Analysis Of Time Warner Cable

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TIME WARNER CABLE
ANNUAL REPORT ANALYSIS

Prepared for
Roya Momeni
Professor

Prepared by
Huang Linlin

DeVry University ACCT 305
December, 9, 2012

Table of Contents Introduction 3 Property and Equipment 3 Intangible Assets 5 Agreement Rights 5 Software 5 Franchise Rights 6 Goodwill 6 Depreciation Method 6 Summary 7 Work Cited 8

Introduction
Financial reports are assessments that help identify the current financial status of a company or organization as of the latest closed accounting period. A financial report may cover a short period of time, such as the most recent calendar month, or time frames of up to a year. Several basic elements are included in the preparation of an effective financial report. This report will cover multiple analysis of how Time Warner Cable operates, such as their assets, intangible assets and goodwill.

Property and Equipment

Time Warner Cable capitalizes improvements that extend asset lives and expense repairs and maintenance costs as incurred. For assets that are sold or retired, they remove the applicable cost and accumulated depreciation and, unless the gain or loss on disposition is presented separately, Time Warner Cable recognizes it as a component of depreciation expense (Balance Sheet, n.d.).Time Warner Cable capitalizes the costs include all direct labor and materials, as well as various indirect costs. They capitalize initial customer installation costs that are directly attributable to installation of the product, including material, labor and overhead costs. All costs incurred in connection with subsequent service disconnect and reconnects are expensed as they are incurred. Time Warner Cable records depreciation using the straight-line method over the asset’s estimated useful life (Time Warner Cable Annual Report, 2010).

Intangible Assets
Agreement Rights
Time Warner Cable programming subsidiaries enter into multiyear license agreements with various multichannel video providers for distribution of their networks’ programming. Time Warner Cable capitalizes amounts paid to secure or extend these programming distribution rights and include them within other intangible assets. They amortize these programming distribution rights on a straight-line basis over the term of the related license agreements. Time Warner Cable classifies the amortization of these programming distribution rights as a reduction to revenue unless the Programming subsidiary receives, or will receive, an identifiable benefit from the distributor separate from the fee paid for the programming distribution right, in which case they recognize the fair value of the identified benefit in the period in which it is received (Time Warner Cable Annual Report, 2010).
Software
Time Warner Cable capitalizes direct development costs associated with internal-use software, including external direct costs of material and services and payroll costs for employees devoting time to these software projects. They also capitalize costs associated with the purchase of software licenses. Time Warner Cable includes these costs within other intangible assets and amortizes them on a straight-line basis over a period not to exceed 5 years, beginning when the asset is substantially ready for use (Time Warner Cable Annual Report, 2010).

Franchise Rights
Time Warner Cable franchise rights consist primarily of cable franchise rights. Cable franchise rights represent the value the company attributes to agreements with state and local authorities that allow access to homes and businesses in cable service areas acquired in business combinations. The company reassesses this determination periodically or whenever events or substantive changes in circumstances occur. Costs the company incurs in negotiating and renewing cable franchise agreements are included in other intangible assets and are primarily amortized on a straight-line basis over the term of the franchise agreement (Time Warner Cable
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