Virgin Media 2011 Annual Report Download - page 100

VIRGIN MEDIA INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 2—Significant Accounting Policies (continued)
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, 2011 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 £75.7 million and
£98.6 million as of December 31, 2011 and 2010, respectively, are included on the consolidated balance sheets.
Deferred financing costs associated with our convertible senior notes are amortized to the expected due date of
the notes which is currently November 2016. Should the holders of the convertible senior notes have the ability
to, and elect to, convert their notes prior to November 2016, we will expense the deferred financing costs
associated with the converted notes in the period of conversion.
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.
Revenue Recognition
Revenue is stated net of value added tax, or VAT, collected from customers on behalf of tax authorities.
On January 1, 2011 we adopted new accounting guidance issued by the FASB for revenue arrangements
with multiple-elements. We adopted this guidance on a prospective basis applicable for transactions originating
or materially modified after the date of adoption. This guidance changed the criteria for separating units of
accounting in multiple-element arrangements and the way in which an entity is required to allocate revenue to
these units of accounting.
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