Twenty-First Century Fox 2014 Annual Report Download - page 90

TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
84
Investments in which the Company has no significant influence (generally less than a 20% ownership interest)
are designated as available-for-sale investments if readily determinable market values are available. If an
investment’s fair value is not readily determinable, the Company accounts for its investment at cost. The Company
reports available-for-sale investments at fair value based on quoted market prices. Unrealized gains and losses on
available-for-sale investments are included in Accumulated other comprehensive (loss) income, net of applicable
taxes and other adjustments until the investment is sold or considered impaired. Dividends and other distributions of
earnings from available-for-sale investments and cost method investments are included in Interest income in the
Consolidated Statements of Operations when declared.
Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation is provided using the straight-line method over
an estimated useful life of 3 to 40 years. Leasehold improvements are amortized using the straight-line method over
the shorter of their useful lives or the life of the lease. Costs associated with the repair and maintenance of property
are expensed as incurred. Changes in circumstances, such as technological advances, or changes to the Company’s
business model or capital strategy, could result in the actual useful lives differing from the Company’s estimates. In
those cases where the Company determines that the useful life of buildings and equipment should be shortened, the
Company would depreciate the asset over its revised remaining useful life, thereby increasing depreciation expense.
Goodwill and intangible assets
The Company has a significant amount of intangible assets, including goodwill, film and television libraries,
Federal Communications Commission (“FCC”) licenses, multi-channel video programming distributor (“MVPD”)
affiliate agreements and relationships and trademarks and other copyrighted products. Goodwill is recorded as the
difference between the consideration paid to acquire entities and amounts assigned to their tangible and identifiable
intangible net assets. In accordance with ASC 350, the Company’s goodwill and indefinite-lived intangible assets,
which primarily consist of FCC licenses, are tested annually for impairment or earlier if events occur or
circumstances change that would more likely than not reduce the fair value below its carrying amount. Intangible
assets with finite lives are generally amortized over their estimated useful lives. The impairment assessment of
indefinite-lived intangibles compares the fair value of these intangible assets to their carrying value.
The Company’s goodwill impairment reviews are determined using a two-step process. The first step of the
process is to compare the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value
of a reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not impaired and the second step
of the impairment review is not necessary. If the carrying amount of a reporting unit exceeds its fair value, the
second step of the goodwill impairment review is required to be performed to estimate the implied fair value of the
reporting unit’s goodwill. The implied fair value of the reporting unit’s goodwill is compared with the carrying
amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of
that goodwill, an impairment loss is recognized in an amount equal to that excess.
When a business within a reporting unit is disposed of, goodwill is allocated to the disposed business using the
relative fair value method.
Asset impairments
Investments
Equity method investments are regularly reviewed for impairment by initially comparing their fair value to
their respective carrying amounts each quarter. The Company determines the fair value of its public company
investments by reference to their publicly traded stock prices. With respect to private company investments, the
Company makes its estimate of fair value by considering other available information, including recent investee
equity transactions, discounted cash flow analyses, estimates based on comparable public company operating
multiples and, in certain situations, balance sheet liquidation values. If the fair value of the investment has dropped
below the carrying amount, management considers several factors when determining whether an other-than-
temporary decline in market value has occurred, including the length of the time and extent to which the market
value has been below cost, the financial condition and near-term prospects of the issuer, the intent and ability of the