Offer to purchase CLEARNET.pdf - About TELUS

TELUS CORPORATION
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Continued)
June 30, 2000
(unaudited)
3. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (Continued)
(d) Future Employee Benefits
Under U.S. GAAP, TELUS Future Employee Benefit assets and obligations have been recorded at their
fair values on acquisition. Accounting for Future Employee Benefits under Canadian GAAP changed to
become more consistent with U.S. GAAP effective January 1, 2000. Canadian GAAP provides that the
transitional balances can be accounted for prospectively. Therefore, to conform to U.S. GAAP, the
amortization of the transitional amount needs to be removed from the future employee benefit expense.
(e) Intangible Assets
As TELUS intangible assets on acquisition have been recorded at their fair value, amortization of such
assets needs to be included under U.S. GAAP. Amortization is calculated using the straight-line method at
the following rates:
Assigned
Fair Value on
Acquisition Useful Life
Subscribers — wireline ...................................... $1,950.0 million 40 years
Spectrum licenses .......................................... $1,833.3 million 40 years
Subscribers — wireless ...................................... $ 250.0 million 10 years
(f) Goodwill
Under the purchase method of accounting, TELUS assets and liabilities at acquisition have been recorded
at their fair values with the excess purchase price being allocated to goodwill. The goodwill on the
acquisition of TELUS is being amortized on a straight line basis over its estimated life of 20 years.
(g) Asset Impairment
In assessing capital asset impairment under Canadian GAAP, estimated future net cash flows are not
discounted in computing the net recoverable amount. Under U.S. GAAP, the determination on whether or
not the assets are impaired is made on a discounted basis. Upon determining that asset impairment existed,
the Company estimated fair value using discounted cash flows.
As a result, under U.S. GAAP the capital assets have a book value which is $232.2 million lower than the
value under Canadian GAAP. Therefore, under U.S. GAAP the annual depreciation expense, after-tax,
would be $40 million lower.
(h) Foreign exchange
U.S. GAAP requires that gains and losses on foreign exchange resulting from the translation of long-term
debt be charged to income when incurred. Canadian GAAP requires foreign exchange gains or losses
arising on the translation of long-term debt be deferred and amortized over the remaining life of the
long-term debt.
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