accrued litigation. The company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which it is a party and records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably eatimated. These judgements are subjective, based on the status of such legal or regulatory proceedings, the merit of the Company's defenses and consultation with corporate and external legal counsel. Actual outcomes of these legal and regulatory proceedings may differ materially from the Companys estimates. Litigation accruals associated with the corresponding accretion charge include in interest expense on the consolidated statement of operations. The company recorded litigation provision of $4.1 billion and $7 million in fiscal 2012 and 2011, respectively. The litigation accrual is an estimate and is based on management understanding of its litigation profile, the specifics of each case, advice of counsel to the extent appropriate and managements best estimate of incurred loss at the balance sheet date.

question 1:

Why does VISA inc sometimes record litigation accrual at the present value rather than the full amount to be paid? Explain the accounting purpose behind $11 million item labeled "interest accretion on settled matter" recorded in 2011.

question 2:

explain why Visa Inc increased its accrual litigation liability from $425 million to $4.386 billion in 2012?

Visa inc Accreditation. The Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which it is a party and records a los contingency when it is probable that Babcity has been incurred and the amount of the loss can be reasonably estimated. These judgments are subjective, based on the status of such legal or regulatory proceeding the merits of the Company's defenses and consultation with corporate and external legal counsel. Actual outcomes of these deal and regulatory proceedings may differ materially from the Company's estimate Litigation serial sociated with settled obligations to be paid over periode longer than one are recorded at the present value of future payment obligations. The obligation is cried to insta payment value with the corresponding secretion charge included in interest experies on the consolidated statements of operations. The Company expenses legal costas dis professional for The Company corded litigation provisions of $4.1 billion and $7 million in fiscal 2012 and 2011. Nectively. The litigation acercat is an estimate and is based on me's understanding of it titigation profile, the species of each case, rice of cal to the extent appropriate and mor's best estimate of incurred oss at the balance sheet date The following table sommaries the activity related to accrued litigation for the year ended September 30, 2012 and 2011: 2013 2011 A mions Hatact Other Provision for seg mer $425 uoo Provision for the Resides of the Interested Pamatos (10) Incest September For the sartet ended use 30, 2012, the Company recorded a litigation provision of 4 billion, which caled it total reserve for the covered into free the class plaintif Sene Art and the resolution of the Individual Plaintiff calme. Een fro the company 2012 post Audio N The Court redry App of the Seat Atos November 9, 20121 Visa inc Accreditation. The Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which it is a party and records a los contingency when it is probable that Babcity has been incurred and the amount of the loss can be reasonably estimated. These judgments are subjective, based on the status of such legal or regulatory proceeding the merits of the Company's defenses and consultation with corporate and external legal counsel. Actual outcomes of these deal and regulatory proceedings may differ materially from the Company's estimate Litigation serial sociated with settled obligations to be paid over periode longer than one are recorded at the present value of future payment obligations. The obligation is cried to insta payment value with the corresponding secretion charge included in interest experies on the consolidated statements of operations. The Company expenses legal costas dis professional for The Company corded litigation provisions of $4.1 billion and $7 million in fiscal 2012 and 2011. Nectively. The litigation acercat is an estimate and is based on me's understanding of it titigation profile, the species of each case, rice of cal to the extent appropriate and mor's best estimate of incurred oss at the balance sheet date The following table sommaries the activity related to accrued litigation for the year ended September 30, 2012 and 2011: 2013 2011 A mions Hatact Other Provision for seg mer $425 uoo Provision for the Resides of the Interested Pamatos (10) Incest September For the sartet ended use 30, 2012, the Company recorded a litigation provision of 4 billion, which caled it total reserve for the covered into free the class plaintif Sene Art and the resolution of the Individual Plaintiff calme. Een fro the company 2012 post Audio N The Court redry App of the Seat Atos November 9, 20121