Property and Equipment
|9 Months Ended|
Sep. 30, 2021
|Property, Plant and Equipment [Abstract]|
|Property and Equipment||Property and Equipment
Property and equipment, net, consists of the following:
Construction in progress consists of the following:
Depreciation and amortization expense on property and equipment was $97 and $88 for the three months ended September 30, 2021 and 2020, respectively, and $284 and $268 for the nine months ended September 30, 2021 and 2020, respectively. We retired property and equipment of $47 and $54 during the three and nine months ended September 30, 2021, respectively. Property and equipment of $65, which included a loss of $13 related to the termination of the Automatic service, was retired during the nine months ended September 30, 2020. There were no retirements of property and equipment during the three months ended September 30, 2020.
We capitalize a portion of the interest on funds borrowed to finance the construction and launch of our satellites. Capitalized interest is recorded as part of the asset’s cost and depreciated over the satellite’s useful life. Capitalized interest costs were and $1 and $5 for the three months ended September 30, 2021 and 2020, respectively, and $6 and $14 for the nine
months ended September 30, 2021 and 2020, respectively, which related to the construction of our SXM-8 satellite. We also capitalize a portion of share-based compensation related to employee time for capitalized software projects. Capitalized share-based compensation costs were $4 for each of the three months ended September 30, 2021 and 2020 and $10 and $13 for the nine months ended September 30, 2021 and 2020, respectively.
As of September 30, 2021, we operated a fleet of six satellites. Each satellite requires an FCC license, and prior to the expiration of each license, we are required to apply for a renewal of the FCC satellite license. The renewal and extension of our licenses is reasonably certain at minimal cost, which is expensed as incurred. The chart below provides certain information on our satellites as of September 30, 2021:
On December 13, 2020, our SXM-7 satellite was launched and in-orbit testing of SXM-7 began on January 4, 2021. During in-orbit testing of SXM-7, events occurred which caused failures of certain SXM-7 payload units. The evaluation of SXM-7 concluded that the satellite will not function as intended, which we considered to be a triggering event prompting the assessment as to whether the asset's carrying value of $220 was recoverable. In determining recoverability of SXM-7, we compared the asset's carrying value to the undiscounted cash flows derived from the satellite. SXM-7 was determined to be a total loss and therefore, we determined that the carrying value of the satellite is not recoverable and an impairment charge of $220 was recorded to Impairment, restructuring and acquisition costs in our unaudited consolidated statements of comprehensive income for the nine months ended September 30, 2021. SXM-7 remains in-orbit at its assigned orbital location, but is not being used to provide satellite radio service.
We procured insurance for SXM-7 to cover the risks associated with the satellite's launch and first year of in-orbit operation. The aggregate coverage under the insurance policies with respect to SXM-7 is $225. During the nine months ended September 30, 2021, we collected $225 of insurance recoveries. Of this amount, $80 and $220 have been recorded as a reduction to Impairment, restructuring and acquisition costs during the three and nine months ended September 30, 2021, respectively. The remaining $5 has been recorded in Other income during the three and nine months ended September 30, 2021.Our SXM-8 satellite was successfully launched into a geostationary orbit on June 6, 2021 and was placed into service on September 8, 2021 following the completion of in-orbit testing. The SXM-8 satellite replaced the XM-3 satellite, which remains available as an in-orbit spare along with XM-5.
The entire disclosure for long-lived, physical asset used in normal conduct of business and not intended for resale. Includes, but is not limited to, work of art, historical treasure, and similar asset classified as collections.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef