Estimating Useful Life, Percent Used Up, and Gain or Loss on Disposal Husky Energy is one of Canada’s largest integrated energy companies. Based in Calgary, Alberta, Husky is publicly traded on the Toronto Stock Exchange. The Company operates in Western and Atlantic Canada, the United States and the Asia Pacific Region with upstream and downstream business segments. The company uses IFRS to prepare its financial statements. During 2015, the company reported depreciation expense of $8,484 million. The property and equipment footnote follows.

Oil and Gas Properties Processing, Transportation and Storage Upgrading Refining Retail and Other Total Cost December 31, 2014 . . . . . . . . . . . . . . . . . . . . . $ 47,974 $1,296 $ 2,274 $ 6,561 $ 2,632 $ 60,737 Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,128 173 46 452 76 2,875 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 — — — — 57 Transfers from exploration and evaluation . . . . . 97 — — — — 97 Intersegment transfers . . . . . . . . . . . . . . . . . . . 6(6)————
Changes in asset retirement obligations . . . . . (107) — (7) (5) (18) (137)
Disposals and derecognition . . . . . . . . . . . . . . (487) — — (24) (4) (515)
Exchange adjustments . . . . . . . . . . . . . . . . . . . 720 2 — 1,152 2 1,876 December 31, 2015 . . . . . . . . . . . . . . . . . . . . . $ 50,388 $1,465 $ 2,313 $ 8,136 $ 2,688 $ 64,990 Accumulated depletion, depreciation, amortization and impairment December 31, 2014 . . . . . . . . . . . . . . . . . . . . . $(23,687) $ (527) $(1,154) $(1,988) $(1,394) $(28,750)
Depletion, depreciation and amortization. . . . . (7,811) (48) (106) (365) (154) (8,484)
Intersegment transfers . . . . . . . . . . . . . . . . . . . (2)2————
Disposals and derecognition . . . . . . . . . . . . . . 370 — — 18 2 390 Exchange adjustments . . . . . . . . . . . . . . . . . . . (170) (1) — (341) — (512)
December 31, 2015 . . . . . . . . . . . . . . . . . . . . . $(31,300) $ (574) $(1,260) $(2,676) $(1,546) $(37,356)
Net book value December 31, 2014 . . . . . . . . . . . . . . . . . . . . . $24,287 $ 769 $ 1,120 $ 4,573 $ 1,238 $ 31,987 December 31, 2015 . . . . . . . . . . . . . . . . . . . . . 19,088 891 1,053 5,460 1,142 27,634 Required

a. Compute the estimated useful life of Husky Energy’s depreciable assets at year-end 2015. Assume that land is 10% of “Refining.”

b. Estimate the percent used up of Husky Energy’s depreciable assets at year-end 2015. How do we interpret this figure?

c. Consider the disposals and derecognition during the year. This refers to assets that were sold and removed from the balance sheet during the year. Calculate the net book value of the total PPE disposed during the year. Assume that Husky Energy received C$72 million cash proceeds for the year.
Determine the gain or loss on the disposal.