Virgin Media 2011 Annual Report Download - page 187

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)
Contingent rent is not a material component of our total rent expense.
Income Taxes
We provide for income taxes in accordance with the Income Taxes Topic of the FASB ASC. Judgment is
required in determining our provision for income taxes, deferred tax assets and liabilities and the extent to which
valuation allowances are necessary to reduce our deferred tax assets. We recognize valuation allowances if it is
not more likely than not that sufficient taxable income will be available in the future against which the temporary
differences and unused tax losses can be utilized. We have considered future taxable income and tax planning
strategies in assessing whether deferred tax assets should be recognized.
Recent Accounting Pronouncements
In September 2011, the FASB issued guidance permitting companies to first assess qualitative factors as a
basis for determining whether it is necessary to perform the two-step goodwill impairment test. The guidance is
effective for goodwill impairment tests performed for fiscal years beginning after December 15, 2011; however,
early adoption is permitted. We adopted this guidance effective October 1, 2011 and applied it to the
performance of our annual goodwill impairment test for both the consumer and business reporting units.
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. The adoption of this guidance has not had a material impact on our consolidated
financial statements for the year ended December 31, 2011. This is principally due to the fact that although prior
to the adoption of this guidance we were unable to meet the criteria to separate the units of accounting for our
residential customer arrangements, the Cable Television Topic of the FASB ASC required us to recognize initial
hookup revenues to the extent we had incurred direct selling costs. The impact of the adoption of this guidance
may be material in future years if we make material changes to product or service offerings, pricing structures,
the components of bundled arrangements or if we enter into material new arrangements in our Business segment.
Note 3—Disposals
Disposal of Equity Investment in UKTV
On September 30, 2011, we completed the sale to Scripps Network Interactive, Inc. (“Scripps”), of our 50%
equity investment in the UKTV joint venture with BBC Worldwide Limited. The aggregate consideration was
£349.9 million, which included approximately £98.1 million for Scripps’ acquisition of preferred equity, loan
stock and other debt. After the inclusion of associated fees, this transaction resulted in a loss on disposal of
£7.2 million in the consolidated statement of operations.
At December 31, 2010 the investment consisted of our £238.8 million share of net assets and £120.4 million
of loans and redeemable preference shares.
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