Rogers 2011 Annual Report Download - page 88

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABULAR AMOUNTS IN MILLIONS OF CANADIAN DOLLARS, EXCEPT PER SHARE AMOUNTS)
1. NATURE OF THE BUSINESS:
Rogers Communications Inc. (“RCI”) is a diversified Canadian
communications and media company, incorporated in Canada, with
substantially all of its operations and sales in Canada. Through its
Wireless segment (“Wireless”), RCI is engaged in wireless voice and
data communications services. RCI’s Cable segment (“Cable”) consists
of Cable Operations, Rogers Business Solutions (“RBS”) and Rogers
Video (“Video”). Through Cable Operations, RCI provides television,
high-speed Internet and telephony products primarily to residential
customers; RBS provides local and long-distance telephone, enhanced
voice and data networking services, and IP access to medium and large
Canadian businesses and governments; and Video offers digital video
disc (“DVD”) and video game sales and rentals. RCI is engaged in radio
and television broadcasting, televised shopping, consumer, trade and
professional publications, sports entertainment, and digital media
properties through its Media segment (“Media”). RCI and its subsidiary
companies are collectively referred to herein as the “Company”.
The Company’s registered office is located at 333 Bloor Street East,
10th Floor, Toronto, Ontario, M4W 1G9.
RCI Class A Voting and Class B Non-Voting shares are traded in Canada
on the Toronto Stock Exchange (“TSX”) and its Class B Non-Voting
shares are also traded on the New York Stock Exchange (“NYSE“).
2. SIGNIFICANT ACCOUNTING POLICIES:
(a) Statement of compliance:
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board (“IASB”).
These are the Company’s first annual consolidated financial
statements prepared in accordance with IFRS, and the Company has
elected January 1, 2010 as the date of transition to IFRS
(the “Transition Date”). IFRS 1, First-time Adoption of IFRS (“IFRS 1”),
has been applied. An explanation of how the transition to IFRS has
affected the consolidated financial statements is included in note 3.
The consolidated financial statements of the Company for the years
ended December 31, 2011 and 2010 and as at January 1, 2010 were
approved by the Board of Directors on February 21, 2012.
(b) Basis of presentation:
The consolidated financial statements include the accounts of the
Company. Intercompany transactions and balances are eliminated on
consolidation.
The consolidated financial statements have been prepared mainly
under the historical cost convention. Other measurement bases used
are described in the applicable notes. The Company’s financial year
corresponds to the calendar year. The consolidated financial
statements are prepared in millions of Canadian dollars.
Presentation of the consolidated statements of financial position
differentiates between current and non-current assets and liabilities.
The consolidated statements of income are presented using the
nature classification for expenses.
Concurrent with the impact of the transition to IFRS described in
note 3, the Company underwent a change in strategy which impacted
the Company’s management reporting resulting in changes to the
Company’s reportable segments. Commencing January 1, 2011, the
results of the former Rogers Retail segment are segregated as follows:
the results of operations of the Video business are presented as a
separate operating segment and the former Rogers Retail segment
results of operations related to wireless and cable products and
services are included in the results of operations of Wireless and Cable
Operations, respectively. In addition, certain intercompany
transactions between the Company’s RBS segment and other
operating segments, which were previously recorded as revenue in
RBS and operating expenses in the other operating segments, are
recorded as cost recoveries in RBS beginning January 1, 2011. The
effect of these changes in management reporting on the
comparatives for 2010 was a decrease in RBS revenue of $108 million
and a decrease in RBS operating costs of $108 million, and a decrease
in Video revenue of $212 million and a decrease in Video operating
costs of $206 million. These transactions were offset by elimination
entries resulting in no effect to the consolidated revenue or operating
costs.
(c) Basis of consolidation:
(i) Subsidiaries:
Subsidiaries are entities controlled by the Company. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
The acquisition method of accounting is used to account for the
acquisition of subsidiaries as follows:
• consideration transferred is measured as the fair value of the
assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, and acquisition
transaction costs are expensed as incurred;
• identifiable assets acquired and liabilities assumed are
measured at their fair values at the acquisition date;
• the excess of the fair value of consideration transferred
including the recognized amount of any non-controlling
interest of the acquiree over the fair value of the identifiable
net assets acquired is recorded as goodwill; and
• if the fair value of the consideration transferred is less than
the fair value of the net assets acquired, the difference is
recognized directly in the consolidated statements of income.
(ii) Investments in associates and joint ventures:
The Company’s interests in investments in associates and joint
ventures are accounted for using the equity method of
accounting. Associates are those entities in which the Company
has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist
when the Company holds between 20 and 50 percent of the
voting power of another entity. Joint ventures are those entities
over whose activities the Company has joint control, established
by contractual agreement and requiring unanimous consent for
strategic financial and operating decisions.
The investments in associates and joint ventures are initially
recognized at cost. The carrying amount is increased or
decreased to recognize, in net income, the Company’s share of
the income or loss of the investee after the date of acquisition.
Distributions received from an investee reduce the carrying
amount of the investment.
84 ROGERS COMMUNICATIONS INC. 2011 ANNUAL REPORT