from our previous estimates. We recognize the effect of these changes
in net income prospectively.
Our intangible assets have increased mainly because of acquisitions. We
amortize the cost of intangible assets with finite lives over their
estimated useful lives. We use judgment to determine the life of these
assets, analyzing all relevant factors, including the expected usage of
the asset, the typical life cycle of the asset and anticipated changes in
the market demand for the products and services that the asset helps
generate.
We do not amortize intangible assets with indefinite lives (spectrum and
broadcast licences) because there is no foreseeable limit to the period
that these assets are expected to generate net cash inflows for us. After
review of the competitive, legal, regulatory and other factors, it is our
view that these factors do not limit the useful lives of our spectrum and
broadcast licences.
The table below shows the impact that changing the useful lives of the
finite-lived intangible assets by one year would have on annual net
income:
(In millions of dollars)
Amortization
Period
Increase in
Net Income if Life
Increased by 1 year
Decrease in
Net Income if Life
Decreased by 1 year
Brand Names 5 – 20 years $ 1 $ (1)
Customer Relationships 3 – 10 years $ 19 $ (31)
Roaming Agreements 12 years $ 3 $ (4)
Marketing Agreements 3 years $ 1 $ (2)
We will change our depreciation methods, depreciation rates or asset
useful lives if they are determined to be different from our previous
estimates. We recognize the effect of these changes in net income
prospectively.
Capitalizing Direct Labour, Overhead and Interest
Certain direct labour and indirect costs associated with the acquisition,
construction, development or improvements of our networks are
capitalized to property, plant and equipment. The capitalized amounts
are calculated based on estimated costs of projects that are capital in
nature, and are generally based on a rate per hour. In addition, interest
costs are capitalized during development and construction of certain
property, plant and equipment. Capitalized amounts increase the cost of
the asset and result in a higher depreciation expense in future periods.
Impairment of Assets
Indefinite-lived intangible assets (including goodwill and spectrum and/
or broadcast licences) and definite life assets (including property, plant
and equipment and other intangible assets) are assessed for impairment
2013 ANNUAL REPORT ROGERS COMMUNICATIONS INC. 79