Time Magazine 2011 Annual Report Download - page 79

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
whether a revision to its estimates of useful lives is warranted. Property, plant and equipment, including capital
leases, consist of (millions):
December 31, Estimated
Useful Lives2011 2010
Land(a) ............................................. $ 502 $ 499
Buildings and improvements ........................... 2,676 2,610 7 to 30 years
Capitalized software costs ............................. 1,770 1,597 3 to 7 years
Furniture, fixtures and other equipment .................. 3,518 3,337 3 to 10 years
8,466 8,043
Less accumulated depreciation ......................... (4,503) (4,169)
Total .............................................. $ 3,963 $ 3,874
(a) Land is not depreciated.
Intangible Assets
As a creator and distributor of branded content and copyrighted entertainment products, Time Warner has a
significant number of intangible assets, including acquired film and television libraries and other copyrighted
products and tradenames. Time Warner does not recognize the fair value of internally generated intangible assets.
Costs incurred to create and produce copyrighted products, such as feature films and television series, generally
are either expensed as incurred or capitalized. Intangible assets acquired in business combinations are recorded at
the acquisition date fair value in the Company’s Consolidated Balance Sheet. Acquired film libraries are
amortized using the film forecast computation model. For more information, see Note 2.
Asset Impairments
Investments
The Company’s investments consist of (i) fair-value investments, including available-for-sale securities and
certain deferred compensation-related investments, (ii) investments accounted for using the cost method of
accounting and (iii) investments accounted for using the equity method of accounting. The Company regularly
reviews its investments for impairment, including when the carrying value of an investment exceeds its related
market value. If it has been determined that an investment has sustained an other-than-temporary decline in its
value, the investment is written down to its fair value by a charge to earnings. Factors that are considered by the
Company in determining whether an other-than-temporary decline in value has occurred include (i) the market
value of the security in relation to its cost basis, (ii) the financial condition of the investee and (iii) the
Company’s intent and ability to retain the investment for a sufficient period of time to allow for recovery in the
market value of the investment.
In evaluating the factors described above for available-for-sale securities, the Company presumes a decline
in value to be other-than-temporary if the quoted market price of the security is 20% or more below the
investment’s cost basis for a period of six months or more (the “20% criterion”) or the quoted market price of the
security is 50% or more below the security’s cost basis at any quarter end (the “50% criterion”). However, the
presumption of an other-than-temporary decline in these instances may be overcome if there is persuasive
evidence indicating that the decline is temporary in nature (e.g., the investee’s operating performance is strong,
the market price of the investee’s security is historically volatile, etc.). Additionally, there may be instances in
which impairment losses are recognized even if the 20% and 50% criteria are not satisfied (e.g., there is a plan to
sell the security in the near term and the fair value is below the Company’s cost basis).
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