2010 10-K: Part II 3. Summary of Significant Accounting Policies The acronyms that appear in these Notes to our Consolidated  Financial Statements refer to the following: ASC Accounting Standards Codification ASU Accounting Standards Update EITF Emerging Issues Task Force FASB  Financial Accounting Standards Board SEC Securities and Exchange Commission Principles of Consolidation.  We conduct our business operations  through wholly owned or majority-owned operating subsidiaries.  The accompanying consolidated financial statements include the  accounts of Morningstar, Inc. and our subsidiaries. The assets,  liabilities, and results of operations of subsidiaries in which we  have a controlling interest have been consolidated. All significant  intercompany accounts and transactions have been eliminated. We account and report the noncontrolling (minority) interests in our  Consolidated Financial Statements in accordance with FASB ASC  810,  Consolidation . A noncontrolling interest is the portion of equity  (net assets) in a subsidiary not attributable, directly or indirectly, to  the parent company. We report the noncontrolling interest in our  Consolidated Balance Sheet within equity separate from the share- holders’ equity attributable to Morningstar, Inc. In addition, we  present the net income (loss) and comprehensive income (loss)  attributed to Morningstar, Inc.’s shareholders and the noncontrolling  interest in our Consolidated Statements of Income and Consolidated  Statements of Equity and Comprehensive Income (Loss). We account for investments in entities in which we exercise sig- nificant influence, but do not control, using the equity method. Use of Estimates.  The preparation of financial statements in  conformity with accounting principles generally accepted in the  United States requires us to make estimates and assumptions that  affect the reported amounts of assets, liabilities, revenues, and  expenses during the reporting period. Actual results may differ from  these estimates. Reclassifications.  Certain amounts reported in previous years have  been reclassified to conform to the 2010 presentation. Cash and Cash Equivalents.  Cash and cash equivalents consist of  cash and investments with original maturities of three months or  less. We state them at cost, which approximates fair value. Fair Value Measurements.  We follow FASB ASC 820,  Fair Value  Measurements and Disclosures . FASB ASC 820 defines fair value,  establishes a framework for measuring fair value, and expands  disclosures about fair value measurements. Under FASB ASC 820,  fair value is defined as the price that would be received to sell an  asset or paid to transfer a liability in an orderly transaction between  market participants at the measurement date. The standard applies  whenever other standards require (or permit) assets or liabilities  to be measured at fair value. The standard does not expand the use  of fair value in any new circumstances and does not require any  new fair value measurements. Investments.  We account for our investments in accordance with  FASB ASC 320,  Investments—Debt and Equity Securities . We clas- sify our investments into three categories: held-to-maturity, trading,  and available-for-sale. U  Held-to-maturity: We classify certain investments, primarily cer- tificates of deposit, as held-to-maturity securities, based on our  intent and ability to hold these securities to maturity. We record  held-to-maturity investments at amortized cost in our Consolidated  Balance Sheets. U  Trading: We classify certain other investments, primarily equity  securities, as trading securities, primarily to satisfy the require- ments of one of our wholly owned subsidiaries, which is a reg- istered broker-dealer. We include realized and unrealized gains  and losses associated with these investments as a component  of our operating income in the Consolidated Statements of Income.  We record these securities at their fair value in our Consolidated  Balance Sheets. U  Available-for-sale: Investments not considered held-to-maturity  or trading securities are classified as available-for-sale securities.  Available-for-sale securities primarily consist of fixed-income  securities. We report unrealized gains and losses for available- for-sale securities as other comprehensive income (loss), net of  related income taxes. We record these securities at their fair  value in our Consolidated Balance Sheets. 108