Oil Pipeline Uniform Accounting Regulations (C.R.C., c. 1058)

Plant Units

• 31 (1) Each company shall establish its own list of plant units for each plant account.

• (2) A company’s list of plant units shall be filed with and be subject to the approval of the Commission.

• (3) Subject to the approval of the Commission, the list of plant units, as filed, may be revised and amended from time to time.

• (4) The cost of an additional plant unit shall be debited to the appropriate plant account.

• (5) The book cost of a plant unit retired, whether replaced or not, shall be credited to the appropriate plant account.

• (6) Where a plant unit is replaced, the book cost of the original plant unit shall be credited to the appropriate plant account and the cost of the replacement unit shall be debited to the appropriate plant account.

Minor Items of Plant

• 32 (1) Subject to section 33, the cost of a minor item of additional plant not constituting a replacement shall be debited to the appropriate plant account.

• (2) The cost of a minor item of plant that constitutes a replacement shall be debited to the appropriate expense account and the book cost of the minor item replaced shall not be adjusted.

• (3) The book cost of a minor item of plant retired and not replaced shall be credited to the appropriate plant account.

Minimum Rule

• 33 (1) Where a minor item of plant is acquired at a cost of less than $1,000, the cost shall be debited to expense.

• (2) A company shall not

  • (a) combine unrelated items of plant for the purpose of excluding the items from the provisions of subsection (1); or

  • (b) divide expenditures made under a general plan for related items that cost $1,000 or more per item into smaller parcels for the purpose of debiting capital items to expense.

• (3) With the approval of the Commission after the filing of a request by a company, the company may, for the purpose of its accounting, adopt a limit of less than the amount set out in subsection (1) for any class of plant.

• (4) No change may be made in the amount of a limit referred to in subsection (3) except with the prior approval of the Commission.

Major Renewals

• 34 (1) In this section, cost of renewals means the aggregate of

  • (a) the cost of material, other than old parts remaining in a rebuilt plant unit, and

  • (b) the cost of labour used in the rebuilding process,

  but does not include the cost of dismantling and repairing old parts that are re-used.

• (2) Subject to subsection (3), where the cost of renewals to parts of a plant unit exceeds 50 per cent of the new replacement cost of a plant unit of the same kind and class, the plant unit shall be considered as rebuilt.

• (3) Subsection (2) does not apply to the renewal of a plant unit where the new replacement cost of that unit would not exceed $120,000.

• (4) A rebuilt plant unit shall be accounted for as an addition and the old plant unit that the rebuilt plant unit replaced shall be accounted for as retired from service.

• (5) Subject to subsection (6), the charge to the appropriate plant account for a rebuilt plant unit shall be the aggregate of

  • (a) the value of old parts remaining in the rebuilt plant unit; and

  • (b) the cost of labour and material applied.

• (6) The cost of dismantling and repairing old parts used in the renewal of plant shall be debited to maintenance expense.

Second-Hand Plant

35 Where second-hand plant not previously owned by the company is acquired in a physical condition that necessitates extensive expenditures to bring it up to the standard required by the company, the expenditures shall be debited to the appropriate plant account.

Retirements of Plant

General

• 36 (1) Where a plant unit, whether replaced or not, is retired from pipeline operations, the book cost of the plant unit shall be credited to the appropriate plant account.

• (2) Where a minor item of plant is retired and not replaced, the book cost of that item shall be credited to the appropriate plant account.

• (3) The book cost and the costs of removal of a depreciable plant unit or a depreciable minor item of plant retired and not replaced shall be debited to account 31 (Accumulated Depreciation — Transportation Plant) or to account 32 (Accumulated Amortization — Transportation Plant), as applicable.

• (4) The net salvage value of a plant unit retired or of a minor item of plant retired and not replaced shall be credited to the accumulated depreciation or accumulated amortization account referred to in subsection (3).

• (5) Each retirement project shall be supported by subsidiary records that show separately the details thereof.

Book Cost

37 Where the book cost of any retired plant is not recorded separately, the book cost of that plant shall be its appropriate share of the book cost of the entire group in which the particular plant is located.

Salvage Value

• 38 (1) Where salvaged material is retained for use by a company, the original cost, estimated if not known, of the material, less a fair allowance for depreciation, shall be debited to account 8 (Materials and Supplies).

• (2) The salvage value of depreciable plant or salvaged material therefrom shall be credited to account 31 (Accumulated Depreciation — Transportation Plant) or account 32 (Accumulated Amortization — Transportation Plant), as applicable.

• (3) The removal costs incurred in dismantling or demolishing retired depreciable plant and in recovering salvage therefrom shall be debited to account 31 (Accumulated Depreciation — Transportation Plant) or account 32 (Accumulated Amortization — Transportation Plant), as applicable, except that the current cost of removing and replacing a minor item of plant in maintenance operations shall be included in the appropriate expense account.

Ordinary Retirement

• 39 (1) In respect of depreciable plant, ordinary retirement means a retirement of depreciable plant that results from causes reasonably assumed to have been anticipated or contemplated in prior depreciation or amortization provisions.

• (2) There shall be no debit or credit to income or to retained earnings for an ordinary retirement.

