Shaw 2015 Annual Report Download - page 66

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]
Software that is not an integral part of the related hardware is classified as an intangible asset. Internally developed software
assets are recorded at historical cost and include direct material and labour costs as well as borrowing costs on qualifying
assets. Software assets are amortized on a straight-line basis over estimated useful lives ranging from three to ten years. The
Company reviews the estimates of lives and useful lives on a regular basis.
Borrowing costs
The Company capitalizes borrowing costs on qualifying assets, for which the commencement date is on or after September 1,
2010, that take more than one year to construct or develop using the Company’s weighted average cost of borrowing which
approximated 6% (2014 – 6.25%).
Impairment
(i) Goodwill and indefinite-life intangibles
The Company tests goodwill and indefinite-life intangibles for impairment annually (as at March 1) and when events or changes
in circumstances indicate that the carrying value may be impaired. The recoverable amount of each cash-generating unit
(“CGU”) is determined based on the higher of the CGU’s fair value less costs to sell (“FVLCS”) and its value in use (“VIU”). A
CGU is the smallest identifiable group of assets that generate cash flows that are independent of the cash inflows from other
assets or groups of assets. The Company’s cash generating units are Cable, Satellite, Media and Data centres. Where the
recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to
goodwill cannot be reversed in future periods.
(ii) Non-financial assets with finite useful lives
For non-financial assets, such as property, plant and equipment and finite-life intangible assets, an assessment is made at each
reporting date as to whether there is an indication that an asset may be impaired. If any indication exists, the recoverable
amount of the asset is determined based on the higher of FVLCS and VIU. Where the carrying amount of the asset exceeds its
recoverable amount, the asset is considered impaired and written down to its recoverable amount. Previously recognized
impairment losses are reviewed for possible reversal at each reporting date and all or a portion of the impairment is reversed if
the asset’s value has increased.
CRTC benefit obligations
The fair value of CRTC benefit obligations committed as part of business acquisitions are initially recorded at the present value
of amounts to be paid net of any expected incremental cash inflows. The obligation is subsequently adjusted for the incurrence
of related expenditures, the passage of time and for revisions to the timing of the cash flows. Changes in the obligation due to
the passage of time are recorded as accretion of long-term liabilities and provisions in the income statement.
Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. The timing or amount of the outflow may still be uncertain. Provisions
are measured using the best estimate of the expenditure required to settle the present obligation at the end of the reporting
period, taking into account risks and uncertainties associated with the obligation. Provisions are discounted where the time
value of money is considered material.
(i) Asset retirement obligations
The Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred, on a
discounted basis, with a corresponding increase to the carrying amount of property and equipment, primarily in respect of
64 Shaw Communications Inc. 2015 Annual Report