Dish Network 2013 Annual Report Download - page 120

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-10
Property and Equipment
Property and equipment are stated at amortized cost less impairment losses, if any. The costs of satellites under
construction, including interest and 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 40 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.
Impairment of 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. 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 recognized is 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.
DBS Satellites. We currently evaluate our DBS satellite fleet for impairment as one asset group whenever events or
changes in circumstances indicate that its carrying amount may not be recoverable. We do not believe any
triggering event has occurred which would indicate impairment as of December 31, 2013.
AWS-4 Satellites. We currently evaluate our AWS-4 satellite fleet for impairment whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable. During the second quarter 2013, we wrote
down the net book value of the T2 and D1 satellites to their fair value and recorded a $438 million impairment
charge on our Consolidated Statements of Operations and Comprehensive Income (Loss). We do not believe any
further triggering event has occurred which would indicate impairment as of December 31, 2013. See Note 8 for
further discussion.
Indefinite Lived Intangible Assets
We do not amortize indefinite lived intangible assets, but test these assets for impairment annually during the fourth
quarter or more often if indicators of impairment 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:
x FCC licenses are a non-depleting asset;
x existing FCC licenses are integral to our business segments and will contribute to cash flows indefinitely;
x replacement satellite applications are generally authorized by the FCC subject to certain conditions,
without substantial cost under a stable regulatory, legislative and legal environment;
x maintenance expenditures to obtain future cash flows are not significant;
x FCC licenses are not technologically dependent; and
x we intend to use these assets indefinitely.