NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Information about significant management estimates and assumptions that have a risk of resulting in a significant adjustment is included in Note 3 as well as the following notes: Estimated unbilled revenue (Note 5) Net realizable value of natural gas in storage held for resale (Note 6) Fair value of financial and derivative instruments (Note 9) Useful lives and amortization rates for intangible assets (Note 11) Useful lives and depreciation rates for property, plant and equipment (Note 12) Recoverable amount of non-financial assets (Note 12) Estimated unearned customer capital contributions (Note 15) Estimated future cost of decommissioning liabilities (Note 17) 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently by the Corporation and its subsidiaries to all periods presented in the consolidated financial statements. a. Changes in accounting policies Effective April 1, 2017, the Corporation early adopted IFRS 9 Financial Instruments on a retrospective basis. As a result of the adoption of IFRS 9, consequential amendments to IAS 1 Presentation of Financial Statements were adopted, which requires impairment of financial assets to be presented in a separate line item in the consolidated statement of comprehensive income. Previously, the approach was to include the impairment of trade receivables in other expenses. The Corporation also adopted consequential amendments to IFRS 7 Financial Instruments: Disclosures . These amendments were applied to 2017-18 disclosures but have generally not been applied to comparative information. The key changes as a result of adoption are summarized below. i. Classification of financial assets and financial liabilities IFRS 9 Financial Instruments includes three principal classification categories for financial assets: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The classification of financial assets under the new standard is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The standard eliminates the previous IAS 39 Financial Instruments: Recognition and Measurement categories of held to maturity, loans and receivables and available for sale. The debt retirement funds were classified as FVTPL under IAS 39. The debt retirement funds are administered and managed by the Ministry of Finance. The business model objective is to hold the underlying investments in debt retirement funds to collect contractual cash flows to provide funds at the debt maturity. The contractual terms of the debt retirement funds give rise to earnings that are amounts for principal and the interest on the principal amount outstanding. As a result of the business model in which debt retirement funds are managed, they are now classified as financial assets at FVOCI under IFRS 9. The adoption of IFRS 9 has not had a significant effect on the Corporation’s accounting policies for financial assets or liabilities. ii. Impairment of financial assets IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model. The expected credit loss model requires the Corporation to account for expected credit losses, and changes in those expected credit losses, at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. The new impairment model applies to financial assets measured at amortized cost and debt instruments at FVOCI, but not to investments in equity instruments. Under IFRS 9, credit losses are recognized earlier than under IAS 39. IFRS 9 also provides a simplified approach for measuring the loss allowance at an amount equal to lifetime ECL’s for trade receivables in certain circumstances.
51
Made with FlippingBook Ebook Creator