Virgin Media 2009 Annual Report Download - page 105

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2—Significant Accounting Policies (Continued)
and indefinite life assets, 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 including, where
appropriate, the recording of adjustments to fair values to reflect non-performance risk. 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, 2009
and 2008.
Foreign Currency Translation
Our reporting currency is the pound sterling because substantially all of our revenues, operating
costs and selling, general and administrative expenses are denominated in U.K. pound sterling.
Exchange gains and losses on translation of our net equity investments in subsidiaries having functional
currencies other than the pound sterling are reported as a separate component of accumulated other
comprehensive income in shareholders’ equity. Foreign currency transactions involving amounts
denominated in currencies other than a subsidiary’s functional currency are recorded at the exchange
rate ruling at the date of the transaction and are remeasured each period with gains and losses
recorded in the consolidated statement of operations.
Cash Equivalents and Restricted Cash
Cash equivalents are short term highly liquid investments purchased with an original maturity of
three months or less. We had cash equivalents totaling £370.4 million and £128.8 million as at
December 31, 2009 and 2008, respectively.
Restricted cash balances of £6.0 million as at December 31, 2009 and £6.1 million as at
December 31, 2008 represent cash balances collateralized against performance bonds given on our
behalf.
Trade Receivables
Our trade receivables are stated at outstanding principal balance, net of allowance for doubtful
accounts. Allowances for doubtful accounts are estimated based on the current aging of trade
receivables, prior collection experience and future expectations of conditions that might impact
F-9