Cogeco 2003 Annual Report Download - page 30

1Significant accounting policies
Nature of operations
Cogeco Cable Inc. (the “Corporation”) is a Canadian public company whose shares are listed on the Toronto Stock Exchange.
The Corporation’s core business is providing cable television services and high-speed Internet access.
Principles of consolidation
The consolidated financial statements include the accounts of the Corporation and its subsidiaries. Business acquisitions
are accounted for under the purchase method and operating results are included in the consolidated financial statements
as of the date of the acquisition of control. Other investments are recorded at cost.
Revenue recognition
Revenue from cable television and related services, and from high-speed Internet access are recognized when services
are provided. Revenue generated from sales of equipment with or without programming credits, which are accounted for as
adeduction from revenue when allowed, are accounted for as a deduction of equipment subsidies. Amounts received or invoiced
that do not comply with this criterion are accounted for as deferred and prepaid income.
Fixed assets
Fixed assets are recorded at cost. During construction of new assets, direct costs plus a portion of overhead costs are capitalized.
Depreciation is provided on a straight-line method over the estimated useful lives over the following periods:
Buildings 40 years
Cable systems 5 to 15 years
Equipment, programming equipment, furniture and fixtures 10 years
Decoders, modems and customer’s premises devices 7 years
Rolling stock under capital leases 5 years
Other equipment 5 years
Leasehold improvements Lease term
The Corporation reviews fixed assets for impairment if events or changes in circumstances indicate that the carrying value may
not be recoverable. Recoverability is measured by a comparison of the carrying amount of an asset to future undiscounted
net cash flows expected to be generated by the asset.
Deferred charges
Deferred charges include new services launch costs, equipment subsidies and other costs incurred in order to expand customer
base and financing costs. New services launch costs and financing costs are amortized using the straight-line method, over a
period not exceeding five years. Equipment subsidies and other costs incurred in order to expand the customer base are amortized
over a period of four years.
Customer base
The customer base represents the difference between price paid and the fair value attributed to tangible and intangible
assets upon acquisition of cable systems. Customer base is considered to have a deemed indefinite life and consequently is not
amortized, but tested for impairment annually or more frequently if changes in circumstances indicate a potential impairment.
Income taxes
Income taxes are accounted for under the asset and liability method. Under this method, future tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing
assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled.
28 Cogeco Cable Inc. 2003
Notes to Consolidated Financial State
YEARS ENDED AUGUST 31, 2003 AND 2002