Virgin Media 2006 Annual Report Download - page 89

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
results of operations and cashflows for Virgin Mobile are included in the consolidated financial statements from July 4, 2006, the date
of its acquisition.
Use of Estimates
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles requires management
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such
estimates and assumptions impact, among others, the following: the amount of uncollectible accounts and notes receivable, the amount
to be paid to terminate certain agreements included in restructuring costs, amounts accrued for vacated properties, the amount to be
paid for other liabilities, including contingent liabilities, our pension expense and pension funding requirements, amounts to be paid
under our employee incentive plans, costs for interconnection, the amount of costs to be capitalized in connection with the
construction and installation of our network and facilities, long−lived assets, certain other intangible assets and the computation of our
income tax expense and liability. Actual results could differ from those estimates.
Fair Values
We have determined the estimated fair value amounts presented in these consolidated financial statements using available market
information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the
estimates of fair value. The estimates presented in these consolidated financial statements are not necessarily indicative of the amounts
that we could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may
have a material effect on the estimated fair value amounts. We have based these fair value estimates on pertinent information available
to us as of December 31, 2006 and 2005.
Principles of Consolidation
The consolidated financial statements include the accounts for us and our wholly−owned subsidiaries. Intercompany accounts
and transactions have been eliminated on consolidation. Our consolidated financial statements also include the accounts of variable
interest entities (“VIEs”), which are entities that among other things, lack sufficient equity to finance their activities without additional
support from other parties. All significant intercompany accounts and transactions have been eliminated. The operating results of
acquired companies are included in our consolidated statement of operations from the date of acquisition.
For investments in which we own 20% to 50% of the voting shares and have significant influence over the operating and
financial policies, the equity method of accounting is used. Accordingly, our share of the earnings and losses of these companies are
included in the share of income (losses) in equity investments in the accompanying consolidated statements of operations. For
investments in which we own less than 20% of the voting shares and do not have significant influence, the cost method of accounting
is used. Under the cost method of accounting, we do not record our share in the earnings and losses of the companies in which we
have an investment.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year presentation.
F−9
Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007