XML 163 R13.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
PROPERTY, PLANT AND EQUIPMENT
 12 Months Ended
Dec. 31, 2019
Property, plant and equipment [abstract]  
PROPERTY, PLANT AND EQUIPMENT PROPERTY, PLANT AND EQUIPMENT

ACCOUNTING POLICY
The following accounting policy applies to property, plant and equipment excluding right-of-use assets recognized under IFRS 16. Our accounting policies for right-of-use assets are included in note 8.

Recognition and measurement, including depreciation
We measure property, plant and equipment upon initial recognition at cost and begin recognizing depreciation when the asset is ready for its intended use. Subsequently, property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditures (capital expenditures) that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes:
•
the cost of materials and direct labour;
•
costs directly associated with bringing the assets to a working condition for their intended use;
•
expected costs of decommissioning the items and restoring the sites on which they are located (see note 20); and
•
borrowing costs on qualifying assets.

We depreciate property, plant and equipment over its estimated useful life by charging depreciation expense to net income as follows:
Asset
Basis
Estimated useful life
Buildings
Diminishing balance
5 to 40 years
Cable and wireless network
Straight-line
3 to 40 years
Computer equipment and software
Straight-line
4 to 10 years
Customer premise equipment
Straight-line
3 to 6 years
Leasehold improvements
Straight-line
Over shorter of estimated useful life or lease term
Equipment and vehicles
Diminishing balance
3 to 20 years


We calculate gains and losses on the disposal of property, plant and equipment by comparing the proceeds from the disposal with the item's carrying amount and recognize the gain or loss in net income.

We capitalize development expenditures if they meet the criteria for recognition as an asset and amortize them over their expected useful lives once the assets to which they relate are available for use. We expense research expenditures, maintenance costs, and training costs as incurred.

Impairment testing, including recognition and measurement of an impairment charge
See "Impairment Testing" in note 9 for our policies relating to impairment testing and the related recognition and measurement of impairment charges. The impairment policies for property, plant and equipment are similar to the impairment policies for intangible assets with finite useful lives.

USE OF ESTIMATES AND JUDGMENTS
ESTIMATES
Components of an item of property, plant and equipment may have different useful lives. We make significant estimates when determining depreciation rates and asset useful lives, which require taking into account company-specific factors, such as our past experience and expected use, and industry trends, such as technological advancements. We monitor and review residual values, depreciation rates, and asset useful lives at least once a year and change them if they are different from our previous estimates. We recognize the effect of changes in estimates in net income prospectively.

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, overhead, and interest costs associated with the acquisition, construction, development, or betterment of our networks.

Furthermore, we use estimates in determining the recoverable amount of property, plant and equipment. The determination of the recoverable amount for the purpose of impairment testing requires the use of significant estimates, such as:
•
future cash flows;
•
terminal growth rates; and
•
discount rates.

We estimate value in use for impairment tests by discounting estimated future cash flows to their present value. We estimate the discounted future cash flows for periods of up to five years, depending on the cash-generating unit (CGU), and a terminal value. The future cash flows are based on our estimates and expected future operating results of the CGU after considering economic conditions and a general outlook for the CGU's industry. Our discount rates consider market rates of return, debt to equity ratios, and certain risk premiums, among other things. The terminal value is the value attributed to the CGU's operations beyond the projected time period of the cash flows using a perpetuity rate based on expected economic conditions and a general outlook for the industry.

We determine fair value less costs to sell in one of the following two ways:
•
Analyzing discounted cash flows - we estimate the discounted future cash flows for five-year periods and a terminal value, similar to the value in use methodology described above, while applying assumptions consistent with those a market participant would make. Future cash flows are based on our estimates of expected future operating results of the CGU. Our estimates of future cash flows, terminal values, and discount rates consider similar factors to those described above for value in use estimates; or
•
Using a market approach - we estimate the recoverable amount of the CGU using multiples of operating performance of comparable entities and precedent transactions in that industry.

We make certain assumptions when deriving expected future cash flows, which may include assumptions pertaining to discount and terminal growth rates. These assumptions may differ or change quickly depending on economic conditions or other events. It is therefore possible that future changes in assumptions may negatively affect future valuations of CGUs and goodwill, which could result in impairment losses.

JUDGMENTS
We make significant judgments in choosing methods for depreciating our property, plant and equipment that we believe most accurately represent the consumption of benefits derived from those assets and are most representative of the economic substance of the intended use of the underlying assets.

