Annual report - About TELUS

notes to consolidated financial statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in Canada and in conformity with prevailing practices in the Canadian telecommunications industry.
The preparation of financial statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
The term “Company” is used to mean TELUS Corporation and where the context of the narrative permits or requires,
its subsidiaries.
(a) Consolidation
The consolidated financial statements include the accounts of the Company and all of the Company’s subsidiaries, of
which the principal ones are TELUS Communications Inc., TELUS Communications (B.C.) Inc., Clearnet Communications
Inc., TELUS Mobility Cellular Inc., ISM Information Systems Management (B.C.) Corporation, TELUS Services Inc.,
Telecom Leasing Canada (TLC) Limited, and QuébecTel Inc. (70%).
(b) Inventories
Inventories are valued at the lower of cost and net realizable value, with cost being determined on an average cost basis.
(c) Capital Assets
Property is recorded at historical cost and, with respect to self-constructed property, includes materials, direct labour
and applicable overhead costs. In addition, where construction projects exceed $20 million and are of a sufficiently
long duration, an amount is capitalized for the cost of funds used to finance construction. This amount is included in
the Consolidated Statement of Income as an offset against financing costs. The rate for calculating the capitalized
financing costs is based on the Company’s one-year cost of borrowing. In 2000, $8.6 million of financing costs was
capitalized ($1.6 million – 1999).
When property, plant and equipment is sold by the Company, the historical cost less accumulated depreciation is netted
against the sale proceeds and the difference is included in the Consolidated Statement of Income.
(d) Depreciation and Amortization
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, 2000, was 6.7% (7.8% – 1999).
Acquired intangible assets are amortized on a straight-line basis over their estimated lives. The spectrum licenses and
wireline subscriber bases are amortized over 40 years and wireless subscriber bases are amortized over 7–10 years.
(e) Deferred Charges
Deferred charges include deferred pension costs, more fully described in Note 17, 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.
(f) 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 10 to 20 years. Management estimates the value of
goodwill to be not less than the unamortized balance at December 31, 2000.
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