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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Internally Developed Software — We capitalize costs related to computer software developed or obtained
for internal use. Software obtained for internal use has generally been enterprise-level business and finance
software customized to meet specific operational needs. Costs incurred in the application development phase are
capitalized and amortized over the useful life of the software, which is generally three years. Costs recognized in
the preliminary project phase and the post-implementation phase, as well as maintenance and training costs, are
expensed as incurred.
Spectrum Licenses — Spectrum licenses primarily include owned spectrum licenses with indefinite lives,
owned spectrum licenses with definite lives, and favorable spectrum leases. Indefinite lived spectrum licenses
acquired are stated at cost and are not amortized. While owned spectrum licenses in the United States are issued
for a fixed time, renewals of these licenses have occurred routinely and at nominal cost. Moreover, we have
determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that
limit the useful lives of our owned spectrum licenses and therefore, the licenses are accounted for as intangible
assets with indefinite lives. The impairment test for intangible assets with indefinite useful lives consists of a
comparison of the fair value of an intangible asset with its carrying amount. If the carrying amount of an
intangible asset exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess.
The fair value is determined by estimating the discounted future cash flows that are directly associated with, and
that are expected to arise as a direct result of the use and eventual disposition of, the asset. Spectrum licenses
with indefinite useful lives are assessed for impairment annually, or more frequently, if an event indicates that
the asset might be impaired. We had no impairment of our indefinite lived intangible assets in any of the periods
presented.
Spectrum licenses with definite useful lives and favorable spectrum leases are stated at cost, net of
accumulated amortization, and are assessed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The carrying value of the definite lived
licenses and spectrum leases are amortized on a straight-line basis over their estimated useful lives or lease term,
including expected renewal periods, as applicable. There were no impairment losses for spectrum licenses with
definite useful lives and favorable spectrum leases in the years ended December 31, 2009, 2008 and 2007.
Other Intangible Assets — Other intangible assets consist of subscriber relationships, trademarks and
patents, and are stated at cost net of accumulated amortization, for those other intangible assets with definite
lives. Amortization is calculated using either the straight-line method or an accelerated method over the assets’
estimated remaining useful lives. Other intangible assets are assessed for impairment whenever events or changes
in circumstances indicate that the carrying amount of the asset may not be recoverable. There were no
impairment losses for our other intangible assets in the years ended December 31, 2009, 2008 and 2007.
Derivative Instruments and Hedging Activities — In the normal course of business, we may be exposed to
the effects of interest rate changes. We have limited our exposure by adopting established risk management
policies and procedures, including the use of derivative instruments. It is our policy that derivative transactions
are executed only to manage exposures arising in the normal course of business and not for the purpose of
creating speculative positions or trading. We record all derivatives on the balance sheet at fair value as either
assets or liabilities. The accounting for changes in the fair value of derivatives depends on the intended use of the
derivative and whether it qualifies for hedge accounting. Our derivative instruments are undesignated, with
changes in fair value recognized currently in the consolidated statement of operations. See Note 11, Derivative
Instruments, for further information.
Debt Issuance Costs — Debt issuance costs are initially capitalized as a deferred cost and amortized to
interest expense under the effective interest method over the expected term of the related debt. Unamortized debt
issuance costs related to extinguishment of debt are expensed at the time the debt is extinguished and recorded in
other income (expenses), net in the consolidated statements of operations. Unamortized debt issuance costs are
recorded in other assets in the consolidated balance sheets.
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