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66 COGECO CABLE INC. 2011 Consolidated financial statements
11. Goodwill and other intangible assets
2011 2010
(in thousands of dollars) $ $
Customer relationships 57,637 28,106
Customer base 989,552 989,552
1,047,189 1,017,658
Goodwill 210,986 144,695
1,258,175 1,162,353
A) Intangible assets
During fiscal years 2011 and 2010, intangible asset variations were as follows:
2011 2010
Custome
r
relationships
Custome
r
base Total
Custome
r
relationships
Custome
r
base Total
(in thousands of dollars) $ $ $ $$ $
Balance, beginning of year 28,106 989,552 1,017,658 32,882 989,552 1,022,434
Business acquisitions (note 2) 34,305 – 34,305 – – –
A
mortization (4,774) – (4,774) (4,776) – (4,776)
Balance, end of year 57,637 989,552 1,047,189 28,106 989,552 1,017,658
At August 31, 2011 and 2010, the Corporation tested the value of customer base for impairment and concluded that no impairment existed.
B) Goodwill
During fiscal years 2011 and 2010, goodwill variation was as follows:
2011 2010
(in thousands of dollars) $ $
Balance, beginning of year 144,695 153,695
Business acquisitions (note 2) 94,743 –
Recognition of pre-acquisition tax losses – (4,432)
Impairment (note 6) (29,344) –
Foreign currency translation adjustment 892 (4,568)
Balance, end of year 210,986 144,695
On November 25, 2009, the Corporation’s subsidiary, Cabovisão, received approval to its request for preservation of tax losses for the taxation
years preceding the 2006 taxation year. Accordingly, the Corporation has adjusted its allocation of the purchase price to reflect the recognition
of additional tax losses incurred prior to the acquisition, in an amount not exceeding management’s best estimate of the level of pre-acquisition
tax losses that will be realized. This adjustment has reduced goodwill by approximately $4.4 million in the year ended August 31, 2010.
Pending resolution of the litigations for taxation years 2003 to 2005 mentioned in note 7, the Corporation will review its estimate periodically to
reflect currently available information and any additional recognition of pre-acquisition tax losses will be recorded as a reduction of goodwill.
At August 31, 2011 and 2010, the Corporation tested the value of goodwill for impairment and concluded that no impairment existed.