Time Magazine 2012 Annual Report Download - page 87

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
interpretation of tax laws and regulations. In the normal course of business, the Company’s tax returns are
subject to examination by various taxing authorities. Such examinations may result in future tax and interest
assessments by these taxing authorities. In determining the Company’s tax provision for financial reporting
purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to
be more likely than not of being sustained upon examination based on their technical merits. There is
considerable judgment involved in determining whether positions taken on the Company’s tax returns are more
likely than not of being sustained.
The Company adjusts its tax reserve estimates periodically because of ongoing examinations by, and
settlements with, the various taxing authorities, as well as changes in tax laws, regulations and interpretations.
The Company’s policy is to recognize, when applicable, interest and penalties on uncertain tax positions as part
of income tax expense. For further information, see Note 9.
Discontinued Operations
In determining whether a group of assets disposed (or to be disposed) of should be presented as a
discontinued operation, the Company makes a determination of whether the group of assets being disposed of
comprises a component of the entity; that is, whether it has historic operations and cash flows that can be clearly
distinguished (both operationally and for financial reporting purposes). The Company also determines whether
the cash flows associated with the group of assets have been significantly (or will be significantly) eliminated
from the ongoing operations of the Company as a result of the disposal transaction and whether the Company has
no significant continuing involvement in the operations of the group of assets after the disposal transaction. If
these determinations can be made affirmatively, the results of operations of the group of assets being disposed of
(as well as any gain or loss on the disposal transaction) are aggregated for separate presentation, if material, apart
from continuing operating results of the Company in the consolidated financial statements.
2. GOODWILL AND INTANGIBLE ASSETS
Time Warner has a significant number of intangible assets, acquired film and television libraries and other
copyrighted products and tradenames. Certain intangible assets are deemed to have finite lives and, accordingly,
are amortized over their estimated useful lives, while others are deemed to be indefinite-lived and therefore are
not amortized. Goodwill and indefinite-lived intangible assets, primarily certain tradenames, are tested annually
for impairment during the fourth quarter, or earlier upon the occurrence of certain events or substantive changes
in circumstances.
For the year ended December 31, 2012, the Networks segment recognized impairments of both Goodwill and
intangible assets related to the shutdown of Imagine (see Note 3 for additional information).
Goodwill
The performance of the Company’s annual impairment analysis did not result in any impairments of
Goodwill in 2012, 2011 or 2010. Refer to Note 1 for a discussion of the 2012 annual impairment test.
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