NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Under the direct membership model, the Company is a direct member in Visa, MasterCard and
other various payment networks as third party sponsorship to the networks is not required. This results in the Company performing settlement between the networks and the merchant and requiring adherence to the standards of the payment networks in
which the Company is a direct member. Settlement assets and obligations result when the Company submits the merchant file to the network or when funds are received by the Company in advance of paying the funds to a different entity or merchant. The
amounts are generally collected or paid the following business day.
Merchant float represents surplus cash balances the Company holds on
behalf of its merchant customers when the incoming amount from the card networks precedes when the funding to customers falls due. Such funds are held in a fiduciary capacity, and are not available for the Company to use to fund its cash
The Company accounts for derivatives in accordance with ASC 815, Derivatives and Hedging. This guidance establishes accounting and
reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. All derivatives, whether designated in hedging relationships or not, are required to be recorded on the
Consolidated Statements of Financial Position at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and the hedged item will be recognized in earnings. If the derivative is designated
as a cash flow hedge, the effective portion of the change in the fair value of the derivative will be recorded in accumulated other comprehensive income (loss) (AOCI) and will be recognized in the statement of income when the hedged item
affects earnings. Additionally, the effective portion of the Companys net investment hedges, which act as economic hedges of the Companys net investments in its foreign subsidiaries, are recorded in AOCI. The Company does not enter into
derivative financial instruments for speculative purposes. See Note 9Derivatives and Hedging Activities for further discussion.
and Contingent Value Rights
During June 2016, Legacy Worldpay disposed of its ownership interest in Visa Europe to Visa, Inc. In
connection with the disposal, the Company agreed to pay the Legacy Worldpay owners 90% of the net-of-tax proceeds from the disposal, pending the resolution of certain
historical claims and the finalization of the proceeds from disposal. The proceeds from the disposal (primarily restricted cash) and the related liability to former owners are recorded in other current assets and other current liabilities,
respectively, in the Companys Consolidated Statements of Financial Position.
For operations outside the United States that prepare financial statements in currencies other than the U.S. dollar, results of operations and
cash flows are translated at average exchange rates during the period and assets and liabilities are translated at spot exchange rates at the end of the period. Foreign currency translation adjustments are included as a separate component of
accumulated other comprehensive income (loss) in total equity. The effects of changes in exchange rates between the designated functional currency and the currency in which a transaction is denominated are recorded as foreign currency transaction
gains (losses) in the Consolidated Statements of Income and Comprehensive Income and were immaterial for the year ended December 31, 2018.
In August 2018, the SEC issued a final rule amending certain of its disclosure requirements. This rule
eliminates or simplifies redundant or outdated disclosure requirements. The rule also requires companies to present changes in shareholders equity on a quarterly basis for both current and prior year periods. The rule is effective for the
Companys 2019 10-Q filings.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which amends and simplifies existing guidance to better align an entitys risk management activities and
financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This ASU is effective for the Company in the first quarter of
fiscal 2019, with early adoption permitted. The Company will adopt this ASU as of January 1, 2019 with an immaterial impact on the Companys Consolidated Financial Statements.
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