Cogeco 2006 Annual Report Download - page 45

Notes to Consolidated Financial Statements COGECO CABLE INC. 2006 43
BUILDINGS 40 to 50 years
CABLE SYSTEMS 4 to 15 years
EQUIPMENT, PROGRAMMING EQUIPMENT, FURNITURE AND FIXTURES 3 to 10 years
HOME TERMINAL DEVICES 3 to 5 years
ROLLING STOCK UNDER CAPITAL LEASES 5 years
OTHER EQUIPMENT 5 to 8 years
LEASEHOLD IMPROVEMENTS Lease term
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
FUTURE ACCOUNTING PRONOUNCEMENTS
iv) Financial Instruments, Hedges and Comprehensive Income
In January 2005, the CICA issued Handbook section 3855, Financial Instruments — Recognition and Measurement ,
Handbook section 3865, Hedges and Handbook section 1530, Comprehensive Income .
Section 3855 establishes standards for recognition and measurement of fi nancial assets, fi nancial liabilities and non-fi nancial
derivatives. The standard specifi es when and to which amount a fi nancial instrument is to be recorded on the balance
sheet. Financial instruments are to be recorded at fair value in some cases, and at cost in others. The section also provides
guidance for disclosure of gains and losses on fi nancial instruments.
Section 3865 includes and replaces the guidance on hedging relationships that was previously contained in AcG-13,
mostly those relating to the designation of hedging relationships and its documentation. The new standard specifi es how
to apply hedge accounting and which information has to be disclosed by the entity.
Section 1530 establishes standards for reporting and display of comprehensive income. Comprehensive income includes
net income as well as all changes in equity during a period, from transactions and events from non-owner sources.
Comprehensive income and its components should be presented in a fi nancial statement with the same prominence as
other fi nancial statements.
These sections are to be applied to interim and annual fi nancial statements relating to fi scal years beginning on or after
October 1, 2006. The Corporation is currently evaluating the impact of these new standards.
D) REVENUE RECOGNITION
The Corporation considers revenue to be earned as services are rendered, provided that ultimate collection is reasonably
assured. 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, from High Speed Internet services and Telephony 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 revenue are deferred and amortized over the average life of a customer’s subscription, 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 criteria 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 principally on a straight-line
method over the estimated useful lives over the following periods: