Annual report - About TELUS

(g) 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.
Future income taxes at December 31, 2000, consist mainly of tax reserves not available for current deduction and 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 losses available to be carried forward.
(h) 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.
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.
(i) 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. Additional other long-term liabilities are comprised of pension and
benefits obligations, building lease liability and New Media and Broadcast Fund.
(j) Employee Benefit Plans
The Company accrues its obligations under employee benefit plans and the related costs, net of plan assets. The Company
has adopted the following policies:
° The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected
benefit method pro rated on service and management’s best estimate of expected plan investment performance,
salary escalation and retirement ages of employees.
° For the purpose of calculating the expected return on plan assets, those assets are valued at fair value.
° The excess of the net actuarial gain (loss) over 10% of the greater of the benefit obligation and the fair value of
the plan assets is amortized over the average remaining service period of active employees of the plan.
(k) 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 included in the
consolidated statement of income. Gains or losses arising from translation of non-current monetary liabilities are deferred
and amortized over the remaining lives of the related liabilities.
(l) Financial Instruments
The Company’s financial instruments consist of cash and temporary investments, accounts receivable, income taxes
receivable, leases receivable, bank indebtedness, accounts payable and accrued liabilities, dividends payable, short-term
obligations, long-term debt and convertible debentures.
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