3. Summary of significant accounting policies (continued)
vi. Other revenue Natural gas and liquid sales are recognized when natural gas and natural gas liquids are delivered to the customer. Compression and gathering revenue is recognized when compression and gathering services are provided to the customer. An estimate of natural gas and natural gas liquids delivered and compression and gathering services rendered but not billed is included in other revenue. p. Borrowing costs Borrowing costs that are directly attributable to the acquisition, construction or development of a qualifying asset are added to the cost of that asset, until it is available for use. Qualifying assets are those assets that take a substantial period of time to get ready for their intended use. As the Corporation borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Corporation capitalizes borrowing costs by applying its weighted average cost of debt. All other borrowing costs are recognized in finance expense in the period in which they are incurred. q. Leased assets The Corporation has assets that are leased. Leased assets are classified as finance leases when the Corporation acquires substantially all of the risks and rewards of ownership. All other leases are classified as operating. Assets held under finance leases are initially recognized at the lower of their fair value at inception of the lease or the present value of the minimum lease payments. The corresponding liability is recorded as a finance lease obligation. Each lease payment is allocated between the liability and interest so as to achieve a constant rate of interest on the remaining balance of the liability. The interest component is included in finance expenses. During the reported periods, the Corporation did not have a material amount of assets held under a finance lease.
Leased assets classified as operating leases are not recognized in the Corporation’s consolidated statement of financial position. Lease payments are recognized in operating and maintenance expense on a straight-line basis over the period of the lease. Future changes in accounting policies The following new standards are not yet effective and have not been applied in preparing these consolidated financial statements: IFRS 9 Financial Instruments – introduces a logical approach for the classification of financial assets driven by cash flow characteristics and the business model in which an asset is held. The new standard also replaces the rule-based hedge accounting requirements in IAS 39 Financial Instruments: Recognition and Measurement to more closely align the accounting with risk management activities. This standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. IFRS 15 Revenue from Contracts with Customers – clarifies the principles for recognizing revenue from contracts with customers and will affect the Corporation’s accounting policies with respect to the following applicable revenue standards and interpretations upon its effective date: IAS 18 Revenue IAS 11 Construction Contracts IFRIC 18 Transfer of Assets from Customers This standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. IFRS 16 Leases – 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 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, with early adoption permitted if IFRS 15 Revenue from Contracts with Customers has also been applied.
Consolidated Financial Statements
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