Comcast 2008 Annual Report Download - page 49

We assess the recoverability of our goodwill annually, or more
frequently whenever events or changes in circumstances indicate
that the asset might be impaired. We generally perform the
assessment of our goodwill one level below the operating segment
level. In our Cable business, since components one level below the
segment level (Cable divisions) are not separate reporting units and
have similar economic characteristics, we aggregate the compo-
nents into one reporting unit at the Cable segment level.
***
Since the adoption of SFAS No. 142, we have performed annual
impairment testing of our indefinite-lived intangibles, including
cable franchise rights, sports franchise rights and goodwill, using
April 1 as the measurement date. In 2008, we changed the timing
of our financial and strategic planning process, including the
preparation of long-term projections, from completion in the early
part of each calendar year to a midyear completion. These long-
term financial projections are used as the basis for performing our
annual impairment testing. As a result, we have changed our
measurement date from April 1 to July 1. We tested our indefinite-
lived intangibles for impairment as of April 1, 2008 and July 1,
2008, and no impairments were indicated as of either date. Since
the adoption of SFAS No. 142 in 2002, we have not recorded any
significant impairments as a result of our impairment testing. We
believe changing the measurement date to coincide with the
completion of our long-term financial projections is preferable and
does not result in the delay, acceleration or avoidance of an
impairment.
Other Intangibles
Other intangible assets consist primarily of franchise-related cus-
tomer relationships acquired in business combinations,
programming distribution rights, software, cable franchise renewal
costs, and programming agreements and rights. We record these
costs as assets and amortize them on a straight-line basis over the
term of the related agreements or estimated useful life. See Note 7
for the ranges of useful lives of our intangible assets.
Programming Distribution Rights
Our Programming subsidiaries enter into multiyear license agree-
ments with various multichannel video providers for distribution of
their programming (“distribution rights”). We capitalize amounts
paid to secure or extend these distribution rights and include them
within other intangible assets. We amortize these distribution rights
on a straight-line basis over the term of the related license agree-
ments. We classify the amortization of these distribution rights as a
reduction of revenue unless the Programming subsidiary receives,
or will receive, an identifiable benefit from the distributor separate
from the fee paid for the distribution right, in which case we
recognize the fair value of the identified benefit as an operating
expense in the period in which it was received.
Software
We capitalize direct development costs associated with
internal-use software, including external direct costs of material
and services and payroll costs for employees devoting time to
these software projects. We also capitalize costs associated with
the purchase of software licenses. We include these costs within
other intangible assets and amortize them on a straight-line basis
over a period not to exceed 5 years, beginning when the asset is
substantially ready for use. We expense maintenance and training
costs, as well as costs incurred during the preliminary stage of a
project, as they are incurred. We capitalize initial operating system
software costs and amortize them over the life of the associated
hardware.
***
We periodically evaluate the recoverability and estimated lives of
our intangible assets subject to amortization 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 undiscounted cash flows is less than the carrying
amount of the asset, we would recognize a loss for the difference
between the estimated fair value and the carrying value of the
asset. Unless presented separately, the loss would be included as
a component of amortization expense.
Asset Retirement Obligations
SFAS No. 143, “Accounting for Asset Retirement Obligations,” as
interpreted by Financial Accounting Standards Board (“FASB”)
Interpretation (“FIN”) No. 47, “Accounting for Conditional Asset
Retirement Obligations — an Interpretation of FASB Statement
No. 143,” requires that a liability be recognized for an asset retire-
ment obligation in the period in which it is incurred if a reasonable
estimate of fair value can be made.
Certain of our franchise and lease agreements contain provisions
requiring us to restore facilities or remove property in the event that
the franchise or lease agreement is not renewed. We expect to
continually renew our franchise agreements and therefore cannot
estimate any liabilities associated with such agreements. A remote
possibility exists that franchise agreements could terminate
unexpectedly, which could result in us incurring significant
expense in complying with restoration or removal provisions. The
disposal obligations related to our properties are not material to
our consolidated financial statements. No such liabilities have been
recorded in our consolidated financial statements.
47 Comcast 2008 Annual Report on Form 10-K