Rogers 2007 Annual Report Download - page 87

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ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT 83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(F) INCOME TAXES:
Future income tax assets and liabilities are recognized for the future
income tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Future income tax assets
and liabilities are measured using enacted or substantively enacted
tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered
or settled. A valuation allowance is recorded against any future
income tax asset if it is not more likely than not that the asset
will be realized. Income tax expense is generally the sum of the
Company’s provision for current income taxes and the difference
between opening and ending balances of future income tax assets
and liabilities.
(G) FOREIGN CURRENCY TRANSLATION:
Monetary assets and liabilities denominated in a foreign currency
are translated into Canadian dollars at the exchange rate in effect
at the balance sheet dates 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. Exchange
gains or losses on translating long-term debt are recognized in the
consolidated statements of income. Foreign exchange gains are
primarily related to the translation of long-term debt.
Unearned revenue includes subscriber deposits, cable installation
fees and amounts received from subscribers related to services and
subscriptions to be provided in future periods.
(C) SUBSCRIBER ACQUISITION AND RETENTION COSTS:
Except as described in note 2(b)(iv), as it relates to cable installation
costs, the Company expenses the costs related to the acquisition or
retention of subscribers.
(D) STOCK-BASED COMPENSATION AND OTHER STOCK-
BASED PAYMENTS:
On May 28, 2007, the Company’s employee stock option plans were
amended to attach cash settled share appreciation rights (“SARs”)
to all new and previously granted options. The SAR feature allows
the option holder to elect to receive in cash an amount equal to
the intrinsic value, being the excess market price of the Class B
Non-Voting share over the exercise price of the option, instead of
exercising the option and acquiring Class B Non-Voting shares. All
outstanding stock options are now classified as liabilities and are
carried at their intrinsic value, as adjusted for vesting, measured
as the difference between the current stock price and the option
exercise price. The intrinsic value of the liability is marked-to-market
each period and is amortized to expenses over the period in which
the related services are rendered, which is usually the graded
vesting period, or, as applicable, over the period to the date an
employee is eligible to retire, whichever is shorter.
The Company accounts for stock-based awards that are settled by
issuance of equity instruments using the fair value method. The
estimated fair value is amortized to expense over the period in which
the related services are rendered, which is usually the vesting period
or, as applicable, over the period to the date an employee is eligible
to retire, whichever is shorter. Effective May 28, 2007, the Company
no longer has stock-based awards that are classified as equity.
The employee share accumulation plan allows employees to
voluntarily participate in a share purchase plan. Under the terms
of the plan, employees of the Company can contribute a specified
percentage of their regular earnings through payroll deductions
and the Company makes certain defined contribution matches,
which are recorded as compensation expense in the period made.
(E) DEPRECIATION:
PP&E are depreciated over their estimated useful lives as follows:
Asset Basis Rate
Buildings Mainly diminishing balance 5% to 62/3%
Towers, head-ends and transmitters Straight line 62/3% to 25%
Distribution cable and subscriber drops Straight line 5% to 20%
Network equipment Straight line 62/3% to 331/3%
Wireless network radio base station equipment Straight line 121/2% to 141/3%
Computer equipment and software Straight line 141/3% to 331/3%
Customer equipment Straight line 20% to 331/3%
Leasehold improvements Straight line Over shorter of
estimated useful life
and lease term
Other Mainly diminishing balance 5% to 331/3%