Rogers 2007 Annual Report Download - page 90

86 ROGERS COMMUNICATIONS INC. 2007 ANNUAL REPORT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ii) Intangible assets:
Intangible assets acquired in a business combination are
recorded at their fair values. Intangible assets with finite
useful lives are amortized over their estimated useful lives and
are tested for impairment, as described in note 2(p). Intangible
assets having an indefinite life, being spectrum and broadcast
licences, are not amortized but are tested for impairment on
an annual or more frequent basis by comparing their fair value
to their carrying amount. An impairment loss on an indefinite
life intangible asset is recognized when the carrying amount
of the asset exceeds its fair value.
Intangible assets with finite useful lives are amortized on a
straight-line basis over their estimated useful lives as follows:
Brand name – Rogers 20 years
Brand name – Fido 5 years
Subscriber bases 21/4 to 42/3 years
Baseball player contracts 5 years
Roaming agreements 12 years
Dealer networks 4 years
Wholesale agreements 38 months
Marketing agreement 5 years
The Company has tested goodwill and intangible assets with
indefinite lives for impairment during 2007 and 2006 and
determined that no impairment in the carrying value of these
assets existed.
(P) LONG-LIVED ASSETS:
The Company reviews long-lived assets, which include PP&E and
intangible assets with finite useful lives, for impairment annually
or more frequently if events or changes in circumstances indicate
that the carrying amount may not be recoverable. If the sum of
the undiscounted future cash flows expected to result from the
use and eventual disposition of a group of assets is less than its
carrying amount, it is considered to be impaired. An impairment
loss is measured as the amount by which the carrying amount of
the group of assets exceeds its fair value. During 2007 and 2006, the
Company has determined that no impairment in the carrying value
of these assets existed.
(Q) ASSET RETIREMENT OBLIGATIONS:
Asset retirement obligations are legal obligations associated with
the retirement of PP&E that result from their acquisition, lease,
construction, development or normal operations. The Company
records the estimated 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 fair value of a liability for
an asset retirement obligation is 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 and, in the
absence of observable market transactions, is determined as the
present value of expected cash flows. The Company subsequently
allocates the asset retirement cost to expense using a systematic
and rational method over the asset’s useful life, and records the
accretion of the liability as a charge to operating expenses.
(M) PROPERTY, PLANT AND EQUIPMENT:
PP&E are recorded at cost. During construction of new assets,
direct costs plus a portion of applicable overhead costs
are capitalized. Repairs and maintenance expenditures are
charged to operating expenses as incurred.
The cost of the initial cable subscriber installation is capitalized.
Costs of all other cable connections and disconnections are
expensed, except for direct incremental installation costs
related to reconnect Cable customers, which are deferred
to the extent of reconnect installation revenues. Deferred
reconnect revenues and expenses are amortized over the
related estimated service period.
(N) ACQUIRED PROGRAM RIGHTS:
Acquired broadcast program rights are carried at the lower
of cost less accumulated amortization, and net realizable
value. Acquired program rights and the related liabilities are
recorded on the consolidated balance sheets when the licence
period begins and the program is available for use. The cost
of acquired program rights is amortized over the expected
performance period of the related programs. Net realizable
value of acquired program rights is assessed using an industry
standard methodology.
(O) GOODWILL AND INTANGIBLE ASSETS:
(i) Goodwill:
Goodwill is the residual amount that results when the purchase
price of an acquired business exceeds the sum of the amounts
allocated to the tangible and intangible assets acquired,
less liabilities assumed, based on their fair values. When the
Company enters into a business combination, the purchase
method of accounting is used. Goodwill is assigned, as of the
date of the business combination, to reporting units that are
expected to benefit from the business combination.
Goodwill is not amortized but instead is tested for impairment
annually or more frequently if events or changes in
circumstances indicate that the asset might be impaired. The
impairment test is carried out in two steps. In the first step,
the carrying amount of the reporting unit, including goodwill,
is compared with its fair value. When the fair value of the
reporting unit exceeds its carrying amount, goodwill of the
reporting unit is not considered to be impaired and the second
step of the impairment test is unnecessary. The second step
is carried out when the carrying amount of a reporting unit
exceeds its fair value, in which case, the implied fair value
of the reporting unit’s goodwill, determined in the same
manner as the value of goodwill is determined in a business
combination, is compared with its carrying amount to measure
the amount of the impairment loss, if any.