Notes to the Consolidated Financial Statements
g. Debt retirement funds Under conditions attached to certain advances from the Province of Saskatchewan’s General Revenue Fund, the Corporation is required, on an annual basis, to invest an amount equal to one per cent of the related outstanding debt. These investments are referred to as debt retirement funds and are administered by Saskatchewan’s Ministry of Finance. Debt retirement funds are classified as financial instruments and are designated as at fair value through other comprehensive income, which are recorded at fair value in the consolidated statement of financial position. The investment and income earned on the investment is returned to the Corporation upon maturity of the related debt. h. Intangible assets Intangible assets are recorded at cost less accumulated amortization and any accumulated impairment losses. Intangible assets are capitalized if it is probable that the asset acquired or developed will generate future economic benefits. The costs incurred to establish technological feasibility or to maintain existing levels of performance are recognized in operating and maintenance expense as incurred. Cost includes expenditures that are directly attributable to the acquisition or development of the asset. The cost of self-developed assets includes materials, services, direct labour and directly attributable overheads. Borrowing costs associated with major projects are capitalized during the development period. Major projects (or qualifying assets) are those projects that are under development for a period greater than six months. Assets under development are recorded as in progress until they are available for use. Amortization of computer software is based on the cost of the asset and is calculated using the straight-line method over the estimated useful life of the asset from the date the asset is available for use. The amortization rate is 10.0 to 20.0 per cent annually. The estimated useful lives, residual values and method of amortization are reviewed annually for reasonableness. i. Property, plant and equipment Property, plant and equipment are recorded at cost less accumulated depreciation and any accumulated impairment losses. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. The cost of major inspections or overhauls are capitalized. The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the specific item if it is probable that the part will generate future economic benefits, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The cost of regular servicing of property, plant and equipment is recognized in operating and maintenance expense as incurred. Cost includes expenditures that are directly attributable to the acquisition or construction of the asset. The cost of self- constructed assets includes materials, services, direct labour and directly attributable overheads. Borrowing costs are capitalized at the initiation of a project and throughout the construction period. Assets under construction are recorded as in progress until they are available for use. At that point, borrowing costs are no longer charged to the projects, the projects are capitalized, and depreciation commences. When property, plant and equipment are disposed of or retired, the related cost, accumulated depreciation and any accumulated impairment losses are eliminated. Depreciation is based on the cost of the asset less its residual value and is calculated using the straight-line method over the estimated useful life of the asset from the date the asset is available for use at the following annual rates (per cent):
Distribution
1.6 to 8.1 Other
2.6 to 8.7 5.5 to 7.7
Transmission and storage
2.0 to 20.0 Computer hardware
Compression
1.6 to 25.0
The estimated useful lives, decommissioning costs and method of depreciation are based on periodic depreciation studies conducted by a third-party, with annual reviews for reasonableness.
62
Made with FlippingBook Ebook Creator