Virgin Media 2012 Annual Report Download - page 156

F-85
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, 2012 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 £35.9 million and £44.5 million as of
December 31, 2012 and 2011, respectively, are included on the consolidated balance sheets.
Restructuring Costs
We account for our restructuring costs, which comprise 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.
Consumer
Fixed line telephone, cable television and internet revenues are recognized as the services are provided to customers.
At the end of each period, adjustments are recorded to defer revenue relating to services billed in advance and to
accrue for earned but unbilled services.
Installation revenue for our Consumer segment is recognized in accordance with the provisions of the Entertainment
—Cable Television Topic of the FASB ASC in relation to installation fees for cable television, fixed line telephone, and
broadband internet services. Installation revenues are recognized at the time the installation is completed to the extent
those fees are less than direct selling costs, which is generally the case.
Mobile handset and other equipment revenues are recognized when the goods have been delivered and title has
passed. Equipment revenue is stated net of discounts earned through service usage.
Mobile service revenues include airtime, data, roaming and long-distance revenues and are invoiced and recorded as
part of a periodic billing cycle. Service revenues are recognized as the services are provided. At the end of each
period, adjustments are recorded to defer revenue relating to services billed in advance and to accrue for earned but
unbilled services. Revenue from non-contract pre-pay customers is recorded as deferred revenue prior to
commencement of services and is recognized as the services are rendered or usage rights expire.
Business
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)