Charter 2015 Annual Report Download - page 105

CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2015, 2014 AND 2013
(dollars in millions, except share or per share data or where indicated)
F- 8
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 installation of equipment necessary to provide video, Internet or voice services are
capitalized. Costs capitalized as part of installations include materials, labor, and certain indirect costs. Indirect costs are associated
with the activities of the Company’s personnel who assist in installation activities and consist of compensation and other 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, including
replacement of certain components, 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 premise equipment and installations 3-8 years
Vehicles and equipment 3-6 years
Buildings and improvements 15-40 years
Furniture, fixtures and equipment 6-10 years
Asset Retirement Obligations
Certain of the Company’s franchise agreements and leases contain provisions requiring the Company to restore facilities or remove
equipment in the event that the franchise or lease agreement is not renewed. The Company expects to continually renew its
franchise agreements and has concluded that all of the related franchise rights are indefinite lived intangible assets. Accordingly,
the possibility is remote that the Company would be required to incur significant restoration or removal costs related to these
franchise agreements in the foreseeable future. A liability is required to be recognized for an asset retirement obligation in the
period in which it is incurred if a reasonable estimate of fair value can be made. The Company has not recorded an estimate for
potential franchise related obligations, but would record an estimated liability in the unlikely event a franchise agreement containing
such a provision were no longer expected to be renewed. The Company also expects to renew many of its lease agreements related
to the continued operation of its cable business in the franchise areas. The Company does not have any significant liabilities related
to asset retirements recorded in its consolidated financial statements.
Other Noncurrent Assets
Other noncurrent assets primarily include trademarks, right-of-entry costs and equity investments. Trademarks have been
determined to have an indefinite life and are tested annually for impairment. Right-of-entry costs represent costs incurred related
to agreements entered into with landlords, real estate companies or owners to gain access to a building in order to provide cable
service. Right-of-entry costs are generally deferred and amortized to amortization expense over the term of the agreement. The
Company accounts for its investments in less than majority owned investees under either the equity or cost method. The Company
applies the equity method to investments when it has the ability to exercise significant influence over the operating and financial
policies of the investee. The Company's share of the investee's earnings (losses) is included in other expense, net in the consolidated
statements of operations. The Company monitors its investments for indicators that a decrease in investment value has occurred
that is other than temporary.