Notes to the Condensed Consolidated Financial Statements (unaudited)
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, 2021. 4. NATURAL GAS IN STORAGE HELD FOR RESALE The revaluation to net realizable value of natural gas in storage at the end of the quarter was $nil (March 31, 2021 - $nil). The Corporation expects that the current inventory value of $51 million could be sold or consumed within the next twelve months. 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 have been taken into account in determining the fair value of financial assets and liabilities, including derivative instruments. In measuring fair value, the Corporation classifies items according to the fair value hierarchy based on the amount of observable inputs. Level 1 valuations use quoted prices (unadjusted) that are available in active markets for identical assets or liabilities as at the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide ongoing pricing information. Level 2 valuations are based on inputs that are either directly or indirectly observable for the asset or liability as at the reporting date. Inputs include quoted market prices, time value, volatility factors and broker quotations which can be substantially observed or corroborated in the marketplace.
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