US Cellular 2010 Annual Report Download - page 51

UNITED STATES CELLULAR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
uncertain including future cash flows, the appropriate discount rate, and other inputs. Different
assumptions for these inputs could create materially different results.
Agent Liabilities
U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for
U.S. Cellular. At December 31, 2010 and 2009, U.S. Cellular had accrued $71.3 million and $55.2 million,
respectively, for amounts due to agents. This amount is included in Other current liabilities in the
Consolidated Balance Sheet.
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, 2010 and
2009, are shown net of accumulated amortization of $11.9 million and $11.8 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. The liability is accreted to its present
value over a period ending with the estimated settlement date of the respective asset retirement
obligation. 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;
• Amounts received from the Universal Service Fund (‘‘USF’’) in states where U.S. Cellular has been
designated an Eligible Telecommunications Carrier (‘‘ETC’’); and
• Redemptions of loyalty reward points for products or services.
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