Comcast 2008 Annual Report Download - page 48

ment. For our AFS and cost method investments, we charge the
impairment to investment income (loss), net. For our equity method
investments, the impairment is recorded to other income (expense)
(see Note 6).
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 paid-in capital.
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
separately, 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
installations. Costs include all direct labor and materials, as well as
various indirect costs. We capitalize initial customer installation
costs directly attributable to installation of the drop, including
material, labor and overhead cost, in accordance with SFAS
No. 51, “Financial Reporting by Cable Television Companies.” All
costs incurred in connection with subsequent service disconnects
and reconnects are expensed 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)
Weighted Average
Original Useful Life 2008 2007
Cable transmission
equipment and
distribution facilities 12 years $ 15,660 $ 14,978
Customer premises
equipment 6 years 17,788 15,373
Scalable infrastructure 6 years 5,776 5,179
Support capital 5 years 5,820 5,521
Buildings and building
improvements 20 years 1,874 1,667
Land – 205 202
Other 8 years 556 512
Property and
equipment, at cost 47,679 43,432
Less: Accumulated
depreciation (23,235) (19,808)
Property and
equipment, net $ 24,444 $ 23,624
We evaluate the recoverability and estimated lives of our property
and equipment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable or the
useful life has changed. The evaluation is 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 undis-
counted cash flows is less than the carrying amount of the asset,
we would recognize a loss for the difference between the esti-
mated fair value and the carrying value of the asset. Unless
presented separately, the lossisincludedasacomponentof
depreciation expense.
Intangible Assets
Indefinite-Lived Intangibles
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 we attribute to our
professional sports teams. We do not amortize cable franchise
rights or sports franchise rights because we have determined that
they have an indefinite life. We reassess this determination
periodically for each franchise based on the factors included in
SFAS No. 142, “Goodwill and Other Intangible Assets,” (“SFAS
No. 142”). Costs we incur in negotiating and renewing cable fran-
chise agreements are included in other intangible assets and are
primarily amortized on a straight-line basis over the term of the
franchise renewal period.
We evaluate the recoverability of our franchise rights annually, or
more frequently whenever events or changes in circumstances
indicate that the assets might be impaired. We estimate the fair
value of our cable franchise rights primarily based on a discounted
cash flow analysis. We also consider multiples of operating income
before depreciation and amortization generated by the underlying
assets, current market transactions, and profitability information in
analyzing the fair values indicated under the discounted cash flow
models. If the value of our cable franchise rights is less than the
carrying amount, we would recognize an impairment for the differ-
ence between the estimated fair value and the carrying value of the
assets. We evaluate the unit of account used to test for impair-
ment of our cable franchise rights periodically to ensure testing is
performed at an appropriate level. In July 2008, our Cable division
management structure was reorganized from five divisions to four.
Our impairment testing as of July 1, 2008 confirmed that no
impairment existed before the change.
Goodwill
Goodwill is the excess of the acquisition cost of an acquired entity
over the fair value of the identifiable net assets acquired. In
accordance with SFAS No. 142, we do not amortize goodwill.
Comcast 2008 Annual Report on Form 10-K 46