Blackberry 2001 Annual Report Download - page 26

Research In Motion Limited >Incorporated Under the Laws of Ontario >United States dollars, in thousands except per share data
Notes to the Consolidated Financial Statements
Nature of Business
Research In Motion Limited (the “Company”) is in the business of designing, manufacturing and marketing wireless
Internet appliances and services and radio modems for the mobile data communications market. The Company was
incorporated on March 7, 1984 under the Ontario Business Corporations Act. The Company’s shares trade publicly on
The Toronto Stock Exchange under the symbol RIM and on the Nasdaq National Market under the symbol RIMM.
1. Summary of Significant Accounting Policies
(a) General –These consolidated financial statements have been prepared by management in accordance with
accounting principles generally accepted in Canada (“Canadian GAAP”) on a basis consistent with prior years,
which conforms in all material respects with accounting principles generally accepted in the United States
(“U.S. GAAP”), except as presented in note 17.
(b) Basis of consolidation –The consolidated financial statements include the accounts of the subsidiaries
with intercompany transactions and balances eliminated. All of the subsidiaries are wholly-owned.
(c) Use of estimates –The preparation of the Company’s consolidated financial statements in accordance
with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
as at the dates of the consolidated financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from these estimates.
(d) Foreign currency translation –Foreign currency denominated assets and liabilities of the Canadian parent
company and wholly-owned subsidiaries that are considered to be fully integrated operations are translated into
United States dollars, the currency of measurement, using the temporal method. Accordingly, monetary assets
and liabilities are translated using the exchange rates in effect at the balance sheet date, non monetary assets
and liabilities at historical exchange rates, and revenues and expenses at the rates of exchange prevailing when
the transactions occurred. Resulting exchange gains and losses are included in income. Any unrealized foreign
exchange gains or losses relating to monetary items with fixed or ascertainable lives extending beyond one year
from the balance sheet date are deferred and amortized over the remaining period.
(e) Cash and cash equivalents –Cash and cash equivalents consist of cash balances with banks and short-term
investments with original maturities of less than three months.
(f) Marketable securities –Marketable securities include preference shares, debentures and discount notes with
original maturities in excess of three months and are carried at the lower of cost and market value.
(g) Inventory –Inventory is stated at the lower of cost and net realizable value, with cost determined on a
first-in-first-out basis. Cost includes the cost of materials plus direct labour applied to the product and the
applicable share of manufacturing overhead.
(h) Capital assets –Capital assets are stated at cost and amortization is provided using the following methods:
Buildings and leaseholds - Straight-line over terms between 5 and 40 years
Information technology - Straight-line over five years
Furniture, fixtures, tooling, equipment and other - 20% per annum on declining balance for furniture,
fixtures, tooling and equipment; straight-line over
seventeen years for other
(i) Long-term investments –Long-term investments in companies where the Company has less than a 20%
ownership interest and does not control or exercise significant influence are accounted for by the cost method.
The Company regularly reviews the carrying values of its long-term investments to determine whether a decline
other than temporary in nature has occurred with any.
(j) Income taxes –Effective March 1, 2000, the Company adopted the new accounting recommendations related
to income taxes on a retroactive basis without restating the financial statements of any prior periods. As a result of
adopting the new accounting recommendations, the previously unrecognized benefit of financing costs of $1.1 million
has now been reflected as an adjustment to share capital. Retained earnings was unaffected by this change.
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