United Airlines 2015 Annual Report Download - page 72

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 Note 2 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. 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 16 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 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 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.
(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. The Company records penalties and interest relating
to uncertain tax positions in Other operating expense and Interest expense, respectively, in its consolidated statements of operations. The
Company has not recorded any significant expense or liabilities related to interest or penalties in its consolidated financial statements.
(r) The Company records expenses associated with amendable labor agreements when the amounts are probable and estimable. These
include costs associated with lump sum cash payments that would be made in conjunction with the ratification of labor agreements. To the extent
these upfront costs are in lieu of future pay increases, they would be capitalized and amortized over the term of the labor agreements. If not, these
amounts would be expensed.
71
Source: United Continental Holdings, Inc., 10-K, February 18, 2016 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.