Sprint - Nextel 2015 Annual Report Download - page 112

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
their device, or purchase the device. As of March 31, 2016 , substantially all of our device leases were classified as operating leases. At lease inception, the devices
leased through Sprint's direct channels are reclassified from inventory to property, plant and equipment. For those devices leased through indirect channels, Sprint
purchases the device to be leased from the retailer at lease inception. The devices are then depreciated using the straight-line method to their estimated residual
value generally over the term of the lease.
The following table presents leased devices and the related accumulated depreciation:
March 31,
2016
2015
(in millions)
Leased devices $ 4,913
$ 1,974
Less: accumulated depreciation (1,267)
(197)
Leased devices, net $ 3,646
$ 1,777
During the years ended March 31, 2016 and 2015 , there were non-cash transfers to leased devices of approximately $3.2 billion and $1.2 billion ,
respectively, along with a corresponding decrease in "Device and accessory inventory." In addition, during the year ended March 31, 2016 , we sold devices
totaling $1.3 billion ( seeNote4.FundingSources). Non-cash accruals included in leased devices totaled approximately $159 million and $182 million as of
March 31, 2016 and 2015 , respectively, for devices purchased from indirect dealers that were leased to our subscribers. Depreciation expense incurred on all
leased devices for the years ended March 31, 2016 and 2015 was $1.8 billion and $206 million , respectively.
As of March 31, 2016 , the minimum estimated payments to be received for leased devices, including devices sold and leased back under Handset Sale-
Leaseback Tranche 1, were as follows (in millions):
Fiscal year 2016 $ 2,403
Fiscal year 2017 694
$ 3,097
During the year ended March 31, 2016 , we recorded $487 million of loss on disposal of property, plant and equipment, which is included in "other,
net" in our consolidated statements of operations. These losses were the result of $65 million in net losses recognized upon the sale of devices to MLS under the
Handset Sale-Leaseback Tranche 1 transaction, which represented the difference between the fair value and net book value of the devices sold and $256 million in
losses from the write-off of leased devices associated with lease cancellations prior to the scheduled customer lease terms where customers did not return the
devices to us. If customers continue to not return devices, we may have material losses in future periods. In addition, we recorded $166 million of losses due to cell
site construction costs and other network costs that are no longer recoverable as a result of changes in the Company's network plans.
During the Successor three-month transition period ended March 31, 2014, we recorded $75 million of loss on disposal of property, plant and
equipment, which is included in "other, net" in our consolidated statements of operations, primarily due to network equipment assets that were no longer necessary
as a result of changes in management's strategic plans.
Impairments
During the three-month period ended December 31, 2014, we recorded an impairment loss of $233 million , which is included in "Impairments" in our
consolidated statements of operations, to reduce the carrying value of the Wireline asset group, which includes the Wireline long-lived assets, to its estimated fair
value of $918 million as of December 31, 2014.
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