NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Deferred Transaction Costs Provisions Decommissioning and Restoration Costs Restructuring Onerous Contracts Employee Benefits Pension Benefits We defer transaction costs associated with issuing long-term debt and direct costs we pay to lenders to obtain revolving credit facilities, and amortize them using the effective interest method over the life of the related instrument. We record a provision when a past event creates a legal or constructive obligation that can be reasonably estimated and is likely to result in an outflow of economic resources. We recognize a provision even when the timing or amount of the obligation may be uncertain. We make significant estimates when measuring a provision for a present obligation, basing the provision on the amount we estimate will be required to settle it, using the most reliable evidence available at the reporting date and including the risks and uncertainties associated with the obligations. We then discount our expected future cash flows to the date of the consolidated statements of financial position at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. We use network and other assets on leased premises in some of our business activities. We expect to exit these premises in the future, so we make provisions for the costs associated with decommissioning the assets and restoring the locations to their original standards when we have a legal or constructive obligation to do so. We calculate these costs based on a current estimate of the costs that will be incurred, project those costs into the future based on management’s best estimates of future trends in prices, inflation and other factors, and discount them to their present value. We revise our forecasts when business conditions or technological requirements change. When we record a decommissioning liability, we record a corresponding asset in property, plant and equipment and depreciate the asset based on its useful life following our depreciation policies for property, plant and equipment. We record the accretion of the liability as a charge to finance costs in the consolidated statements of income. We make provisions for restructuring when we have approved a detailed and formal restructuring plan, and either the restructuring has started or management has announced the plan’s main features to the employees affected by it. We make provisions for onerous contracts when the unavoidable costs of meeting our obligation under the contract exceed the benefits we expect to realize from it. We measure these provisions at the present value of the expected cost of terminating the contract or the expected cost of continuing with the contract (whichever is lower). We recognize any impairment loss on the assets associated with the contract before we make the provision. See note 17 for a breakdown of our provisions. We offer contributory and non-contributory defined benefit pension plans that provide employees with a lifetime monthly pension on retirement. We use significant estimates to determine the estimated useful lives of property, plant and equipment, considering industry trends such as technological advancements, our past experience, our expected use and our review of asset lives. We use estimates to determine certain costs that are directly attributable to self-constructed assets. These estimates primarily include certain internal and external direct labour associated with the acquisition, construction, development or betterment of our network. They also include interest costs, which we capitalize to certain property, plant and equipment during construction and development. Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets also includes: We recognize property, plant and equipment at cost, less accumulated depreciation and accumulated impairment losses. We recognize termination benefits as an expense when we are committed to a formal detailed plan to terminate employment before the normal retirement date and it is not realistic that we will withdraw it. See note 22 for more information about our pension plans. We recognize contributions to defined contribution plans as an employee benefit expense in operating costs in the consolidated statements of income in the periods the employees provide the related services. The cost of pensions is actuarially determined and takes into account the following assumptions and methods for pension accounting related to our defined benefit plans: We accrue our pension plan obligations as employees provide the services necessary to earn the pension. We use a discount rate based on market yields on high quality corporate bonds at the measurement date to calculate the accrued pension benefit obligation. Remeasurements of the accrued pension benefit obligation are determined at the end of the year, and include actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling. These are recognized in other comprehensive income and retained earnings. We separately calculate our net obligation for each defined benefit plan by estimating the amount of future benefits that employees have earned in return for their service in the current and prior years, and discounting those benefits to determine their present value. Termination Benefits Property, Plant and Equipment Recognition and Measurement 98 ROGERS COMMUNICATIONS INC. 2013 ANNUAL REPORT GLYPH<129> the expected rates of salary increases for calculating increases in future benefits GLYPH<129> mortality rates for calculating the life expectancy of plan members, and GLYPH<129> past service costs from plan amendments are immediately expensed in net income. GLYPH<129> the cost of materials and direct labour GLYPH<129> costs directly associated with bringing the assets to a working condition for their intended use GLYPH<129> costs of dismantling and removing the items and restoring the site where they are located (see Provisions , above), and GLYPH<129> borrowing costs on qualifying assets.