Sprint - Nextel 2010 Annual Report Download - page 102

the assets once the assets are placed in service. Our network construction expenditures are recorded as construction in
progress until the network or other asset is placed in service, at which time the asset is transferred to the appropriate PP&E
category. We capitalize costs of additions and improvements, including salaries, benefits and related overhead costs associated
with constructing PP&E and interest costs related to construction. The estimated useful life of equipment is determined based
on historical usage of identical or similar equipment, with consideration given to technological changes and industry trends that
could impact the network architecture and asset utilization. Leasehold improvements are recorded at cost and amortized over
the lesser of their estimated useful lives or the related lease term, including renewals that are reasonably assured. Maintenance
and repairs are expensed as incurred.
PP&E is assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. When such events or circumstances exist, we determine the recoverability of the asset’s carrying
value by estimating the expected undiscounted future cash flows that are directly associated with and that are expected to arise
as a direct result of the use of the asset. If the expected undiscounted future cash flows are less than the carrying amount of the
asset, a loss is recognized for the difference between the fair value of the asset and its carrying value. For purposes of testing
impairment, our long-lived assets, including PP&E and intangible assets with definite useful lives, and our spectrum license
assets in the United States are combined into a single asset group. This represents the lowest level for which there are
identifiable cash flows which are largely independent of other assets and liabilities, and management believes that utilizing
these assets as a group represents the highest and best use of the assets and is consistent with management’s strategy of utilizing
our spectrum licenses on an integrated basis as part of our nationwide networks. Internationally, for purposes of testing
impairment, our long-lived assets, consisting of PP&E, definite-lived intangible assets and our spectrum assets are primarily
combined into a single asset group for each country in which we operate. In the third quarter of 2010, due to our continued
losses and significant uncertainties surrounding our ability to obtain required liquidity to fund our operating and capital needs,
management concluded that an adverse change in circumstances existed requiring us to assess the recoverability of the carrying
value of our long-lived assets. Based on this assessment, we determined that the carrying value of our long-lived assets in the
United States was recoverable, primarily supported by the fair value of our spectrum licenses. Management has determined that
a similar assessment was not necessary in the fourth quarter. For the year ended December 31, 2010, we recorded impairment
losses of $6.6 million relating to PP&E and other long-lived assets in our international operations. There were no PP&E
impairment losses recorded in the years ended December 31, 2009 and 2008.
In addition to the analyses described above, we periodically assess certain assets that have not yet been deployed in our
networks, including equipment and cell site development costs. This assessment includes the provision for identified
differences between recorded amounts and the results of physical counts and the write-off of network equipment and cell site
development costs whenever events or changes in circumstances cause us to conclude that such assets are no longer needed to
meet management’s strategic network plans and will not be deployed. With the substantial completion of our prior build plans
and due to the uncertainty of the extent and timing of future expansion of our networks, we reviewed all network projects in
process. Any projects that no longer fit within management’s strategic network plans were abandoned and the related costs
written down, resulting in a charge of approximately $180.0 million. See Note 4, Property, Plant and Equipment, for further
information.
Internally Developed Software — We capitalize costs related to computer software developed or obtained for internal use,
and interest costs incurred during the period of development. 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.
Table of Contents CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(CONTINUED)
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