US Cellular 2012 Annual Report Download - page 52

United States Cellular Corporation
Notes to the Consolidated Financial Statements (Continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
Agent Liabilities
U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for
U.S. Cellular. At December 31, 2012 and 2011, U.S. Cellular had accrued $88.2 million and $75.3 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 include legal fees 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, 2012 and 2011, are
shown net of accumulated amortization of $12.7 million and $9.6 million, respectively.
Asset Retirement Obligations
U.S. Cellular operates cell sites, retail stores and office spaces in its operating markets. A majority of
these sites, stores and office spaces are leased. Most of these leases contain terms which require or
may require U.S. Cellular to return the leased property to its original condition at the lease expiration
date.
U.S. Cellular accounts for asset retirement obligations by recording 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. The carrying amount of
the long-lived asset is depreciated over the useful life of the 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;
• 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.
44