Dish Network 2015 Annual Report Download - page 119

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-15
downlink spectrum, as well as AWS-1 and paired AWS-3 spectrum. DISH Network’s H Block downlink spectrum
and the remaining AWS-3 and AWS-4 spectrum is included in the band for which the 3GPP completed the
feasibility study. Based on the above changes in facts and circumstances during the fourth quarter 2015, we
concluded that there was a change to potential uses of the above wireless spectrum licenses and implemented a new
policy for the balance sheet classification of capitalized interest related to these assets. Effective October 1, 2015, all
interest capitalized on these FCC authorizations was recorded in “FCC authorizations” on our Consolidated Balance
Sheets, which is the qualifying asset on which interest is capitalized. We believe this presentation is more
meaningful to the users of our financial statements and is consistent with the presentation used by the majority of
our competitors in the wireless industry. As of September 30, 2015, $644 million of capitalized interest related to
the H Block and AWS-4 licenses have been reclassified from construction in progress within “Property and
equipment, net” to “FCC authorizations” in our Consolidated Balance Sheets to conform to the current period
accounting policy. This change has no effect on our Consolidated Statements of Operations and Comprehensive
Income (Loss) or on “Total stockholders’ equity (deficit)” on our Consolidated Balance Sheets.
Business Combinations
When we acquire a business, we allocate the purchase price to the various components of the acquisition based upon
the fair value of each component using various valuation techniques, including the market approach, income
approach and/or cost approach. The accounting standard for business combinations requires most identifiable
assets, liabilities, noncontrolling interests and goodwill acquired to be recorded at fair value. Transaction costs
related to the acquisition of the business are expensed as incurred. Costs associated with the issuance of debt
associated with a business combination are capitalized and included as a yield adjustment to the underlying debt’s
stated rate. Acquired intangible assets other than goodwill are amortized over their estimated useful lives unless the
lives are determined to be indefinite. Amortization of these intangible assets are recorded on a straight line basis
over an average finite useful life primarily ranging from approximately two to ten years or in relation to the
estimated discounted cash flows over the life of the intangible asset.
Other Investment Securities
Generally, we account for our unconsolidated equity investments under either the equity method or cost method of
accounting. Because these equity securities are generally not publicly traded, it is not practical to regularly estimate
the fair value of the investments; however, these investments are subject to an evaluation for other-than-temporary
impairment on a quarterly basis. This quarterly evaluation consists of reviewing, among other things, company
business plans, current financial statements and key financial metrics, if available, for factors that may indicate an
impairment of our investment. Such factors may include, but are not limited to, cash flow concerns, material
litigation, violations of debt covenants and changes in business strategy. The fair value of these equity investments
is not estimated unless there are identified changes in circumstances that may indicate an impairment exists and
these changes are likely to have a significant adverse effect on the fair value of the investment.
Long-Term Deferred Revenue, Distribution and Carriage Payments
Certain programmers provide us up-front payments. Such amounts are deferred and recognized as reductions to
“Subscriber-related expenses” on a straight-line basis over the relevant remaining contract term (generally up to ten
years). The current and long-term portions of these deferred credits are recorded in our Consolidated Balance
Sheets in “Deferred revenue and other” and “Long-term deferred revenue, distribution and carriage payments and
other long-term liabilities,” respectively.
Sales Taxes
We account for sales taxes imposed on our goods and services on a net basis in our Consolidated Statements of
Operations and Comprehensive Income (Loss). Since we primarily act as an agent for the governmental authorities,
the amount charged to the customer is collected and remitted directly to the appropriate jurisdictional entity.