Rogers 2011 Annual Report Download - page 102

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(j) Financial instruments – hedge accounting:
IAS 39 requires that the Company include credit risk when measuring
the ineffective portion of its cross-currency interest rate exchange
agreements. Under previous Canadian GAAP, the Company elected
not to include credit risk in the determination of the ineffective
portion of its cross-currency interest rate exchange agreements.
The impact of this change is summarized as follows:
Year ended December 31, 2010
Consolidated statement of comprehensive income:
Finance costs – change in fair value of derivative instruments $ 6
Change in fair value of derivative instruments (6)
Adjustment before income taxes $ –
January 1,
2010 December 31, 2010
Consolidated statements of financial
position:
Equity reserves – hedging $ 7 $ 1
Adjustment to retained earnings before
income taxes 7 1
Related income tax effect (1) –
Adjustment to retained earnings $ 6 $ 1
(k) Share of the income or loss of associates:
IAS 1, Presentation of Financial Statements (“IAS 1”), requires that the
share of the income or loss of associates accounted for using the
equity method are presented as a separate line item on the face of
the consolidated statements of income. Under previous Canadian
GAAP, the share of the income or loss of associates was included with
other income.
For the year ended December 31, 2010, the impacts of applying IAS 1
was less than $1 million.
(l) Intangible assets and impairment of assets:
IAS 36, Impairment of Assets (“IAS 36”), uses a one-step approach for
both testing for and measurement of impairment, with asset carrying
values compared directly with the higher of fair value less costs to sell
and value in use (which uses discounted future cash flows) and assets
are tested for impairment at the level of cash generating units, which
is the lowest level of assets that generate largely independent cash
flows. Canadian GAAP, however, uses a two-step approach to
impairment testing: first comparing asset carrying values with
undiscounted future cash flows to determine whether impairment
exists; and then measuring any impairment by comparing asset
carrying values with fair values, and assets are grouped at the lowest
level for which identifiable cash flows are largely independent of the
cash flows of other assets and liabilities for impairment testing
purposes.
The impact of this change is summarized as follows:
Year ended December 31, 2010
Consolidated statement of comprehensive income:
Impairment of assets $ 5
Adjustment before income taxes $ 5
January 1,
2010 December 31, 2010
Consolidated statements of financial
position:
Intangible assets $ – $ (5)
Adjustment to retained earnings before
income taxes – (5)
Related income tax effect – 1
Adjustment to retained earnings $ – $ (4)
IAS 38, Intangible Assets (“IAS 38”), requires acquired program rights
to be classified as intangible assets. Under previous Canadian GAAP,
these amounts were classified as other current assets and other long-
term assets. Therefore, upon transition, the Company reclassified an
amount of $100 million at January 1, 2010 and $77 million at
December 31, 2010 to intangible assets.
The impact of the changes is summarized as follows:
January 1,
2010 December 31, 2010
Consolidated statements of financial
position:
Other current assets $ (61) $ (49)
Intangible assets 100 77
Other long-term assets (39) (28)
Adjustment to retained earnings $ – $ –
(m) Income taxes:
The above changes decreased (increased) the net deferred tax liability
as follows:
Note January 1, 2010 December 31, 2010
Employee benefits (b) $ 44 $ 64
Stock-based compensation (c) 4 –
Customer loyalty programs (d) (1) –
Property, plant and equipment (e) 3 3
Joint ventures (f) (10) (9)
Financial instruments – transaction
costs (g) (16) (15)
Provisions (h) 10 8
Impairment of assets (l) – 1
Decrease in net deferred tax liability $ 34 $ 52
The effect on the consolidated statement of comprehensive income
for the year ended December 31, 2010 was to decrease the previously
reported tax charge for the period by $18 million.
Under IFRS, all deferred tax balances are classified as non-current,
regardless of the classification of the underlying assets or liabilities, or
the expected reversal date of the temporary difference. The effect of
this change, including the impact of netting deferred tax assets and
98 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT