Frontier Communications 2014 Annual Report Download - page 73

considered to be impaired, the impairment is measured by the amount by which the carrying amount of
the assets exceeds the estimated fair value. Also, we periodically reassess the useful lives of our
tangible and intangible assets to determine whether any changes are required.
(h) Investments:
Investments in entities that we do not control, but where we have the ability to exercise significant
influence over operating and financial policies, are accounted for using the equity method of
accounting.
(i) Income Taxes and Deferred Income Taxes:
We file a consolidated federal income tax return. We utilize the asset and liability method of
accounting for income taxes. Under the asset and liability method, deferred income taxes are recorded
for the tax effect of temporary differences between the financial statement basis and the tax basis of
assets and liabilities using tax rates expected to be in effect when the temporary differences are
expected to reverse.
(j) Stock Plans:
We have various stock-based compensation plans. Awards under these plans are granted to
eligible officers, management employees, non-management employees and non-employee directors.
Awards may be made in the form of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, restricted stock units or other stock-based awards, including
awards with performance, market and time-vesting conditions. Our general policy is to issue shares
from treasury upon the grant of restricted shares, earning of performance shares and the exercise of
options.
The compensation cost recognized is based on awards ultimately expected to vest. U.S. GAAP
requires forfeitures to be estimated and revised, if necessary, in subsequent periods if actual forfeitures
differ from those estimates.
(k) Net Income Per Common Share Attributable to Common Shareholders:
Basic net income per common share is computed using the weighted average number of common
shares outstanding during the period being reported on, excluding unvested restricted stock awards.
The impact of dividends paid on unvested restricted stock awards have been deducted in the
determination of basic and diluted net income per common share attributable to common shareholders
of Frontier. Except when the effect would be antidilutive, diluted net income per common share reflects
the dilutive effect of certain common stock equivalents, as described further in Note 12—Net Income
Per Common Share.
(l) Disaggregation of Network Related Expenses and Selling, General and Administrative
Expenses:
Historically, the Company has included network related expenses such as facility rent, utilities,
maintenance and other costs, each related to the operation of Frontier’s communications network, as
well as salaries, wages and related benefits associated with personnel who are responsible for the
delivery of services as well as operation and maintenance of its communications network, within the
line item “Other operating expenses” in its Consolidated Statements of Income. Effective with the year
ended December 31, 2014, these network related expenses are being reported separately as “Network
related expenses” in the Consolidated Statements of Income.
F-12
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements