McKesson 2015 Annual Report Download - page 72

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McKESSON CORPORATION
FINANCIAL NOTES
1. Significant Accounting Policies
Nature of Operations: McKesson Corporation (“McKesson,” the “Company,” the “Registrant” or “we” and
other similar pronouns) delivers pharmaceuticals, medical supplies and healthcare information technology that
make healthcare safer while reducing costs. We conduct our business through two operating segments,
McKesson Distribution Solutions and McKesson Technology Solutions, as further described in Financial Note
26, “Segments of Business.”
Basis of Presentation: The consolidated financial statements and accompanying notes are prepared in
accordance with U. S. generally accepted accounting principles (“GAAP”). The consolidated financial statements
of McKesson include the financial statements of all wholly-owned subsidiaries and majority-owned or controlled
companies. We also evaluate our ownership, contractual and other interests in entities to determine if they are
variable interest entities (“VIEs”), if we have a variable interest in those entities and the nature and extent of
those interests. Refer to Financial Note 16, “Variable Interest Entities” for more information on VIEs.
Investments in business entities in which we do not have control, but have the ability to exercise significant
influence over operating and financial policies, are accounted for using the equity method and our proportionate
share of income or loss is recorded in other income, net. Equity investments in non-publicly traded entities are
primarily accounted for using the cost method. Intercompany transactions and balances have been eliminated.
Fiscal Period: The Company’s fiscal year begins on April 1 and ends on March 31. Unless otherwise noted,
all references to a particular year shall mean the Company’s fiscal year.
Reclassifications: Certain prior year amounts have been reclassified to conform to the current year
presentation.
Use of Estimates: The preparation of financial statements in conformity with U.S. GAAP requires that we
make estimates and assumptions that affect the reported amounts in the consolidated financial statements and
accompanying notes. Actual amounts could differ from those estimated amounts.
Cash and Cash Equivalents: All highly liquid debt instruments purchased with original maturity of three
months or less at the date of acquisition are included in cash and cash equivalents.
Cash equivalents, which are available-for-sale, are carried at fair value. Cash equivalents are primarily
invested in AAA rated prime and U.S. government money market funds denominated in U.S. dollars, AAA rated
prime money market funds denominated in Euros, overnight repurchase agreements collateralized by U.S.
government securities, Canadian government securities and/or securities that are guaranteed or sponsored by the
U.S. government and an AAA rated prime money market fund denominated in British pound sterling.
The remaining cash and cash equivalents are deposited with several financial institutions. Deposits at U.S.
banks exceed the amount insured by the Federal Deposit Insurance Corporation. We mitigate the risk of our
short-term investment portfolio by depositing funds with reputable financial institutions and monitoring risk
profiles and investment strategies of money market funds.
Restricted Cash: Cash that is subject to legal restrictions or is unavailable for general operating purposes is
classified as restricted cash and is included within prepaid expenses and other for current balances and other
assets for non-current balances in the consolidated balance sheets. At March 31, 2015 and 2014, restricted cash
was not material.
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