XM Radio 2014 Annual Report Download - page 116

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We have evaluated events subsequent to the balance sheet date and prior to the filing of this
Annual Report for the year ended December 31, 2014 and have determined that no events have
occurred that would require adjustment to our consolidated financial statements. For a discussion of
subsequent events that do not require adjustment to our consolidated financial statements refer to
Note 19.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to
make certain estimates, judgments and assumptions that affect the amounts reported in the
financial statements and footnotes. Estimates, by their nature, are based on judgments and
available information. Actual results could differ materially from those estimates. Significant
estimates inherent in the preparation of the accompanying consolidated financial statements include
asset impairment, depreciable lives of our satellites, share-based payment expense, and income
taxes.
(2) Acquisitions
On November 4, 2013, we purchased all of the outstanding shares of the capital stock of the
connected vehicle business of Agero, Inc. (“Agero”). The transaction was accounted for using the
acquisition method of accounting. During the year ended December 31, 2014, the purchase price
allocation associated with the connected vehicle business of Agero was finalized resulting in a net
increase to Goodwill of $554, of which $1,144 related to the finalization of the working capital
calculation.
As of December 31, 2014, our Goodwill balance associated with this acquisition was $390,016.
No other assets or liabilities have been adjusted as a result of the final working capital calculation
and adjusted purchase price allocation.
(3) Summary of Significant Accounting Policies
In addition to the significant accounting policies discussed in this Note 3, the following table
includes our significant accounting policies that are described in other notes to our consolidated
financial statements, including the number and page of the note:
Significant Accounting Policy Note # Page #
Fair Value Measurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 F-13
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 F-16
Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 F-17
Property and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 F-19
Equity Method Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 F-21
Share-Based Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 F-27
Legal Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 F-31
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 F-35
Cash and Cash Equivalents
Our cash and cash equivalents consist of cash on hand, money market funds, certificates of
deposit, in-transit credit card receipts and highly liquid investments purchased with an original
maturity of three months or less.
Revenue Recognition
We derive revenue primarily from subscribers, advertising and direct sales of merchandise.
F-10
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Dollar amounts in thousands, unless otherwise stated)