United Airlines 2012 Annual Report Download - page 92

Table of Contents
amortized on the straight-line method over the life of the lease or, in the case of certain aircraft, over their estimated useful lives, whichever is
shorter. Amortization of capital lease assets is included in depreciation and amortization expense. The estimated useful lives of property and
equipment are as follows:

Aircraft and related rotable parts 27 to 30
Buildings 25 to 45
Other property and equipment 4 to 15
Computer software 5
Building improvements 1 to 40
As of December 31, 2012, UAL, United and Continental had a carrying value of computer software of $302 million, $68 million and $234
million, respectively. For the year ended December 31, 2012, UAL, United and Continental depreciation expense related to computer software was
$81 million, $37 million and $44 million, respectively. Aircraft parts were assumed to have residual values with a range of 7% to 11% of original
cost, depending on type, and other categories of property and equipment were assumed to have no residual value.
(h) The cost of maintenance and repairs, including the cost of minor replacements, is charged to expense as incurred,
except for costs incurred under our power-by-the-hour (“PBTH”) engine maintenance agreements. PBTH contracts transfer certain risk to third-
party service providers and fix the amount we pay per flight hour or per cycle to the service provider in exchange for maintenance and repairs under
a predefined maintenance program. Under PBTH agreements, the Company recognizes expense at a level rate per engine hour, unless the level of
service effort and the related payments during the period are substantially consistent, in which case the Company recognizes expense based on the
amounts paid.
(i) Lease fair value adjustments, which arose from recording operating leases at fair value under fresh start
accounting or the Merger, are amortized on a straight line basis over the related lease term.
(j) Payments made to regional carriers under capacity purchase agreements are reported in regional capacity purchase
in our consolidated statements of operations. As of December 31, 2012, United had 222 call options to purchase regional jet aircraft being operated
by certain regional carriers. At December 31, 2012, none of the call options was exercisable because none of the required conditions to make an
option exercisable by United was met.
(k) Advertising costs, which are included in other operating expenses, are expensed as incurred. Advertising expenses for the three years
ended December 31 were as follows (in millions):
 




2012 $154 $ 83 $ 71
2011 142 73 69
2010 90 67 23 $74
(l) The Company has finite-lived and indefinite-lived intangible assets, including goodwill. As of December 31, 2012, goodwill
represents the excess purchase price over the fair values of tangible and identifiable intangible assets acquired and liabilities assumed from
Continental in the Merger. Finite-lived intangible assets are amortized over their estimated useful lives. Goodwill and indefinite-lived intangible
assets are not amortized but are reviewed for impairment annually or more frequently if
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