3. Summary of significant accounting policies (continued)
p. Revenue (continued)
iv. Revenue collected for municipalities In accordance with The SaskEnergy Act , the Corporation is required to collect amounts on behalf of certain municipalities. The Corporation acts in the capacity of an agent rather than as the principal in the collection of these amounts. Therefore, the revenue collected for and paid to municipalities is recognized on a net basis in operating and maintenance expense.
v.
Government grants Government grants are recognized initially as deferred revenue when there is reasonable assurance that the Corporation will comply with the relevant conditions of the grant and the grant will be received. Grants that compensate the Corporation for expenses incurred are recognized in other revenue in the same period the related expenses are recognized. Grants that compensate the Corporation for the cost of an asset are recognized in other revenue on a straight-line basis over the estimated useful life of the asset.
vi. Other revenue Royalty revenue is recognized when natural gas from wells subject to royalty agreements is delivered to the customer. Natural gas and liquid sales are recognized when natural gas and natural gas liquids are delivered to the customer. q. Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset are added to the cost of that asset, until it is available for use. Qualifying assets are those assets that take a substantial period of time to get ready for their intended use. As the Corporation borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Corporation capitalizes borrowing costs by applying its weighted average cost of debt. All other borrowing costs are recognized in finance expense in the period in which they are incurred.
r.
Leased assets The Corporation’s leased assets are under operating leases. As the Corporation does not assume substantially all of the risks and rewards of ownership, the leased assets are not recognized in the Corporation’s consolidated statement of financial position. Lease payments are recognized in operating and maintenance expense in the period in which they are incurred. Future changes in accounting policies The following new and amended standards are not yet effective and have not been applied in preparing these consolidated financial statements: IFRS 9 Financial Instruments – replaces the rule-based hedge accounting requirements in IAS 39 Financial Instruments: Recognition and Measurement to more closely align the accounting with risk management activities. This standard is effective for annual periods beginning on or after January 1, 2018. IFRS 15 Revenue from Contracts with Customers – clarifies the principles for recognizing revenue from contracts with customers and will affect the Corporation’s accounting policies with respect to the following applicable revenue Standards and Interpretations upon its effective date: IAS 18 Revenue IAS 11 Construction Contracts IFRIC 18 Transfer of Assets from Customers This standard is effective for annual periods beginning on or after January 1, 2017. The Corporation is continuing to review the new and amended standards and has not yet determined the impact on its consolidated financial statements.
s.
50
Consolidated Financial Statements
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