Comcast 2007 Annual Report Download - page 46

We use the equity method to account for investments in which we
have the ability to exercise significant influence over the investee’s
operating and financial policies. Equity method investments are
recorded at original cost and adjusted to recognize our propor-
tionate share of the investee’s net income or losses after the date
of investment, amortization of basis differences, additional con-
tributions made and dividends received, and impairment charges
resulting from adjustments to fair value. We generally record our
share of the investee’s net income or loss one quarter in arrears
due to the timing of our receipt of such information. Gains (losses)
on the sale of equity method investments are recorded in other
income (expense).
If a consolidated entity or equity method investee issues additional
securities that change our proportionate share of the entity, we
recognize the change as a gain or loss in our consolidated state-
ment of operations. In cases where gain realization is not assured,
we record the gain to additional capital.
Restricted, publicly traded investments and investments in pri-
vately held companies are stated at cost and adjusted for any
known decrease in value (see Note 6).
We review our non-trading investment portfolio each reporting
period to determine whether a decline in the fair value is consid-
ered to be other than temporary. If an investment is deemed to
have experienced an other than temporary decline below its cost
basis, we reduce the carrying amount of the investment to its fair
market value. We charge the impairment to earnings and establish
a new cost basis for the investment.
Property and Equipment
Property and equipment are stated at cost. We capitalize improve-
ments that extend asset lives and expense other repairs and
maintenance charges as incurred. For assets that are sold or
retired, we remove the applicable cost and accumulated deprecia-
tion and, unless the gain or loss on disposition is presented sep-
arately, we recognize it as a component of depreciation expense.
We capitalize the costs associated with the construction of our
cable transmission and distribution facilities and new service in-
stallations. Costs include all direct labor and materials, as well as
various indirect costs. We capitalize the installation charges only
upon the initial deployment of our customer premise equipment,
which includes converters and cable modems. All costs incurred in
connection with subsequent disconnects and reconnects are ex-
pensed as they are incurred.
We record depreciation using the straight-line method over esti-
mated useful lives. Our significant components of property and
equipment are as follows:
December 31 (in millions) Useful Life 2007 2006
Cable transmission and
distribution facilities 5–12 years $ 14,978 $ 13,020
Customer premise
equipment 2–8 years 15,373 12,687
Scalable infrastructure 5–12 years 5,179 4,406
Support capital 4–12 years 5,521 4,677
Buildings and building
improvements 5–40 years 1,667 1,366
Land — 202 163
Other 3–16 years 512 435
Property and equipment, at cost 43,432 36,754
Less: accumulated depreciation (19,808) (15,506)
Property and equipment, net $ 23,624 $ 21,248
We periodically evaluate the recoverability and estimated lives of
our property and equipment in accordance with SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets”
(“SFAS No. 144”). Our evaluations occur whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable or the useful life has changed, and they include analyses
based on the cash flows generated by the underlying assets and
profitability information, including estimated future operating results,
trends or other determinants of fair value. If the total of the expected
future undiscounted cash flows is less than the carrying amount of the
asset, we recognize a loss for the difference between the fair value
and the carrying value of the asset. Unless presented separately, the
loss is included as a component of depreciation expense.
Intangible Assets
Franchise Rights
Our franchise rights consist of cable franchise rights and sports
franchise rights. Cable franchise rights represent the value attrib-
uted to agreements with local authorities that allow access to
homes in cable service areas acquired in business combinations.
Sports franchise rights represent the value attributed to our pro-
fessional sports teams. We do not amortize cable franchise rights
Comcast 2007 Annual Report on Form 10-K 44