iHeartMedia 2001 Annual Report Download - page 71

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71
Prepaid Expenses
Included in prepaid expenses are event expenses including show advances and deposits and other costs
directly related to future entertainment events. Such costs are charged to operations upon completion of
the related events.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation is computed using the straight-line method
at rates that, in the opinion of management, are adequate to allocate the cost of such assets over their
estimated useful lives, which are as follows:
Buildings and improvements- 10 to 39 years
Structures and site leases - 5 to 40 years, or life of lease
Towers, transmitters and studio equipment - 7 to 20 years
Furniture and other equipment - 3 to 20 years
Leasehold improvements - generally life of lease
Expenditures for maintenance and repairs are charged to operations as incurred, whereas expenditures for
renewal and betterments are capitalized.
Intangible Assets
Intangible assets are stated at cost. Excess cost over the fair value of net assets acquired is classified as
goodwill. Intangible assets and goodwill acquired prior to June 30, 2001 are amortized using the
straight-line method. Intangible assets acquired subsequent to June 30, 2001, that are classified as
indefinite-lived intangibles (principally broadcast FCC licenses) and goodwill are not being amortized
and are evaluated for impairment under the appropriate accounting guidance. Goodwill and licenses
acquired prior to June 30, 2001 are amortized generally over 15 to 25 years. Transit and street furniture
contract intangibles are classified as definite-lived intangibles and are amortized over the respective lives
of the agreements, typically four to fifteen years. Other definite-lived intangible assets are amortized
over their appropriate lives.
Long-Lived Assets
The Company periodically evaluates the propriety of the carrying amount of goodwill and other
intangible assets and related amortization periods to determine whether current events or circumstances
warrant adjustments to the carrying value and/or revised estimates of amortization periods. These
evaluations consist of the projection of undiscounted cash flows over the remaining amortization periods
of the related intangible assets. The projections are based on historical trend lines of actual results,
adjusted for expected changes in operating results. To the extent such projections indicate that
undiscounted cash flows are not expected to be adequate to recover the carrying amount of the related
intangible assets, such carrying amounts are written down to fair value by charges to expense. During
2001, the Company recorded impairment charges of approximately $170.0 million related to the write off
of duplicative and excess assets identified primarily in the radio segment, the impairment of goodwill and
excess property, plant and equipment in Poland within the outdoor segment, and an on-air talent contract
within the radio segment. The fair values of the goodwill in Poland and the on-air talent contract were
determined based on discounted cash flow models and assumptions of future expected cash flows and the
fair values related to property, plant, and equipment were based on estimated cash proceeds. These
impairment charges were recorded in depreciation and amortization expense in the statement of
operations.