Virgin Media 2009 Annual Report Download - page 170

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2—Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S.
generally accepted accounting principles, or GAAP. We have evaluated subsequent events through the
date the financial statements were available to be issued on February 26, 2010.
On April 1, 2009, we sold our sit-up reporting unit, which was formerly included within our
Content segment. In accordance with the provisions of the Property, Plant and Equipment Topic of the
Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, the
planned sale of the sit-up business met the requirements for it to be reflected as assets and liabilities
held for sale and discontinued operations in both the current and prior periods. These consolidated
financial statements reflect sit-up as assets and liabilities held for sale and discontinued operations and
we have retrospectively adjusted the balance sheet as of December 31, 2008 and statements of
operations, cash flows and shareholders’ equity for the years ended December 31, 2008 and 2007.
Principles of Consolidation
The consolidated financial statements include the accounts for us and our wholly owned
subsidiaries. Intercompany accounts and transactions have been eliminated on consolidation. The
operating results of acquired companies are included in our consolidated statements of operations from
the date of acquisition.
For investments in which we own 20% to 50% of the voting shares and have significant influence
over the operating and financial policies, the equity method of accounting is used. Accordingly, our
share of the earnings and losses of these companies are included in the share of income (losses) in
equity investments in the accompanying consolidated statements of operations. For investments in
which we own less than 20% of the voting shares and do not have significant influence, the cost
method of accounting is used. Under the cost method of accounting, we do not record our share in the
earnings and losses of the companies in which we have an investment and such investments are
generally reflected in the consolidated balance sheet at historical cost.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Such estimates and assumptions impact, among others, the following: the amount
of uncollectible accounts receivable, the amount to be paid to terminate certain agreements included in
restructuring costs, amounts accrued for vacated properties, the amount to be paid for other liabilities,
including contingent liabilities, our pension expense and pension funding requirements, amounts to be
paid under our employee incentive plans, costs for interconnection, the amount of costs to be
capitalized in connection with the construction and installation of our network and facilities, goodwill
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.
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