Waste Management 2007 Annual Report Download - page 104

Assets held-for-sale
During our operations review processes, we, from time to time, identify under-performing operations. We
assess these operations for opportunities to improve their performance. A possible conclusion of this review may be
that offering the related assets for sale to others is in our best interests. Additionally, we continually review our real
estate portfolio and identify any surplus property.
We classify these assets as held-for-sale when they meet the following criteria: (i) management, having the
authority to approve the action, commits to a plan to sell the assets; (ii) the assets are available for immediate sale in
their present condition, subject only to conditions that are usual and customary for the sale of such assets; (iii) we are
actively searching for a buyer; (iv) the assets are being marketed at a price that is reasonable in relation to their
current fair value; (v) actions necessary to complete the plan indicate that it is unlikely that significant changes to
the plan will be made or the plan will be withdrawn; and (vi) the sale is probable and the transfer is expected to
qualify for recognition as a completed sale within one year.
These assets are recorded at the lower of their carrying amount or their fair value less the estimated cost to sell
and are included within current “Other assets” within our Consolidated Balance Sheets. We continue to review our
classification of assets held-for-sale to ensure they meet our held-for-sale criteria.
Discontinued operations
We analyze our operations that have been divested or classified as held-for-sale in order to determine if they
qualify for discontinued operations accounting. Only operations that qualify as a component of an entity
(“Component”) under generally accepted accounting principles can be included in discontinued operations. Only
Components where we do not have significant continuing involvement with the divested operations would qualify
for discontinued operations accounting. For our purposes, continuing involvement would include continuing to
receive waste at our landfill, waste-to-energy facility or recycling facility from a divested hauling operation or
transfer station or continuing to dispose of waste at a divested landfill or transfer station. After completing our
analysis at December 31, 2007, we determined that the operations that qualify for discontinued operations
accounting are not material to our Consolidated Statements of Operations.
Goodwill and other intangible assets
Goodwill is the excess of our purchase cost over the fair value of the net assets of acquired businesses. In
accordance with SFAS No. 142, Goodwill and Other Intangible Assets, we do not amortize goodwill. As discussed
in the Asset impairments section below, we assess our goodwill for impairment at least annually.
Other intangible assets consist primarily of customer contracts, customer lists, covenants not-to-compete,
licenses, permits (other than landfill permits, as all landfill related intangible assets are combined with landfill
tangible assets and amortized using our landfill amortization policy) and other contracts. Other intangible assets are
recorded at cost and are amortized using either a 150% declining balance approach or on a straight-line basis as we
determine appropriate. Customer contracts and customer lists are generally amortized over seven to ten years.
Covenants not-to-compete are amortized over the term of the non-compete covenant, which is generally two to five
years. Licenses, permits and other contracts are amortized over the definitive terms of the related agreements. If the
underlying agreement does not contain definitive terms and the useful life is determined to be indefinite, the asset is
not amortized.
Asset impairments
We monitor the carrying value of our long-lived assets for potential impairment and test the recoverability of
such assets whenever events or changes in circumstances indicate that their carrying amounts may not be
recoverable. If an indication of impairment occurs, the asset is reviewed to determine whether there has been
an impairment. An impairment loss is recorded as the difference between the carrying amount and fair value of the
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)