FairPoint Communications 2002 Annual Report Download - page 499

with this revenue, charged by third-party wireless providers, is also
included in cost of services. The Partnership used this method because
it has passed through to its customers most of the costs related to
these revenues. However, the wireless industry and the Partnership
have increasingly been using pricing plans that include flat rate
pricing and larger home service areas. Under these types of plans,
amounts charged to the Partnership by other wireless providers may not
necessarily be passed through to its customers.
In 2002, the Partnership adopted a policy to include these revenues as
retail revenue rather than cost of services on a net basis. Roamer
revenue includes only the revenue from other wireless providers'
customers who use the Partnership's network. Retail revenue and cost
of services of $881,197 and $985,702 for 2001 and 2000, respectively,
were reclassified to conform to this presentation. This change in
presentation has no impact on operating income, net income or
partners' equity.
- 7 -
ILLINOIS VALLEY CELLULAR RSA 2-I PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
EXPENSE RECOGNITION
Pursuant to the Partnership Agreement, expenses included in the
Statements of Income represent expenses incurred by the Partnership,
including an allocation of administrative and operations costs from
the operating partner.
INCOME TAXES
The Internal Revenue Code and applicable state statutes provide that
income and expenses of a partnership are not separately taxable to the
Partnership, but rather accrue directly to the partners. Accordingly,
no provision for federal or state income taxes has been made in the
financial statements.
ADVERTISING COSTS
Advertising costs are expensed as incurred. Advertising expenses were
$346,620, $294,841, and $337,750 in 2002, 2001, and 2000,
respectively.
CASH EQUIVALENTS
All highly liquid investments with a maturity of three months or less
at the time of purchase are considered cash equivalents. The carrying
value of cash and cash equivalents approximates its fair value due to
the short maturity of the instruments.
RECLASSIFICATIONS
Certain reclassifications have been made to the 2001 and 2000
financial statements to conform with the 2002 presentation.
- 8 -
ILLINOIS VALLEY CELLULAR RSA 2-I PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE 3. PROPERTY AND EQUIPMENT