Frontier Communications 2007 Annual Report Download - page 67

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CITIZENS COMMUNICATIONS COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(4) PROPERTY, PLANT AND EQUIPMENT:
The components of property, plant and equipment at December 31, 2007 and 2006 are as follows:
($ in thousands) Estimated
Useful Lives 2007 2006
Land .................................................. N/A $ 23,347 $ 17,944
Buildings and leasehold improvements ....................... 41years 343,826 324,230
General support ......................................... 5to17years 492,771 425,952
Central office/electronic circuit equipment .................... 5to11years 2,855,645 2,602,168
Cable and wire .......................................... 15to60years 3,484,838 3,171,421
Other .................................................. 20to30years 46,620 11,800
Construction work in progress .............................. 128,250 131,951
7,375,297 6,685,466
Less: Accumulated depreciation ............................ (4,040,053) (3,701,962)
Property, plant and equipment, net .......................... $3,335,244 $ 2,983,504
Depreciation expense is principally based on the composite group method. Depreciation expense was $374.4
million, $350.1 million and $393.8 million for the years ended December 31, 2007, 2006 and 2005, respectively.
Effective with the completion of an independent study of the estimated useful lives of our plant assets we
adopted new lives beginning October 1, 2007.
(5) RETAINED EARNINGS—CUMULATIVE EFFECT ADJUSTMENT:
In September 2006, the SEC staff issued Staff Accounting Bulletin (SAB) Topic 1N (SAB No. 108),
“Financial Statements — Considering the Effects of Prior Year Misstatements when Quantifying Misstatements
in Current Year Financial Statements”. SAB No. 108 provides guidance on how prior year misstatements should
be taken into consideration when quantifying misstatements in current year financial statements for purposes of
determining whether the financial statements are materially misstated. Under this guidance, companies should
take into account both the effect of a misstatement on the current year balance sheet as well as the impact upon
the current year income statement in assessing the materiality of a current year misstatement. Once a current year
misstatement has been quantified, the guidance in SAB Topic 1M, “Financial Statements Materiality,” (SAB
No. 99) will be applied to determine whether the misstatement is material.
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