XM Radio 2010 Annual Report Download - page 98

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(3) Summary of Significant Accounting Policies
Use of Estimates
In presenting consolidated financial statements, management makes estimates and assumptions that affect the
reported amounts and accompanying notes. Additionally, estimates were used when recording the fair values of
assets acquired and liabilities assumed in the Merger. Estimates, by their nature, are based on judgment and
available information. Actual results could differ materially from those estimates.
Significant estimates inherent in the preparation of the accompanying consolidated financial statements
include revenue recognition, asset impairment, useful lives of our satellites, share-based payment expense, and
valuation allowances against deferred tax assets. Economic conditions in the United States could have a material
impact on our accounting estimates.
Recent Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) updated Accounting Standards Codification (“ASC”)
470 to incorporate ASU 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Con-
vertible Debt Issuance or Other Financing, into the ASC. This standard requires share-lending arrangements in an
entity’s own shares to be initially measured at fair value and treated as an issuance cost, excluded from basic and
diluted earnings per share, and requires an entity to recognize a charge to earnings if it becomes probable the
counterparty will default on the arrangement. This guidance was adopted as of January 1, 2010 on a retrospective
basis, as required, for all arrangements outstanding as of that date. The following table reflects the retrospective
adoption of ASU 2009-15 on our December 31, 2009 consolidated balance sheet:
As Originally
Reported
Retrospective
Adjustments
As Currently
Reported
Balance Sheet Line Item:
Deferred financing fees, net .................... $ 8,902 $ 57,505 $ 66,407
Related party long-term assets, net of current
portion ................................. 110,594 1,173 111,767
Long-term debt, net of current portion ............ 2,799,127 575 2,799,702
Long-term related party debt, net of current portion . . 263,566 13 263,579
Additional paid-in capital ..................... 10,281,331 70,960 10,352,291
Accumulated deficit ......................... (10,241,238) (12,870) (10,254,108)
The following table reflects the adoption of ASU 2009-15 on our statement of operations for the years ended
December 31, 2009 and 2008:
As Originally
Reported
Retrospective
Adjustments
As Currently
Reported
As Originally
Reported
Retrospective
Adjustments
As Currently
Reported
For the Year Ended
December 31, 2009
For the Year Ended
December 31, 2008
Statement of Operations Line
Item:
Interest expense, net of amounts
capitalized ............. $(306,420) $(9,248) $(315,668) $ (144,833) $(3,622) $ (148,455)
Net loss attributable to common
stockholders ............ (528,978) (9,248) (538,226) (5,313,288) (3,622) (5,316,910)
For the year ended December 31, 2010, we recorded $10,095, in interest expense related to the amortization of
the costs associated with the share-lending arrangement and other issuance costs. As of December 31, 2010, the
unamortized balance of the debt issuance costs was $51,243, with $50,218 recorded in deferred financing fees, net,
F-10
SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)