2. Basis of preparation (continued)
d. Use of estimates and judgments (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 Revenue recognition related to contracts with customers Existence of decommissioning liabilities Identification of own-use derivative contracts
Information about significant management estimates and assumptions that have a risk of resulting in a significant 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 Recoverable amount of non-financial assets
Estimated unearned customer capital contributions Estimated future cost of decommissioning liabilities
3. Summary of significant accounting policies
The accounting policies, as detailed in Note 3 to the consolidated financial statements for the year ended March 31, 2018, have been applied consistently, by the Corporation and its subsidiaries, to all periods presented in these condensed consolidated financial statements, with the exception of the change in accounting estimates and change in accounting policy identified below.
a. Change in accounting estimates
Effective December 31, 2018, the results of an independent third party depreciation study were implemented on the property, plant and equipment and intangible assets of TransGas Limited, the Corporation’s wholly owned subsidiary. As a change in estimate, the impact was applied prospectively and resulted in an approximate $5.8 million decrease in depreciation and amortization expense for the nine months ended December 31, 2018. During December 2018, the Corporation implemented the results of an independent third party depreciation study related to the property, plant and equipment and intangible assets of SaskEnergy’s Distribution Utility. As a change in estimate, the impact was applied prospectively and resulted in an approximate reduction of $0.5 million in depreciation and amortization expense for the nine months ended December 31, 2018. During the third quarter, a provision increase of $42.5 million was recorded effective December 31, 2018 with a corresponding increase to property, plant and equipment, a result of changes to estimated future cost of decommission assets.
b. Future changes in accounting policies
IFRS 16 Leases is a new standard that is not yet effective and has not yet been applied in preparing these condensed consolidated financial statements. IFRS 16 broadens the definition of a lease and increases transparency regarding a Corporation’s leasing obligations. Under the new standard, an asset and liability is recognized on the condensed consolidated statement of financial position for all material contracts that meet the definition of a lease. This standard is effective for annual periods beginning on or after January 1, 2019. The Corporation is continuing to review the new standard and has completed a preliminary assessment of the impact on its condensed consolidated financial statements. It is expected to have minimal impacts on leases but the Corporation has not yet determined the full impact of the standard.
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2018-19 THIRD QUARTER REPORT
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