Offer to purchase CLEARNET.pdf - About TELUS

TELUS CORPORATION
(FORMERLY BCT.TELUS COMMUNICATIONS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(e) Depreciation
Assets are depreciated on a straight-line basis over their estimated useful life as determined by a continuing
program of engineering studies. The composite depreciation rate for the year ended December 31, 1999 was
7.8% (7.9% — 1998).
(f) Deferred Charges
Deferred charges include deferred pension costs, more fully described in Note 16, deferred costs of issuing
debt and deferred start-up costs. The deferred start-up costs are amounts relating to information services
contracts that will be matched with related revenues. Discounts on long-term debt are amortized to interest
expense on a straight-line basis over the remaining lives of the related liabilities. Where interest coupons
and residuals are held as separate investments in sinking funds, discounts are amortized over the period to
maturity or call date so as to produce a constant rate of return on the investments.
(g) Goodwill
Goodwill represents the excess of the cost of acquired businesses over the fair value attributed to the net
identifiable assets. Goodwill is being amortized on a straight-line basis over either twelve or fifteen
years. Management estimates the value of goodwill to be not less than the unamortized balance at
December 31, 1999.
(h) Income Taxes
The Company and its subsidiaries follow the liability method of accounting for income taxes. Under this
method, current income taxes are recognized for the estimated income taxes payable for the current year.
Future income tax assets and liabilities are recognized for temporary differences between the tax and
accounting bases of assets and liabilities as well as for the benefit of losses available to be carried forward to
future years for tax purposes that are more likely than not to be realized.
The balance of future income taxes at December 31, 1999 consists mainly of reserves not available for
current deduction, undepreciated capital cost in excess of net book value of capital assets arising from the
difference between the Company’s depreciation rates and those prescribed for income tax purposes and tax
losses available to be carried forward.
(i) Leases
Leases are classified as capital or operating depending upon the terms and conditions of the contracts.
Where the Company is the lessor, the majority of capital leases are through its subsidiary, Telecom Leasing
Canada (TLC) Limited, which acts as a financing intermediary. The long-term leases receivable represent
the present value of future lease payments receivable due beyond one year. Finance income derived from
these financing leases is recorded so as to produce a constant rate of return over the terms of the leases.
Where the Company is the lessee, asset values recorded under capital leases are amortized on a
straight-line basis over the term of the lease. Obligations recorded under capital leases are reduced by lease
payments net of imputed interest.
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