44 Orbit G arant 2012 annual rep O rt N OTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) For the years ended June 30, 2012 and 2011 (in thousands of Canadian dollars, except for earnings per share and option data) Goodwill Goodwill initially arising from a business acquisition is measured and recognized as the excess of the fair value of the consi deration paid over the fair value of the recognized identifable assets acquired and liabilities assumed. When the Company acquires less than 100% of the equity interests in the business acquired at the acquisition date, goodwill attributable to the non-controlling interest is also recognized at fair value. Intangible assets Intangible assets are accounted for at cost. Amortization is based on their estimated useful life using the straight-li ne method and the following periods: Customer relationship 36 months Drilling technology 60 months Non-compete agreement 36 months Amortization methods, residual values and the useful lives of signifcant intangible assets are reviewed at each fnancial year- end. Any change is accounted for prospectively as a change in accounting estimate. Impairment of long-lived assets For the purposes of assessing impairment, assets are grouped in cash-generating units (“CGU”), which represent the lowest level s for which there are separately identifable cash infows generated by those assets. The Company reviews, at each balance s heet date, whether events or circumstances have occurred to indicate that the carrying amounts of its long-lived assets with fnite useful lives may be less than their recoverable amounts. Goodwill, other intangible assets having an indefnite useful life, and intangible assets not yet available for use are tes ted for impairment on June 30 of each fnancial year, as well as whenever there is an indication that the carrying amount of the asset, or the CG U to which an asset has been allocated, exceeds its recoverable amount. The recoverable amount is the higher of the fair value, less costs to sell, and the value in use of the asset or the CGU. Fair value, less costs to sell, represents the amount an entity could obtain at the val uation date from the asset’s disposal in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of dispos al. The value in use represents the present value of the future cash fows expected to be derived from the asset or the CGU. An impairment loss is recognized in the amount by which the carrying amount of an asset or a CGU exceeds its recoverabl e amount. When the recoverable amount of a CGU to which goodwill has been allocated is lower than the CGU’s carrying amount, the rel ated goodwill is frst impaired. Any excess amount of impairment is recognized and attributed to assets in the CGU, pro rated to the carryi ng amount of each asset in the CGU. An impairment loss recognized in prior periods for long-lived assets with fnite useful lives and intangible assets having an i ndefnite useful life, other than goodwill, can be reversed through the statement of earnings up to the excess of the recoverabl e amount of the asset or the CGU over its carrying value. Income taxes Current income taxes are recognized with respect to amounts expected to be paid or recovered under the tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Deferred income taxes are accounted for using the liability method. Under thi s method, deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing ass ets and liabilities in the consolidated fnancial statements and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates in effect for the year in which those temporary differences are expec ted to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in earnings i n the period that includes the substantive enactment date. A deferred tax asset is recognized initially when it is probable that future taxable i ncome will be suffcient to use the related tax benefts and may be subsequently reduced, if necessary, to an amount that is more likely than not to be realized. A deferred tax expense or beneft is recognized in other comprehensive earnings or otherwise directly in equity to the extent that it relates to items that are recognized in other comprehensive earnings or directly in equity in the same or a different period. In the course of the Company’s operations, there are a number of uncertain tax positions due to the complexity of certain trans actions and due to the fact that related tax interpretations and legislation are continually changing. When a tax position is uncertai n, the Company recognizes an income tax beneft or reduces an income tax liability only when it is probable that the tax beneft will be reali zed in the future or that the income tax liability is no longer probable.