2015-16 SaskEnergy Annual Report

3. Summary of significant accounting policies (continued)

c. Joint arrangements When assessing whether a joint arrangement is in the form of a joint operation or a joint venture, the Corporation considers the arrangement’s structure, legal form and contractual terms as well as any other relevant factors. The Corporation’s existing joint arrangements, which are identified below, are in the form of joint operations as the Corporation has the rights to the assets, and obligations for the liabilities, relating to the arrangements. The consolidated financial statements include the Corporation’s share of jointly controlled assets, incurred liabilities, revenue and expenses as well as any liabilities and expenses that the Corporation has incurred directly in respect of its joint arrangements.

Joint Arrangement

Operating Jurisdiction


Principal Activity

Kisbey Gas Gathering and Processing Facility Totnes Natural Gas Storage Facility

Saskatchewan, Canada Saskatchewan, Canada

50.0% 50.0%

Natural gas processing Natural gas storage

d. Cash and cash equivalents The Corporation does not hold any short-term investments that would be classified as 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.


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. Debt retirement funds Under conditions attached to certain advances from the Province of Saskatchewan’s General Revenue Fund, the Corporation is required, on an annual basis, to invest an amount equal to one per cent of the related outstanding debt. These investments are referred to as debt retirement funds and are administered by Saskatchewan’s Ministry of Finance. Debt retirement funds are classified as financial instruments and are designated as at fair value through profit or loss, which are recorded at fair value in the consolidated statement of financial position. The investment and income earned on the investment is returned to the Corporation upon maturity of the related debt. h. Financial and derivative instruments The Corporation classifies its financial instruments into one of the following categories: financial assets and financial liabilities at fair value through profit or loss, held-to-maturity, loans and receivables, available-for-sale and other liabilities. During the reported periods, the Corporation did not have any financial instruments in the categories of held-to-maturity, and available- for-sale. 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.


Consolidated Financial Statements

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