has not presented required
separate disclosures because its gross unrealized loss positions in debt securities for the periods presented are not material. In addition, the credit and non-
credit loss components of debt securities on the balance sheet for which OTTI was previously recognized were not material. The Company had no OTTI for
available-for-sale debt securities during fiscal 2010. The Company recognized OTTI of $9 million during fiscal 2009 primarily related to corporate debt,
mortgage backed and asset backed securities, and $9 million during fiscal 2008 primarily related to auction rate securities.
Trading assets include mutual fund equity security investments related to various employee compensation and benefit plans. The trading activity of
these investments is dependent upon the actions of the Company's employees. Interest and dividend income and changes in fair value are recorded in
investment income, net, and offset in personnel expense on the 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 in equity in earnings of
unconsolidated affiliates on the consolidated statements of operations. The equity method of accounting is also used 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 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 changes in circumstances influencing the investment, expectations of the entity's cash flows and capital needs, and the viability of its
business model.
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