Visa 2010 Annual Report Download - page 83

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2010
(in millions, except as noted)
Other revenues primarily include revenues earned from Visa Europe in connection with the Visa Europe Framework Agreement (see Note 3—Visa
Europe), and fees from cardholder services and licensing and certification. Other revenues also include optional service or product enhancements, such as
extended cardholder protection and concierge services. 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, and operating loss and credit carryforwards. 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 net periodic pension cost 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 equity. The
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