FairPoint Communications 2009 Annual Report Download - page 120

Table of Contents
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The Company performed step one of its annual goodwill impairment assessment as of October 1, 2009 and concluded that there was no
impairment at that time. In light of the Chapter 11 Cases, the Company performed an interim goodwill impairment assessment as of December 31, 2009
and determined that goodwill was not impaired.
As of December 31, 2009, the Company had goodwill of $595.1 million.
The Company's only non-amortizable intangible asset is the trade name of Legacy FairPoint acquired in the Merger. Consistent with the valuation
methodology used to value the trade name at the Merger, the Company assesses the fair value of the trade name based on the relief from royalty method.
If the carrying amount of the trade name exceeds its estimated fair value, the asset is considered impaired. The Company performed its annual non-
amortizable intangible asset impairment assessment as of October 1, 2009 and concluded that there was no indication of impairment at that time. In light
of the Chapter 11 Cases, the Company performed an interim non-amortizable intangible asset impairment assessment as of December 31, 2009 and
determined that the trade name was not impaired.
For its non-amortizable intangible asset impairment assessments at October 1, and December 31, 2009, the Company made certain assumptions
including an estimated royalty rate, an effective tax rate and a discount rate, and applied these assumptions to projected future cash flows of the
consolidated FairPoint Communications, Inc. business, exclusive of cash flows associated with wholesale revenues as these revenues are not generated
through brand recognition. Changes in one or more of these assumptions may have resulted in the recognition of an impairment loss.
While no impairment charges resulted from the analyses performed at October 1, and December 31, 2009, asset values may be adjusted in the
future due to the outcome of the Chapter 11 Cases or the application of "fresh start" accounting upon the Company's emergence from Chapter 11.
The Company's amortizable intangible assets consist of customer lists and a non-compete agreement. Amortizable intangible assets must be
reviewed for impairment whenever indicators of impairment exist. See note 3(j) above.
The intangible assets of the Verizon Northern New England business were not transferred to Spinco, and thus are not included in the Company's
balance sheet for periods subsequent to the Merger date. Prior to the Merger, the Verizon Northern New England business' intangible assets consisted
of non-network internal use software, which had a weighted average useful life of 7 years and was carried at $2.0 million, net of $15.4 million in
accumulated amortization as of December 31, 2007. Amortization of Verizon New England business intangible assets was $3.2 million in the year
ended December 31, 2007.
(o) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences
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