Sprint - Nextel 2012 Annual Report Download - page 134

Table of Contents
SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Compensation Costs
The cost of employee services received in exchange for share
- based awards classified as equity is measured using the estimated fair value
of the award on the date of the grant, and that cost is recognized over the period that the award recipient is required to provide service in exchange for
the award. Awards of instruments classified as liabilities are measured at the estimated fair value at each reporting date through settlement. Share
-
based compensation cost related to awards with graded vesting is recognized using the straight - line method.
Pre
- tax share and non - share based compensation charges from our incentive plans included in net loss were $82 million for 2012, $73 million
for 2011, and $70 million for 2010. The net income tax benefit (expense) recognized in the consolidated financial statements for share - based
compensation awards was
$14 million for 2012, $13 million for 2011, and $(18) million for 2010. As of December 31, 2012, there was $39 million of total
unrecognized compensation cost related to non
- vested incentive awards that are expected to be recognized over a weighted average period of 1.71
years.
Advertising 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, 2012 , 2011 and 2010.
New Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board (FASB) issued authoritative guidance regarding Fair Value Measurement:
Amendments to Achieve Common Fair Value Measurement and Disclosure 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 were effective beginning in the first quarter
2012, and did not have a material effect on our consolidated financial statements.
In December 2011, the FASB issued authoritative guidance regarding Disclosures about Offsetting Assets and Liabilities, which requires
common disclosure requirements to allow investors to better compare and assess the effect of offsetting arrangements on financial statements
prepared under U.S. GAAP with financial statements prepared under IFRS. The standard will be effective beginning in the first quarter of 2013, requires
retrospective application, and will only affect disclosures in the footnotes to the financial statements. In October 2012, the FASB tentatively decided to
limit the scope of this authoritative guidance to derivatives, repurchase agreements, and securities lending and securities borrowing arrangements. In
January 2013, the FASB issued additional clarifying guidance which limited the scope of the disclosure requirements to derivatives, repurchase
agreements and reverse purchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with
specific criteria contained in U.S. GAAP or subject to a master netting arrangement or similar agreement. Based on the scope revision, we do not expect
this authoritative guidance to impact our existing disclosures.
In July 2012, the FASB issued authoritative guidance regarding Testing Indefinite
- Lived Intangible Assets for Impairment, which is
intended to reduce the cost and complexity of the annual impairment test for indefinite - lived intangible assets by providing entities with the option of
performing an elective qualitative assessment to determine whether further impairment testing is necessary. The standard will be effective for annual
and interim indefinite
- lived intangible asset impairment tests performed beginning the first quarter of 2013, with early adoption permitted under certain
circumstances. We early adopted the provisions of this standard as part of our annual assessment of indefinite - lived intangible assets with no effect
on our financial statements.
SoftBank Transaction
On October 15, 2012, Sprint entered into an Agreement and Plan of Merger (Merger Agreement) with SOFTBANK CORP., a kabushiki
kaisha organized and existing under the laws of Japan, and certain of its wholly
- owned subsidiaries (together, "SoftBank"). In addition, on October 15,
2012, Sprint and SoftBank entered into a Bond Purchase Agreement (Bond Agreement).
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Note 3.
Proposed Business Transactions and Acquisitions