Twenty-First Century Fox 2013 Annual Report Download - page 96

TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Investments in which the Company has no significant influence (generally less than a 20% ownership
interest) or does not exert significant influence are designated as available-for-sale investments if readily
determinable market values are available. If an investment’s fair value is not readily determinable, the Company
accounts for its investment at cost. The Company reports available-for-sale investments at fair value based on
quoted market prices. Unrealized gains and losses on available-for-sale investments are included in accumulated
other comprehensive income, net of applicable taxes and other adjustments until the investment is sold or
considered impaired. Dividends and other distributions of earnings from available-for-sale investments and cost
investments are included in Interest income in the consolidated statements of operations when declared.
Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation is provided using the straight-line method
over an estimated useful life of 3 to 40 years. Leasehold improvements are amortized using the straight-line
method over the shorter of their useful lives or the life of the lease. Costs associated with the repair and
maintenance of property are expensed as incurred. Changes in circumstances, such as technological advances or
changes to the Company’s business model or capital strategy, could result in the actual useful lives differing from
the Company’s estimates. In those cases where the Company determines that the useful life of buildings and
equipment should be shortened, the Company would depreciate the asset over its revised remaining useful life,
thereby increasing depreciation expense.
Goodwill and intangible assets
The Company has a significant amount of intangible assets, including goodwill, film and television libraries,
Federal Communications Commission (“FCC”) licenses, and other copyright products and trademarks. Goodwill is
recorded as the difference between the cost of acquiring entities and amounts assigned to their tangible and
identifiable intangible net assets. In accordance with ASC 350, the Company’s goodwill and indefinite-lived
intangible assets, which primarily consist of FCC licenses, are tested annually for impairment or earlier if events
occur or circumstances change that would more likely than not reduce the fair value below its carrying amount.
Intangible assets with finite lives are generally amortized over their estimated useful lives. The impairment
assessment of indefinite-lived intangibles compares the fair value of these intangible assets to their carrying value.
The Company's goodwill impairment reviews are determined using a two-step process. The first step of the
process is to compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair
value of a reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not impaired and the
second step of the impairment review is not necessary. If the carrying amount of a reporting unit exceeds its fair
value, the second step of the goodwill impairment review is required to be performed to estimate the implied fair
value of the reporting unit's goodwill. The implied fair value of the reporting unit's goodwill is compared with the
carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair
value of that goodwill, an impairment loss is recognized in an amount equal to that excess.
When a business within a reporting unit is disposed of, goodwill is allocated to the disposed business using
the relative fair value method.
Asset impairments
Investments
Equity method investments are regularly reviewed for impairment by initially comparing their fair value to
their respective carrying amounts each quarter. The Company determines the fair value of its public company
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