Virgin Media 2013 Annual Report Download - page 38

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VIRGIN MEDIA INC.
(See note 1)
Notes to Consolidated Financial Statements — (Continued)
December 31, 2013, 2012 and 2011
II - 13
Alignment of accounting policies
On June 8, 2013, we adopted Liberty Global’s accounting policy for installation fees relating to our B2B contracts involving
both installation services and the provision of ongoing services. Previously, we generally treated installation fees received from
customers with B2B contracts as a separate deliverable and recognized revenue upon completion of the installation activity in an
amount that was based on the relative standalone selling price methodology. Our current accounting policy is to generally defer
upfront installation fees on our B2B contracts and recognize the associated revenue over the contractual term of the arrangement.
The following table provides the amount of installation revenue we previously recognized that would have been deferred under
Liberty Global’s accounting policy in the indicated periods (in millions):
Year ended December 31, 2012.............................................................................................................................. £ 69.6
Period from January 1, 2013 to June 7, 2013 ......................................................................................................... £ 17.5
The following table provides a rollforward of our deferred revenue for installation services provided to customers with B2B
contracts in the period from June 7, 2013 through December 31, 2013 (in millions):
Balance at June 7, 2013 (a)..................................................................................................................................... £ —
Amounts deferred for completed installation services (b)................................................................................. 5.4
Amortization of deferred revenue over contract life.......................................................................................... (0.2)
Balance at June 30, 2013 ........................................................................................................................................ 5.2
Amounts deferred for completed installation services (b) ................................................................................ 10.6
Amortization of deferred revenue over contract life......................................................................................... (0.5)
Balance at September 30, 2013 .............................................................................................................................. 15.3
Amounts deferred for completed installation services (b) ................................................................................ 18.7
Amortization of deferred revenue over contract life......................................................................................... (2.1)
Balance at December 31, 2013............................................................................................................................... £ 31.9
______________
(a) Amounts that were included in Old Virgin Media’s consolidated balance sheet as of June 7, 2013 were eliminated in
acquisition accounting. For additional information, see note 3.
(b) Represents amounts that would have been recognized upfront as installation revenue under Old Virgin Media’s policy, but
were deferred under Liberty Global’s policy.
(2) Summary of Significant Accounting Policies
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
(GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and
assumptions are used in accounting for, among other things, the valuation of acquisition-related assets and liabilities, allowances
for uncollectible accounts, programming and copyright expenses, deferred income taxes and related valuation allowances, loss
contingencies, fair value measurements, impairment assessments, capitalization of internal costs associated with construction and
installation activities, useful lives of long-lived assets, share-based compensation and actuarial liabilities associated with certain
benefit plans. Actual results could differ from those estimates.
Reclassifications and Retrospective Restatement
Reclassifications. Certain prior period amounts have been reclassified to conform to the presentation of Liberty Global
including (i) reclassifications between operating costs and SG&A expenses in our consolidated statements of operations for the