Sprint - Nextel 2012 Annual Report Download - page 129

Table of Contents
SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Sprint Nextel Corporation, including its consolidated subsidiaries, (“Sprint,” “ we, ” “us,” “our” or the “Company” ) is a communications
company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of
individual consumers, businesses, government subscribers and resellers. We have organized our operations to meet the needs of our targeted
subscriber groups through focused communications solutions that incorporate the capabilities of our wireless and wireline services.
The Wireless segment includes retail, wholesale, and affiliate service revenue from a wide array of wireless voice and data transmission
services and equipment revenue from the sale of wireless devices and accessories in the U.S., Puerto Rico and the U.S. Virgin Islands.
The Wireline segment includes revenue from domestic and international wireline voice and data communication services, including services
to the cable multiple systems operators that resell our local and long distance services and use our back office systems and network assets in support
of their telephone service provided over cable facilities primarily to residential end
- use subscribers.
Consolidation Policies and Estimates
The consolidated financial statements include our accounts, those of our wholly owned subsidiaries, and subsidiaries we control or in
which we have a controlling financial interest. All significant intercompany transactions and balances have been eliminated in consolidation.
Investments where Sprint maintains majority ownership, but lacks full decision making ability over all major issues, are accounted for using the equity
method. Sprint's most significant equity investment is in Clearwire for which Sprint does not have a controlling vote or the ability to control operating
and financial policies.
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States
(GAAP). This requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities,
revenues and expenses and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements. These estimates
are inherently subject to judgment and actual results could differ.
Certain prior period amounts have been reclassified to conform to the current period presentation. Subsequent events were evaluated for
disclosure through the date on which the financial statements were filed with the Securities and Exchange Commission (SEC).
Summary of Significant Accounting Policies
Cash and Cash Equivalents
Cash equivalents generally include highly liquid investments with maturities at the time of purchase of three months or less. These
investments may include money market funds, certificates of deposit, U.S. government and government
- sponsored debt securities, corporate debt
securities, municipal securities, bank - related securities, and credit and debit card transactions in process.
Allowance for Doubtful Accounts
An allowance for doubtful accounts is established to cover probable and reasonably estimable losses. Because of the number of subscriber
accounts, it is not practical to review the collectibility of each of those accounts individually to determine the amount of allowance for doubtful
accounts each period, although some account level analysis is performed with respect to large wireless and wireline subscribers. The estimate of
allowance for doubtful accounts considers a number of factors, including collection experience, aging of the accounts receivable portfolios, credit
quality of the subscriber base and other qualitative considerations, including macro
- economic factors. Amounts written off against the allowance for
doubtful accounts, net of recoveries and other adjustments, were
$549 million , $519 million , and $437 million in 2012, 2011 and 2010 , respectively.
F - 8
Note 1.
Description of Operations
Note 2.
Summary of Significant Accounting Policies and Other Information