Cricket Wireless 2011 Annual Report Download - page 62

Depreciation and Amortization
Depreciation of property and equipment is applied using the straight-line method over the estimated useful
lives of our assets once the assets are placed in service. The following table summarizes the depreciable lives (in
years):
Depreciable
Life
Network equipment:
Switches .............................................................. 10
Switch power equipment .................................................. 15
Cell site equipment and site improvements ................................... 7
Towers ................................................................ 15
Antennae .............................................................. 5
Computer hardware and software ............................................. 3-5
Furniture, fixtures, retail and office equipment .................................. 3-7
Impairment of Long-Lived Assets
We assess potential impairments to our long-lived assets, including property and equipment and certain
intangible assets, when there is evidence that events or changes in circumstances indicate that their respective
carrying values may not be recoverable. An impairment loss may be required to be recognized when the
undiscounted cash flows expected to be generated by a long-lived asset (or group of such assets) is less than its
carrying value. Any required impairment loss would be measured as the amount by which the asset’s carrying
value exceeds its fair value and would be recorded as a reduction in the carrying value of the related asset and
charged to results of operations. There were no events or circumstances that occurred during the year ended
December 31, 2011 that indicated that the carrying value of any long-lived assets may not be recoverable.
In August 2010, we entered into a wholesale agreement which we use to offer Cricket services in
nationwide retailers outside of our current network footprint. This agreement allowed us to strengthen and
expand our distribution and provided us greater flexibility with respect to our network expansion plans. As a
result, after entering into this wholesale agreement, we determined to spend an increased portion of our planned
capital expenditures on the deployment of next-generation LTE technology and to defer our previously planned
network expansion activities. As a result of these developments, costs for certain network, design, site acquisition
and capitalized interest relating to the expansion of our network which had been previously accumulated in
construction-in-progress were determined to be impaired and we recorded an impairment charge of $46.5 million
during the third quarter of 2010.
Impairment of Indefinite-Lived Intangible Assets
We assess potential impairments to our indefinite-lived intangible assets, including wireless licenses and
goodwill, on an annual basis or when there is evidence that events or changes in circumstances indicate an
impairment condition may exist. In addition on a quarterly basis, we evaluate the triggering event criteria
outlined in the authoritative guidance for goodwill and other intangible assets to determine whether events or
changes in circumstances indicate that an impairment condition may exist. Our annual impairment test is
conducted each year during the third quarter.
Wireless Licenses
We operate networks under PCS and AWS wireless licenses granted by the FCC that are specific to a
particular geographic area on spectrum that has been allocated by the FCC for such services. Wireless licenses
are initially recorded at cost and are not amortized. Although FCC licenses are issued with a stated term (ten
years in the case of PCS licenses and fifteen years in the case of AWS licenses), wireless licenses are considered
to be indefinite-lived intangible assets because we expect to provide wireless service using the relevant licenses
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