Notes to the Consolidated Financial Statements
d. Cash and cash equivalents Bank indebtedness forms part of the Corporation’s cash management and is included as a component of cash and cash equivalents for the purpose of the Consolidated Statement of Cash Flows. e. Natural gas in storage held for resale Natural gas in storage is stated at the lower of weighted average cost and net realizable value. Net realizable value is determined using natural gas market prices based on anticipated delivery dates. f. Inventory of supplies Inventory of supplies consist primarily of pipe and general stock for construction and maintenance and are stated at the lower of weighted average cost and net realizable value. Replacement value is used as management’s best estimate of net realizable value. When estimating the net realizable value, the Corporation also considers any obsolescence that may exist due to changes in technology. g. Financial and derivative instruments Financial instruments are classified into one of the following categories: financial assets and financial liabilities at fair value through profit or loss, amortized cost, and financial assets and financial liabilities at fair value through other comprehensive income. During the reporting periods, financial instruments were classified in each of these three categories. All financial instruments are measured at fair value on initial recognition. Transaction costs are included in the initial carrying amount of financial instruments, except for financial assets and financial liabilities at fair value through profit or loss, in which case the transaction costs are expensed as incurred. Measurement in subsequent periods depends on the classification of the financial instrument. i. Financial assets and financial liabilities at fair value through profit or loss Financial assets and financial liabilities are classified as fair value through profit or loss if they are held for trading or designated as such upon initial recognition. A financial asset or financial liability is classified as held for trading if it has been acquired with the intention of generating profits in the near term, is part of a portfolio of financial instruments that are managed together where there is evidence of a recent pattern of short-term profit taking or is a derivative. A financial asset or financial liability is designated as fair value through profit or loss if the Corporation manages such instruments and makes decisions based on their fair value in accordance with its documented risk management or investment strategy. Subsequent to initial recognition, financial assets and financial liabilities at fair value through profit or loss are measured at fair value with any revaluation gains and losses recognized in net income. ii. Financial assets and financial liabilities at fair value through other comprehensive income Debt retirement funds are classified as financial assets at fair value through other comprehensive income as the following conditions are met: • The debt retirement funds are administered by the Government of Saskatchewan Ministry of Finance whose business model objective is to both hold underlying investments to collect contractual cash flows and to sell; and • The contractual terms of the debt retirement funds give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. iii. Amortized cost Trade and other receivables, trade and other payables, short-term debt, dividends payable, and long-term debt are classified at amortized cost. The amortized cost category consists of financial assets and liabilities with fixed or determinable payments that are not quoted in an active market. These financial assets and liabilities are accounted for at amortized cost using the effective interest method.
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