Cogeco 2015 Annual Report Download - page 68

Consolidated financial statements COGECO CABLE INC. 2015 67
associated with the cost will flow to the Corporation and the cost can be measured reliably. The carrying amount of the replaced part
is derecognized. All other day-to-day maintenance costs are recognized in profit or loss in the period in which they are incurred.
Depreciation is recognized from the date the asset is ready for its intended use so as to write-off the cost of assets, other than freehold
land and properties under construction, less their residual values over their useful lives, using the straight-line method. Assets held
under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term
of the relevant lease. Depreciation periods are as follows:
Buildings and leasehold improvements(1) 10 to 40 years
Networks and infrastructure(2) 5 to 20 years
Home terminal devices 3 to 5 years
Data centre equipment(3) 3 to 7 years
Rolling stock and equipment(4) 3 to 10 years
(1) Leasehold improvements are amortized over the shorter of the term of the lease or economic life.
(2) Networks and infrastructure include cable towers, headends, transmitters, fibre and coaxial networks, customer drops and network equipment.
(3) Data centre equipment includes general infrastructure, mechanical and electrical equipment, security and access control. Servers that are
included as part of the hosting product line are amortized on a straight-line basis over their expected useful life, which is three years.
(4) Rolling stock and equipment includes rolling stock, programming equipment, furniture and fixtures, computer and software and other equipments.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
The estimated useful lives, residual values and depreciation method are reviewed annually, with the effect of any changes in estimate
accounted for on a prospective basis.
The gain or loss arising on the disposal or write-off of an item of property, plant and equipment is determined as the difference between
the sale proceeds, if any, and the carrying amount of the asset and is recognized as profit or loss.
The Corporation does not record decommissioning obligations in connection with its fibre and coaxial networks. The Corporation expects
to renew all of its agreements with utility companies to access their support structures in the future, thus the resulting present value of
the obligation is not significant.
E) INTANGIBLE ASSETS
Intangible assets acquired separately
Intangible assets acquired separately are measured on initial recognition at cost less accumulated amortization and impairment losses,
if they are amortizable, otherwise, only net of accumulated impairment losses. The useful lives of intangible assets are assessed as
either finite or indefinite.
Identifiable intangible assets acquired in a business combination
Identifiable intangible assets acquired in a business combination are recognized separately from goodwill if they meet the definition of
intangible asset and if their fair value can be measured reliably. The cost of these intangible assets equals their acquisition-date fair
value. Subsequent to initial recognition, identifiable intangible assets acquired in a business combination are recorded at cost less
accumulated amortization and impairment losses, if they are amortizable, otherwise only net of accumulated impairment losses. The
useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite useful lives
Intangible assets with finite useful lives are amortized over their useful life. The estimated useful lives are reviewed annually, with the
effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with finite useful lives are amortized
as follows:
Customer relationships are amortized on a straight-line basis over the estimated useful life, defined as the average life of a
customer's subscription, not exceeding eight years;
Favorable leases are amortized on a straight-line basis over the remaining non-cancelable term of the lease agreement;
Reconnect and additional service activation costs are capitalized up to a maximum amount not exceeding the revenue
generated by the reconnect activity and are amortized over the average life of a customer's subscription, not exceeding four
years; and
Direct and incremental costs associated with the acquisition of Enterprise data service customers are capitalized and amortized
over the term of the revenue arrangement.
Intangible assets with indefinite useful lives
Intangible assets with indefinite useful lives are those for which there is no foreseeable limit to their useful economic life as they arise
from contractual or other legal rights that can be renewed without significant cost. They are comprised of Cable Distribution Undertaking
Broadcasting Licenses and Franchises (“Cable Distribution Licenses”) and Trade name. Cable Distribution Licenses are comprised
of broadcast authorities licenses and exemptions from licensing that allow access to homes and customers in a specific area. The