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Consolidated financial statements COGECO CABLE INC. 2011 55
Notes to the consolidated financial statements
Years ended August 31, 2011 and 2010
Nature of operations
Cogeco Cable Inc. (the “Corporation”) is a Canadian public corporation whose shares are listed on the Toronto Stock Exchange (“TSX”). The
Corporation’s core business is providing Cable Television, High Speed Internet (“HSI”), Telephony, managed information technology and
infrastructure, 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. The retroactive adoption of Section 3064 reduced the fiscal year 2010 opening
retained earnings by an amount of $24.3 million.
ii. Financial instrument disclosures
In 2009, the Canadian Accounting Standards Board (“AcSB”) amended CICA Handbook Section 3862, Financial instruments – disclosures, to
require enhanced disclosures about the relative reliability of the data, or inputs, that an entity uses in measuring the fair values of its financial
instruments. The new requirements are effective for annual financial statements for fiscal years ending after September 30, 2009. The adoption
of this amendment did not have any impact on the classification and measurement of the Corporation’s financial instruments. The new
disclosures pursuant to this amendment are included in note 17 of the Corporation’s consolidated financial statements.
Future accounting pronouncements
iii. Harmonization of Canadian and international accounting standards
In March 2006, the AcSB of the CICA released its new strategic plan, which proposed to abandon Canadian GAAP and effect a complete
convergence to the International Financial Reporting Standards (“IFRS”) for Canadian publicly accountable entities. This plan was confirmed in
subsequent exposure drafts issued in April 2008, March 2009 and October 2009. The changeover will occur no later than fiscal years beginning
on or after January 1, 2011. Accordingly, the Corporation’s first interim consolidated financial statements presented in accordance with IFRS
will be for the three-month period ending November 30, 2011, and its first annual consolidated financial statements presented in accordance
with IFRS will be for the year ending August 31, 2012.