Virgin Media 2010 Annual Report Download - page 192

VIRGIN MEDIA INVESTMENT HOLDINGS LIMITED AND SUBSIDIARIES
VIRGIN MEDIA INVESTMENTS LIMITED AND SUBSIDIARIES
COMBINED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 2—Significant Accounting Policies (continued)
Intangible assets include customer lists. Customer lists represent the portion of the purchase price allocated
to the value of the customer base acquired in business combinations. Customer lists are amortized on a straight-
line basis over the period in which we expect to derive benefits, which is principally three to six years.
Asset Retirement Obligations
We account for our obligations under the Waste Electrical and Electronic Equipment Directive adopted by
the European Union in accordance with the Asset Retirement and Environmental Obligations Topic of the FASB
ASC whereby we accrue the cost to dispose of certain of our customer premises equipment at the time of
acquisition. We also record asset retirement obligations for the estimated cost of removing leasehold
improvements and equipment that have been installed on leased network sites and administrative buildings.
Impairment of Long-Lived Assets
In accordance with the Property, Plant and Equipment Topic of the FASB ASC, long-lived assets, including
fixed assets and amortizable definite lived intangible assets, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. We assess the recoverability
of the carrying value of long-lived assets, by first grouping our long-lived assets with other assets and liabilities
at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and
liabilities (the asset group) and, secondly, estimating the undiscounted future cash flows that are directly
associated with and expected to arise from the use of and eventual disposition of such asset group. We estimate
the undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the
carrying value of the asset group exceeds the estimated undiscounted cash flows, we record an impairment
charge to the extent the carrying value of the long-lived asset exceeds its fair value. We determine fair value
through quoted market prices in active markets or, if quoted market prices are unavailable, through the
performance of internal analysis of discounted cash flows or external appraisals. The undiscounted and
discounted cash flow analyses are based on a number of estimates and assumptions, including the expected
period over which the asset will be utilized, projected future operating results of the asset group, discount rate
and long term growth rate.
As of December 31, 2010 there were no indicators of impairment that suggest the carrying amounts of our
long-lived assets are not recoverable.
Deferred Financing Costs
Deferred financing costs are incurred in connection with the issuance of debt and are amortized over the
term of the related debt using the effective interest method. Deferred financing costs of £89.4 million and
£101.8 million as of December 31, 2010 and 2009, respectively, are included on the consolidated balance sheets.
Restructuring Costs
We account for our restructuring costs, which comprise of lease and contract exit costs as well as employee
termination costs, in accordance with the Exit or Disposal Cost Obligations Topic of the FASB ASC and recognize a
liability for costs associated with restructuring activities when the liability is incurred. In 2008, we initiated a
restructuring program aimed at driving further improvements in our operational performance and eliminating
inefficiencies. Accruals in respect of exit activities within this program are recognized at the date the liability is incurred.
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