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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT 97
Depreciation expense for 2010 amounted to $1,560 million (2009 –
$1,543 million).
PP&E not yet in service and, therefore, not depreciated at
December31,2010 amounted to $1,610 million (2009 – $1,013 million).
(A) IMPAIRMENT:
(i) Goodwill:
The Company tested goodwill for impairment during 2010 and
2009 and no impairment of goodwill was recorded.
In assessing whether or not there is an impairment, the Company
uses a combination of approaches to determine the fair value of a
reporting unit, including both the discounted cash flows and
market approaches. If there is an indication of impairment, the
Company uses a discounted cash flow model in estimating the
amount of impairment. Under the discounted cash flows approach,
the Company estimates the discounted future cash flows for three
to seven years, depending on the reporting unit, and a terminal
value. The future cash flows are based on the Company’s estimates
and include consideration for expected future operating results,
economic conditions and a general outlook for the industry in
which the reporting unit operates. The discount rates used by the
Company consider debt to equity ratios and certain risk premiums.
The terminal value is the value attributed to the reporting unit’s
operations beyond the projected time period of three to seven
years using a perpetuity rate based on expected economic
conditions and a general outlook for the industry. Under the
market approach, the Company estimates the fair value of the
reporting unit by multiplying normalized earnings before interest,
income taxes and depreciation and amortization by multiples
based on market inputs.
The Company has made certain assumptions for the discount and
terminal growth rates to reflect variations in expected future cash
flows. These assumptions may differ or change depending on
economic conditions or other events. Therefore, it is possible that
future changes in assumptions may negatively impact future
valuations of reporting units and goodwill which could result in
goodwill impairment losses.
(ii) Intangible assets:
In the fourth quarter of 2010, the Company recorded an
impairment charge of $6 million relating to the broadcast licence
of a radio station in the Media segment. Using the Greenfield
income approach, the Company determined the fair value of the
broadcast licence to be lower than its carrying value.
In the fourth quarter of 2009, the Company recorded an
impairment charge of $4 million relating to the broadcast licence
of a radio station in the Media segment. Using the Greenfield
income approach, the Company determined the fair value of the
broadcast licence to be lower than its carrying value.
Also in the fourth quarter of 2009, the Company recorded an
impairment charge of $1 million related to a conventional
television broadcast licence in the Media segment using the
Greenfield income approach and replacement cost. The Company
determined the fair value of the broadcast licence to be lower than
its carrying value.
The Company has made certain assumptions within the Greenfield
income approach which may differ or change depending on
economic conditions or other events. Therefore, it is possible that
future changes in assumptions may negatively impact future
valuations of intangible assets which could result in further
impairment losses.
10. PROPERTY, PLANT AND EQUIPMENT:
11. GOODWILL AND INTANGIBLE ASSETS:
Details of PP&E are as follows:
2010 2009
Cost
Accumulated
depreciation
Net book
value Cost
Accumulated
depreciation
Net book
value
Land and buildings $ 821 $ 196 $ 625 $ 828 $ 181 $ 647
Towers, head-ends and transmitters 1,583 996 587 1,361 833 528
Distribution cable and subscriber drops 5,206 3,315 1,891 5,058 3,055 2,003
Network equipment 6,082 3,276 2,806 5,530 2,847 2,683
Wireless network radio base station equipment 1,408 774 634 1,219 654 565
Computer equipment and software 3,292 2,232 1,060 2,853 1,974 879
Customer equipment 1,469 1,086 383 1,358 949 409
Leasehold improvements 384 224 160 369 212 157
Equipment and vehicles 974 627 347 891 565 326
$ 21,219 $ 12,726 $ 8,493 $ 19,467 $ 11, 270 $ 8,197