XM Radio 2012 Annual Report Download - page 95

SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The difference between our investment and our share of the fair value of the underlying net assets of our
affiliates is first allocated to either finite-lived intangibles or indefinite-lived intangibles and the balance is
attributed to goodwill. We follow ASC 350, Intangibles — Goodwill and Other, which requires that equity
method finite-lived intangibles be amortized over their estimated useful life while indefinite-lived intangibles and
goodwill are not amortized. The amortization of equity method finite-lived intangible assets is recorded in
Interest and investment income (loss) in our consolidated statements of comprehensive income. We periodically
evaluate our equity method investments to determine if there has been an other than temporary decline below
carrying value. Equity method finite-lived intangibles, indefinite-lived intangibles and goodwill are included in
the carrying amount of the investment.
Property and Equipment
Property and equipment, including satellites, are stated at cost, less accumulated depreciation. Equipment
under capital leases is stated at the present value of minimum lease payments. Depreciation are calculated using
the straight-line method over the following estimated useful life of the asset:
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 ..... 3-15years
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
amortization 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. We did not record any impairments in 2012,
2011 or 2010.
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and
identifiable intangible assets acquired in business combinations. Our annual impairment assessment of our single
reporting unit is performed during the fourth quarter of each year, and an assessment is performed at other times
if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset
below its carrying value. Step one of the impairment assessment compares the fair value 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. We did not record any impairments in 2012, 2011 or 2010.
The impairment test for other intangible assets not subject to amortization consists of a comparison of the
fair value of the intangible asset with its carrying value. This test is performed during the fourth quarter of each
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