Windstream 2007 Annual Report Download - page 128
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies and Changes, Continued:
expense over the period that each award vests. This expense is included in cost of services and selling, general,
administrative and other expenses in the accompanying consolidated statements of income.
Operating Leases – Certain of the Company’s operating lease agreements include scheduled rent escalations
during the initial lease term and/or during succeeding optional renewal periods. Windstream accounts for these
operating leases in accordance with SFAS No. 13, “Accounting for Leases”, and FASB Technical Bulletin
No. 85-3, “Accounting for Operating Leases with Scheduled Rent Increases”. Accordingly, the scheduled
increases in rent expense are recognized on a straight-line basis over the initial lease term and those renewal
periods that are reasonably assured. The difference between rent expense and rent paid is recorded as deferred rent
and is included in other liabilities in the accompanying consolidated balance sheets. Leasehold improvements are
amortized over the shorter of the estimated useful life of the asset or the lease term, including renewal option
periods that are reasonably assured.
Income Taxes – The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for
Income Taxes”, under the asset and liability method. Deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax balances are adjusted to reflect tax rates
based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are
expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
results of operations in the period of the enactment date. A valuation allowance is recorded to reduce the carrying
amounts of deferred tax assets unless it is more likely than not that such assets will be realized.
Earnings Per Share – Basic earnings per share of common stock was computed by dividing net income applicable
to common shares by the weighted average number of common shares outstanding during each year. Diluted
earnings per share reflects the potential dilution that could occur assuming conversion or exercise of all dilutive
outstanding stock instruments.
F-42