Cogeco 2007 Annual Report Download - page 49

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Notes to Consolidated Financial Statements COGECO CABLE INC. 2007 47
1) SIGNIFICANT ACCOUNTING POLICIES (continued)
iii. Accounting changes
In July 2006, the CICA issued Handbook Section 1506,
Accounting Changes
, which modifi es certain aspects of the previous
standard. A reporting entity may not change its accounting method unless required by primary source of GAAP or to provide
a more reliable and relevant presentation of the fi nancial statements. In addition, changes in accounting methods must
be applied retroactively and additional information must be disclosed. This Section applies to interim and annual fi nancial
statements relating to fi scal years beginning on or after January 1, 2007.
iv. Harmonization of Canadian and International Standards
In March 2006, the Accounting Standards Board of the CICA released its new strategic plan, which proposes to abandon
Canadian GAAP and effect a complete convergence to the International Financial Reporting Standards. At the end of a
transitional period of approximately fi ve years, Canadian GAAP will cease to exist as a separate distinct basis of fi nancial
reporting for public companies. The Corporation will convert to these new standards according to the timetable set with
these new rules. The Corporation will closely monitor changes arising from this convergence.
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, High Speed Internet 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 is 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 offers.
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 mainly on a straight-
line basis over the estimated useful lives over the following periods:
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
The Corporation reviews, when a triggering event occurs, the carrying values of its long-lived assets by comparing the
carrying amount of the asset or group of assets to the expected future undiscounted cash fl ow to be generated by the
asset or group of assets. An impairment loss is recognized when the carrying amount of an asset or group of assets held for
use exceeds the sum of the undiscounted cash fl ow expected from its use and eventual disposal. The impairment loss is
measured as the amount by which the asset carrying amount exceeds its fair value.