NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Depreciation Rates Review NOTE 13: GOODWILL AND INTANGIBLE ASSETS Goodwill and Intangible Assets 108 ROGERS COMMUNICATIONS INC. 2013 ANNUAL REPORT Property, plant and equipment not yet in service and therefore not depreciated at December 31, 2013 was $882 million (December 31, 2012 – $917 million). Capitalized interest on property, plant and equipment was recorded at a weighted average rate of approximately 5.1% (2012 – 5.8%). We reviewed depreciation rates for all of our property, plant and equipment in 2013 and made no changes. In 2012, we changed the estimates of useful lives of certain network, customer premise equipment, computer equipment and software assets. We accounted for the impact of these changes prospectively, resulting in depreciation expense to be lower by approximately $90 million in 2012 compared to the amount we would have recorded using the previous useful lives. The tables below summarize the changes in the net carrying amounts of goodwill and intangible assets in 2013 and 2012. In 2012, we acquired certain 2500 MHz spectrum from Inukshuk Limited Partnership (Inukshuk), a 50% owned joint venture. This resulted in a non-cash increase of spectrum licences of $360 million (see note 14). Brand names, customer relationships, roaming agreements and marketing agreements are all intangible assets with finite lives and we amortize them in depreciation and amortization expense in the consolidated statements of income. This amounted to $150 million in 2013 (2012 – $141 million). December 31, 2011 December 31, 2012 Net book value Acquisitions Net additions and disposals Amortization Current period impairment loss Net book value Goodwill $ 3,280 $ – $ 2 $ – $ (67) $ 3,215 Spectrum licences 1,875 360 (4) – – 2,231 Broadcast licences 116 – 2 – (8) 110 Brand names 200 – 1 (18) – 183 Customer relationships 232 – 1 (70) – 163 Roaming agreements 210 – – (44) – 166 Marketing agreements 12 – 1 (9) – 4 Acquired program rights 76 – 87 (64) (5) 94 $ 6,001 $ 360 $ 90 $ (205) $ (80) $ 6,166 December 31, 2012 December 31, 2013 Net book value Acquisitions (Note 7) Net additions and disposals Amortization Current period impairment loss Net book value Goodwill $ 3,215 $ 536 $ – $ – $ – $ 3,751 Spectrum licences 2,231 – 44 – – 2,275 Broadcast licences 110 104 11 – – 225 Brand names 183 – – (16) – 167 Customer relationships 163 233 – (87) – 309 Roaming agreements 166 – – (43) – 123 Marketing agreements 4 – 1 (4) – 1 Acquired program rights 94 – 69 (52) – 111 $ 6,166 $ 873 $ 125 $ (202) $ – $ 6,962 December 31, 2013 December 31, 2012 Cost prior to impairment losses Accumulated amortization Accumulated impairment losses Net book value Cost prior to impairment losses Accumulated amortization Accumulated impairment losses Net book value Goodwill $ 3,972 $ – $ 221 $ 3,751 $ 3,436 $ – $ 221 $ 3,215 Indefinite life intangible assets: Spectrum licences 2,275 – – 2,275 2,231 – – 2,231 Broadcast licences 324 – 99 225 209 – 99 110 Finite life intangible assets: Brand names 438 257 14 167 437 240 14 183 Customer relationships 1,543 1,234 – 309 1,310 1,147 – 163 Roaming agreements 523 400 – 123 523 357 – 166 Marketing agreements 9 8 – 1 63 59 – 4 Acquired program rights 168 52 5 111 162 63 5 94 Total intangible assets 5,280 1,951 118 3,211 4,935 1,866 118 2,951 Total goodwill and intangible assets $ 9,252 $ 1,951 $ 339 $ 6,962 $ 8,371 $ 1,866 $ 339 $ 6,166