Virgin Media 2008 Annual Report Download - page 177

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2—Significant Accounting Policies (Continued)
Software Development Costs
We capitalize costs related to computer software developed or obtained for internal use in
accordance with SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use. Software obtained for internal use has generally been enterprise-level business and finance
software that we customize to meet our specific operational needs. Costs incurred in the application
development phase are capitalized and amortized over their useful lives, which are generally three to
five years. We have not sold, leased or licensed software developed for internal use to our customers
and we have no intention of doing so in the future.
Income Taxes
We provide for income taxes in accordance with FASB Statement No. 109, Accounting for Income
Taxes. Judgment is required in determining our provision for income taxes, deferred tax assets and
liabilities and the extent to which deferred tax assets can be recognized. We recognize deferred tax
assets only if it is more likely than not that sufficient taxable income will be available in the future
against which the temporary differences and unused tax losses can be utilized. We have considered
future taxable income and tax planning strategies in assessing whether deferred tax assets should be
recognized.
In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement 109, or FIN 48. FIN 48 prescribes a comprehensive model
for recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or
expected to be taken on a tax return, including a decision whether to file or not to file in a particular
jurisdiction. We adopted FIN 48 on January 1, 2007. The adoption did not have a material effect on
our consolidated financial statements.
Note 3—Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board, or FASB, issued Statement
No. 157, Fair Value Measurements, or FAS 157. FAS 157 provides guidance for using fair value to
measure assets and liabilities. It also responds to investors’ requests for expanded information about
the extent to which companies measure assets and liabilities at fair value, the information used to
measure fair value, and the effect of fair value measurements on earnings. FAS 157 applies whenever
other standards require (or permit) assets or liabilities to be measured at fair value, and does not
expand the use of fair value in any new circumstances. FAS 157 is effective for certain financial
instruments included in financial statements issued for fiscal years beginning after November 15, 2007
and for all other non-financial instruments for fiscal years beginning after November 15, 2008. The
provisions of FAS 157 relating to certain financial instruments were adopted by us in the first quarter
of 2008 effective January 1, 2008, and did not have a material impact on our consolidated financial
statements.
In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets
and Financial Liabilities—Including an amendment of FASB Statement No. 115, or FAS 159. FAS 159
allows companies to elect to measure certain assets and liabilities at fair value and is effective for fiscal
years beginning after November 15, 2007. We did not elect to measure any of our financial assets or
liabilities at fair value as a result of the implementation of FAS 159.
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