Shaw 2010 Annual Report Download - page 78

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(iii) Deferred IRU revenue
Prepayments received under indefeasible right to use (“IRU”) agreements are amortized on a
straight-line basis into income over the term of the agreement and are recognized in the
Consolidated Statements of Income and Retained Earnings (Deficit) as deferred IRU revenue
amortization.
Cash and cash equivalents
Cash and cash equivalents include money market instruments that are purchased three months or
less from maturity, and are presented net of outstanding cheques. When the amount of outstanding
cheques and the amount drawn under the Company’s operating facility (see note 9) are greater than
the amount of cash and cash equivalents, the net amount is presented as bank indebtedness.
Short-term securities
Short-term securities include money market instruments with terms ranging from three to twelve
months to maturity and are recorded at cost plus accrued interest.
Allowance for doubtful accounts
The Company maintains an allowance for doubtful accounts for the estimated losses resulting from
the inability of its customers to make required payments. In determining the allowance, the
Company considers factors such as the number of days the subscriber account is past due, whether
or not the customer continues to receive service, the Company’s past collection history and changes
in business circumstances.
Inventories
Inventories include subscriber equipment such as DCTs and DTH receivers, which are held pending
rental or sale at cost or at a subsidized price. When subscriber equipment is sold, the equipment
revenue and equipment costs are deferred and amortized over two years. When the subscriber
equipment is rented, it is transferred to property, plant and equipment and amortized over its useful
life. Inventories are determined on a first-in, first-out basis, and are stated at cost due to the
eventual capital nature as either an addition to property, plant and equipment or deferred
equipment costs.
74
Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2010, 2009 and 2008
[all amounts in thousands of Canadian dollars except share and per share amounts]