Notes to the Consolidated Financial Statements
j. 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 is 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 associated with major projects are capitalized during the construction period. Major projects (or qualifying assets) are those projects that are under construction for a period greater than six months. Assets under construction are recorded as in progress until they are available for use. When property, plant and equipment is 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
1.5 to 4.5 2.1 to 50.0 1.6 to 80.0 1.9 to 20.0 12.9 to 24.5
Transmission and storage
Gathering, treatment and compression
Vehicles, equipment and other
Computer hardware
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. k. Impairment i. Financial assets Financial assets, other than those classified as at Fair Value through Profit or Loss (FVTPL), are reviewed at each reporting date to determine whether there is any indication of impairment. Loss allowances are recognized for Estimated Credit Losses (ECL) on financial assets measured at amortized cost and debt instruments designated as Fair Value through Other Comprehensive Income (FVOCI). Loss allowances for trade receivables are measured at an amount equal to lifetime ECL. Debt instruments and other receivables that are determined to have low credit risk at the reporting date are measured at 12-month ECL. Impairment is the financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from receivables from customers. The Corporation considers impairment for trade and other receivables on both an individual and a collective basis. In assessing collective impairment, the Corporation uses historical trends of the likelihood of default, timing of recoveries and the amount of losses incurred, adjusted for management’s judgment as to the impact of current and future economic and credit conditions. The carrying amount of trade and other receivables is reduced through the use of an allowance account. Once reasonable collection efforts have been exhausted, and a trade and other receivable balance is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized immediately as an impairment loss on trade and other receivables in the consolidated statement of comprehensive income.
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