US Cellular 2014 Annual Report Download - page 50

United States Cellular Corporation
Notes to Consolidated Financial Statements (Continued)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING
PRONOUNCEMENTS (Continued)
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 6—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
2014, 2013 or 2012. See Note 9—Property, Plant and Equipment for additional details related to useful
lives.
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.
U.S. Cellular has one asset group for purposes of assessing property, plant and equipment for
impairment based on the fact that the individual operating markets are reliant on centrally operated data
centers, mobile telephone switching offices and network operations center. U.S. Cellular operates a
single integrated national wireless network, and the lowest level for which identifiable cash flows are
largely independent of the cash flows of other groups of assets and liabilities represent cash flows
generated by this single interdependent network.
Agent Liabilities
U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for
U.S. Cellular. At December 31, 2014 and 2013, U.S. Cellular had accrued $95.3 million and
$121.3 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 underwriters’ and legal fees and other charges related to
issuing U.S. Cellular’s various borrowing instruments and other long-term agreements, and are amortized
over the respective term of each instrument. The amounts of deferred charges included in the
Consolidated Balance Sheet at December 31, 2014 and 2013, are shown net of accumulated
amortization of $34.2 million and $26.0 million, respectively. At December 31, 2014, Other assets and
deferred charges includes a $60.0 million deposit made by Advantage Spectrum L.P. to the FCC to
participate in Auction 97. See Note 13—Variable Interest Entities for additional information.
Asset Retirement Obligations
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. Until the obligation is fulfilled, U.S. Cellular updates its estimates
relating to cash flows required and timing of settlement. U.S. Cellular records the present value of the
changes in the future value as an increase or decrease to the liability and the related carrying amount of
the long-lived asset. The liability is accreted to future 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 related asset. Upon settlement of the obligation, any difference
between the cost to retire the asset and the recorded liability is recognized in the Consolidated
Statement of Operations.
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