FairPoint Communications 2011 Annual Report Download - page 98

Table of Contents
losses and prior service costs and credits that arise during the period as a component of other accumulated comprehensive income, net of applicable income
taxes. Amounts recognized through accumulated comprehensive income are amortized into current income in accordance with the Compensation-Retirement
Benefits Topic of the ASC. Additionally, a company must determine the fair value of plan assets as of the company’s year end.
(r) Business Segments
Management views its business of providing data, video and voice communication services to residential, wholesale and business customers as one
business segment as defined in the Segment Reporting Topic of the ASC The Company’s services consists of retail and wholesale telecommunications
services, including voice and HSD in 18 states. The Company’s chief operating decision maker assesses operating performance and allocates resources based
on the consolidated results.
(s) Other Long-Term Liabilities
On the Effective Date, the Company recorded $13.0 million in unfavorable union contracts and $0.7 million in unfavorable leasehold agreements, each
of which resulted from agreements with contract rates in excess of market value rates as of the Effective Date. Amortization is recognized on a straight-line
basis over the remaining term of the agreements, ranging from 1 to 7 years, as a reduction of employee expense and rent expense within operating expenses.
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In June 2011, the FASB issued ASU 2011-05 related to the presentation of comprehensive income which eliminates the option to present the components
of other comprehensive income as part of the statement of changes in stockholders’ equity. This ASU requires that all non-owner changes in stockholders’
equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This new guidance is to be
applied retrospectively, and is effective for interim and annual periods beginning after December 15, 2011, with early adoption permitted. In December 2011,
the FASB issued ASU 2011-12 which deferred the elective date for amendments to the presentation of reclassification of items out of accumulated other
comprehensive income in ASU 2011-05. The Company does not expect this amendment to the ASC to have a material impact on its consolidated financial
statements.
In May 2011, the FASB issued ASU 2011-04 related to achieving common fair value measurements and disclosure requirements between U.S. GAAP
and International Financial Reporting Standards (“IFRS”). This ASU changes the wording used to describe many of the requirements in U.S. GAAP for
measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. The ASU also
expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied
prospectively, and is effective for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company does not
expect the adoption of this amendment to the ASC to have a material impact on its consolidated financial statements.
On January 1, 2011, the Company adopted ASU 2010-28 regarding when to perform step 2 of the goodwill impairment test for reporting units with zero
or negative carrying amounts. This ASU modifies step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those
reporting units, an entity is required to perform step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In
determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors
indicating an impairment may exist. The qualitative factors are consistent with the previously existing guidance, which required that goodwill of a reporting
unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a
reporting unit below its carrying amount. For public entities, the amendments in this ASU are effective for fiscal year, and interim periods within those years,
beginning after December 15, 2010. The adoption of this amendment to the ASC did not have a material impact on the Company’s consolidated financial
statements.
In October 2009, the FASB issued ASU 2009-13 regarding revenue recognition for multiple deliverable arrangements. This method allows a vendor to
allocate revenue in an arrangement using its best estimate of selling price if neither vendor specific objective evidence nor third party evidence of selling price
exists. Accordingly, the residual method of revenue allocation will no longer be permissible. This ASU must be adopted no later than the beginning of the first
fiscal year beginning on or after June 15, 2010. The adoption of this amendment to the ASC did not have a material impact on the Company’s consolidated
financial statements.
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