United Airlines 2014 Annual Report Download - page 73

Table of Contents
(i) Lease fair value adjustments, which arose from recording operating leases at fair value under fresh start or
business combination accounting, are amortized on a straight-line basis over the related lease term.
(j) Payments made to regional carriers under CPAs are reported in Regional capacity purchase in our consolidated
statements of operations. As of December 31, 2014, United had 281 call options to purchase regional jet aircraft being operated by certain regional
carriers. At December 31, 2014, 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 were $179
million, $178 million and $154 million for the years ended December 31, 2014, 2013 and 2012, respectively.
(l) The Company has finite-lived and indefinite-lived intangible assets, including goodwill. 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 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. See Notes 2 and 17 of this report for
additional information related to intangibles.
(m) The Company evaluates the carrying value of long-lived 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 17 of this report for additional 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 restricted stock units (“RSUs”) are remeasured at fair value
throughout the requisite service period on the last day of each reporting period based upon UAL’s stock price. In addition to the service
requirement, certain 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 on the last day of each reporting period to adjust compensation
expense based on both UAL’s stock price and the then current level of expected performance achievement for the performance-based awards. See
Note 5 of this report for additional information on UAL’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.
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