NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
h. 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. i. Financial and derivative instruments Financial instruments are classified into one of the following categories: financial assets and financial liabilities at fair value through profit or loss, amortized cost, and financial assets and financial liabilities at fair value through other comprehensive income. During the reporting periods, financial instruments were classified in each of these three categories. 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. i. Financial assets and financial liabilities at fair value through profit or loss Financial assets and financial liabilities are classified as fair value through profit or loss if they are held for trading or designated as such upon initial recognition. A financial asset or financial liability is classified as held for trading if it has been acquired with the intention of generating profits in the near term, is part of a portfolio of financial instruments that are managed together where there is evidence of a recent pattern of short-term profit taking or is a derivative. A financial asset or financial liability is designated as fair value through profit or loss if the Corporation manages such instruments and makes decisions based on their fair value in accordance with its documented risk management or investment strategy. Subsequent to initial recognition, financial assets and financial liabilities at fair value through profit or loss are measured at fair value with any revaluation gains and losses recognized in net income. ii. Financial assets and financial liabilities at fair value through other comprehensive income Debt retirement funds represent investments that the Corporation intends to hold for the long term for strategic purposes. As permitted by IFRS 9, these investments have been designated at the date of initial application as measured at fair value through other comprehensive income. Under IAS 39, these investments were designated as at fair value through profit or loss because they were managed on a fair value basis and their performance was monitored on this basis. iii. Amortized cost Trade and other receivables that were classified as loans and receivables under IAS 39 are now classified at amortized cost. The amortized cost category consists of financial assets with fixed or determinable payments that are not quoted in an active market. These financial assets are accounted for at amortized cost using the effective interest method. iv. Derivative instruments A variety of derivative instruments are utilized to manage exposure to natural gas price risk. Derivative instruments are classified as fair value through profit or loss and are recorded at fair value within current assets or current liabilities, as applicable, commencing on the trade date. The change in the fair value is recorded in net income and classified within the revenue or expense category to which it relates.
58
Made with FlippingBook Ebook Creator