XM Radio 2009 Annual Report Download - page 170

Property and Equipment
Property and equipment, including satellites, are stated at cost less accumulated depreciation and amortization.
Equipment under capital leases is stated at the present value of minimum lease payments. Depreciation and
amortization are calculated using the straight-line method over the following estimated useful lives:
Satellite system ............................. 2—15years
Terrestrial repeater network .................... 5—15years
Broadcast studio equipment .................... 3—15years
Capitalized software and hardware ............... 3—7years
Satellite telemetry, tracking and control facilities .... 3—17.5 years
Furniture, fixtures, equipment and other ........... 2—7years
Building .................................. 20or30years
Leasehold improvements ...................... Lesser of useful life or remaining lease term
We review long-lived assets, such as property and equipment, and purchased intangibles subject to amor-
tization for impairment whenever events or changes in circumstances indicate the carrying amount may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an
asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds the estimated future cash flows, an impairment charge is recognized for the amount by which the
carrying amount exceeds the fair value of the asset.
Goodwill and Other Intangible Assets
Goodwill represents the purchase price in excess of the net amount assigned to identifiable assets acquired and
liabilities assumed in the Merger. We perform an impairment test annually in early October, or more frequently if
indicators of impairment exist. The fair value of the entity is compared to its carrying value and if the fair value
exceeds its carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, the implied fair
value of goodwill is compared to the carrying value of goodwill. If the implied fair value exceeds the carrying value
then goodwill is not impaired; otherwise, an impairment loss will be recorded by the amount the carrying value
exceeds the implied fair value.
Other intangible assets with indefinite lives are tested for impairment at least annually or more frequently if
indicators of impairment exist.
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 ASC 360-10-35, Property, Plant
and Equipment/Overall/Subsequent Measurement.
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, 2009 and 2008,
the carrying amounts of cash and cash equivalents, accounts and other receivables, and accounts payable
approximated fair value due to the short-term nature of these instruments.
The fair value for publicly traded instruments is determined using quoted market prices and, for non-publicly
traded instruments, fair value is based upon estimates from a market maker and brokerage firm. As of December 31,
2009 and 2008, the carrying value of our long-term debt was $3,076,575 and $3,220,507, respectively; and the fair
value approximated $3,195,375 and $1,211,613, respectively.
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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)