2. Basis of preparation (continued)
Information about critical judgments in applying accounting policies that have a significant effect on the amounts recognized in the condensed consolidated financial statements include:
Revenue recognition related to unbilled revenue Existence of decommissioning liabilities
Information about significant management estimates and assumptions that have a significant risk of resulting in a material adjustment within the next financial period include:
Estimated unbilled revenue Net realizable value of natural gas in storage held for resale Fair value of financial and derivative instruments Useful lives and amortization rates for intangible assets Useful lives and depreciation rates for property, plant, and equipment
Estimated unearned customer capital contributions Estimated future cost of decommissioning liabilities
During the year, the Corporation modified its estimate of deferred revenue. As the Corporation’s customer capital contributions are often subject to refunds over a specified period, an estimate of these refunds remains in deferred revenue until the eligible refund period expires. Under the new methodology, the Corporation calculated the estimated refunds based on a customer’s requested delivery capacity rather than management’s estimate of future customer usage. This change is a more accurate reflection of the amount that is likely to be refunded, and as such, is an improvement over the previous estimation process. As a change in estimate, the impact was applied prospectively effective January 1, 2015 and resulted in approximately $12 million of customer contribution revenue for the year.
3. Summary of significant accounting policies
The accounting policies, as detailed in Note 3 to the consolidated financial statements for the year ended December 31, 2014, have been applied consistently, by the Corporation and its subsidiaries, to all periods presented in these condensed consolidated financial statements. Certain comparative amounts in the condensed consolidated statement of comprehensive income have been reclassified to conform with the current quarter’s presentation (Note 15).
a. Changes in accounting policies
Effective January 1, 2015, the Corporation adopted the following new and amended IFRS:
IAS 19 Employee benefits
The adoption of this amended standard had no impact on the condensed consolidated financial statements.
b. Fair value measurements
For recurring and non-recurring fair value measurements, the Corporation estimates the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the reporting date under current market conditions. This requires the Corporation to make certain assumptions, including the principal (or most advantageous) market, the most appropriate valuation technique and the most appropriate valuation premise. The Corporation’s own credit risk and the credit risk of the counterparty have been taken into account in determining the fair value of financial assets and liabilities, including derivative instruments.
In measuring fair value, the Corporation classifies items according to the following fair value hierarchy based on the amount of observable inputs:
i. Level 1
Quoted prices (unadjusted) are available in active markets for identical assets or liabilities as at the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide ongoing pricing information. The Corporation did not classify any of its fair value measurements within Level 1.
19
2015/2016 FOURTH QUARTER REPORT
Made with FlippingBook Ebook Creator