US Cellular 2014 Annual Report Download - page 48

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United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
receivable. When it is probable that an account balance will not be collected, the account balance is
charged against the allowance for doubtful accounts. U.S. Cellular does not have any off-balance sheet
credit exposure related to its customers.
The changes in the allowance for doubtful accounts during the years ended December 31, 2014, 2013
and 2012 were as follows:
2014 2013 2012
(Dollars in thousands)
Beginning balance ............................... $ 60,238 $ 26,902 $ 23,537
Additions, net of recoveries ....................... 101,282 98,864 67,372
Deductions ................................... (116,942) (65,528) (64,007)
Ending balance(1) ................................ $ 44,578 $ 60,238 $ 26,902
(1) In 2014, this balance includes a $6.1 million allowance related to the long-term portion of
unbilled equipment installment receivables.
Inventory
Inventory consists primarily of wireless devices stated at the lower of cost or market, with cost
determined using the first-in, first-out method and market determined by replacement costs or estimated
net realizable value.
Goodwill
U.S. Cellular has Goodwill as a result of its acquisitions of wireless businesses. Such Goodwill represents
the excess of the total purchase price over the fair value of net assets acquired in these transactions.
U.S. Cellular performs its annual impairment assessment of Goodwill as of November 1 of each year. For
purposes of conducting its Goodwill impairment test in 2014 and 2013, U.S. Cellular identified four
reporting units. The four reporting units represent four geographic groupings of operating markets,
representing four geographic service areas. A discounted cash flow approach was used to value each
reporting unit for purposes of the Goodwill impairment review.
See Note 7—Intangible Assets for additional details related to Goodwill.
Licenses
Licenses consist of direct and incremental costs incurred in acquiring Federal Communications
Commission (‘‘FCC’’) licenses to provide wireless service.
U.S. Cellular has determined that wireless licenses are indefinite-lived intangible assets and, therefore,
not subject to amortization based on the following factors:
• Radio spectrum is not a depleting asset.
• The ability to use radio spectrum is not limited to any one technology.
• U.S. Cellular and its consolidated subsidiaries are licensed to use radio spectrum through the FCC
licensing process, which enables licensees to utilize specified portions of the spectrum for the
provision of wireless service.
• U.S. Cellular and its consolidated subsidiaries are required to renew their FCC licenses every ten years
or, in some cases, every fifteen years. To date, all of U.S. Cellular’s license renewal applications have
been granted by the FCC. Generally, license renewal applications filed by licensees otherwise in
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