Cogeco 2004 Annual Report Download - page 34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
32 Cogeco Cable Inc. 2004
1SIGNIFICANT ACCOUNTING POLICIES (continued)
August 31, 2004 2003
Before After Before After
(amounts are in thousands of dollars) adoption adoption restatement restatement
$$$$
Fixed assets 739,547 687,960 765,085 723,273
Deferred charges 34,273 48,293 39,147 53,186
Deferred and prepaid income 16,070 32,437 15,194 29,232
Future income tax liabilities 214,296 195,523 172,588 160,380
Retained earnings 69,041 33,880 95,677 66,074
Consequently, retained earnings have been reduced by $29.6 million and $21.6 million as at September 1, 2003 and 2002, respectively.
vii) Disclosure of Guarantees
In February 2003, the CICA issued Accounting Guideline 14 (“AcG-14”), Disclosure of Guarantees, which provides guidance regarding the
identification of guarantees and requires a guarantor to disclose the significant details of guarantees that have been given. A guarantee
is a contract or an indemnification agreement that contingently requires the Corporation to make payments based on changes in an
underlying, related to an asset, a liability or an equity security of the guaranteed party or based on a third party failure to perform under
an obligating agreement. It could be also an indirect guarantee of the indebtedness of another party. Disclosure required under AcG-14
is presented in note 14.
viii) Asset Retirement Obligations
In March 2003, the CICA issued Handbook Section 3110, Asset Retirement Obligations, which provides guidance for the recognition,
measurement and disclosure of liabilities for asset retirement obligations and the associated asset retirement costs. The standard
applies to legal obligations associated with the retirement of a tangible long-lived asset that result from acquisition, construction,
development or normal operations. The standard requires the Corporation to record the fair value of a liability for an asset retirement
obligation in the year in which it is incurred and when a reasonable estimate of fair value can be made. The standard describes the fair
value of a liability for an asset retirement obligation as the amount at which that liability could be settled in a current transaction
between willing parties, that is, other than in a forced or liquidation transaction. The Corporation is subsequently required to allocate
that asset retirement cost to the expense using a systematic and rational method over the asset’s useful life. The standard applies
to fiscal years beginning on or after January 1, 2004. The Corporation is currently evaluating the impact of this new standard on the
consolidated financial statements.
ix) Variable Interest Entities
In June 2003, the CICA issued Accounting Guideline 15 (“AcG-15”), Consolidation of Variable Interest Entities, which defines Variable
Interest Entities as entities that have insufficient equity or their equity investors lack one or more specified essential characteristics of
a controlling financial interest. The standard provides guidance for determining when an entity is a Variable Interest Entity and who, if
anyone, should consolidate the Variable Interest Entity. The Guideline will apply to all annual and interim periods beginning on or after
November 1, 2004. The Corporation is currently evaluating the impact of this new accounting guideline but its adoption is not expected
to have a material impact on the consolidated financial statements.