Charter 2010 Annual Report Download - page 56

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A tax position that meets the more-likely-than-not recognition threshold
is measured to determine the amount of benefit to be recognized
in our financial statements. e tax position is measured at the
largest amount of benefit that has a greater than 50% likelihood
of being realized when the position is ultimately resolved. ere is
considerable judgment involved in determining whether positions
taken on the tax return are “more likely than not” of being sustained.
Charter adjusts its uncertain tax reserve estimates periodically because
of ongoing examinations by, and settlements with, the various
taxing authorities, as well as changes in tax laws, regulations and
interpretations.
No tax years for Charter or Charter Holdco are currently under
examination by the Internal Revenue Service. Tax years ending 2007
through 2010 remain subject to examination and assessment. Years
prior to 2007 remain open solely for purposes of examination of
Charter’s loss and credit carryforwards.
Litigation
Legal contingencies have a high degree of uncertainty. When a loss
from a contingency becomes estimable and probable, a reserve is
established. e reserve reflects management's best estimate of the
probable cost of ultimate resolution of the matter and is revised as
facts and circumstances change. A reserve is released when a matter
is ultimately brought to closure or the statute of limitations lapses.
We have established reserves for certain matters. Although certain
matters are not expected individually to have a material adverse effect
on our consolidated financial condition, results of operations or
liquidity, such matters could have, in the aggregate, a material adverse
effect on our consolidated financial condition, results of operations or
liquidity.
Programming Agreements
We exercise significant judgment in estimating programming expense
associated with certain video programming contracts. Our policy
is to record video programming costs based on our contractual
agreements with our programming vendors, which are generally
multi-year agreements that provide for us to make payments to
the programming vendors at agreed upon market rates based on
the number of customers to which we provide the programming
service. If a programming contract expires prior to the parties' entry
into a new agreement and we continue to distribute the service,
we estimate the programming costs during the period there is no
contract in place. In doing so, we consider the previous contractual
rates, inflation and the status of the negotiations in determining
our estimates. When the programming contract terms are finalized,
an adjustment to programming expense is recorded, if necessary, to
reflect the terms of the new contract. We also make estimates in the
recognition of programming expense related to other items, such as
the accounting for free periods and credits from service interruptions,
as well as the allocation of consideration exchanged between the
parties in multiple-element transactions.
Significant judgment is also involved when we enter into agreements
that result in us receiving cash consideration from the programming
vendor, usually in the form of advertising sales, channel positioning
fees, launch support or marketing support. In these situations,
we must determine based upon facts and circumstances if such
cash consideration should be recorded as revenue, a reduction in
programming expense or a reduction in another expense category
(e.g., marketing).