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Table of Contents
Index to Consolidated Financial Statements
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — ( CONTINUED)
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 network. For PP&E, there
were no impairment losses recorded in the 190 days ended
July 9, 2013 and the years ended December 31, 2012 and 2011.
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, classified as construction in progress. This assessment includes the provision for differences between recorded amounts and
the results of physical counts and the provision for excessive and obsolete equipment. 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 once the
software has been placed in service, which is generally three years. We periodically assess capitalized software costs that have not been placed in service to
determine whether any projects are no longer expected to be completed. The capitalized cost associated with any projects that are not expected to be completed
are written down. 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 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
estimated fair value of spectrum licenses are determined by the use of the Greenfield direct value method, which estimates value through estimating discounted
future cash flows of a hypothetical start
- up business. 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 impairments for any of the periods presented for indefinite lived intangible assets.
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 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 favorable spectrum leases
in the 190 days ended
July 9, 2013 and the years ended December 31, 2012 and 2011.
Other Intangible Assets
— Other intangible assets consist of subscriber relationships, trademarks, patents and other, and are stated at cost net of
accumulated amortization. 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 190 days ended
July 9, 2013 and the years ended December 31, 2012 and
2011.
Derivative Instruments and Hedging Activities
— It is our policy that hedging activities 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.
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