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Table of Contents
Index to Consolidated Financial Statements
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(CONTINUED)
F-79
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.