NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Notes to Consolidated Financial Statements We , us , our , Rogers , Rogers Communications and the Company refer to Rogers Communications Inc. and our subsidiaries. RCI refers to the legal entity Rogers Communications Inc., not including our subsidiaries. RCI also holds interests in various investments and ventures. Rogers Communications is a diversified Canadian communications and media group. Substantially all of our operations and sales are in Canada. RCI is incorporated in Canada and its registered office is located at 333 Bloor Street East, Toronto, Ontario, M4W 1G9. RCI’s shares are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI). We report our results of operations in four segments: Subsidiaries are entities we control. We include the financial statements of our subsidiaries in our consolidated financial statements from the date we gain control of them until our control ceases. We eliminate all intercompany transactions and balances on consolidation. We account for acquisitions of subsidiaries using the acquisition method of accounting. We calculate the fair value of the consideration paid as the fair value at the acquisition date of the following: We measure goodwill as the fair value of the consideration transferred, less the net recognized amount of the identifiable assets acquired and liabilities assumed, all measured at fair value as of the acquisition date. When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss. We use estimates and judgment to determine the fair value of assets acquired and liabilities assumed, using the best available information including information from financial markets. This may include discounted cash flow analyses which utilize key assumptions such as discount rates, attrition rates, and terminal growth rates to estimate future earnings. We expense the transaction costs associated with the acquisitions as we incur them. See note 7 for information related to business combinations in 2013 and 2012. When preparing our financial statements, management makes judgments, estimates and assumptions that affect how accounting policies are applied and the amounts we report as assets, liabilities, revenue and expenses. Significant changes in the assumptions, including those related to our future business plans and cash flows, could materially change the carrying amounts we record. Actual results could be different from these estimates. Wireless, Cable and Business Solutions are operated by our subsidiary, Rogers Communications Partnership, and our other wholly owned subsidiaries. Media is operated by our wholly owned subsidiary Rogers Media Inc. and its subsidiaries. See note 3 for more information about our operating segments. We prepared our consolidated financial statements according to International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Our Board of Directors approved the consolidated financial statements for the years ended December 31, 2013 and 2012 on February 12, 2014. All amounts, except per share amounts, are in Canadian dollars, which is our functional currency, and rounded to the nearest million, unless otherwise noted. We prepare the consolidated financial statements on a historical cost basis, except for certain financial instruments, liabilities for cash-settled share-based payments and the net deferred pension liability, which we measure at fair value as described in the notes. We use estimates that are inherently uncertain in the following key areas: Wireless Wireless telecommunications operations for consumers and businesses Cable Cable telecommunications operations, including cable television, Internet and cable telephony for Canadian consumers and businesses Business Solutions Network connectivity through our fibre network assets to support a range of voice, data, networking, data centre and cloud- based services for medium and large Canadian businesses, governments, and other telecommunications providers Media A diversified portfolio of media properties, including television and radio broadcasting, digital media, multi-platform shopping, publishing and sports media and entertainment Use of Estimates and Judgments S tatement of Compliance NOTE 2: SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Business Combinations Basis of Consolidation Subsidiaries GLYPH<129> assets given, plus GLYPH<129> equity instruments issued, less GLYPH<129> liabilities incurred or assumed at the date of exchange. NOTE 1: NATURE OF THE BUSINESS GLYPH<129> considering inputs to determine the fair value of assets acquired and liabilities assumed in business combinations (see Basis of Consolidation , above) GLYPH<129> considering industry trends and other factors to determine the estimated useful lives of property, plant and equipment (see Property, Plant and Equipment , below) GLYPH<129> capitalizing direct labour, overhead and interest costs to property, plant and equipment (see Property, Plant and Equipment , below) GLYPH<129> determining the recoverable amount of non-financial assets when testing for impairment (see Impairment , below), and GLYPH<129> measuring the fair value of derivative instruments (see note 20), pension obligations (see note 22) and stock-based compensation liabilities (see note 24). 94 ROGERS COMMUNICATIONS INC. 2013 ANNUAL REPORT