Telus 2011 Annual Report Download - page 79

TELUS 2011 ANNUAL REPORT . 75
MANAGEMENT’S DISCUSSION & ANALYSIS: 8
would be converted into a Common Share on a one-for-one basis,
effected by way of a court-approved plan of arrangement and will be
subject to the approval of two-thirds of the votes cast by the holders
of Common Shares and two-thirds of the votes cast by the holders of
Non-Voting Shares, each voting separately as a class; there can be
no assurance that the proposal will receive voting approval. If this plan
of arrangement is not completed, the market price of Non-Voting
Shares and Common Shares may decline.
7.10 Transactions between related parties
Investments in significant controlled entities
At December 31, 2011, TELUS Corporation ultimately controls 100%
of the equity of TELUS Communications Inc., which in turn ultimately
controls 100% of the equity of TELUS Communications Company
and TELE-MOBILE COMPANY, unchanged from December 31, 2010,
and January 1, 2010.
Transactions with key management personnel
Key management personnel have authority and responsibility for planning,
directing and controlling the activities of the Company, and consist of the
Company’s Board of Directors and the Company’s Executive Leadership
Team. Total compensation expense amounts for key man agement per-
sonnel for the years ended December 31, 2011 and 2010, were $28 million
and $29 million, respectively. See Note 23 of the Audited consolidated
financial statements for additional detail.
Transactions with defined benefit pension plans
The Company provided management and administrative services to
its defined benefit pension plans. The charges for these services were
on a cost recovery basis and were immaterial to the Company. The
Company also made employer contributions to defined benefit plans
as discussed in Section 7.1.
8.1 Critical accounting estimates
TELUS’ significant accounting policies are described in Note 1 of the
Audited consolidated financial statements dated December 31, 2011. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates, assump-
tions and judgements that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Examples of significant judgements, apart from those involving esti-
mation, include: (i) the Company’s choice to depreciate and amortize its
property, plant, equipment and intangible assets subject to amortization
on a straight-line basis as it believes that this method reflects the con-
sumption of resources related to the economic lifespan of those assets
better than an accelerated method and is more representative of the
economic substance of the underlying use of those assets; and (ii) the
Company’s view that its spectrum licences granted by Industry Canada
will likely be renewed by Industry Canada; that the Company intends
to renew them; and that the Company believes it has the financial and
operational ability to renew them and, thus, they are deemed to have
an indefinite life.
The Company’s critical accounting estimates and assumptions are
described below and are generally discussed with the Audit Committee
each quarter.
General
.The Company has considered in determining its critical accounting
estimates, trends, commitments, events or uncertainties that it reason-
ably expects to materially affect the methodology or assumptions,
subject to the items identified in the Caution regarding forward-looking
statements section of this MD&A.
.In the normal course, changes are made to assumptions underlying
all critical accounting estimates to reflect current economic conditions,
updating of historical information used to develop the assumptions
and changes in the Company’s credit ratings, where applicable. Unless
otherwise specified in the discussion of the specific critical accounting
estimate, it is expected that no material changes in overall financial
performance and financial statement line items would arise either from
reasonably likely changes in material assumptions underlying the
estimate or from selection of a different estimate from within a valid
range of estimates.
.All critical accounting estimates are uncertain at the time of making
the estimate and affect the following Consolidated statements of
income and other comprehensive income line items: Income taxes
(except for estimates about goodwill) and Net income. Similarly,
all critical accounting estimates affect the following Consolidated
statements of financial position line items: Current assets (Income
and other taxes receivable); Current liabilities (Income and other taxes
payable); Deferred income tax liabilities; and Common Share and
Non-Voting Share equity (retained earnings). The discussion of each
critical accounting estimate does not differ between the Company’s
two segments, wireless and wireline, unless explicitly noted.
8CRITICAL ACCOUNTING ESTIMATES AND ACCOUNTING POLICY DEVELOPMENTS
Accounting estimates that are critical to determining financial results, and changes
to accounting policies