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Consolidated Financial Statements COGECO CABLE INC. 2010 49
Notes to the consolidated financial statements
Years ended August 31, 2010 and 2009
Nature of operations
Cogeco Cable Inc. (the “Corporation”) is a Canadian public company whose shares are listed on the Toronto Stock Exchange (“TSX”). The
Corporation’s core business is providing Cable Television, High Speed Internet (“HSI”), Telephony and other telecommunications services to its
residential and commercial customers in Canada and in Portugal.
1. Significant accounting policies
The consolidated financial statements are prepared in conformity with Canadian Generally Accepted Accounting Principles (“GAAP”).
A) Consolidation principles
The consolidated financial statements include the accounts of the Corporation and its subsidiaries as well as those of a variable interest entity
for which the Corporation is the primary beneficiary. 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.
B) Recent accounting pronouncements and changes in accounting policies
Adopted during fiscal 2010
i. Goodwill and intangible assets
In February 2008, the Canadian Institute of Chartered Accountants (“CICA”) issued Handbook section 3064, Goodwill and intangible assets,
replacing Section 3062, Goodwill and other intangible assets and Section 3450, Research and development costs. The new section established
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 remained unchanged from the standards included in the previous Section
3062. The new section was applicable to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008,
with retroactive application. The adoption of Section 3064 resulted in the elimination of the deferral of new service launch costs which are now
recognized as operating costs when they are incurred. Reconnect and additional service activation costs are capitalized up to an amount not
exceeding the revenue generated by the reconnect activity. Consequently, the Corporation adjusted opening retained earnings on a retroactive
basis and the prior period comparative figures have been restated. The adoption of this new section had the following impacts on the
Corporation’s consolidated financial statements:
Consolidated statement of income (loss)
Increase (decrease) Year ended
August 31, 2009
(in thousands of dollars) $
Operating costs 16,519
A
mortization of deferred charges (14,353)
Future income tax expense (613)
Net income (1,553)