Intel 2008 Annual Report Download - page 69

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Trading Assets
Investments that we designate as trading assets are reported at fair value, with gains or losses resulting from changes in fair
value recognized in earnings. Our trading asset investments include:
Debt Instrument Investments
We classify available-for-sale debt instruments with original maturities at the date of purchase greater than approximately
three months and remaining maturities less than one year as short-term investments. We classify available-for-sale debt
instruments with remaining maturities greater than one year as other long-term investments. We account for cost basis loan
participation notes at amortized cost and classify them as short-term investments and other long-term investments based on
stated maturities.
Available
-for-Sale Investments
Investments that we designate as available-for-sale are reported at fair value, with unrealized gains and losses, net of tax,
recorded in accumulated other comprehensive income (loss). We determine the cost of the investment sold based on the
specific identification method. Our available-for-sale investments include:
Non
-Marketable and Other Equity Investments
We account for non-marketable and other equity investments under either the cost or equity method and include them in other
long-term assets. Our non-marketable and other equity investments include:
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•
Marketable debt instruments
when the interest rate or foreign exchange rate risk is hedged at inception by a related
derivative instrument. We record the gains or losses of these investments arising from changes in fair value due to
interest rate and currency market fluctuations and credit market volatility, offset by losses or gains on the related
derivative instruments, in interest and other, net. We also designate certain floating-rate securitized financial
instruments, primarily asset
-
backed securities purchased after December 30, 2006, as trading assets.
•
Equity securities offsetting deferred compensation
when the investments seek to offset changes in liabilities related to
equity and other market risks of certain deferred compensation arrangements. We offset the gains or losses from
changes in fair value of these equity securities against losses or gains on the related liabilities and include them in
interest and other, net.
•
Marketable equity securities
when we deem the investments not to be strategic in nature at the time of original
classification, and generally have the ability and intent to mitigate equity market risk through the sale or the use of
derivative instruments. For these marketable equity securities, we include gains or losses from changes in fair value,
primarily offset by losses or gains on related derivative instruments, in gains (losses) on other equity investments, net.
•
Marketable debt instruments
when the interest rate and foreign currency risks are not hedged at inception of the
investment or when our designation for trading assets is not met. We hold these debt instruments to generate a return
commensurate with three-month LIBOR. We record the interest income and realized gains and losses on the sale of
these instruments in interest and other, net.
•
Marketable equity securities
when the investments are considered strategic in nature at the time of original
classification or there are barriers to mitigating equity market risk through the sale or use of derivative instruments at
the time of original classification. We acquire these equity investments for the promotion of business and strategic
objectives. To the extent that these investments continue to have strategic value, we typically do not attempt to reduce
or eliminate the inherent equity market risks through hedging activities. We record the realized gains or losses on the
sale or exchange of marketable equity securities in gains (losses) on other equity investments, net.
•
Equity method investments
when we have the ability to exercise significant influence, but not control, over the
investee. We record equity method adjustments in gains (losses) on equity method investments, net, and may do so
with up to a one-quarter lag. Equity method adjustments include: our proportionate share of investee income or loss,
gains or losses resulting from investee capital transactions, adjustments to recognize certain differences between our
carrying value and our equity in net assets of the investee at the date of investment, impairments, and other adjustments
required by the equity method. Equity method investments include marketable and non
-
marketable investments.
•
Non
-marketable cost method investments when the equity method does not apply. We record the realized gains or
losses on the sale of non
-
marketable cost method investments in gains (losses) on other equity investments, net.