2004 Crown Investments Corporation of Saskatchewan Annual Report

Notes to Consolidated Financial StatementsDecember 31, 20041. Summary of Significant Accounting Policies (continued)k) Other assets (continued)Customer accounts acquired are capitalized and amortized on a straight-line basis over their useful lifefrom the date of acquisition.The Corporation has assigned unamortized goodwill balances to reporting units and no longer recordsany goodwill amortization. The Corporation identifies goodwill impairment by comparing the fairvalue of its reporting units to their carrying amounts. Fair values of reporting units are calculated usingindustry specific valuation methods which include discounted cash flows, earnings multiples andmarket comparable approach. Goodwill is tested for impairment annually or more frequently if eventsor changes in circumstances indicate that the assets may be impaired. Any goodwill impairment ispresented as a charge against earnings in the year impairment is recognized.l) Income taxesThe Corporation uses the asset and liability method of accounting for income taxes. Current incometaxes are recognized as estimated income taxes payable for the current year. Future income tax assetsand liabilities consist of temporary differences between tax and accounting bases of assets and liabilitiesas well as the benefit of losses available to be carried forward to future years for tax purposes that arelikely to be realized. The effect on future tax assets and liabilities of a change in tax rates is recognizedas income in the period that includes the date of enactment or substantive enactment. A valuationallowance is recorded against any future income tax asset if it is more likely than not that the asset willnot be realized.m) Deferred revenue due within one yearCurrent deferred revenue primarily consists of insurance premiums. These premiums are taken intoincome over the life of the policy.n) Provision for unpaid insurance claimsThe provision for unpaid claims represents an estimate of the total cost of claims to the year-end date.Included in the estimate are reported claims, claims incurred but not reported and an estimate ofadjustment expenses to be incurred on these claims. The provision is calculated without discountingexcept for long-term disability claims. The estimates are necessarily subject to uncertainty and areselected from a range of possible outcomes. During the life of the claim, adjustments to the estimatesare made as additional information becomes available. The change in outstanding losses plus paidlosses is reported as claims incurred in the current period.o) Revenue recognitionRevenue from utility and other services is recognized when the services are delivered to customers.The estimate of services rendered but not billed is included in accounts receivable. Revenue from longdistance, wireless airtime and directory services are recognized based on usage or rate plans over theperiod the services are provided. Revenues from insurance premiums written are taken into incomeover the terms of the related policies. Revenue from sales of reconstituted and synthetic crude arerecorded on the basis of regular meter readings. Revenue from sales of other products is recognizedwhen goods are shipped and title has passed to the customer or based on the right to revenue pursuantto contracts with customers, tenants and clients.70