Qualcomm 2012 Annual Report Download - page 66

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
using the first-in, first-out method. Recoverability of inventories is assessed based on review of committed purchase orders from customers, as
well as purchase commitment projections provided by customers, among other things.
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. Beginning in May 2012, interest expense related to the broadband wireless access (BWA) spectrum and
related construction of the network infrastructure assets in India is being capitalized to construction in progress within property, plant and
equipment. Capitalized interest is added to the cost of the underlying asset. The Company does not expect to amortize the BWA spectrum and
related network infrastructure assets because they are classified as held for sale (Note 2). 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 or betterments are charged to expense as incurred.
Goodwill and Other Intangible Assets. Goodwill represents the excess of purchase price 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.
Beginning in fiscal 2012, the Company elected to perform a qualitative assessment to test one of its reporting unit ’ s goodwill and certain of its
indefinite-lived intangible assets for impairment. Using the qualitative assessment, if the Company determines that the fair value of a reporting
unit or indefinite-lived intangible asset is more likely than not (i.e., a likelihood of more than 50%) less than its carrying amount, a quantitative
impairment test will be performed. If necessary, goodwill is quantitatively 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 quantitatively assessed for impairment, if necessary, by comparing their estimated fair values to their carrying values. If the
carrying value exceeds the fair value, the difference is recorded as an impairment.
Long-lived assets, such as property, plant 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. Long-lived assets to be disposed of by sale are reported at the lower of their carrying amounts or
their estimated fair values less costs to sell and are not depreciated.
Revenue Recognition. The Company derives revenues principally from sales of integrated circuit products, licensing of its
F- 9
September 30,
2012
September 25,
2011
Wireless spectrum
5
5
Marketing-related
9
9
Technology-based
11
11
Customer-related
6
3
Total finite-lived intangible assets
11
11