wagclicu. 16-50. LO5, 6 HUSKY ENERGY (HSE) Homework MBC 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 Can- ada, 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 deprecia- tion expense of $2,591 million. The property and equipment footnote follows. Oil and Gas Properties Processing, Transportation and Storage Retail and Other Property, Plant and Equipment (in C$ millions) Upgrading Refining Total $ 86 12 $ 2,599 62 $ 41,815 2,465 64 79 $ 9,191 744 3 $ 2,930 151 $ 56,621 3,434 67 79 Cost December 31, 2017 Additions Acquisitions.. Transfers from exploration and evaluation. Intersegment transfers Changes in asset retirement obligations. Disposals and derecognition. Exchange adjustments December 31, 2018 (5) 43 (632) 362 III (10) 773 7 (1) 3 45 (643) 1,139 1 $ 44,196 $101 $ 2,659 $10,691 $ 3,090 $ 60,742 $ (47) (2) $(1,462) (123) Accumulated depletion, depreciation, amortization, and impairment December 31, 2017 $(26,016) Depletion, depreciation, amortization, and impairment. (1,811) Disposals and derecognition. 586 Exchange adjustments (138) December 31, 2018 $(27,379) Net book value December 31, 2017 $15,799 December 31, 2018 16,817 $ (3,176) $(1,842) $(32,543) (503) (152) (2,591) 10 596 (264) (1) (404) $ (3,933) $(1,995) $(34,942) (1) $ (50) $(1,585) $ 39 51 $ 1,137 1,074 $ 6,015 6,758 $ 1,088 1,100 $ 24,078 25,800 Required a. Compute the average useful life of Husky Energy's depreciable assets in 2018. Assume that land is 10% of Refining. b. Estimate the percent used up of Husky Energy's depreciable assets in 2018. 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 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. wagclicu. 16-50. LO5, 6 HUSKY ENERGY (HSE) Homework MBC 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 Can- ada, 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 deprecia- tion expense of $2,591 million. The property and equipment footnote follows. Oil and Gas Properties Processing, Transportation and Storage Retail and Other Property, Plant and Equipment (in C$ millions) Upgrading Refining Total $ 86 12 $ 2,599 62 $ 41,815 2,465 64 79 $ 9,191 744 3 $ 2,930 151 $ 56,621 3,434 67 79 Cost December 31, 2017 Additions Acquisitions.. Transfers from exploration and evaluation. Intersegment transfers Changes in asset retirement obligations. Disposals and derecognition. Exchange adjustments December 31, 2018 (5) 43 (632) 362 III (10) 773 7 (1) 3 45 (643) 1,139 1 $ 44,196 $101 $ 2,659 $10,691 $ 3,090 $ 60,742 $ (47) (2) $(1,462) (123) Accumulated depletion, depreciation, amortization, and impairment December 31, 2017 $(26,016) Depletion, depreciation, amortization, and impairment. (1,811) Disposals and derecognition. 586 Exchange adjustments (138) December 31, 2018 $(27,379) Net book value December 31, 2017 $15,799 December 31, 2018 16,817 $ (3,176) $(1,842) $(32,543) (503) (152) (2,591) 10 596 (264) (1) (404) $ (3,933) $(1,995) $(34,942) (1) $ (50) $(1,585) $ 39 51 $ 1,137 1,074 $ 6,015 6,758 $ 1,088 1,100 $ 24,078 25,800 Required a. Compute the average useful life of Husky Energy's depreciable assets in 2018. Assume that land is 10% of Refining. b. Estimate the percent used up of Husky Energy's depreciable assets in 2018. 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 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
