Qualcomm 2011 Annual Report Download - page 66

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
instruments. The value of the put options recorded in other current liabilities was $80 million at September 25, 2011. There were no put options
outstanding at September 26, 2010.
Property, Plant and Equipment. Property, plant and equipment are recorded at cost and depreciated or amortized using the straight-line
method over their estimated useful lives. Upon the retirement or disposition of property, plant and equipment, the related cost and accumulated
depreciation or amortization are removed, and a gain or loss is recorded. Buildings and building improvements on owned land are depreciated
over 30 years and 15 years, respectively. Leasehold improvements and buildings on leased land are amortized over the shorter of their
estimated useful lives or the remaining term of the related lease, not to exceed 15 and 20 years, respectively. Other property, plant and
equipment have useful lives ranging from 2 to 25 years. Direct external and internal costs of developing software for internal use are capitalized
subsequent to the preliminary stage of development. Leased property meeting certain capital lease criteria is capitalized, and the net present
value of the related lease payments is recorded as a liability. Amortization of assets under capital lease is recorded using the straight-line method
over the shorter of the estimated useful lives or the lease terms. Maintenance, repairs, and minor renewals and betterments are charged to
expense as incurred.
Goodwill and Other Intangible Assets. Goodwill represents the excess of purchase price and related costs over the value assigned to the net
tangible and identifiable intangible assets of businesses acquired. Acquired intangible assets other than goodwill are amortized over their useful
lives unless the lives are determined to be indefinite. For intangible assets purchased in a business combination or received in a non-monetary
exchange, the estimated fair values of the assets received (or, for non-monetary exchanges, the estimated fair values of the assets transferred if
more clearly evident) are used to establish the cost bases (except for non-monetary exchanges in which neither of the values of the assets
received or the assets transferred in non-monetary exchanges are determinable within reasonable limits). Valuation techniques consistent with
the market approach, income approach and/or cost approach are used to measure fair value.
Weighted-average amortization periods for finite-lived intangible assets, by class, were as follows (in years):
Impairment of Goodwill and Other Long-Lived Assets. Goodwill and other indefinite-lived intangible assets are tested annually for
impairment in the fourth fiscal quarter and in interim periods if certain events occur indicating that the carrying amounts may be impaired.
Goodwill is assessed for impairment using a two-step approach. First, the Company compares the estimated fair value of the reporting unit in
which the goodwill resides to its carrying value. The second step, if necessary, measures the amount of such impairment by comparing the
implied fair value of goodwill to its carrying value. Other indefinite-lived intangible assets are assessed for impairment by comparing their
estimated fair values to their carrying values. If the carrying values exceed the fair values, the difference is recorded as an impairment.
Long-lived assets, such as property and equipment and intangible assets subject to amortization, are reviewed for impairment when there is
evidence that events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset or asset group to estimated undiscounted
future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated
future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset or asset group exceeds the
estimated fair value of the asset or asset group. Assets to be disposed of are reported at the lower of the carrying amount or the estimated fair
value less costs to sell and are not depreciated.
Revenue Recognition. The Company derives revenues principally from sales of integrated circuit products, licensing of its intellectual
property and software, and sales of messaging, software hosting, software development software and other services and related hardware. The
timing of revenue recognition and the amount of revenue actually recognized in each case depends upon a variety of factors, including the
specific terms of each arrangement and the nature of the Company’s deliverables and obligations.
For transactions entered into prior to the first quarter of fiscal 2010, the Company allocated revenue for transactions that included multiple
elements to each unit of accounting based on its relative fair value using vendor-specific objective evidence (VSOE). The price charged when
the element was sold separately generally determined fair value. When the Company had objective evidence of the fair values of undelivered
elements but not delivered elements, the Company allocated revenue first to
F- 8
September 25,
2011 September 26,
2010
Spectrum licenses
5
5
Marketing-related
9
18
Technology-based
11
14
Customer-related
3
5
Total finite-lived intangible assets
11
14