iHeartMedia 2000 Annual Report Download - page 59

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Expenditures for maintenance and repairs are charged to operations as incurred, whereas expenditures for
renewal and betterments are capitalized.
Intangible Assets
Intangible assets are stated at cost and are being amortized using the straight-line method. Excess cost
over the fair value of net assets acquired (goodwill) and certain licenses are amortized generally over 20
to 25 years. Transit and street furniture contract intangibles are amortized over the respective lives of the
agreements, typically four to eleven years. Contracts are amortized over the respective lives of the
agreements. Other intangible assets are amortized over their appropriate lives.
The periods of amortization are evaluated annually to determine whether circumstances warrant revision.
Long-Lived Assets
The Company periodically evaluates the propriety of the carrying amount of goodwill and other
intangible assets and related amortization periods to determine whether current events or circumstances
warrant adjustments to the carrying value and/or revised estimates of amortization periods. These
evaluations consist of the projection of undiscounted cash flows over the remaining amortization periods
of the related intangible assets. The projections are based on historical trend lines of actual results,
adjusted for expected changes in operating results. To the extent such projections indicate that
undiscounted cash flows are not expected to be adequate to recover the carrying amount of the related
intangible assets, such carrying amounts are written down to fair value by charges to expense. At this
time, the Company believes that no impairment of goodwill or other intangible assets has occurred and
that no revisions to the amortization periods are warranted.
Other Investments
Other investments are composed primarily of equity securities. These securities are classified as
available -for-sale and carried at fair value based on quoted market prices. Securities are carried at
historical value when quoted market prices are unavailable. The net unrealized gains or losses on these
investments, net of tax, are reported as a separate component of shareholders’ equity. The average cost
method is used to compute the realized gains and losses on sales of equity securities.
Equity Method Investments
Investments in companies in which the Company owns 20 percent to 50 percent of the voting common
stock or otherwise exercises significant influence over operating and financial policies of the company are
accounted for under the equity method. The Company does not recognize gains or losses upon the
issuance of securities by any of its equity method investees.
Financial Instruments
Due to their short maturity, the carrying amounts of accounts and notes receivable, accounts payable,
accrued liabilities, and short-term borrowings approximated their fair values at December 31, 2000 and
1999. The carrying amounts of long-term debt and Liquid Yield Option Notes approximated their fair
value at the end of 2000 and 1999, except as disclosed in Note D and Note F, respectively.
Income Taxes
The Company accounts for income taxes using the liability method. Under this method, deferred tax
assets and liabilities are determined based on differences between financial reporting bases and tax bases
of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income
in the periods in which the deferred tax asset or liability is expected to be realized or settled. As all
earnings from the Company’ s foreign operations are permanently reinvested and not distributed, the
Company’ s income tax provision does not include additional U.S. taxes on foreign operations.