Comcast 2011 Annual Report Download - page 87

If an equity method investee were to issue additional securities that would change our proportionate share of
the entity, we would recognize the change, if any, as a gain or loss in our consolidated statement of income.
Property and Equipment
Property and equipment are stated at cost. We capitalize improvements that extend asset lives and expense
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 recog-
nize 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 vari-
ous indirect costs. We capitalize initial customer installation costs that are directly attributable to installation
of the drop, including material, labor and indirect costs, in accordance with accounting guidance related to
cable television companies. All costs incurred in connection with subsequent service disconnections and
reconnections 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 of our property and equipment whenever events or substantive changes in
circumstances indicate that the carrying amount may not be recoverable. The evaluation is based on the cash
flows generated by the underlying asset groups, including estimated future operating results, trends or other
determinants of fair value. If the total of the expected future undiscounted cash flows were less than the carry-
ing amount of the asset group, we would recognize an impairment charge to the extent the carrying amount
of the asset group exceeds its estimated fair value. Unless presented separately, the impairment charge is
included as a component of depreciation expense.
Intangible Assets
Indefinite-Lived Intangible Assets
Franchise Rights
Our franchise rights consist primarily of cable franchise rights. Cable franchise rights represent the value we
attributed to agreements with state and 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 professional sports team that was acquired in a business combination. We do not
amortize our franchise rights because we have determined that they meet the definition of an indefinite-lived
intangible asset. 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 generally amortized on a straight-line basis over the term of the franchise
agreement.
Other
Other indefinite-lived intangible assets include trade names and FCC licenses.
***
We evaluate the recoverability of our franchise rights and other indefinite-lived intangible assets 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 and other indefinite-lived intangible assets
primarily based on a discounted cash flow analysis. In analyzing the fair values indicated under the dis-
counted cash flow models, we also consider multiples of operating income before depreciation and
85 Comcast 2011 Annual Report on Form 10-K