Virgin Media 2006 Annual Report Download - page 154

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
Bundled services revenue is recognized in accordance with the provisions of EITF No 00−21, Accounting for revenue
arrangements with multiple deliverables, to assess whether the components of the bundled services should be recognized separately.
For bundled packages that have separately identifiable components, the total consideration is allocated to the different
components based on their relative fair values. Where the fair value of a delivered component cannot be determined reliably but the
fair value of the undelivered component can be, the fair value of the undelivered component is deducted from the total consideration
and the net amount is allocated to the delivered components based on the “residual value” method.
Programming revenues are recognized in accordance with SOP 00−2, Accounting by Producers or Distributors of Films.
Revenue on transactional and interactive sales is recognized as and when the services are delivered. Advertising sales revenue is
recognized at estimated realizable values when the advertising is aired.
Retail revenues are recognized on dispatch of goods to customers and are net of discounts given and less actual and expected
returns, refunds and credit card charge−backs.
Subscriber Acquisition Costs
Costs incurred in respect to the acquisition of customers of our Mobile segment, including payments to distributors and the cost
of handset promotions, are expensed as incurred.
Advertising Expense
We expense the cost of advertising as incurred. Advertising costs were £71.8 million, £51.1 million and £40.3 million in 2006,
2005 and 2004, respectively.
Stock−Based Compensation
We are an indirect, wholly−owned subsidiary of Virgin Media. Accordingly, we have no stock−based compensation plans.
Certain of our employees participate in the stock−based compensation plans of Virgin Media, which are described in Virgin Media’s
annual report. Prior to January 1, 2006 Virgin Media accounted for these plans using the fair value recognition provisions of FASB
Statement No. 123, Accounting for Stock−Based Compensation (FAS 123). On December 16, 2004, the Financial Accounting
Standards Board (“FASB”) issued Statement No. 123 (revised 2004), Share Based Payment (FAS 123R), which is a revision of
FAS 123. FAS 123R also supersedes APB 25 and amends FASB Statement No. 95, Statement of Cash Flows (FAS 95). Virgin Media
adopted FAS 123R on January 1, 2006 and elected to use the modified prospective method, therefore, prior period results were not
restated.
Pensions
We account for our defined benefit pension plans using FASB Statement No. 87, Employer’s Accounting for Pensions (FAS
87) and the disclosure rules under FASB Statement No. 132 (revised), Employers Disclosures about Pensions and Other
Postretirement Benefits, an Amendment of FASB Statements 87, 88 and 106 (FAS 132R). Under FAS 87, pension expense is
recognized on an accrual basis over
F−75
Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007