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)
Revenue from operating leases of equipment is recognized when service is rendered to customers. The
leased equipment is depreciated in accordance with the Company’s depreciation policy.
(j) Other Long-term Liabilities
Included in Other Long-term Liabilities are contributions from the Government of Alberta under the
Individual Line Service program, which are recognized as income on a straight-line basis over the estimated
useful life of the related assets. The amount to be recognized as income within one year is included with
Advance Billings and Customer Deposits in the Consolidated Balance Sheet.
(k) Research and Development
Research and development costs are expensed in the period in which they are incurred unless they meet
certain identifiable criteria for deferral. Research and development costs expensed during the year
amounted to $2.5 million ($61.6 million — 1998).
(l) Translation of Foreign Currencies
Trade transactions completed in foreign currencies are translated into Canadian dollars at the rates
prevailing at the time of the transactions. Monetary assets and liabilities denominated in foreign currencies
are translated into equivalent Canadian dollars at the rate of exchange in effect at the balance sheet date
with any resulting gain or loss being expensed. Gains or losses arising from translation of non-current
monetary liabilities are deferred and amortized over the remaining lives of the related liabilities.
(m) Financial Instruments
The Company’s financial instruments consist of cash and temporary investments, accounts receivable, leases
receivable, sinking fund assets, bank indebtedness, accounts payable and accrued liabilities, dividends
payable, notes payable under commercial paper programs and long-term debt.
The carrying value of cash and temporary investments, bank indebtedness, accounts receivable, leases
receivable, accounts payable and accrued liabilities, dividends payable and notes payable under commercial
paper programs approximates their fair values due to the immediate or short-term maturity of these
financial instruments. The fair values of the Company’s sinking fund assets are determined by quoted
market prices at the balance sheet date. The fair value of the Company’s long-term debt is estimated based
on quoted market prices for the same or similar issues or on the current rates offered to the Company for
debt of the same maturity as well as the use of discounted future cash flows using current rates for similar
financial instruments subject to similar risks and maturities. As of December 31, 1999 the estimated fair
value of long-term debt exceeded the carrying value by approximately $249 million ($463 million — 1998).
The Company is exposed to interest rate risk arising from fluctuations in interest rates on its temporary
investments, sinking fund assets, notes payable under commercial paper programs and long-term debt.
The Company uses various financial instruments which are not reflected on the balance sheet to reduce or
eliminate exposure to interest rate and currency risks, and as part of structured financing. These
instruments are accounted for on the same basis as the underlying exposure being hedged. At December 31,
1999, the total notional amount of derivative financial instruments outstanding was $442.4 million
($416.5 million — 1998). The fair market value of these instruments at December 31, 1999 exceeded their
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