page 91 Bombardier Inc. Annual Report 2003-04 c) Depreciable intangible assets Long-term investments Income taxes  Earnings per share Employee future benefits Securitization transactions Depreciable intangible assets represent the cost of acquired licences, patents and trademarks and are amortized over their estimated useful lives, not exceeding 20 years.  Long-term investments presented in other assets are carried at cost. If it is determined that an investment has suffered a decline in value that is other than temporary, it is written down to its estimated net realizable value. The Corporation applies the liability method of accounting for income taxes. Deferred income tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying amounts of assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using substantively enacted tax rates which will be in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded to reduce the carrying amount of deferred income tax assets, when it is more likely than not that such assets will not be realized. Basic earnings per share are computed based on net income less dividends on preferred shares, divided by the weighted average number of Class A Shares (Multiple Voting) and Class B Shares (Subordinate Voting) outstanding during the fiscal year. Diluted earnings per share are computed using the treasury stock method, giving effect to the exercise of all dilutive elements. The Corporation sponsors several domestic and foreign funded and unfunded defined benefit pension plans covering a majority of its employees. The Corporation also provides post-employment and post-retirement benefit plans. These benefit plans essentially consist of self-insured long-term disability plans in Canada and post-retirement health-care coverage and life insurance benefits in Canada and in the United States. The cost of pension and other benefits earned by employees is actuarially determined using the projected benefit method prorated on services, and Management’s best estimate of expected plan investment performance, salary escalation, retirement ages of employees and health-care costs. Plan obligations are determined based on expected future benefit payments discounted using current market interest rates, and plan assets are measured at fair value. The Corporation uses a market-related valuation of assets that recognizes the effect of investment gains or losses over a three-year period from the year in which they occur for purposes of measuring the pension cost. The net actuarial gains and losses, based on the market-related value of plan assets, more than 10% of the greater of the benefit obligation  and the market-related value of plan assets as well as prior service costs are amortized to income over the estimated average remaining service life of plan participants of approximately 16 years. When an event, such as the sale of a segment, gives rise to both a curtailment and a settlement, the curtailment is accounted for prior to the settlement. A curtailment is the loss by employees of the right to earn future benefits under the plan. A settlement is the discharge of a plan’s obligation. The Corporation uses a measurement date of December 31. Transfers of loans and receivables in securitization transactions are recognized as sales when control over these assets is deemed to have been surrendered, and consideration other than beneficial interests in the transferred assets was received. Assets retained may include interest-only strips, subordinated tranches of securities, servicing rights, over-collateralization amounts, cash reserve accounts and transferors’ interests, all of which are included in receivables for Bombardier, and in finance receivables for BC. When the transfer is considered a sale, all assets sold are derecognized, assets received and the liabilities incurred are recognized at fair value. Such gain or loss depends in part on the previous carrying amount of the financial assets involved in the transfer. The carrying amount is allocated between the assets sold and the retained interests based on their relative fair values as at the date of transfer. Fair values are generally estimated based on the present value of future expected cash flows using Management’s best estimates for credit losses, rate of prepayment, forward yield curves, and discount rates commensurate with the risks involved. Retained interests are accounted for as loans or investments in accordance with their substance. When the carrying value exceeds the fair value of the retained interests accounted for as investments, and the decline in fair value is other than temporary, the retained interest is written down to fair value in the same period.