XM Radio 2008 Annual Report Download - page 67

Other intangible assets with indefinite lives are tested for impairment at least annually or more frequently if
indicators of impairment exist under the provisions of SFAS No. 142.
Other intangible assets with finite lives are amortized over their respective estimated useful lives to their
estimated residual values, and reviewed for impairment under the provisions of SFAS No. 144, Accounting for
Impairment or Disposal of Long-Lived Assets.
Fair Value of Financial Instruments
The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly
transaction between market participants to sell the asset or transfer the liability. As of December 31, 2008 and 2007,
we have determined that the carrying amounts of cash and cash equivalents, accounts and other receivables, and
accounts payable approximate fair value due to the short-term nature of these instruments.
The fair value of our long-term debt is determined by either (i) estimation of the discounted future cash flows
of each instrument at rates currently offered to us for similar debt instruments of comparable maturities by our
bankers, or quoted market prices at the reporting date for the traded debt securities. As of December 31, 2008 and
2007, the carrying value of long-term debt was $3,251,466 and $1,314,418, respectively; while the fair value
approximated $1,211,613 and $1,309,017, respectively.
Reclassifications
Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the
current period presentation.
Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This Statement defines fair
value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. In
February 2008, the FASB issued FASB Staff Position (“FSP”) 157-1, Application of FASB Statement No. 157 to
FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for
Purposes of Lease Classification or Measurement under Statement 13 and FSP 157-2, Effective Date of FASB
Statement No. 157. FSP 157-1 amends SFAS No. 157 to remove certain leasing transactions from its scope.
FSP 157-2, delays the effective date of SFAS No. 157 for all nonfinancial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on at least an annual basis, until January 1, 2009 for
calendar year end entities. In October 2008, the FASB issued FSP 157-3, Determining the Fair Value of a Financial
Asset When the Market for That Asset Is Not Active, which provides a detailed example to illustrate key
considerations in determining the fair value of a financial asset in an inactive market, and emphasizes the
requirements to disclose significant unobservable inputs used as a basis for estimating fair value. We adopted the
provisions of SFAS No. 157 on January 1, 2008, except as it applies to nonfinancial assets and liabilities as noted in
FSP 157-2. Neither the partial adoption nor the issuance of FSP 157-3 had any significant impact on our
consolidated results of operations or financial position. We will adopt the provisions of SFAS No. 157, as
amended, on January 1, 2009 as it relates to nonfinancial assets and liabilities, and do not expect a significant impact
on our consolidated results of operations or financial position as a result.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities — Including an Amendment of FASB Statement No. 115, which permits entities to choose to measure
many financial instruments and certain other items at fair value. The objective is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets
and liabilities differently without having to apply complex hedge accounting provisions. This Statement is expected
to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement
objectives for accounting for financial instruments. We adopted the provisions of SFAS No. 159 on January 1, 2008
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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)