Virgin Media 2009 Annual Report Download - page 110

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2—Significant Accounting Policies (Continued)
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 the Revenue
Recognition Topic of the FASB ASC, 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 the Entertainment—Films Topic of the
FASB ASC. Revenue on transactional and interactive sales is recognized as and when the services are
delivered. Advertising sales revenue is recognized at estimated realizable values when the advertising is
aired.
Subscriber Acquisition Costs
Costs incurred in respect to the acquisition of our customers, including payments to distributors
and the cost of mobile handset promotions, are expensed as incurred.
Advertising Expense
We expense the cost of advertising as incurred. Advertising costs were £105.7 million, £99.8 million
and £108.6 million in 2009, 2008 and 2007, respectively.
Stock-Based Compensation
We have a number of stock-based employee compensation plans, as described more fully in
note 11. We account for these compensation plans in accordance with the Compensation—Stock
Compensation Topic of the FASB ASC which requires all entities to measure liabilities incurred in
stock-based payment transactions at fair value and to estimate the number of instruments for which the
requisite service period is expected to be rendered. Where applicable, modifications to the terms or
conditions of an award are measured by comparing the fair value of the modified award with the fair
value of the award immediately before the modification.
Pensions
We account for our defined benefit pension arrangements in accordance with the Compensation-
Retirement Benefits Topic of the FASB ASC which requires that pension expense is recognized on an
accrual basis over employees’ approximate service periods. Pension expense calculated is generally
independent of funding decisions or requirements.
We recognize the funded status of our defined benefit postretirement plans on our balance sheet,
and changes in the funded status are reflected in comprehensive income.
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