Waste Management 2008 Annual Report Download - page 108
Download and view the complete annual report
Please find page 108 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.unpaid claims is included in “Accrued liabilities” in our Consolidated Balance Sheets if expected to be settled
within one year, or otherwise is included in long-term “Other liabilities.” Estimated insurance recoveries related to
recorded liabilities are reflected as current “Other receivables” or long-term “Other assets” in our Consolidated
Balance Sheets when we believe that the receipt of such amounts is probable.
Foreign currency
We have operations in Canada. The functional currency of our Canadian subsidiaries is Canadian dollars. The
assets and liabilities of our foreign operations are translated to U.S. dollars using the exchange rate at the balance
sheet date. Revenues and expenses are translated to U.S. dollars using the average exchange rate during the period.
The resulting translation difference is reflected as a component of comprehensive income.
Revenue recognition
Our revenues are generated from the fees we charge for waste collection, transfer, disposal and recycling
services and the sale of recycled commodities, electricity and steam. The fees charged for our services are generally
defined in our service agreements and vary based on contract specific terms such as frequency of service, weight,
volume and the general market factors influencing a region’s rates. The fees we charge for our services generally
include fuel surcharges, which are intended to pass through increased direct and indirect costs incurred because of
changes in market prices for fuel. We generally recognize revenue as services are performed or products are
delivered. For example, revenue typically is recognized as waste is collected, tons are received at our landfills or
transfer stations, recycling commodities are delivered or as kilowatts are delivered to a customer by a waste-to-
energy facility or independent power production plant.
We bill for certain services prior to performance. Such services include, among others, certain residential
contracts that are billed on a quarterly basis and equipment rentals. These advance billings are included in deferred
revenues and recognized as revenue in the period service is provided.
Capitalized interest
We capitalize interest on certain projects under development, including internal-use software and landfill
expansion projects, and on certain assets under construction, including operating landfills and waste-to-energy
facilities. During 2008, 2007 and 2006, total interest costs were $472 million, $543 million and $563 million,
respectively, of which $17 million for 2008, $22 million for 2007 and $18 million for 2006, were capitalized,
primarily for landfill construction costs. The capitalization of interest for operating landfills is based on the costs
incurred in the pursuit of probable landfill expansions and on discrete landfill cell construction projects that are
expected to exceed $500,000 and require over 60 days to construct. In addition to the direct cost of the cell
construction project, the calculation of capitalized interest includes an allocated portion of the common landfill site
costs. The common landfill site costs include the development costs of a landfill project or the purchase price of an
operating landfill, and the ongoing infrastructure costs benefiting the landfill over its useful life. These costs are
amortized to expense in a manner consistent with other landfill site costs.
Income taxes
The Company is subject to income tax in the United States, Canada and Puerto Rico. Current tax obligations
associated with our provision for income taxes are reflected in the accompanying Consolidated Balance Sheets as a
component of “Accrued liabilities,” and the deferred tax obligations are reflected in “Deferred income taxes.”
Deferred income taxes are based on the difference between the financial reporting and tax basis of assets and
liabilities. The deferred income tax provision represents the change during the reporting period in the deferred tax
assets and deferred tax liabilities, net of the effect of acquisitions and dispositions. Deferred tax assets include tax
loss and credit carryforwards and are reduced by a valuation allowance if, based on available evidence, it is more
74
WASTE MANAGEMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)