Visa 2010 Annual Report Download - page 85

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2010
(in millions, except as noted)
Share-based compensation. The Company recognizes share-based compensation cost using the fair value method of accounting. The Company
recognizes compensation cost for awards with only service conditions on a straight-line basis over the requisite service period, which is generally the vesting
period. Compensation cost for performance and market condition based awards is initially estimated based on target performance and is adjusted as
appropriate based on management's best estimate throughout the performance period. See Note 18—Share-based Compensation.
Earnings per share. The Company calculates earnings per share using the two-class method to reflect the different rights of each class and series of
outstanding common stock. The dilutive effect of incremental common stock equivalents is reflected in diluted earnings per share by application of the
treasury stock method. See Note 17—Earnings Per Share. Beginning in the first quarter of fiscal 2010, the Company included unvested instruments granted in
share-based payment transactions that have non-forfeitable rights to dividends or dividend equivalents in the calculation of earnings per share as a separate
class of security. This change did not result in any impact to fiscal 2009 and 2008 full year diluted class A net income per share.
Recently Issued Accounting Pronouncements
In June 2009, the FASB issued Accounting Standards Codification ("ASC") 810-10, "Consolidation", which changes how a company determines when
an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a
company is required to consolidate an entity is based on, among other things, an entity's purpose and design and a company's ability to direct the activities of
the entity that most significantly impact the entity's economic performance. The Company will adopt ASC 810-10 effective October 1, 2010. Early adoption is
prohibited. The adoption is not expected to have a material impact on the consolidated financial statements.
In October 2009, the FASB issued Accounting Standards Update ("ASU") 2009-13, which addresses the accounting for multiple-deliverable revenue
arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. The Company will adopt ASU
2009-13 effective October 1, 2010. The adoption is not expected to have a material impact on the consolidated financial statements.
In January 2010, the FASB issued ASU 2010-06, which requires additional information in the roll-forward of Level 3 assets and liabilities, including
the presentation of purchases, sales, issuances and settlements on a gross basis. This ASU impacts disclosures only. The Company will adopt this guidance in
the second quarter of fiscal 2011. See Note 5—Investments and Fair Value Measurements.
Note 2—The Reorganization
In a series of transactions from October 1 to October 3, 2007, Visa undertook a reorganization in which Visa U.S.A., Visa International, Visa Canada
and Inovant became direct or indirect subsidiaries of Visa Inc. and the retrospective responsibility plan was established. See Note 4—Retrospective
Responsibility Plan. The Company reflected the reorganization as a single transaction occurring on October 1, or the reorganization date, using the purchase
method of accounting with Visa U.S.A. as the accounting acquirer. Visa Europe did not become a subsidiary of Visa Inc., but rather remained owned and
governed by its European member financial institutions. See Note 3—Visa Europe.
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