Cogeco 2014 Annual Report Download - page 52

MD&A COGECO CABLE INC. 2014 51
or loss in the same period as the hedged item affects profit or loss and in the same line item as the hedged items. Any ineffective portion of
changes in the fair value of the derivative financial instrument is recognized immediately in profit or loss.
Embedded derivatives
Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host
contract and the embedded derivative are not closely related. A separate instrument with the same terms as the embedded derivative would meet
the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss. At August 31, 2014 and 2013,
embedded derivatives or non-financial derivatives that require separate fair value recognition on the consolidated statements of financial position
were not significant.
CONTINGENCIES AND COMMITMENTS
The Corporation is subject to various claims and contingencies related to lawsuits, taxes and commitments under contractual and other commercial
obligations. The contractual and other commercial obligations primarily relate to network fees and operating lease agreements for use of premises
and transmission facilities. The Corporation recognizes liabilities for contingencies and commitments when a loss is probable and can be reasonably
estimated based on available information. Significant assumption changes as to the likelihood and estimates of a loss could result in the recognition
of an additional liability.
ADOPTION OF NEW ACCOUNTING STANDARDS
The Corporation adopted the following new accounting standards on September 1, 2013. The impacts of the application of this standard are
described in Note 3 of the consolidated financial statements.
Amendments to IAS 19 Employee Benefits: The principal difference in the amended standard is that the expected long-term rate of
return on plan assets will no longer be used to calculate the defined benefit costs. The defined benefit costs concepts of "interest cost"
and "expected return on plan assets" are replaced by the concept of "net interest" calculated by applying the discount rate to the net
liability or asset. The amended standard does not prescribe the classification within the statement of profit or loss of defined benefit
net interest. The Corporation has decided to include the net interest expense or income in financial expense.
The Corporation also adopted the following standards on September 1, 2013 which had no impact on the consolidated financial statements.
Amendments to IFRS 7 Financial Instruments: Disclosures;
IFRS 10 Consolidated Financial Statements;
IFRS 12 Disclosure of Interest in Other Entities; and
IFRS 13 Fair Value Measurement;
FUTURE ACCOUNTING DEVELOPMENTS IN CANADA
A number of new standards, interpretations and amendments to existing standards were issued by the International Accounting Standard Board
(“IASB”) that are mandatory but not yet effective for the period ended August 31, 2014, and have not been applied in preparing these consolidated
financial statements. The following standards may have a material impact on future consolidated financial statements of the Corporation:
Effective for annual periods
starting on or after
IFRS 9 Financial Instruments January 1, 2018 Early adoption permitted
IFRS 15 Revenue from Contracts with Customers January 1, 2017 Early adoption permitted
Amendments to IAS 19 Defined Benefits Plans: Employee Contributions July 1, 2014 Early adoption permitted
IFRIC 21 Levies January 1, 2014 Early adoption permitted
IFRS 9 replaces the guidance in IAS 39 Financial Instruments: Recognition and Measurement. The Standard includes requirements for recognition
and measurement, impairment, derecognition and general hedge accounting. The IASB completed its project to replace IAS 39 in phases, adding
to the standard as it completed each phase. The version of IFRS 9 issued in 2014 supersedes all previous versions; however, for a limited period,
previous versions of IFRS 9 may be adopted early if not already done so provided the relevant date of initial application is before February 1,
2015. IFRS 9 does not replace the requirement for portfolio fair value hedge accounting for interest risk since this phase of the project was
separated from IFRS 9 project due to the longer term nature of the macro hedging project which is currently at the discussion paper phase of the
due process. Consequently, the exception in IAS 39 for a fair value hedge of an interest rate exposure of a portfolio of financial assets or financial
liabilities continues to apply.
IFRS 15 establishes principles for reporting the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts
with customers. It provides a single model for an entity to recognize revenue in order to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. IFRS
15 supersedes the following standards: IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15
Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC-31 Revenue-Barter Transactions Involving
Advertising Services. Application of the standard is mandatory for all IFRS reporters and it applies to nearly all contracts with customers: the main
exceptions are leases, financial instruments and insurance contracts.