Cogeco 2004 Annual Report Download - page 35

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cogeco Cable Inc. 2004 33
1SIGNIFICANT ACCOUNTING POLICIES (continued)
d) Revenue recognition
The Corporation earns revenue from several sources. The recognition of revenue from the principal sources is as follows:
•
Revenue from cable television and related services, and from high-speed Internet access services are recognized when services are provided;
•
Revenue generated from sales of home terminal devices are recorded as equipment revenue upon activation of services;
•
Installation revenues are deferred and amortized over the average life of a customer, which is four years;
•
Promotional offers are accounted as a deduction of revenue when customers are taking advantage of such offer.
Amounts received or invoiced that do not comply with these criterions are accounted for as deferred and prepaid income.
e) Fixed assets
Fixed assets are recorded at cost. During construction of new assets, direct costs plus a portion of overhead costs are capitalized. Financial
expense incurred during construction is expensed. Amortization 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
Home terminal devices 3 to 5 years
Rolling stock under capital leases 5 years
Other equipment 5 years
Leasehold improvements Lease term
f) Deferred charges
Deferred charges with anticipated future benefits include new services launch costs, equipment subsidies, reconnect costs 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 reconnect costs are amortized over the average life of a customer, which is four years.
g) 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.
h) 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.