Notes to the Consolidated Financial Statements (unaudited)
d. Use of estimates and judgments In the application of the Corporation’s accounting policies, which are described in Note 3, management is required to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may differ from these estimates. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised as well as any future periods affected. 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 Designation of own-use derivative contracts (Note 11) 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 Expected credit losses Net realizable value of natural gas in storage held for resale (Note 4) Fair value of financial and derivative instruments (Note 5) Useful lives and depreciation rates for right-of-use (ROU) assets Useful lives and amortization rates for intangible assets Useful lives and depreciation rates for property, plant and equipment (Note 8)
Recoverable amount of non-financial assets (Note 8) Estimated unearned customer capital contributions Estimated future cost of decommissioning liabilities
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting policies applied by the Corporation and its subsidiaries to the condensed consolidated financial statements are consistent with those applied to the consolidated financial statements prepared for the year ended March 31, 202 3 . NATURAL GAS IN STORAGE HELD FOR RESALE The revaluation to net realizable value of natural gas in storage at the end of June 30, 2023 was $nil (March 31, 2022 - $nil). As at June 30, 2023, the Corporation expects that the $27 million of current inventory could be sold or consumed within the next twelve months. 4. 5. FINANCIAL AND DERIVATIVE INSTRUMENTS 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 are taken into account in determining the fair value of financial assets and liabilities, including derivative instruments.
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