US Cellular 2009 Annual Report Download - page 53

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
the asset to its estimated fair value. If the carrying value exceeds the estimated fair value (less cost to
sell), an impairment loss is recognized for the difference.
Quoted market prices in active markets are the best evidence of fair value of a tangible long-lived asset
and are used when available. If quoted market prices are not available, the estimate of fair value is
based on the best information available, including prices for similar assets and the use of other valuation
techniques. A present value analysis of cash flow scenarios is often the best available valuation
technique. The use of this technique involves assumptions by management about factors that are
uncertain including future cash flows, the appropriate discount rate, and other inputs. Different
assumptions for these inputs could create materially different results.
Other Assets and Deferred Charges
Other assets and deferred charges primarily represent legal and other charges related to U.S. Cellular’s
various borrowing instruments, and are amortized over the respective term of each instrument. The
amounts for deferred charges included in the Consolidated Balance Sheet at December 31, 2009 and
2008, are shown net of accumulated amortization of $11.8 million and $10.9 million, respectively.
Asset Retirement Obligations
U.S. Cellular accounts for asset retirement obligations in accordance with GAAP, which requires entities
to record the fair value of a liability for legal obligations associated with an asset retirement in the period
in which the obligations are incurred. At the time the liability is incurred, U.S. Cellular records a liability
equal to the net present value of the estimated cost of the asset retirement obligation and increases the
carrying amount of the related long-lived asset by an equal amount. Over time, the liability is accreted to
its present value, and the capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the obligation, any difference between the cost to retire the asset and the recorded liability
(including accretion of discount) is recognized in the Consolidated Statement of Operations.
Treasury Shares
Common Shares repurchased by U.S. Cellular are recorded at cost as treasury shares and result in a
reduction of equity. Treasury shares are reissued as part of U.S. Cellular’s stock-based compensation
programs. When treasury shares are reissued, U.S. Cellular determines the cost using the first-in, first-out
cost method. The difference between the cost of the treasury shares and reissuance price is included in
Additional paid-in capital or Retained earnings.
Revenue Recognition
Revenues from wireless operations consist primarily of:
• Charges for access, airtime, roaming, long distance, data and other value added services provided to
U.S. Cellular’s retail customers and to end users through third-party resellers;
• Charges to carriers whose customers use U.S. Cellular’s systems when roaming;
• Sales of equipment and accessories; and
• Amounts received from the Universal Service Fund (‘‘USF’’) in states where U.S. Cellular has been
designated an Eligible Telecommunications Carrier (‘‘ETC’’).
Revenues related to wireless services are recognized as services are rendered. Revenues billed in
advance or in arrears of the services being provided are estimated and deferred or accrued, as
45