FairPoint Communications 2010 Annual Report Download - page 85
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Table of Contents
Balance, beginning of period $ 58,358 $ 20,340 $25,585
Acquisition of Legacy FairPoint — — 1,832
Contributed back to Verizon — — (9,356)
Provision charged to expense 20,525 48,402 25,234
Provision charged to other accounts (a) (586) (91) 5,419
Amounts written off, net of recoveries (37,689) (10,293) (28,374)
Balance, end of period $ 40,608 $ 58,358 $ 20,340
(a) Provision charged to other accounts includes accruals charged to accounts payable for anticipated uncollectible charges on purchase of accounts
receivable from others which were billed by the Company.
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade receivables. The
Company places its cash with high-quality financial institutions. Concentrations of credit risk with respect to trade receivables are principally related to
receivables from other interexchange carriers and are otherwise limited to the Company’s large number of customers in several states.
The Company sponsors pension and post-retirement healthcare plans for certain employees. Plan assets are held by a third party trustee. The Company’s
plans hold debt and equity securities for investment purposes. The value of these plan assets is dependent on the financial condition of those entities issuing
the debt and equity securities. A significant decline in the fair value of plan assets could result in additional contributions to the plans by the Company in
order to meet funding requirements under ERISA.
Materials and supplies include new and reusable supplies and network equipment, which are stated principally at average original cost, except that specific
costs are used in the case of large individual items.
Property, plant and equipment is recorded at cost. Depreciation expense is principally based on the composite group remaining life method and straight-line
composite rates. This method provides for the recognition of the cost of the remaining net investment in telephone plant, property and equipment less
anticipated positive net salvage value, over the remaining asset lives. This method requires the periodic revision of depreciation rates.
At December 31, 2010 and 2009, accumulated depreciation for property, plant and equipment was $4.4 billion and $4.2 billion, respectively.
The estimated asset lives used are presented in the following table:
Buildings 45
Central office equipment 5 — 11
Outside communications plant
Copper cable 15 — 18
Fiber cable 25
Poles and conduit 30 — 50
Furniture, vehicles and other 3 — 15
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