Waste Management 2008 Annual Report Download - page 105
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Please find page 105 of the 2008 Waste Management annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Capital leases — Assets under capital leases are capitalized using interest rates appropriate at the inception of
each lease and are amortized over either the useful life of the asset or the lease term, as appropriate, on a straight-line
basis. The present value of the related lease payments is recorded as a debt obligation. Our future minimum annual
capital lease payments are included in our total future debt obligations as disclosed in Note 7.
Acquisitions
We account for the assets acquired and liabilities assumed in a business combination based on fair value
estimates as of the date of acquisition. These estimates are revised during the allocation period as necessary if, and
when, information regarding contingencies becomes available to further define and quantify assets acquired and
liabilities assumed. The allocation period generally does not exceed one year. To the extent contingencies such as
preacquisition environmental matters, litigation and related legal fees have been resolved or settled during the
allocation period, such items have been included in the revised allocation of the purchase price. After the allocation
period, the effect of changes in such contingencies has been included in results of operations in the periods in which
the adjustments are determined.
In certain acquisitions, we agree to pay additional amounts to sellers contingent upon achievement by the
acquired businesses of certain negotiated goals, such as targeted revenue levels, targeted disposal volumes or the
issuance of permits for expanded landfill airspace. Contingent payments, when incurred, have been recorded as
purchase price adjustments or compensation expense, as appropriate, based on the nature of each contingent
payment. Refer to the Guarantees section of Note 10 for additional information related to these contingent
obligations.
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 under
generally accepted accounting principles can be included in discontinued operations. Only components of an entity
where we do not have significant continuing involvement with the divested operations would qualify for discon-
tinued 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, 2008, 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 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.
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WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)