Dish Network 2009 Annual Report Download - page 102

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-12
Property and Equipment
Property and equipment are stated at cost. The costs of satellites under construction, including certain amounts prepaid
under our satellite service agreements, are capitalized during the construction phase, assuming the eventual successful
launch and in-orbit operation of the satellite. If a satellite were to fail during launch or while in-orbit, the resultant loss
would be charged to expense in the period such loss was incurred. The amount of any such loss would be reduced to
the extent of insurance proceeds estimated to be received, if any. Depreciation is recorded on a straight-line basis over
useful lives ranging from one to forty years. Repair and maintenance costs are charged to expense when incurred.
Renewals and improvements that add value or extend the asset’s useful life are capitalized.
Long-Lived Assets
We review our long-lived assets and identifiable finite lived intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate our
satellite fleet for recoverability as one asset group. For assets which are held and used in operations, the asset
would be impaired if the carrying value of the asset (or asset group) exceeded its undiscounted future net cash
flows. Once an impairment is determined, the actual impairment is reported as the difference between the carrying
value and the fair value as estimated using discounted cash flows. Assets which are to be disposed of are reported
at the lower of the carrying amount or fair value less costs to sell. We consider relevant cash flow, estimated future
operating results, trends and other available information in assessing whether the carrying value of assets are
recoverable.
Other Intangible Assets
We do not amortize indefinite lived intangible assets, but test these assets for impairment annually or whenever
indicators of impairments arise. Intangible assets that have finite lives are amortized over their estimated useful
lives and tested for impairment as described above for long-lived assets. Our intangible assets with indefinite lives
primarily consist of FCC licenses. Generally, we have determined that our FCC licenses have indefinite useful lives
due to the following:
 FCC spectrum is a non-depleting asset;
 Existing DBS licenses are integral to our business and will contribute to cash flows indefinitely;
 Replacement satellite applications are generally authorized by the FCC subject to certain conditions,
without substantial cost under a stable regulatory, legislative and legal environment;
 Maintenance expenditures to obtain future cash flows are not significant;
 DBS licenses are not technologically dependent; and
 We intend to use these assets indefinitely.
We combine all our indefinite lived FCC licenses into a single unit of accounting, except for 700 MHz wireless
licenses (see Note 8). The analysis encompasses future cash flows from satellites transmitting from such licensed
orbital locations, including revenue attributable to programming offerings from such satellites, the direct operating
and subscriber acquisition costs related to such programming, and future capital costs for replacement satellites.
Projected revenue and cost amounts include current and projected subscribers. In conducting our annual
impairment test in 2009, we determined that the estimated fair value of the FCC licenses, calculated using a
discounted cash flow analysis, exceeded their carrying amounts.