Shaw 2014 Annual Report Download - page 37

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Shaw Communications Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
August 31, 2014
ŠIFRS 15 Revenue from Contracts with Customers, was issued in May 2014 and replaces
IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programs,
IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets
from Customers and SIC-31 Revenue – Barter Transactions Involving Advertising Services.
The new standard requires revenue to be recognized to depict the transfer of promised
goods or services to customers in an amount that reflects the consideration expected to
be received in exchange for those goods or services. The principles are to be applied in
the following five steps: (1) identify the contract(s) with a customer, (2) identify the
performance obligations in the contract, (3) determine the transaction price, (4) allocate
the transaction price to the performance obligations in the contract, and (5) recognize
revenue when (or as) the entity satisfies a performance obligation. The new standard is to
be applied either retrospectively or on a modified retrospective basis and is effective for
the annual period commencing September 1, 2017.
ŠIFRS 9 Financial Instruments: Classification and Measurement replaces IAS 39 Financial
Instruments and applies a principal-based approach to the classification and
measurement of financial assets and financial liabilities, including an expected credit
loss model for calculating impairment, and includes new requirements for hedge
accounting. The standard is required to be applied retrospectively for the annual period
commencing September 1, 2018.
Change in accounting estimates
During the current year, the Company reviewed the useful lives of its property, plant and
equipment as well as the amortization period for amounts deferred under multiple element
arrangements, including equipment revenue and associated equipment costs and connection
fees. The review resulted in changes in the amortization period for amounts deferred under
multiple element arrangements and estimated useful lives of certain assets effective
September 1, 2013. As a result, cable and telecommunication distribution system assets are
amortized on a straight-line basis over 5 to 20 years, and digital cable terminals and modems
on a straight-line basis over 2 to 5 years. The amortization period for amounts deferred and
amortized on a straight-line basis under multiple element arrangements is 3 years. The impact
of the changes has been accounted for prospectively. The changes in estimates in respect of
unamortized balances at August 31, 2013 resulted in decreases to revenue and amortization as
summarized below.
($millions Cdn)
Year ended
August 31, 2014
Revenue 3
Amortization
Deferred equipment revenue 29
Deferred equipment costs 66
Property, plant and equipment, intangibles and other 63
I. Known events, trends, risks and uncertainties
The Company is subject to a number of risks and uncertainties which could have a material
adverse effect on its future profitability. Included herein is a “Caution Concerning
Forward-Looking Statements” section which should be read in conjunction with this report.
33