Cogeco 2009 Annual Report Download - page 56

Consolidated financial statements COGECO CABLE INC. 2009 55
foreign exchange gains and losses on long-term debt denominated in foreign currency that is designated as a hedge of a net
investment in self-sustaining foreign subsidiaries are recorded as foreign currency translation adjustments in accumulated other
comprehensive income, net of income taxes. As a result, an amount of $4.5 million was reclassified as at September 1, 2006 from
the foreign currency translation adjustment to accumulated other comprehensive income and the Corporation’s comparative
consolidated financial statements were restated in accordance with transitional provisions.
Embedded derivatives
All embedded derivatives that are not closely related to the host contracts are measured at fair value, with changes in fair value
recorded in the consolidated statements of income. On September 1, 2007, there were no significant embedded derivatives or non-
financial derivatives that require separate fair value recognition on the consolidated balance sheets. In accordance with the new
standards, the Corporation selected September 1, 2002, as its transition date for adopting the standard related to embedded
derivatives.
v. ACCOUNTING CHANGES
In July 2006, the CICA issued Section 1506, Accounting Changes, which modifies certain aspects of the previous standard. A
reporting entity may not change its accounting method unless required by a primary source of GAAP or to provide a reliable and
more relevant presentation of the financial statements. In addition, changes in accounting methods must be applied retroactively
and additional information must be disclosed. This Section applies to interim and annual financial statements relating to fiscal years
beginning on or after January 1, 2007. During the first quarter of fiscal 2008, the Corporation adopted this new standard and
concluded that it had no significant impact on these consolidated financial statements.
FUTURE ACCOUNTING PRONOUNCEMENTS
vi. GOODWILL AND INTANGIBLE ASSETS
In February 2008, the CICA issued Section 3064, Goodwill and intangible assets, replacing Section 3062, Goodwill and other
intangible assets and Section 3450, Research and development costs. The new Section establishes standards for the recognition,
measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets by profit-oriented
enterprises. Standards concerning goodwill are unchanged from the standards included in the previous Section 3062. The new
Section will be applicable to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008,
with retroactive application. The adoption of this section on September 1, 2009, will decrease deferred charges by $32.3 million,
decrease future income tax liabilities by $9.6 million and decrease opening retained earnings by $22.7 million at September 1, 2008.
The impact on fiscal 2009 results will increase operating costs by $16.5 million, decrease amortization of deferred charges by $14.4
million, decrease future income tax expense by $0.6 million for a decrease in net income of $1.6 million.
vii. BUSINESS COMBINATIONS, CONSOLIDATED FINANCIAL STATEMENTS AND NON-CONTROLLING INTERESTS
In January 2009, the CICA issued Handbook Section 1582, Business Combinations, which replaces Section 1581 of the same
name, and Sections 1601, Consolidated Financial Statements and 1602, Non-Controlling Interests, which together replace Section
1600, Consolidated Financial Statements. These new Sections harmonize significant aspects of Canadian accounting standards
with the International Financial Reporting Standards (“IFRS”) that will be mandated for entities with fiscal years beginning on or after
January 1, 2011.
Section 1582 requires that all business acquisitions be measured at the fair value of the acquired entity at the acquisition date even
if the business combination is achieved in stages, or if less than 100% of the equity interest in the acquiree is owned at the
acquisition date, and expands the definition of a business subject to an acquisition. The Section also establishes new guidance on
the measurement of consideration given and the recognition and measurement of assets acquired and liabilities assumed in a
business combination. Furthermore, under this new guidance, acquisition costs, which were previously included as a component of
the consideration given, and any negative goodwill resulting from the allocation of the purchase price, which was allocated as a
reduction of non-current assets acquired under the previous standard, will be recorded in earnings in the current period. This new
Section will be applied prospectively and will only impact the Corporation’s consolidated financial statements for future acquisitions
concluded in periods subsequent to the date of adoption.
Sections 1601 and 1602 dealing with consolidated financial statements require an entity to measure non-controlling interest upon
acquisition either at fair value or at the non-controlling interest's proportionate share of the acquiree's identifiable net assets. The
new Sections also require non-controlling interest to be presented as a separate component of shareholders' equity.
The new standards will apply as of the beginning of the first annual reporting period beginning on or after January 1, 2011, with
simultaneous early adoption permitted. Early adoption may reduce the amount of restatement required upon conversion to IFRS.
The Corporation is currently assessing the impact of these new Sections on its consolidated financial statements.