Dish Network 2011 Annual Report Download - page 104

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-10
Additionally, in situations where the fair value of a debt security is below its carrying amount, we consider the decline to
be other-than-temporary and record a charge to earnings if any of the following factors apply:
x we have the intent to sell the security,
x it is more likely than not that we will be required to sell the security before maturity or recovery, or
x we do not expect to recover the security’s entire amortized cost basis, even if there is no intent to sell the
security.
In general, we use the first in, first out method to determine the cost basis on sales of marketable investment securities.
Accounts Receivable
Management estimates the amount of required allowances for the potential non-collectability of accounts receivable based
upon past collection experience and consideration of other relevant factors. However, past experience may not be indicative
of future collections and therefore additional charges could be incurred in the future to reflect differences between estimated
and actual collections.
DISH Inventory
Inventory is stated at the lower of cost or market value. Cost is determined using the first-in, first-out method. The cost of
manufactured inventory includes the cost of materials, labor, freight-in, royalties and manufacturing overhead.
Blockbuster Rental Library Inventory
Our rental library inventory consists of movies and video games available for rental by customers and previously rented
movies and video games that are available for sale. Our rental library inventory is carried at cost and includes an allocation
of costs incurred in our distribution center to prepare this product for our stores. This inventory is amortized over its
estimated useful life ranging from six to 24 months, depending on the title, down to an estimated residual value. Because of
the relatively short useful lives of this inventory and because this inventory is available for sale to customers at any time, we
view these assets as current assets.
Blockbuster Merchandise Inventory
Our merchandise inventory consists primarily of new and traded movies and video games and other general merchandise,
including confections, and are stated at the lower of cost or market value. We include in the cost of our merchandise
inventory an allocation of costs incurred in our distribution center to prepare this product for our stores. Merchandise
inventory costs are determined using the weighted-average method, the use of which approximates the first-in, first-out
basis.
Property and Equipment
Property and equipment are stated at cost. The costs of satellites under construction, including certain amounts prepaid
under our satellite service agreements, are capitalized during the construction phase, assuming the eventual successful
launch and in-orbit operation of the satellite. If a satellite were to fail during launch or while in-orbit, the resultant loss
would be charged to expense in the period such loss was incurred. The amount of any such loss would be reduced to the
extent of insurance proceeds estimated to be received, if any. Depreciation is recorded on a straight-line basis over useful
lives ranging from one to 40 years. Repair and maintenance costs are charged to expense when incurred. Renewals and
improvements that add value or extend the asset’s useful life are capitalized.