JetBlue Airlines 2011 Annual Report Download - page 67

Estimated useful lives and residual values for our property and equipment are as follows:
Estimated Useful Life Residual Value
Aircraft ................................. 25years 20%
In-flight entertainment systems .............. 5years 0%
Aircraft parts ............................. Fleet life 10%
Flight equipment leasehold improvements ...... Lower of lease term or economic life 0%
Ground property and equipment .............. 3-10 years 0%
Leasehold improvements—other ............. Lower of lease term or economic life 0%
Buildings on leased land .................... Lease term 0%
Property under capital leases is initially recorded at an amount equal to the present value of future minimum
lease payments computed on the basis of our incremental borrowing rate or, when known, the interest rate
implicit in the lease. Amortization of property under capital leases is on a straight-line basis over the expected
useful life and is included in depreciation and amortization expense.
We record impairment losses on long-lived assets used in operations when events and circumstances
indicate that the assets may be impaired and the undiscounted future cash flows estimated to be generated by the
assets are less than the assets’ net book value. If impairment occurs, the loss is measured by comparing the fair
value of the asset to its carrying amount. Impairment losses are recorded in depreciation and amortization
expense.
Software: We capitalize certain costs related to the acquisition and development of computer software.
We amortize these costs using the straight-line method over the estimated useful life of the software, which is
generally between five and ten years. The net book value of computer software, which is included in other assets
on our consolidated balance sheets, was $50 million and $46 million at December 31, 2011 and 2010,
respectively. Amortization expense related to computer software was $10 million, $13 million and $14 million
for the years ended December 31, 2011, 2010 and 2009, respectively. Amortization expense related to computer
software capitalized as of December 31, 2011 is expected to be approximately $10 million in 2012, $9 million in
2013, $8 million in 2014, $6 million in 2015, and $4 million in 2016.
Intangible Assets: Intangible assets consist of acquired take-off and landing slots at certain domestic
airports. We record these assets at cost and amortize them on a straight-line basis over their expected useful lives,
up to 15 years. In 2011, we acquired eight take-off and landing slots at each of New York’s LaGuardia Airport
and Washington D.C.’s Ronald Reagan National Airport for approximately $72 million, of which $40 million
was paid as of December 31, 2011. As of December 31, 2011, the cost and accumulated amortization of
intangible assets recorded was $76 and $2 million, respectively, and are included in other long term assets on our
consolidated balance sheet. Amortization expense related to these intangible assets is expected to be
approximately $4 million in 2012 and $5 million per year in each of 2013 through 2016. We periodically
evaluate these intangible assets for impairment; however we have not recorded any impairment losses to date
through December 31, 2011.
Intangible assets also include an indefinite lived asset related to an air-to-ground spectrum license acquired
by LiveTV in 2006 at a public auction from the Federal Communications Commission for approximately $7
million. In September 2010, we determined this spectrum license had been impaired as further discussed in Note
14, which resulted in a loss of approximately $5 million being recorded in other operating expenses during 2010.
There was no further impairment in 2011, leaving approximately $2 million remaining in other long term assets
related to this license as of December 31, 2011.
Passenger Revenues: Passenger revenue is recognized net of the taxes that we are required to collect from
our customers, including federal transportation taxes, security taxes and airport facility charges, when the
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