Shaw 2012 Annual Report Download - page 74
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Shaw Communications Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2012 and 2011
[all amounts in millions of Canadian dollars except share and per share amounts]
Cash
Cash is presented net of outstanding cheques. When the amount of outstanding cheques and
the amount drawn under the Company’s revolving term facility are greater than the amount of
cash, the net amount is presented as bank indebtedness.
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 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.
Property, plant and equipment
Property, plant and equipment are recorded at purchase cost. Direct labour and other directly
attributable costs incurred to construct new assets, upgrade existing assets and connect new
subscribers are capitalized and borrowing costs on qualifying assets for which the
commencement date is on or after September 1, 2010 are also capitalized. As well, any asset
removal and site restoration costs in connection with the retirement of assets are capitalized.
Repairs and maintenance expenditures are charged to operating expense as incurred.
Amortization is recorded on a straight-line basis over the estimated useful lives of assets as
follows:
Asset Estimated useful life
Cable and telecommunications distribution system 5-15 years
Digital cable terminals and modems 2-7 years
Satellite audio, video and data network equipment and DTH receiving
equipment 2-10 years
Transmitters, broadcasting and communication equipment 5-15 years
Buildings 15-40 years
Data processing 3-4 years
Other 3-20 years
The Company reviews the estimates of lives and useful lives on a regular basis.
Assets held for sale and discontinued operations
Assets are classified as held for sale when specific criteria are met and are measured at the
lower of carrying amount and estimated fair value less costs to sell. Assets held for sale are not
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