Rogers Communications Inc. is a diversified Canadian communications and media company engaged in three primary lines of


Rogers Communications Inc. is a diversified Canadian communications and media company engaged in three primary lines of business: Wireless, Cable, and Media. The following is part of Rogers' revenue recognition policy note in its financial statements:
Notes to the Financial Statements
31, 2011
Note 2 (d): Significant accounting policies-Revenue recognition
The Company's principal sources of revenue and recognition of these revenues for financial statement purposes are as follows:
• Monthly subscriber fees in connection with wireless and wireline services, cable, telephony, Internet services, rental of equipment, network services, and media subscriptions are recorded as revenue on a pro rata basis as the service is provided;
• Installation fees and activation fees charged to subscribers are recorded in Wireless as part of equipment revenue and, in Cable, are deferred and amortized over the related service period. The related service period for Cable ranges from 26 to 48 months, based on subscriber disconnects, transfers of service and moves. . . . New connect installation costs are capitalized [added] to PP&E [long-lived assets] and depreciated over the useful lives of the related assets;
• Advertising revenue is recorded in the period the advertising airs on the Company's radio or television stations; is featured in the Company's publications; or is displayed on the Company's digital properties.
• The Toronto Blue Jays Baseball Club's revenue from home game admission and concessions is recognized as the related games are played during the baseball season. Revenue from radio and television agreements is recorded at the time the related games are aired.
Rogers' balance sheet included a current liability of $335 million at December 31, 2011, called Unearned Revenue.
Unearned revenue includes subscriber deposits, cable installation fees, and amounts received from subscribers
related to services and subscriptions to be provided in future periods.
(a) When does Rogers recognize its revenue from monthly subscriber fees?
(b) When should Rogers record unearned revenue from its subscription services? When should it record unearned revenue for its Blue Jays home game admission revenue?
(c) If Rogers (inappropriately) recorded these unearned revenues as revenue when the cash was received in advance, what would be the effect on the company's financial position? (Use the basic accounting equation and explain what elements would be overstated or understated.)
(d) According to this note, Rogers' new installation costs are depreciated over the useful life of the related assets. Is this an appropriate method of expense recognition for these costs? Explain.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Accounting Principles Part 1

ISBN: 978-1118306789

6th Canadian edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow

Question Posted: