Virgin Media 2010 Annual Report Download - page 103

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 2—Significant Accounting Policies (continued)
On June 4, 2010, we announced the sale to BSkyB of our television channel business known as Virgin
Media TV. Virgin Media TV’s operations comprised our former Content segment. We determined that as of
June 30, 2010 the planned sale met the requirements for Virgin Media TV to be reflected as assets and liabilities
held for sale and discontinued operations in both the current and prior periods, and accordingly, we adjusted the
consolidated balance sheet as of December 31, 2009 and consolidated statements of operations, cash flows and
shareholders’ equity for the years ended December 31, 2009 and 2008. Virgin Media TV’s operations have been
included in discontinued operations through July 12, 2010, which is the date the sale was completed following
approval from regulators in Ireland.
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.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year presentation.
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
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