DIRECTV 2011 Annual Report Download - page 92

DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
for which the benefit has not yet been recognized in ‘‘Income tax expense’’ in the or liability and may be observable or unobservable. The three level hierarchy of
Consolidated Statements of Operations due to the uncertainty of whether such inputs is as follows:
benefits will be ultimately realized. We recognize interest and penalties accrued Level 1: Valuation is based on quoted market prices in active markets for
related to unrecognized tax benefits in ‘‘Income tax expense’’ in the Consolidated identical assets or liabilities.
Statements of Operations. Unrecognized tax benefits are recorded in ‘‘Income tax
expense’’ in the Consolidated Statements of Operations at such time that the Level 2: Valuation is based upon quoted prices for similar assets and liabilities
benefit is effectively settled. in active markets, or other inputs that are observable, for substantially
the full term of the asset or liability.
Advertising Costs Level 3: Valuation is based upon other unobservable inputs that are not
We expense advertising costs primarily in ‘‘Subscriber acquisition costs’’ in the corroborated by market data.
Consolidated Statements of Operations as incurred. Advertising costs for print and
media related to national advertising campaigns, net of payments received from Note 3: Accounting Changes, Change in Accounting Estimate and
programming content providers for marketing support, were $464 million in 2011, New Accounting Standard
$396 million in 2010 and $363 million in 2009. We previously reported Accounting Changes
advertising expenses, net of payments received from programming content providers
for marketing support of $342 million in 2010 and $317 million in 2009, for Revenue Recognition. On January 1, 2011 we adopted the revisions issued by
advertising costs primarily in ‘‘Subscriber acquisition costs’’ in the Consolidated the Financial Accounting Standards Board, or FASB, to the standard for revenue
Statements of Operations. arrangements with multiple deliverables. The revised standard allows entities to use
the ‘‘best estimate of selling price’’ in addition to third-party evidence or actual
Market Concentrations and Credit Risk selling prices for determining the fair value of a deliverable, and includes additional
disclosure requirements for revenue arrangements with multiple deliverables. The
We sell programming services and extend credit, in amounts generally not adoption of this change did not have an effect on our consolidated results of
exceeding $200 each, to a large number of individual residential subscribers operations and financial position.
throughout the United States and most of Latin America. As applicable, we
maintain allowances for anticipated losses. Comprehensive Income. In June 2011, the FASB modified the presentation of
comprehensive income in the financial statements. The revised standard requires an
Fair Value Measurement entity to present the total of comprehensive income, the components of net
income, and the components of other comprehensive income either in a single
We determine the fair value measurements of assets and liabilities based on the continuous statement of comprehensive income or in two separate but consecutive
three level valuation hierarchy established for classification of fair value statements and must be applied retrospectively. This standard eliminates the current
measurements. The valuation hierarchy is based on the transparency of inputs to option to report other comprehensive income and its components in the statement
the valuation of an asset or liability as of the measurement date. Inputs refer of changes in equity. The revised standard does not change the items that must be
broadly to the assumptions that market participants would use in pricing an asset reported in other comprehensive income or when an item of other comprehensive
income must be reclassified to net income. The modification of the standard did
not have an effect on our consolidated results of operations and financial position,
when adopted, on December 31, 2011.
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