Comcast 2009 Annual Report Download - page 54

Table of Contents
45
Comcast 2009 Annual Report on Form 10-
K
If an 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 statement of
operations.
Property and Equipment
Property and equipment are stated at cost. We capitalize
improvements that extend asset lives and expense other
repairs and maintenance costs as incurred. For assets that
are sold or retired, we remove the applicable cost and
accumulated depreciation 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
and improvements to 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 that are directly
attributable to installation of the drop, including material, labor
and overhead costs, in accordance with accounting guidance
related to 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 the asset’s
estimated useful life. See Note 7 for our significant
components of property and equipment.
We evaluate the recoverability and estimated lives of our
property and equipment whenever events or substantive
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 are 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.
Intangible Assets
Indefinite-Lived Intangibles
Franchise Rights
Our franchise rights consist primarily of cable franchise
rights. Cable franchise rights represent the value we
attributed to agreements with local authorities that allow
access to homes and businesses in cable service areas
acquired in business combinations. We also have sports
franchise rights, which represent the value we attributed to
our two professional sports teams that were acquired in
business combinations. We do not amortize our franchise
rights because we have determined that they have an
indefinite life. We reassess this determination periodically or
whenever events or substantive changes in circumstances
occur. Costs we incur in negotiating and renewing cable
franchise agreements are included in other intangible assets
and are primarily amortized on a straight-line basis over the
term of the franchise agreement.
We evaluate the recoverability of our franchise rights
annually, or more frequently whenever events or substantive
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
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 difference between the estimated fair value and the
carrying value of the assets.
We also evaluate the unit of account used to test for
impairment of our cable franchise rights periodically or
whenever events or substantive changes in circumstances
occur to ensure impairment testing is performed at an
appropriate level.
Goodwill
We assess the recoverability of our goodwill annually, or
more frequently whenever events or substantive changes in
circumstances indicate that the asset might be impaired,
since we do not amortize goodwill. 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 components into one
reporting unit at the Cable segment level.
Other Intangibles
Other intangible assets consist primarily of franchise-related
customer relationships acquired in business combinations,
programming distribution rights, software, cable franchise
renewal costs, and programming agreements and rights.
These assets are amortized primarily on a straight-line basis
over the estimated useful life or the term of the related
agreements. See Note 8 for the ranges of useful lives of our
intangible assets.
Programming Distribution Rights
Our Programming subsidiaries enter into multiyear license
agreements with various multichannel video providers for
distribution of our networks’ programming (“programming
distribution rights”). We capitalize amounts paid to secure or
extend these programming distribution rights and include
them within other intangible assets. We amortize these
programming distribution rights on a straight-line basis over
the term of the related license agreements. We classify the
amortization of these programming distribution rights as a
reduction to revenue unless the Programming subsidiary
receives, or will receive, an identifiable benefit from the
distributor separate from the fee paid for the programming
distribution right, in which case we recognize the fair value of
the identified benefit in the period in which it is received.