Virgin Media 2006 Annual Report Download - page 93

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
estimates and assumptions, including the expected period over which the asset will be utilized, projected future operating results of the
asset group, discount rate and long term growth rate.
As of December 31, 2006, we reviewed our long−lived assets for impairment and determined that there was no impairment of our
long−lived assets.
Deferred Financing Costs
Deferred financing costs of £99.7 million and £57.1 million as of December 31, 2006 and 2005, respectively, are included in
other assets. Deferred financing costs are incurred in connection with the issuance of debt and are amortized over the term of the
related debt using the effective interest method.
Restructuring Costs
As of January 1, 2003, we adopted FASB Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities
(FAS 146) and recognize a liability for costs associated with restructuring activities when the liability is incurred. Prior to 2003, we
recognized a liability for costs associated with restructuring activities at the time a commitment to restructure is given in accordance
with EITF 94−3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a restructuring). Liabilities for costs associated with restructuring activities initiated prior to January 1,
2003 continue to be accounted for under EITF 94−3.
In 2006, we initiated a number of restructuring programs as part of our acquisitions of Telewest and Virgin Mobile. Provisions in
respect to exit activities of the acquired businesses are recognized under EITF 95−3, Recognition of Liabilities in Connection with a
Purchase Business Combination and included on the acquired company’s opening balance sheet. Provisions in respect to exit activities
of the historic NTL business are recognized under FAS 146.
Revenue Recognition
We recognize revenue only when it is realized or realizable and earned. We recognize revenue when all of the following are
present:
• persuasive evidence of an arrangement exists between us and our customers;
• delivery has occurred or the services have been rendered;
• the price for the service is fixed or determinable; and
• collectibility is reasonably assured.
Telephone, cable television and internet revenues are recognized as the services are provided to customers. At the end of each
period, adjustments are recorded to defer revenue relating to services billed in advance and to accrue for earned but unbilled services.
Installation revenues are recognized in accordance with the provisions of FASB Statement No. 51, Financial Reporting by Cable
Television Companies, in relation to connection and activation fees for cable television, as well as telephone and internet services, on
the basis that we market and maintain a unified fiber network through which we provide all of these services. Installation revenues are
recognized at the time the installation has been completed to the extent that those fees are less than direct selling costs.
F−13
Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007