2. Basis of preparation (continued)
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 Revenue recognition related to contracts with customers Existence of decommissioning liabilities Identification of own-use derivative contracts
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 Net realizable value of natural gas in storage held for resale Fair value of financial and derivative instruments Useful lives and amortization rates for intangible assets Useful lives and depreciation rates for property, plant, and equipment Recoverable amount of non-financial assets
Estimated unearned customer capital contributions Estimated future cost of decommissioning liabilities
3. Summary of significant accounting policies
The accounting policies, as detailed in Note 3 to the consolidated financial statements for the year ended March 31, 2018, have been applied consistently, by the Corporation and its subsidiaries, to all periods presented in these condensed consolidated financial statements, with the exception of the change in accounting policy identified below.
a. Future changes in accounting policies
IFRS 16 Leases is a new standard that is not yet effective and has not yet been applied in preparing these condensed consolidated financial statements. IFRS 16 broadens the definition of a lease and increases transparency regarding a Corporation’s leasing obligations. Under the new standard, an asset and liability is recognized on the condensed consolidated statement of financial position for all material contracts that meet the definition of a lease. This standard is effective for annual periods beginning on or after January 1, 2019. The Corporation is continuing to review the new standard and has completed a preliminary assessment of the impact on its condensed consolidated financial statements. It is expected to have minimal impacts on leases but the Corporation has not yet determined the full impact of the standard.
b. Change in accounting policy
SaskEnergy adopted IFRS 15, Revenue from Contracts with Customers, with a date of initial application of April 1, 2018. The Corporation adopted IFRS 15 based on retrospective application, where the cumulative effect of initially applying IFRS 15 would be recorded as an adjustment recognized in the opening balance of retained earnings as at April 1, 2018. Comparative information has not been restated and continues to be reported under previous accounting standards, IAS 11, Construction Contracts and IAS 18, Revenue. The Corporation elected to apply the following practical expedients in adopting IFRS 15: - The Corporation applied the standard retrospectively only to contracts that are not completed contracts at the date of initial application. - The Corporation recognized revenue from contracts where the right to consideration from a customer corresponds directly with the value to the customer of the Corporation’s performance completed to date in the amount to which the Corporation has the right to invoice. - The Corporation did not adjust the promised amount of consideration for the effects of a significant financing component if the Corporation expected, at the contract inception, that the period between when the Corporation transfers the good or service to the customer and when the customer pays for the service will be one year or less; and - The Corporation applied the standard to a portfolio of contracts. Specific contract types were assessed to determine if the portfolio method was most appropriate. In adopting IFRS 15, no changes in accounting policies or adjustments to the amounts recognized in the financial statements were made. The new standard only affects contracts with customers and does not apply to insurance contracts, financial instruments or lease contracts, which fall in the scope of other IFRSs. Disaggregation of revenue recognized, as required by IFRS 15, has been provided in Notes 11 and 12 of these condensed consolidated financial statements.
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2018-19 SECOND QUARTER REPORT
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