Virgin Media 2007 Annual Report Download - page 162

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. Significant Accounting Policies (Continued)
As of December 31, 2007, there were no indicators of impairment that suggest the carrying
amounts of our long-lived assets are not recoverable.
Deferred Financing Costs
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. Deferred financing costs of
£88.9 million and £99.7 million as of December 31, 2007 and 2006, respectively, are included in other
assets.
Restructuring Costs
As of January 1, 2003, we adopted FASB Statement No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, or 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), or EITF 94-3. 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. Accruals 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. Accruals 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.
Fixed line 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 fixed line 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. Installation fees in excess of direct selling costs are deferred and amortized
over the expected life of the customer’s connection.
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