3. Summary of significant accounting policies (continued)
a. Change in accounting policies (continued)
i.
Leases (continued)
The impact of adoption of IFRS 16 as at April 1, 2019 is as follows:
April 1, 2019
Excluding the Impact of IFRS 16
IFRS 16 Impact
As Reported
Notes
(millions)
Assets Property, plant and equipment
$
2,524
$
(9)
$
2,515
Right-of-use assets
2
-
16
16
Liabilities Current liabilities Current portion of lease liability
1 1
$
3 4
$
3 4
$
6 8
Lease liability
Notes
1) Lease liability
On adoption of IFRS 16, the Corporation recognized additional lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17. Under the principles of the new lease standard, these leases have been measured at the present value of the unpaid lease payments, discounted using the rate implicit in the lease. In some cases, that rate was not readily determined, therefore the Corporation’s weighted average incremental borrowing rates were applied. Weighted average incremental borrowing rates used were 4 per cent at April 1, 2019. Short-term and low-value leases were excluded. Total lease obligations of $14 million were recorded at April 1, 2019, of which $6 million is the current portion.
2) Right-of-use assets
The ROU assets for buildings, parking lots, computers and computer equipment were measured at an amount equal to the associated lease liability. The ROU assets for vehicles will be depreciating at a slower rate than the associated lease liability and are therefore recognized at a higher amount upon adoption.
3) Reclassification of finance leases
Leases previously accounted for as finance leases under IAS 17 were reclassified to ROU assets and lease liabilities from property, plant and equipment and finance lease obligations, respectively.
ii. Revenue
IFRS 15, Revenue from contracts with customers , was effective for annual periods beginning on or after January 1, 2018. SaskEnergy adopted IFRS 15 with a date of initial application of April 1, 2018. The Corporation implemented IFRS 15 using the cumulative effect method, where the effect of initially applying IFRS 15 would be recorded as an adjustment recognized in the opening balance of retained earnings as at April 1, 2018. The new standard only affects contracts with customers and does not apply to insurance contracts, financial instruments or lease contracts, which fall in the scope of other international financial reporting standards. Refer to the consolidated financial statements for the year ended March 31, 2019 for more information.
iii. Other changes
The following accounting standard changes, which did not have a material impact on the condensed consolidated financial statements, are also effective for periods beginning on or after January 1, 2019: Amendments to IAS 28 Long-term interests in associates and joint ventures Annual improvements to IFRS (2015-17) cycle o IFRS 3 Business combinations o IFRS 11 Joint arrangements o IAS 23 Borrowing costs Amendments to IAS 19 Employee benefits
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2019-20 THIRD QUARTER REPORT
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