Shaw 2015 Annual Report Download - page 67

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]
transmitter sites. This cost is amortized on the same basis as the related asset. The liability is subsequently increased for the
passage of time and the accretion is recorded in the income statement as accretion of long-term liabilities and provisions. The
discount rates applied are subsequently adjusted to current rates as required at the end of reporting periods. Revisions due to
the estimated timing of cash flows or the amount required to settle the obligation may result in an increase or decrease in the
liability. Actual costs incurred upon settlement of the obligation are charged against the liability to the extent recorded.
(ii) Restructuring provisions
Restructuring provisions, primarily in respect of employee termination benefits, are recognized when a detailed plan for the
restructuring exists and a valid expectation has been raised to those affected that the plan will be carried out.
(iii) Other provisions
Provisions for disputes, legal claims and contingencies are recognized when warranted. The Company establishes provisions
after taking into consideration legal assessments (if applicable), expected availability of insurance or other recourse and other
available information.
Deferred credits
Deferred credits primarily include: (i) prepayments received under IRU agreements amortized on a straight-line basis into
income over the term of the agreement, (ii) equipment revenue, as described in the revenue and expenses accounting policy,
deferred and amortized over three to five years, (iii) connection fee revenue, initial setup fees and upfront installation revenue,
as described in the revenue and expenses accounting policy, deferred and amortized over two to ten years, (iv) a deposit on a
future fibre sale, and (v) amounts received in respect of granting an option to acquire its wireless spectrum licenses.
Leases
(i) Operating leases
Rent expense for real estate leases that have escalating lease payments is recorded on a straight-line basis over the term of the
lease. The difference between the expense recorded and the amount paid is recorded as deferred rent and included in deferred
credits in the statement of financial position.
(ii) Finance leases
Leases of property and equipment that transfer substantially all the risks and rewards of ownership are classified as finance
leases. Finance leases are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at
the present value of the minimum lease payments. Lease payments are apportioned between interest expense and reduction of
the lease liability. The property and equipment acquired under finance leases is depreciated over the shorter of the useful life of
the asset and the lease term.
Income taxes
The Company accounts for income taxes using the liability method, whereby deferred income tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of assets and liabilities measured using
substantively enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets
and liabilities are offset if there is a legally enforceable right to offset and they relate to income taxes levied by the same
authority in the same taxable entity. Income tax expense for the period is the tax payable for the period using tax rates
substantively enacted at the reporting date, any adjustments to taxes payable in respect of previous years and any change
during the period in deferred income tax assets and liabilities, except to the extent that they relate to a business combination or
divestment, items recognized directly in equity or in other comprehensive income. The Company records interest and penalties
related to income taxes in income tax expense.
2015 Annual Report Shaw Communications Inc. 65