XM Radio 2015 Annual Report Download - page 101

We have evaluated events subsequent to the balance sheet date and prior to the filing of this
Annual Report for the year ended December 31, 2015 and have determined that no events have
occurred that would require adjustment to our consolidated financial statements. For a discussion of
subsequent events that do not require adjustment to our consolidated financial statements refer to
Note 18.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
footnotes. 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 asset impairment, depreciable lives
of our satellites, share-based payment expense, and income taxes.
(2) Acquisitions
On November 4, 2013, we purchased all of the outstanding shares of capital stock of the
connected vehicle business of Agero, Inc. (“Agero”) for $525,352. The transaction was accounted
for using the acquisition method of accounting. During the year ended December 31, 2014, the
purchase price allocation associated with the connected vehicle business of Agero was finalized
resulting in a net decrease in the purchase price of $1,144.
(3) Summary of Significant Accounting Policies
In addition to the significant accounting policies discussed in this Note 3, the following table
includes our significant accounting policies that are described in other notes to our consolidated
financial statements, including the number and page of the note:
Significant Accounting Policy Note # Page #
Fair Value Measurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 F-13
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 F-16
Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 F-17
Property and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 F-18
Equity Method Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 F-20
Share-Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 F-26
Legal Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 F-30
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 F-33
Cash and Cash Equivalents
Our cash and cash equivalents consist of cash on hand, money market funds, certificates of
deposit, in-transit credit card receipts and highly liquid investments purchased with an original
maturity of three months or less.
Revenue Recognition
We derive revenue primarily from subscribers, advertising and direct sales of merchandise.
Revenue from subscribers consists primarily of subscription fees, and to a lesser extent,
revenue from rental car companies and non-refundable activation and other fees. Revenue is
recognized as it is realized or realizable and earned. We recognize subscription fees as our
services are provided. At the time of sale, vehicle owners purchasing or leasing a vehicle with a
subscription to our service typically receive between a three and twelve month prepaid subscription.
F-10
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars and shares in thousands, except per share amounts)