Sprint - Nextel 2011 Annual Report Download - page 79

Table of Contents
SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
revenue unless we receive, or will receive, an identifiable benefit in exchange for the consideration, and the fair value of such benefit can be reasonably estimated, in
which case the consideration will be recorded as a selling expense. We compensate our dealers using specific compensation programs related to the sale of our devices
and our subscriber service contracts, or both. When a commission is earned by a dealer solely due to a selling activity relating to wireless service, the cost is recorded as a
selling expense. When a commission is earned by a dealer due to the dealer selling one of our devices, the cost is recorded as a reduction to equipment revenue. Point-of-
sale discounts for devices which are directly sourced by distributors are recognized as sales expense.
A
dvertisin
g
Costs
We recognize advertising expense when incurred as selling, general and administrative expense. Advertising expenses totaled $1.4 billion for each of the years
ended December 31, 2011 and 2010, and $1.5 billion for the year ended December 31, 2009.
New Accounting Pronouncements
In September 2009, the Financial Accounting Standards Board (FASB) modified the accounting for Multiple-Deliverable Revenue Arrangements and Certain
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evenue Arrangements that Include Software Elements. These modifications alter the methods previously required for allocating consideration received in multiple-
element arrangements to require revenue allocation based on a relative selling price method, including arrangements containing software components and non-software
components that function together to deliver the product's essential functionality. These modifications were effective beginning in the first quarter 2011 and did not have a
material effect on our consolidated financial statements.
In July 2010, the FASB amended the requirements for Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. As
a result of these amendments, an entity is required to disaggregate by portfolio segment or class certain existing disclosures and provide certain new disclosures about its
financing receivables and related allowance for credit losses. The new disclosures as of the end of the reporting period were effective for the fiscal year ending
December 31, 2010, while the disclosures about activity that occurs during a reporting period were effective for the first quarter 2011, neither of which had a material
effect on our consolidated financial statements.
In May 2011, the FASB issued authoritative guidance regarding Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and
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isclosure Requirements in U.S. GAAP and IFRSs, which resulted in common requirements for measuring fair value and for disclosing information about fair value
measurement under both U.S. GAAP and International Financial Reporting Standards (IFRS), including a consistent definition of the term "fair value." The amendments
will be effective beginning in the first quarter 2012; however, we do not expect the effect of adoption to be material.
The FASB issued authoritative guidance regarding Comprehensive Income: Presentation of Comprehensive Income in June 2011, which was subsequently
revised in December 2011, that amends existing guidance to present the total of comprehensive income, the components of net income and the components of other
comprehensive income, in either one continuous statement of comprehensive income or in two consecutive financial statements. The guidance eliminates the option to
present the components of other comprehensive income in the statement of changes in shareholders' equity. The amendments will be effective beginning in the first
quarter 2012, with early adoption permitted, require retrospective application, and will only effect presentation of information in our primary financial statements. We
early adopted the new presentation requirements which resulted in reporting the components of comprehensive income (loss) in the Consolidated Statements of
Comprehensive Loss, rather than the Consolidated Statements of Shareholders' Equity, as previously reported.
In September 2011, the FASB issued authoritative guidance regarding Testing Goodwill for Impairment which is intended to reduce the cost and complexity of
the annual goodwill impairment test by providing entities with the option of performing a qualitative assessment to determine whether further impairment testing is
necessary. The revised standard will be effective for annual and interim goodwill impairment tests performed beginning in the first quarter 2012, with early adoption
permitted under certain circumstances. We early adopted the provisions of this standard as part of our annual assessment of goodwill with no effect on our financial
statements.
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