US Cellular 2013 Annual Report Download - page 49

United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
Investments in Unconsolidated Entities
Investments in unconsolidated entities consist of amounts invested in wireless entities in which U.S.
Cellular holds a noncontrolling interest. U.S. Cellular follows the equity method of accounting for such
investments in which its ownership interest is less than or equal to 50% but equals or exceeds 20% for
corporations and 3% for partnerships and limited liability companies, or for unconsolidated entities in
which its ownership is greater than 50% but U.S. Cellular does not have a controlling financial interest.
The cost method of accounting is followed for such investments in which U.S. Cellular’s ownership
interest is less than 20% for corporations and is less than 3% for partnerships and limited liability
companies and for investments for which U.S. Cellular does not have the ability to exercise significant
influence.
For its equity method investments for which financial information is readily available, U.S. Cellular records
its equity in the earnings of the entity in the current period. For its equity method investments for which
financial information is not readily available, U.S. Cellular records its equity in the earnings of the entity
on a one quarter lag basis.
Property, Plant and Equipment
U.S. Cellular’s Property, plant and equipment is stated at the original cost of construction or purchase
including capitalized costs of certain taxes, payroll-related expenses, interest and estimated costs to
remove the assets.
Expenditures that enhance the productive capacity of assets in service or extend their useful lives are
capitalized and depreciated. Expenditures for maintenance and repairs of assets in service are charged
to System operations expense or Selling, general and administrative expense, as applicable. Retirements
and disposals of assets are recorded by removing the original cost of the asset (along with the related
accumulated depreciation) from plant in service and charging it, together with net removal costs (removal
costs less any applicable accrued asset retirement obligations and salvage value realized), to (Gain) loss
on asset disposals, net.
Costs of developing new information systems are capitalized and amortized over their expected
economic useful lives.
Depreciation
Depreciation is provided using the straight-line method over the estimated useful life of the assets.
U.S. Cellular depreciates leasehold improvement assets associated with leased properties over periods
ranging from one to thirty years; such periods approximate the shorter of the assets’ economic lives or
the specific lease terms.
Useful lives of specific assets are reviewed throughout the year to determine if changes in technology or
other business changes would warrant accelerating the depreciation of those specific assets. Due to the
Divestiture Transaction more fully described in Note 5—Acquisitions, Divestitures and Exchanges, U.S.
Cellular changed the useful lives of certain assets in 2013 and 2012. Other than the Divestiture
Transaction, there were no other material changes to useful lives of property, plant and equipment in
2013, 2012 or 2011.
Impairment of Long-lived Assets
U.S. Cellular reviews long-lived assets for impairment whenever events or changes in circumstances
indicate that the assets might be impaired. If necessary, the impairment test for tangible long-lived assets
41