Cogeco 2014 Annual Report Download - page 66

Consolidated financial statements COGECO CABLE INC. 2014 65
contractual, economic or other factors that would prevent their renewals or limit the period over which they will contribute to the
Corporation's cash flows. The Trade name is considered to have an indefinite economic life because of the institutional nature of the
corporate trade name, its proven ability to maintain market leadership and profitable operations over long periods of time and the
Corporation’s commitment to develop and enhance its value. The Corporation reviews at the end of each reporting period whether
events and circumstances continue to support indefinite useful life assessment for these licenses and the Trade name. Intangible assets
with indefinite useful lives are not amortized, but tested for impairment at least annually or more frequently if there is any indication of
impairment.
Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately
recognized. It is not amortized but tested for impairment at least annually or more frequently if there is an indication of impairment.
F) IMPAIRMENT OF NON FINANCIAL ASSETS
At the end of each reporting period, the Corporation reviews the carrying value of its property, plant and equipment and intangible
assets with finite useful lives to determine whether there is any indication of impairment. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss, if any.
Goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually or more frequently if there is an
indication of impairment.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
For the purpose of impairment testing, assets that cannot be tested on an individual basis are grouped together into the smallest
identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of
assets (“cash-generating unit” or “CGU”). When a reasonable and consistent basis of allocation can be identified, corporate assets are
allocated to an individual CGU, otherwise they are allocated to the smallest group of CGU for which a reasonable and a consistent
basis of allocation can be identified.
An impairment loss is recognized when the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses
recognized in respect of CGUs are allocated first to reduce the carrying amount of any allocated goodwill and then to reduce the carrying
amount of other assets on a pro rata basis. The impairment loss is recognized immediately in profit or loss in the period in which the
loss occurs.
Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or
no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment
loss is recognized immediately in profit or loss.
For the purpose of impairment testing, goodwill is allocated to each of the Corporation's CGUs that are expected to benefit from the
synergies of the related business combination. An impairment loss recognized for goodwill cannot be reversed.
G) LEASES
Lessee
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to
ownership of the asset to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognized as assets of the Corporation at their fair value at the inception of the lease or, if lower,
at the present value of the minimum lease payments as determined at the inception of the lease. Subsequent to initial recognition, the
asset is accounted for in accordance with the accounting policy applicable to that asset. The corresponding liability is included in the
statement of financial position as a finance lease obligation. Lease payments are apportioned between financial expense and reduction
of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Financial expense and
depreciation of the assets are recognized in profit or loss in the period they occur.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease.
Lessor
The Corporation leases certain telecommunication equipment, primarily home terminal devices, to its customers. These leases are
classified as operating leases and rental revenue is recognized on a straight-line basis over the term of the relevant lease.
H) INCOME TAXES
Income tax expense represents the sum of the taxes currently payable and deferred. Current and deferred taxes are recognized in
profit or loss, except when they relate to a business combination or to items that are recognized in other comprehensive income or
directly in equity.