Shaw 2012 Annual Report Download - page 81

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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]
Actual results could differ from those estimates and significant changes in assumptions could
cause an impairment in assets. The following require the most difficult, complex or subjective
judgements which result from the need to make estimates about the effects of matters that are
inherently uncertain.
Estimation uncertainty
The following are key assumptions concerning the future and other key sources of estimation
uncertainty that could impact the carrying amount of assets and liabilities and results of
operations in future periods:
(i) Allowance for doubtful accounts
The Company is required to make an estimate of an appropriate allowance for doubtful
accounts on its receivables. The estimated allowance required is a matter of judgement and the
actual loss eventually sustained may be more or less than the estimate, depending on events
which have yet to occur and which cannot be foretold, such as future business, personal and
economic conditions.
(ii) Property, plant and equipment
The Company is required to estimate the expected useful lives of its property, plant and
equipment. These estimates of useful lives involve significant judgement. In determining these
estimates, the Company takes into account industry trends and company-specific factors,
including changing technologies and expectations for the in-service period of these assets.
Management’s judgement is also required in determination of the amortization method, the
residual value of assets and the capitalization of labour and overhead.
(iii) Business combinations – purchase price allocation
Purchase price allocations involve uncertainty because management is required to make
assumptions and judgements to estimate the fair value of the identifiable assets acquired and
liabilities assumed in business combinations. Fair value estimates are based on quoted market
prices and widely accepted valuation techniques, including discounted cash flow (“DCF”)
analysis. Such estimates include assumptions about inputs to the valuation techniques,
industry economic factors and business strategies.
(iv) Impairment
The Company estimates the recoverable amount of its CGUs using a FVLCS calculation based
on a DCF analysis. Significant judgements are inherent in this analysis including estimating the
amount and timing of the cash flows attributable to the broadcast rights and licenses and the
AWS licenses, the selection of an appropriate discount rate, and the identification of
appropriate terminal growth rate assumptions. In this analysis the Company estimates the
discrete future cash flows associated with the intangible asset for five years and determines a
terminal value. The future cash flows are based on the Company’s estimates of future operating
results, economic conditions and the competitive environment. The terminal value is estimated
using both a perpetuity growth assumption and a multiple of operating income before
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