US Cellular 2015 Annual Report Download - page 77

Investments in Unconsolidated Entities
For its equity method investments for which financial information is readily available, TDS 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, TDS records its equity in the earnings of the entity on a one quarter lag basis.
Property, Plant and Equipment
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 Cost of services 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 an applicable accrued asset retirement obligation and salvage value
realized), to (Gain) loss on asset disposals, net.
TDS capitalizes certain costs of developing new information systems.
Depreciation and Amortization
Depreciation is provided using the straight-line method over the estimated useful life of the related asset, except for
certain Wireline segment assets, which use the group depreciation method. The group depreciation method develops a
depreciation rate based on the average useful life of a specific group of assets, rather than each asset individually. TDS
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 6 — Acquisitions, Divestitures and Exchanges, U.S. Cellular changed the useful lives of certain
assets in 2013. Other than the Divestiture Transaction, there were no material changes to useful lives of property, plant
and equipment in 2015, 2014 or 2013. See Note 9 — Property, Plant and Equipment for additional details related to
useful lives.
Impairment of Long-Lived Assets
TDS 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 a 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.
TDS Telecom has three asset groups of Wireline, Cable and HMS for purposes of assessing property, plant and
equipment for impairment based on their integrated network, assets and operations. The cash flows generated by each
of these groups is the lowest level for which identifiable cash flows are largely independent of the cash flows of other
groups of assets and liabilities.
Agent Liabilities
U.S. Cellular has relationships with agents, which are independent businesses that obtain customers for U.S. Cellular. At
December 31, 2015 and 2014, U.S. Cellular had accrued $75.7 million and $95.3 million, respectively, for amounts due
to agents. These amounts are included in Other current liabilities in the Consolidated Balance Sheet.
69
TELEPHONE AND DATA SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS