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Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 28, 2020
Accounting Policies [Abstract]  
Estimates and Assumptions
A. Estimates and Assumptions
In preparing the condensed consolidated financial statements, the Company uses certain estimates and assumptions that affect reported amounts and disclosures. These estimates and underlying assumptions can impact all elements of the Company’s financial
statements. For example, in the condensed consolidated statements of operations, estimates are used when allocating bond issuance costs in the form of amortization and determining provisions for taxes on income. In the condensed consolidated balance sheets, estimates are used in determining the valuation of assets, such as investments, which also impact the condensed consolidated statements of operations.
The Company’s estimates are often based on complex judgments and assumptions that it believes to be reasonable, but that can be inherently uncertain and unpredictable. If the Company’s estimates and assumptions are not representative of actual outcomes, its results could be materially impacted.
As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause the Company to change those estimates and assumptions. The Company is subject to risks and uncertainties that may cause actual results to differ from estimated amounts. The Company regularly evaluates its estimates and assumptions using historical experience and expectations about the future. The Company adjusts its estimates and assumptions when facts and circumstances indicate the need for change.
Fair Value
B. Fair Value
The Company is often required to measure certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. For example, the Company uses fair value when accounting for and reporting of certain financial instruments, such as short-term investments. The Company estimates fair value using an exit price approach, which requires, among other things, that it determine the price that would be received to sell an asset or paid to transfer a liability in an orderly market. The determination of an exit price is considered from the perspective of market participants, considering the highest and best use of
non-financial
assets and, for liabilities, assuming that the risk of
non-performance
will be the same before and after the transfer.
When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following techniques:
 
•
 
Income approach, which is based on the present value of a future stream of net cash flows.
 
•
 
Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.
 
•
 
Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence.
The Company’s fair value methodologies depend on the following types of inputs:
 
•
 
Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).
 
•
 
Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (Level 2 inputs).
 
•
 
Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).
A single estimate of fair value can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions. For information about the risks associated with estimates and assumptions, see
Note 2A.
Foreign Currency Translation
C. Foreign Currency Translation
The Company and Finco are U.S. dollar functional entities. The effects of converting
non-functional
currency monetary assets and liabilities into the functional currency are recorded in
Other (income)/deductions—net
, see
Note 3
.
Investments
D. Investments
The Company’s short-term investments are comprised of equity securities with readily determinable fair values, which include money market funds primarily invested in U.S. Treasury and government debt. Equity securities with readily determinable fair values are carried at fair value, with changes in fair value reported in
Other (income)/deductions—net.
Realized gains or losses on sales of investments are determined by using the specific identification cost method. The Company regularly evaluates its financial assets for impairment.
A single estimate of fair value and impairment reviews can involve a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions. For information about the risks associated with estimates and assumptions, see
Note 2A.
Tax
E. Tax
The Company did not generally file separate tax returns, as it was generally included in the tax grouping of other Pfizer entities within the respective entity’s tax jurisdiction. The income tax benefit included in these condensed consolidated financial statements has been calculated using the separate return basis, as if the Company filed a separate tax return.