Rogers 2014 Annual Report Download - page 100

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Multiple deliverable arrangements
We offer some products and services as part of multiple deliverable
arrangements. We record these as follows:
• Divide the products and services into separate units of accounting,
as long as the delivered elements have stand-alone value to
customers and we can determine the fair value of any undelivered
elements objectively and reliably; then
• Measure and allocate the arrangement consideration among the
accounting units based on their relative fair values and recognize
revenue when the relevant criteria are met for each unit.
• When an amount allocated to a delivered item is contingent upon
the delivery of additional items or meeting specified performance
conditions, the amount allocated to the delivered item is limited to
the non-contingent amount.
Unearned revenue
We record payments we receive in advance of providing goods and
services as unearned revenue. Advance payments include subscriber
deposits, cable installation fees and amounts subscribers pay for
services and subscriptions that will be provided in future periods.
PROPERTY, PLANT AND EQUIPMENT
Depreciation
We depreciate property, plant and equipment over its estimated
useful life by charging depreciation expense to the Consolidated
Statements of Income as follows:
Asset Basis
Estimated
useful life
Buildings Diminishing balance 5 to 40 years
Cable and wireless network Straight-line 3 to 30 years
Computer equipment and
software Straight-line 4 to 10 years
Customer premise
equipment Straight-line 3 to 5 years
Leasehold improvements Straight-line Over shorter of
estimated useful
life or lease term
Equipment and vehicles Diminishing balance 3 to 20 years
Components of an item of property, plant and equipment may have
different useful lives. We make significant estimates when determining
depreciation methods, depreciation rates and asset useful lives, which
requires taking into account company-specific factors and industry
trends. We monitor and review our depreciation methods,
depreciation rates and asset useful lives at least once a year and
change them if they are different from our previous estimates. We
recognize the effect of changes in estimates in net income
prospectively.
Recognition and measurement
We measure property, plant and equipment upon initial recognition at
cost, and record amortization when the asset is ready for its intended
use. Upon commencement of depreciation, the asset is carried at cost
less accumulated depreciation and accumulated impairment losses.
Cost includes expenditures that are directly attributable to the
acquisition of the asset. The cost of self-constructed assets also
includes:
• the cost of materials and direct labour;
• costs directly associated with bringing the assets to a working
condition for their intended use;
• costs of dismantling and removing the items and restoring the site
where they are located (see Provisions, below); and
• borrowing costs on qualifying assets.
We use estimates to determine certain costs that are directly
attributable to self-constructed assets. These estimates primarily
include certain internal and external direct labour associated with the
acquisition, construction, development or betterment of our network.
They also include interest costs, which we capitalize to certain property,
plant and equipment during construction and development.
We use significant estimates to determine the estimated useful lives of
property, plant and equipment, considering industry trends such as
technological advancements, our past experience, our expected use
and our review of asset lives.
We incur costs related to subscriber acquisition and retention.
• We capitalize cable installation costs that relate to the cable network
and depreciate them over the expected life of the cable customer.
• We defer direct incremental installation costs related to reconnect
cable customers and amortize them as the related reconnect
installation revenues are recorded.
• We expense all other costs as incurred.
We calculate gains and losses on the disposal of property, plant and
equipment by comparing the proceeds from the disposal with the
item’s carrying amount, and recognize the gain or loss in other income
in the Consolidated Statements of Income.
We capitalize development expenditures if they meet the criteria for
recognition as an asset, and amortize them over their expected useful
lives once they are available for use. We expense research
expenditures and maintenance and training costs as incurred.
See note 7 for more information about our property, plant and
equipment.
INTANGIBLE ASSETS
Amortization
We measure intangible assets that we acquire in business
combinations at fair value upon initial recognition and record
amortization when the asset is ready for its intended use. Upon the
commencement of amortization, the asset is carried at cost less
accumulated amortization and impairment losses. Intangible assets are
tested for impairment as required (see Impairment,below).
Indefinite useful lives
We do not amortize intangible assets with indefinite lives (spectrum
and broadcast licences) because there is no foreseeable limit to the
period that these assets are expected to generate net cash inflows for
us. We use judgement to determine the indefinite life of these assets,
analyzing all relevant factors, including the expected usage of the
asset, the typical life cycle of the asset and anticipated changes in the
market demand for the products and services that the asset helps
generate. After review of the competitive, legal, regulatory and other
factors, it is our view that these factors do not limit the useful lives of
our spectrum and broadcast licences.
96 ROGERS COMMUNICATIONS INC. 2014 ANNUAL REPORT