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 2018, the company reported depreciation expense of $2,591 million. The property and equipment footnote follows. Processing Retail Transportation and and Storage Upgrading Refining Other Total $86 12 $2,599 62 $9,191 744 $2,930 151 $56,621 3,434 3 67 III 79 (5) 5 - 2 (2) (5) 7 45 (1) (10) 773 (643) 1,139 101 = 3 Oil and Gas Property, plant and Equipment (in C$ millions) Properties Cost Dec 31, 2017 $41,815 Additions 2,465 Acquisitions 64 Transfers from exploration and evaluation 79 Intersegment transfers Changes in asset retirement obligations 43 Disposals and derecognition (632) Exchange adjustments 362 Dec. 31, 2018 $44,196 Accumulated depletion, depreciation, amortization, and impairment Dec. 31, 2017 $(26,016) Depletion, depreciation, amortization, and impairment (1,811) Disposals and derecognition 586 Exchange adjustments (138) Dec. 31, 2018 $(27,379) Net book value Dec 31, 2017 $15,799 Dec 31, 2018 16,817 $101 $2,659 $10,691 $3,095 $60,742 $(47) $(1,462) $(3,176) $(1,842) $(32,543) (2) (123) (503) (152) (2.591) 10 596 (264) (1) (404) $(1,585) $(3,933) $(1,995) $(34,942) (1) $(50) $39 $1,137 $6,015 6,758 $1,088 1,100 $24,078 25,800 51 1,074 Required a. Compute the average useful life of Husky Energy's depreciable assets in 2018. Assume that land is 10% of "Refining." Note: Round your answer to one decimal place (for example, enter 6.8 for 6.77555). 0 years b. Estimate the percent used up of Husky Energy's depreciable assets in 2018. Note: Round percentage to one decimal place (for example, enter 6.7% for 6.6555%). 0 % C. Consider the disposals and derecognition during the year. This refers to assets that were sold and removed from the balance sheet during 2018. Calculate the net book value of the total PPE disposed during the year. Assume that Husky Energy received $4 million cash proceeds for the year. Determine the gain or loss on the disposal. Note: Do not use any negative signs with your answers. $ 0 Gain 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 2018, the company reported depreciation expense of $2,591 million. The property and equipment footnote follows. Processing Retail Transportation and and Storage Upgrading Refining Other Total $86 12 $2,599 62 $9,191 744 $2,930 151 $56,621 3,434 3 67 III 79 (5) 5 - 2 (2) (5) 7 45 (1) (10) 773 (643) 1,139 101 = 3 Oil and Gas Property, plant and Equipment (in C$ millions) Properties Cost Dec 31, 2017 $41,815 Additions 2,465 Acquisitions 64 Transfers from exploration and evaluation 79 Intersegment transfers Changes in asset retirement obligations 43 Disposals and derecognition (632) Exchange adjustments 362 Dec. 31, 2018 $44,196 Accumulated depletion, depreciation, amortization, and impairment Dec. 31, 2017 $(26,016) Depletion, depreciation, amortization, and impairment (1,811) Disposals and derecognition 586 Exchange adjustments (138) Dec. 31, 2018 $(27,379) Net book value Dec 31, 2017 $15,799 Dec 31, 2018 16,817 $101 $2,659 $10,691 $3,095 $60,742 $(47) $(1,462) $(3,176) $(1,842) $(32,543) (2) (123) (503) (152) (2.591) 10 596 (264) (1) (404) $(1,585) $(3,933) $(1,995) $(34,942) (1) $(50) $39 $1,137 $6,015 6,758 $1,088 1,100 $24,078 25,800 51 1,074 Required a. Compute the average useful life of Husky Energy's depreciable assets in 2018. Assume that land is 10% of "Refining." Note: Round your answer to one decimal place (for example, enter 6.8 for 6.77555). 0 years b. Estimate the percent used up of Husky Energy's depreciable assets in 2018. Note: Round percentage to one decimal place (for example, enter 6.7% for 6.6555%). 0 % C. Consider the disposals and derecognition during the year. This refers to assets that were sold and removed from the balance sheet during 2018. Calculate the net book value of the total PPE disposed during the year. Assume that Husky Energy received $4 million cash proceeds for the year. Determine the gain or loss on the disposal. Note: Do not use any negative signs with your answers. $ 0 Gain
