Shaw 2009 Annual Report Download - page 66

Investments and other assets
Investments in other entities are accounted for using the equity method or cost basis depending
upon the level of ownership and/or the Company’s ability to exercise significant influence over the
operating and financial policies of the investee. Investments of this nature are recorded at original
cost and adjusted periodically to recognize the Company’s proportionate share of the investee’s net
income or losses after the date of investment, additional contributions made and dividends
received. Investments are written down when there is clear evidence that a decline in value that
is other than temporary has occurred.
Amounts paid and payable for spectrum licenses are recorded as deposits until Industry Canada
awards the operating licenses which was subject to approval of documents at year end.
Revenue and expenses
(i) Service revenue
Service revenue from cable, Internet, Digital Phone and DTH customers includes subscriber service
revenue earned as services are provided. Satellite distribution services and telecommunications
service revenue is recognized in the period in which the services are rendered to customers.
Subscriber connection fees received from customers are deferred and recognized as service revenue
on a straight-line basis over two years. Direct and incremental initial selling, administrative and
connection costs related to subscriber acquisitions, in an amount not exceeding initial subscriber
connection fee revenue, are deferred and recognized as an operating expense on a straight-line
basis over the same two years. The costs of physically connecting a new home are capitalized as part
of the distribution system and costs of disconnections are expensed as incurred.
Installation revenue received on contracts with commercial business customers is deferred and
recognized as service revenue on a straight-line basis over the related service contract, which
generally span two to ten years. Direct and incremental costs associated with the service contract, in
an amount not exceeding the upfront installation revenue, are deferred and recognized as an
operating expense on a straight-line basis over the same period.
(ii) Deferred equipment revenue and deferred equipment costs
Revenue from sales of modems, DTH equipment and digital cable terminals (“DCTs”) is deferred
and recognized on a straight-line basis over two years commencing when subscriber service is
activated. The total cost of the equipment, including installation, is deferred and recognized on a
straight-line basis over the same period. The DCT, DTH and modem equipment is generally sold to
customers at cost or a subsidized price in order to expand the Company’s customer base.
Revenue from sales of satellite tracking hardware and costs of goods sold are deferred and
recognized on a straight-line basis over the related service contract for monthly service charges
for air time, which is generally five years. The amortization of the revenue and cost of sale of satellite
service equipment commences when goods are shipped.
Recognition of deferred equipment revenue and deferred equipment costs is recorded as deferred
equipment revenue amortization and deferred equipment costs amortization, respectively.
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Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2009, 2008 and 2007
[all amounts in thousands of Canadian dollars except share and per share amounts]