Extraordinary Retirement

• 40 (1) In respect of depreciable plant, extraordinary retirement means a retirement of depreciable plant that results from causes not reasonably assumed to have been anticipated or contemplated in prior depreciation or amortization provisions, including such causes as fire, storm, flood, sudden and complete obsolescence or unexpected and permanent shutdown of an entire operating assembly.

• (2) Where the gain or loss on an extraordinary retirement is material, the company shall inform the Regulator and shall transfer the amount of the gain or loss from account 31 (Accumulated Depreciation-Transportation Plant) or account 32 (Accumulated Amortization-Transportation Plant) to account 402 (Extraordinary Income) or to account 422 (Extraordinary Income Deductions), as applicable.

• (3) Immaterial gains or losses resulting from extraordinary retirements shall be accounted for in the same way as ordinary retirements.

Pipeline Relocations

• 41 (1) Where a plant unit of pipeline is relocated, it shall be considered as plant retired and its book cost shall be credited to the appropriate plant account.

• (2) Where a plant unit of pipeline has been relocated, the relocated plant unit shall be considered as an addition and the cost shall be debited to the appropriate plant account.

• (3) Where a company’s pipeline or any part thereof is located in accordance with an agreement that may require the company to relocate all or part of its pipeline and the circumstances are such that the company has no reasonable alternative but to relocate more than a plant unit of pipeline, the company may, with the approval of the Commission, debit the costs of relocation to expenses for the period in which the relocation was carried out.

• (4) Where a relocation of a type referred to in subsection (3) results from action by a governmental authority, the cost of relocation may be accounted for in the manner set out in subsection (3).

Line Pipe Replacements

• 42 (1) Where a plant unit of line pipe is replaced with other pipe in the same location, a company shall debit to the appropriate plant account the cost of opening and back filling the trench together with the cost of hauling, laying and connecting the pipe, the cost of removing retired pipe from the trench and other costs of pipeline construction.

• (2) The cost of reconditioning line pipe not removed shall be accounted for as repairs and not as retirements or replacements.

Other Plant

• 43 (1) Where plant is no longer required for pipeline purposes but is retained by the company, its book cost shall be transferred to account 34 (Other Plant) and the accumulated depreciation or accumulated amortization, if any, with respect thereto shall be transferred from account 31 (Accumulated Depreciation — Transportation Plant) or account 32 (Accumulated Amortization — Transportation Plant) to account 35 (Accumulated Depreciation — Other Plant) or to account 40 (Accumulated Amortization — Other Plant), as applicable.

• (2) Where depreciable other plant included in account 34 (Other Plant) is retired or sold, the book cost, salvage and removal costs shall be recorded in account 35 (Accumulated Depreciation — Other Plant).

• (3) Where the gain or loss from the sale or retirement of depreciable other plant is material, the company shall inform the Regulator and shall transfer the amount of the gain or loss from account 35 (Accumulated Depreciation-Other Plant) or account 40 (Accumulated Amortization-Other Plant) to account 402 (Extraordinary Income) or to account 422 (Extraordinary Income Deductions), as applicable.

• (4) Where the gain or loss from the sale or retirement of depreciable other plant included in account 34 (Other Plant) is not material, the company shall transfer the amount of the gain or loss from account 35 (Accumulated Depreciation — Other Plant) or account 40 (Accumulated Amortization — Other Plant) to account 410 (Other Income) or to account 420 (Other Income Deductions), as applicable.

Land Retired or Sold

• 44 (1) Where land is retired or sold, account 30 (Transportation Plant), account 34 (Other Plant), or account 38 (Transportation Plant Leased to Others) shall be credited with the book cost of the land.

• (2) Where the gain or loss from the sale or retirement of land is material the company shall inform the Regulator and shall transfer the amount of the gain or loss to account 402 (Extraordinary Income) or to account 422 (Extraordinary Income Deductions), as applicable.

• (3) Where the gain or loss from the sale or retirement of land is not material, the company shall transfer the amount of the gain or loss to account 410 (Other Income) or to account 420 (Other Income Deductions), as applicable.

Maintenance

General

45 The cost of repairs recorded in the maintenance accounts for transportation plant shall include

• (a) the cost of inspection to determine the repairs that are necessary;

• (b) the cost of adjusting, repairing or replacing parts; and

• (c) the cost of inspection, testing and running of parts to determine whether or not the repairs have been properly made and the repaired item is ready for service.

• 46 (1) Maintenance accounts kept in accordance with Schedule VI shall be debited with the costs of repairing and maintaining plant and shall include

  • (a) incidental costs including the construction and removal of false work in connection with maintenance;

  • (b) the cost of relocating pipeline plant where retirement accounting for units of plant is not involved;

  • (c) the cost of raising or lowering line pipe in the trench where retirement accounting for units of plant is not involved;

  • (d) the cost of repairing fences, sidewalks, driveways and streets within or adjacent to the plant; and

  • (e) the cost of installing, maintaining and removing temporary facilities to prevent any interruptions in operations.

• (2) Where employees whose pay is normally debited to transportation expenses

  • (a) mow and beautify grounds and buildings,

  • (b) periodically restore seasonal features such as gardens, shrubbery and lawns, or

  • (c) clear and remove snow, ice and fallen timber,

  their pay and any other costs arising from such employment may be debited to the maintenance or transportation account, at the option of the company.