Virgin Media 2008 Annual Report Download - page 174

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2—Significant Accounting Policies (Continued)
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.
Rental revenues in respect of line rentals and rental of equipment provided to customers are
recognized on a straight-line basis over the term of the rental agreement.
Mobile handset and other equipment revenues are recognized when the goods have been delivered
and title has passed. Equipment revenue is stated net of discounts earned through service usage.
Mobile service revenues include airtime, data, roaming and long-distance revenues and are invoiced
and recorded as part of a periodic billing cycle. Service revenues are recognized as the services are
provided. 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.
Contract customers are billed in arrears based on usage and revenue is recognized when the
service is rendered and collectibility is reasonably assured. Revenue from non-contract pre-pay
customers is recorded as deferred revenue prior to commencement of services and is recognized as the
services are rendered or usage expires.
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
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