Rogers 2005 Annual Report Download - page 107

103 ROGERS 2005 ANNUAL REPORT . NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
an annual or more frequent basis by comparing their fair value with book value. An impairment loss on indefinite life
intangible assets is recognized when the carrying amount of the asset exceeds its fair value.
Intangible assets with determinable lives are amortized on a straight-line basis annually over their estimated
useful lives as follows:
Subscriber bases 21⁄4 to 42⁄3 years
Brand names – Rogers 20 years
Brand names – Fido 5 years
Dealer networks 4 years
Wholesale agreements 38 months
Roaming agreements 12 years
Player contracts 5 years
The Company has tested goodwill and intangible assets with indefinite lives for impairment during 2005 and 2004 and
determined that no impairment in the carrying value of these assets existed.
(g ) FO R EI G N C U RR E NCY TR A NS L ATI O N:
Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars at the exchange
rate in effect at the balance sheet date and non-monetary assets and liabilities and related depreciation and amortization
expenses are translated at the historical exchange rate. Revenue and expenses, other than depreciation and amortization,
are translated at the average rate for the month in which the transaction was recorded. The accounting for the effect
of cross-currency interest rate exchange agreements used to hedge long-term debt is described in note 2(m). Exchange
gains or losses on translating long-term debt are recognized in the consolidated statements of income. In 2005, foreign
exchange gains related to the translation of long-term debt totalled $33.3 million (2004 – losses of $66.9 million).
(h ) DE F ER R E D C HA R GES :
The costs of obtaining bank and other debt financings are deferred and amortized on a straight-line basis over the life
of the debt to which they relate.
During the development and pre-operating phases of new products and businesses, related incremental costs
are deferred and amortized on a straight-line basis over periods of up to five years.
(i ) IN V EN T OR I ES:
Inventories are primarily valued at the lower of cost, on a first-in, first-out basis, and net realizable value. Video rental
inventory, which includes videocassettes, DVDs and video games, is depreciated to its estimated residual value. The
residual value of the video rental inventory is recorded as a charge to operating expense upon the sale of the video
rental inventory. Depreciation of video rental inventory is charged to cost of sales on a diminishing-balance basis over a
six month period.
(j ) PE N SI O N B ENE F IT S :
The Company accrues its pension plan obligations as employees render the services necessary to earn the pension. The
Company uses the current settlement discount rate to measure the accrued pension benefit obligation and uses the
corridor method to amortize actuarial gains or losses (such as changes in actuarial assumptions and experience gains or
losses) over the average remaining service life of the employees. Under the corridor method, amortization is recorded
only if the accumulated net actuarial gains or losses exceed 10% of the greater of accrued pension benefit obligation
and the value of the plan assets at the beginning of the year.
The Company uses the following methods and assumptions for pension accounting:
(i) The cost of pensions is actuarially determined using the projected benefit method prorated on service and
management’s best estimate of expected plan investment performance, salary escalation, compensation levels
at the time of retirement and retirement ages of employees. Changes in these assumptions would impact future
pension expense.
(ii) For the purpose of calculating the expected return on plan assets, those assets are valued at fair value.
(iii) Past service costs from plan amendments are amortized on a straight-line basis over the average remaining
service period of employees.