FairPoint Communications 2004 Annual Report Download - page 87

a five-year period. The Company began amortizing its billing system costs in 2004 based on the total operating subsidiaries
that the Company had migrated to the new system.
(i) Debt Issue and Offering Costs
Debt issue costs are being amortized over the life of the related debt, ranging from 3 to 10 years. During 2003, $5.0 million
in net book value of debt issue costs were written off in association with refinancing activity classified as other nonoperating
expense in the statements of operations. During 2004, the Company wrote-off debt issuance and offering costs of $6.0 million
associated with an abandoned offering of Income Deposit Securities (IDSs), classified as other nonoperating expense in the
statements of operations. The offering of IDSs was abandoned in December of 2004 in favor of the transactions described in
note 2. Debt issue and offering costs of $1.0 million remained capitalized after the write-off that are a direct and incremental
benefit to the transactions described in note 2. Accumulated amortization of loan origination costs from continuing operations
was $14.9 million and $10.3 million at December 31, 2004 and 2003, respectively.
(j) Goodwill and Other Intangible Assets
Goodwill consists of the difference between the purchase price incurred in acquisitions using the purchase method of
accounting and the fair value of net assets acquired. In accordance with SFAS No. 142, 
 which the Company adopted effective January 1, 2002, goodwill is no longer amortized, but instead is assessed for
impairment at least annually. During this assessment, management relies on a number of factors, including operating
results, business plans, and anticipated future cash flows.
(k) Impairment of Long-lived Assets
Long-lived assets, such as property, plant, and equipment and purchased intangibles subject to amortization, are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to
estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset
exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less
costs to sell and depreciation ceases.
(l) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
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