United Airlines 2012 Annual Report Download - page 93

Table of Contents
events or circumstances indicate that the asset may be impaired. Goodwill and indefinite-lived assets are reviewed for impairment on an annual
basis as of October 1, or on an interim basis whenever a triggering event occurs.
In most cases, these indefinite-lived assets are separately associated with and directly assignable to a specific separate company. In cases where the
asset is shared between the companies, a prorate allocation was performed based on historical financial and operating measures. This resulted in a
fair value allocation of such assets to United and Continental of 54% and 46%, respectively. Any impairment charges resulting from the testing of
the fair values of these indefinite-lived intangible assets are also assigned to the applicable company using the same methodology; the impairment
charge is recognized at the company to which the asset is assigned. See Notes 4 and 21 for additional information related to intangibles, including
impairments recognized in 2012, 2011 and 2010.
(m)  The Company evaluates the carrying value of long-lived assets and intangible assets subject to amortization
whenever events or changes in circumstances indicate that an impairment may exist. For purposes of this testing, the Company has generally
identified the aircraft fleet type as the lowest level of identifiable cash flows for purposes of testing aircraft for impairment. An impairment charge is
recognized when the asset’s carrying value exceeds its net undiscounted future cash flows and its fair market value. The amount of the charge is the
difference between the asset’s carrying value and fair market value. See Note 21 for information related to asset impairments.
(n) The Company measures the cost of employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award. The resulting cost is recognized over the period during which an employee is required to provide
service in exchange for the award, usually the vesting period. Obligations for cash-settled restricted stock units (“RSUs”) are remeasured at fair
value throughout the requisite service period on the last day of each reporting period based upon the Company’s stock price. In addition to the
service requirement, cash-settled performance-based RSUs have performance metrics that must be achieved prior to vesting. These awards are
accrued based on the expected level of achievement at each reporting period. A cumulative adjustment is recorded to adjust compensation expense
based on the current fair value of the awards and expected level of achievement for the performance-based awards. See Note 7 for additional
information on the Company’s share-based compensation plans.
(o) Certain governmental taxes are imposed on the Company’s ticket sales through a fee included in ticket prices. The Company
collects these fees and remits them to the appropriate government agency. These fees are recorded on a net basis (excluded from operating revenue).
(p) The Company accrues for estimated lease costs over the remaining term of the lease at the present value of future
minimum lease payments, net of estimated sublease rentals (if any), in the period that aircraft are permanently removed from service. When
reasonably estimable and probable, the Company estimates maintenance lease return condition obligations for items such as minimum aircraft and
engine conditions specified in leases and accrues these amounts over the lease term while the aircraft are operating, and any remaining unrecognized
estimated obligations are accrued in the period that an aircraft is removed from service.
(q) The Company has recorded reserves for income taxes and associated interest that may become payable in
future years. Although management believes that its positions taken on income tax matters are reasonable, the Company nevertheless has
established tax and interest reserves in recognition that various taxing authorities may challenge certain of the positions taken by the Company,
potentially resulting in additional liabilities for taxes and interest. The Company’s uncertain tax position reserves are reviewed periodically and are
adjusted as events occur that affect its estimates, such as the availability of new information, the lapsing of applicable statutes of limitation, the
conclusion of tax audits, the measurement of additional estimated liability, the identification of new tax matters, the release of administrative tax
guidance affecting its estimates of tax liabilities, or the rendering of relevant court decisions. See Note 8 for further information related to uncertain
income tax positions.
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