Time Warner Cable 2006 Annual Report Download - page 114

values. The remaining useful lives assigned to such assets were generally shorter than the useful lives assigned to
comparable new assets, to reflect the age, condition and intended use of the acquired property, plant and equipment.
As of December 31, 2006 and 2005, the Company’s property, plant and equipment and related accumulated
depreciation included the following (in millions):
2006 2005
Estimated
Useful Lives
As of December 31,
Land, buildings and improvements
(a)
.................... $ 910 $ 634 10-20 years
Distribution systems ................................ 10,531 7,397 3-25 years
(b)
Converters and modems ............................. 3,630 2,772 3-4 years
Vehicles and other equipment ......................... 1,835 1,220 3-10 years
Construction in progress ............................. 637 521
17,543 12,544
Less: Accumulated depreciation ....................... (5,942) (4,410)
Total .......................................... $11,601 $ 8,134
(a)
Land is not depreciated.
(b)
Weighted-average useful lives for distribution systems are approximately 12 years.
Asset Retirement Obligations
FASB Statement No. 143, Accounting for Asset Retirement Obligations, requires that a liability be recognized
for an asset retirement obligation in the period in which it is incurred if a reasonable estimate of fair value can be
made. The Company has certain franchise and lease agreements containing provisions requiring the Company to
restore facilities or remove equipment in the event the agreement is not renewed. The Company anticipates that
these agreements will be renewed on an ongoing basis; however, a remote possibility exists that such agreements
could be terminated unexpectedly, which could result in the Company incurring significant expense in complying
with such agreements. Should a franchise or lease agreement containing a provision referenced above be
terminated, the Company would record an estimated liability for the fair value of the restoration and removal
expense. As of December 31, 2006, no such liabilities have been recorded as the franchise and lease agreements are
expected to be renewed and any costs associated with equipment removal provisions in the Company’s lease
agreements are either not estimable or are insignificant to the Company’s results of operations.
Intangible Assets
TWC has a significant number of intangible assets, including customer relationships and cable franchises.
Customer relationships and cable franchises acquired in business combinations are accounted for under the
purchase method of accounting and are recorded at fair value on the Company’s consolidated balance sheet. Other
costs incurred to negotiate and renew cable franchise agreements are capitalized as incurred. Customer relation-
ships acquired are amortized over their estimated useful life (4 years) and other costs incurred to negotiate and
renew cable franchise agreements are amortized over the term of such franchise agreements.
Asset Impairments
Investments
TWC’s investments are primarily accounted for using the equity method of accounting. A subjective aspect of
accounting for investments involves determining whether an other-than-temporary decline in value of the invest-
ment has been sustained. If it has been determined that an investment has sustained an other-than-temporary decline
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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)