Cogeco 2013 Annual Report Download - page 60

Consolidated financial statements COGECO CABLE INC. 2013 59
D) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are measured at cost, less accumulated depreciation and accumulated impairment losses.
During construction of new assets, direct costs plus overhead costs directly attributable to the asset are capitalized. Borrowing costs
directly attributable to the acquisition or construction of qualifying assets, which require a substantial amount of time to get ready for
their intended use or sale, are capitalized until such time the assets are substantially ready for their intended use or sale. All other
borrowing costs are recorded as financial expense in the period in which they are incurred.
The cost of replacing a part of property, plant and equipment that is ready for its intended use is added to the carrying amount of the
property, plant and equipment or recognized as a separate component if applicable, only if it is probable that the economic benefits
associated with the cost will flow to the Corporation and the cost can be measured reliably. The carrying amount of the replaced part is
derecognized. All other day-to-day maintenance costs are recognized in profit or loss in the period in which they are incurred.
Depreciation is recognized from the date the asset is ready for its intended use so as to write-off the cost of assets, other than freehold
land and properties under construction, less their residual values over their useful lives, using the straight-line method. Assets held under
finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the
relevant lease. Depreciation periods are as follows:
BUILDINGS AND LEASEHOLD IMPROVEMENTS(1) 10 TO 40 YEARS
NETWORK SYSTEMS(2) 5 TO 20 YEARS
HOME TERMINAL DEVICES 3 TO 5 YEARS
DATA CENTRE EQUIPMENT(3) 3 TO 7 YEARS
ROLLING STOCK AND EQUIPMENT(4) 3 TO 10 YEARS
(1) Leasehold improvements are amortized over the shorter of the term of the lease or economic life.
(2) Network systems includes cable towers, headends, transmitters, fibre and coaxial networks, customer drops, and network equipment.
(3) Data centre equipment includes general infrastructure, mechanical and electrical equipment, security and access control. Servers that are included
as part of the hosting product line are amortized on a straight-line basis over their expected useful life, which is 3 years.
(4) Rolling stock and equipment includes rolling stock, programming equipment, furniture and fixtures, computer and software, assets held under finance
leases, and other equipments.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
The estimated useful lives, residual values and depreciation method are reviewed annually, with the effect of any changes in estimate
accounted for on a prospective basis.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between
the sale proceeds and the carrying amount of the asset and is recognized as profit or loss.
The Corporation does not record decommissioning obligations in connection with its cable distribution network. The Corporation expects
to renew all of its agreements with utility companies to access their support structures in the future, thus the resulting present value of
the obligation is not significant.
E) INTANGIBLE ASSETS
Intangible assets acquired separately
Intangible assets acquired separately are measured on initial recognition at cost less accumulated amortization, if they are amortizable,
otherwise, net of accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite.
Identifiable intangible assets acquired in a business combination
Identifiable intangible assets acquired in a business combination are recognized separately from goodwill if they meet the definition of
intangible asset and if their fair value can be measured reliably. The cost of these intangible assets equals their acquisition-date fair
value. Subsequent to initial recognition, identifiable intangible assets acquired in a business combination are recorded at cost less
accumulated amortization, if they are amortizable, otherwise net of accumulated impairment losses. The useful lives of intangible assets
are assessed as either finite or indefinite.