EXPLANATORY INFORMATION
The table below summarizes our property, plant and equipment as at December 31, 2019, 2018, and 2017.
(In millions of dollars)
December 31, 2019
 
December 31, 2018
 
December 31, 2017
 
 
Cost

Accumulated depreciation

Net carrying amount

Cost

Accumulated depreciation

Net carrying amount

Cost

Accumulated depreciation

Net carrying amount

 
 
 
 

 
 
 

 
 
 
Land and buildings
1,182

(461
)
721

1,125

(428
)
697

1,090

(397
)
693

Cable and wireless networks
21,778

(13,814
)
7,964

21,024

(13,550
)
7,474

20,252

(13,206
)
7,046

Computer equipment and software
5,903

(3,749
)
2,154

5,514

(3,305
)
2,209

4,996

(2,807
)
2,189

Customer premise equipment
1,963

(1,387
)
576

1,908

(1,279
)
629

1,565

(1,090
)
475

Leasehold improvements
596

(281
)
315

539

(250
)
289

496

(220
)
276

Equipment and vehicles
1,244

(776
)
468

1,292

(810
)
482

1,246

(782
)
464

 
 
 
 

 
 
 

 
 
 
Property, plant and equipment
32,666

(20,468
)
12,198

31,402

(19,622
)
11,780

29,645

(18,502
)
11,143

Right-of-use assets
1,911

(175
)
1,736

—

—

—

—

—

—

 
 
 
 
 
 
 
 
 
 
Total
34,577

(20,643
)
13,934

31,402

(19,622
)
11,780

29,645

(18,502
)
11,143


The tables below summarize the changes in the net carrying amounts of property, plant and equipment during 2019 and 2018.
(In millions of dollars)
December 31, 2018

 
 
December 31, 2019
 
 
Net carrying
amount

Effect of IFRS 16 transition

Additions 1

Depreciation

Disposals and other 2

Net carrying amount

 
 
 
 
 
 
 

Land and buildings
697

—

57

(34
)
1

721

Cable and wireless networks
7,474

(95
)
1,739

(1,157
)
3

7,964

Computer equipment and software
2,209

—

644

(706
)
7

2,154

Customer premise equipment
629

—

236

(292
)
3

576

Leasehold improvements
289

—

60

(33
)
(1
)
315

Equipment and vehicles
482

—

109

(75
)
(48
)
468

 
 
 
 
 
 
 
Property, plant and equipment
11,780

(95
)
2,845

(2,297
)
(35
)
12,198

Right-of-use assets (note 8)
—

1,576

335

(175
)
—

1,736

 
 
 
 
 
 
 
Total property, plant and equipment
11,780

1,481

3,180

(2,472
)
(35
)
13,934

1 
Excludes proceeds on disposition of $38 million (see note 29).
2 
Includes disposals, reclassifications, and other adjustments.
(In millions of dollars)
December 31, 2017

 
December 31, 2018
 
 
Net carrying
amount

Additions 1

Depreciation

Disposals and other 2

Net carrying amount

 
 
 
 
 
 

Land and buildings
693

40

(32
)
(4
)
697

Cable and wireless networks
7,046

1,556

(1,128
)
—

7,474

Computer equipment and software
2,189

653

(633
)
—

2,209

Customer premise equipment
475

423

(269
)
—

629

Leasehold improvements
276

44

(31
)
—

289

Equipment and vehicles
464

99

(81
)
—

482

 
 
 
 
 
 
Total property, plant and equipment
11,143

2,815

(2,174
)
(4
)
11,780

1 
Excludes proceeds on disposition of $25 million (see note 29).
2 
Includes disposals, reclassifications, and other adjustments.

Property, plant and equipment not yet in service and therefore not subject to depreciation as at December 31, 2019 was $1,320 million (2018 - $1,339 million). During 2019, capitalized interest pertaining to property, plant and equipment was recognized at a weighted average rate of approximately 3.9% (2018 - 3.9%).

In 2019, we disposed of certain assets with a net carrying amount of $38 million (2018 - $9 million). We received total proceeds of $38 million (2018 - $25 million) for these assets, thereby recognizing a nil (2018 - $16 million) gain on disposition.

Annually, we perform an analysis to identify fully depreciated assets that have been disposed of. In 2019, this resulted in an adjustment to cost and accumulated depreciation of $1,159 million (2018 - $943 million). The disposals had nil impact on the Consolidated Statements of Income.