XM Radio 2015 Annual Report Download - page 107

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Receivables, net consists of the following:
December 31,
2015
December 31,
2014
Gross customer accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 98,740 $101,634
Allowance for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,118) (7,815)
Customer accounts receivable, net.................................. $ 92,622 $ 93,819
Receivables from distributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,012 105,731
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,148 21,029
Total receivables, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $234,782 $220,579
(7) Inventory, net
Inventory consists of finished goods, refurbished goods, chipsets and other raw material
components used in manufacturing radios. Inventory is stated at the lower of cost or market. We
record an estimated allowance for inventory that is considered slow moving or obsolete or whose
carrying value is in excess of net realizable value. The provision related to products purchased for
resale in our direct to consumer distribution channel and components held for resale by us is
reported as a component of Cost of equipment in our consolidated statements of comprehensive
income. The provision related to inventory consumed in our OEM and retail distribution channel is
reported as a component of Subscriber acquisition costs in our consolidated statements of
comprehensive income.
Inventory, net consists of the following:
December 31,
2015
December 31,
2014
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,085 $ 12,150
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,159 17,971
Allowance for obsolescence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,949) (10,724)
Total inventory, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,295 $ 19,397
(8) Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of the net
tangible and identifiable intangible assets acquired in business combinations. Our annual impairment
assessment of our single reporting unit is performed as of 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. At the date of our annual assessment
for 2015 and 2014, the fair value of our single reporting unit substantially exceeded its carrying
value and therefore was not at risk of failing step one of ASC 350-20, Goodwill. ASC 350-35 states
that if the carrying amount of the reporting unit is zero or negative, the second step of the
impairment test shall be performed to measure the amount of impairment loss, if any, when it is
more likely than not that a goodwill impairment exists based on adverse qualitative factors.
Subsequent to our annual assessment performed in the fourth quarter of 2015, we were not aware
of any adverse qualitative factors that would indicate any impairment to our goodwill as of
December 31, 2015.
F-16
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollars and shares in thousands, except per share amounts)