Shaw 2015 Annual Report Download - page 64

Shaw Communications Inc.
Notes to the Consolidated Financial Statements
August 31, 2015 and 2014
[all amounts in millions of canadian dollars except share and per share amounts]
Initial setup fees related to the installation of data centre services and installation revenue received on contracts with
commercial business customers are deferred and recognized as 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 installation of services or
service contract, in an amount not exceeding the upfront 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 DTH equipment and DCTs is deferred and recognized on a straight-line basis over three years
commencing when subscriber service is activated. The total cost of the equipment, including installation, represents an
inventoriable cost which is deferred and recognized on a straight-line basis over the same period. The DCT and DTH 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 is 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.
(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 included in amortization of property, plant and equipment, intangibles and other in the
consolidated statements of income.
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 three 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.
62 Shaw Communications Inc. 2015 Annual Report