Virgin Media 2012 Annual Report Download - page 154

F-83
Cash and Cash Equivalents and Restricted Cash
Cash equivalents are short term highly liquid investments purchased with an original maturity of three months or less
and are recorded at amortized cost, which approximates fair value. We had cash and cash equivalents totaling £194.9
million and £282.0 million as at December 31, 2012 and 2011, respectively.
Restricted cash balances of £1.9 million as at December 31, 2012 and £1.9 million as at December 31, 2011 represent
cash balances collateralized against performance bonds given on our behalf.
Trade Receivables
Our trade receivables are stated at outstanding principal balance, net of allowance for doubtful accounts. Allowances
for doubtful accounts are estimated based on the current aging of trade receivables, prior collection experience and
future expectations of conditions that might impact recoverability. Amounts charged to expense are included in selling,
general and administrative expenses in the consolidated statements of comprehensive income. The movements in
our allowance for doubtful accounts for the years ended December 31, 2012, 2011 and 2010 are as follows (in millions):
Year ended December 31,
2012 2011 2010
Balance, January 1 £ 10.9 £ 6.4 £ 9.0
Charged to costs and expenses 30.2 32.6 25.4
Write offs, net of recoveries (32.1) (28.1) (28.0)
Balance, December 31 £ 9.0 £ 10.9 £ 6.4
Inventory
Inventory consists of consumer goods for re-sale. Consumer goods for re-sale are valued at the lower of cost or market
value using the first-in, first-out, or FIFO, method. Cost represents the invoiced purchase cost of inventory. This valuation
requires us to make judgments, based on currently available information, about obsolete, slow-moving, or defective
inventory. Based upon these judgments and estimates, which are applied consistently from period to period, we adjust
the carrying amount of our inventory for re-sale to the lower of cost or market value. Included within prepaid expenses
and other current assets is inventory of £17.5 million and £13.1 million as at December 31, 2012 and 2011, respectively.
Fixed Assets
Depreciation is computed by the straight-line method over the estimated useful lives of the assets. Land is not
depreciated. Estimated useful lives are as follows:
Operating equipment:
Cable distribution plant 5-30 years
Switches and headends 3-10 years
Customer premises equipment 5-10 years
Other operating equipment 4-20 years
Other equipment:
Buildings 20-50 years
Leasehold improvements 7 years or, if less, the lease term
Computer infrastructure 3-5 years
Other equipment 5-10 years
Costs associated with network construction, initial customer installations, initial installations of new services in customer
premises, and the addition of network equipment to provide new or enhanced services are capitalized. Costs capitalized
as part of initial customer installations include materials and direct labor.
Table of Contents
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)