Charter 2009 Annual Report Download - page 62

CCH II, LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009, 2008, AND 2007
(dollars in millions, except where indicated)
F-14
(11) The adjustments required to report assets and liabilities at fair value under fresh start accounting resulted in a
pre-tax gain of $5.5 billion, which was reported as gain due to fresh start accounting adjustments in the
consolidated statement of operations for the eleven months ended November 30, 2009. The following is a
summary of the adjustments to member’ s equity as a result of fresh start accounting adjustments.
Gain due to fresh start accounting adjustments $ 5,501
Income tax expense (98)
CC VIII preferred equity held by CCH I fair value adjustment 299
$ 5,702
(12) Represents the elimination of accumulated other comprehensive loss.
3. Summary of Significant Accounting Policies
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities at purchase of three months or less to be cash
equivalents. These investments are carried at cost, which approximates market value. Cash and cash equivalents
consist primarily of money market funds and commercial paper.
Property, Plant and Equipment
Additions to property, plant and equipment are recorded at cost, including all material, labor and certain indirect
costs associated with the construction of cable transmission and distribution facilities. While the Company’ s
capitalization is based on specific activities, once capitalized, costs are tracked by fixed asset category at the cable
system level and not on a specific asset basis. For assets that are sold or retired, the estimated historical cost and
related accumulated depreciation is removed. Costs associated with initial customer installations and the additions
of network equipment necessary to enable advanced services are capitalized. Costs capitalized as part of initial
customer installations include materials, labor, and certain indirect costs. Indirect costs are associated with the
activities of the Company’ s personnel who assist in connecting and activating the new service and consist of
compensation and indirect costs associated with these support functions. Indirect costs primarily include employee
benefits and payroll taxes, direct variable costs associated with capitalizable activities, consisting primarily of
installation and construction vehicle costs, the cost of dispatch personnel and indirect costs directly attributable to
capitalizable activities. The costs of disconnecting service at a customer’ s dwelling or reconnecting service to a
previously installed dwelling are charged to operating expense in the period incurred. Costs for repairs and
maintenance are charged to operating expense as incurred, while plant and equipment replacement and betterments,
including replacement of cable drops from the pole to the dwelling, are capitalized.
Depreciation is recorded using the straight-line composite method over management’ s estimate of the useful lives of
the related assets as follows:
Cable distribution systems 7-20 years
Customer equipment and installations 4-8 years
Vehicles and equipment 1-6 years
Buildings and leasehold improvements 15-40 years
Furniture, fixtures and equipment 6-10 years