Intel 2007 Annual Report Download - page 59

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 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 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 base the cost of the investment sold 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 designate floating-rate securitized financial instruments, such as
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 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 equity investments, net.
•
Marketable debt instruments
when the interest rate and foreign currency risks are not generally 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. 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 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 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, amortization of certain differences between our carrying value and our
equity in the net assets of the investee at the date of investment, and other adjustments required by the equity method.
Equity method investments include marketable and non
-
marketable investments.
•
Non
-marketable cost method investments when we do not have the ability to exercise significant influence over the
investee.