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

Cost of Labour

• 16 (1) Cost of labour for construction of plant shall include the amount paid for labour, including employee benefits, performed by the company’s employees.

• (2) Where the employees referred to in subsection (1) are specially assigned to construction work, their pay while so engaged shall be included in the cost of the work.

• (3) No charge shall be made to plant accounts for the pay of the company’s employees whose services in connection with construction are merely incidental, except as provided in section 26.

• (4) The allocation of travelling and other incidental expenses of the company’s employees shall be made to accounts on the same basis as the distribution of the pay of those employees.

Cost of Materials and Supplies

• 17 (1) Cost of materials and supplies shall include the purchase price of materials and supplies at the point of free delivery, the cost of ad valorem taxes, inspection, transportation and, where appropriate, a suitable proportion of store expenses.

• (2) In determining the cost of materials and supplies, suitable allowance shall be made for all discounts allowed and realized on the purchase thereof.

• (3) In debiting the plant accounts with materials and supplies used, allowance shall be made for the value of

  • (a) unused portions and other salvage;

  • (b) the materials recovered from temporary pipe, scaffolding and other temporary structures used in construction; and

  • (c) small tools recovered and usable for other purposes.

Cost of Special Machine and Heavy Work Equipment Service

• 18 (1) Cost of special machine and heavy work equipment service shall include the cost of labour, material, depreciation, supplies and other costs incurred in maintaining and operating power shovels, scrapers, pile drivers, dredgers, ditchers, material loaders and similar equipment, and any amount paid to others for rent, operation and maintenance of such equipment.

• (2) Where a construction project necessitates the purchase of equipment to be used exclusively on the project until the project is completed, the cost of the equipment shall be debited to the accounts representing the cost of the project and while the cost remains so debited no debit shall be made to expenses for depreciation on the equipment.

• (3) The amount realized from any subsequent sale of equipment referred to in subsection (2), or the appraised value of any equipment retained after the completion of the project for which it was purchased, shall be credited to the accounts debited with the equipment’s cost.

• (4) The appraised value of equipment retained after the completion of the project for which it was purchased shall be debited to the appropriate plant account and, thereafter, for the purposes of accounting, that appraised value shall be considered as the cost of the equipment.

Cost of Transportation

• 19 (1) Cost of transportation incurred in the construction of plant shall include the cost of transporting men, equipment and material and supplies used for construction purposes.

• (2) The cost of transportation of construction material to the point where material is received by the company shall be included, if practicable, in the cost of the material.

Cost of Contract Work

20 Cost of contract work shall include any amount paid for work performed under contract by other companies and individuals.

Cost of Insurance, Injuries and Damages

• 21 (1) Cost of insurance, injuries and damages shall include

  • (a) the premiums paid for insuring plant during construction;

  • (b) the costs incurred for protection against fire and wilful destruction of plant during construction; and

  • (c) the costs incurred in respect of injuries to persons, damage to property of others and damage to plant incidental to construction.

• (2) Insurance recovered or recoverable for compensation for injuries to persons injured during the construction of plant shall be credited to the account or accounts to which such compensation is debited.

• (3) Insurance recovered or recoverable in respect of property damage incidental to the construction of plant shall be credited to the account or accounts debited with the cost of the damage.

• (4) Subject to subsection (5), any injury or damage incidental to the removal of a structure or part thereof shall be debited to the account recording the retirement costs of the structure.

• (5) Any injury or damage incidental to the removal of a structure or part thereof that is an encumbrance on newly acquired land by a company shall be included in the cost of that land.

Cost of Privileges

22 Cost of privileges shall include compensation paid for the temporary use of public and private property in connection with a construction project.

Cost of Engineering services

23 Cost of engineering services shall include any amount paid to other companies, firms or individuals engaged by the company to plan, design, prepare estimates, supervise, inspect or give general advice and assistance in connection with a construction project.

Earnings and Expenses During Construction

24 Earnings and expenses during the construction of plant shall include all revenues derived during the construction period from property that is included in the cost of plant under construction and all expenses that are attributable to the revenues received.

Cost of Rents

25 Cost of rents shall include any amount paid for the use of construction quarters and office space occupied by construction forces.

Cost of Overhead During Construction

• 26 (1) Cost of overhead during construction shall include engineering, supervision and administrative salaries and expenses, employee benefits, legal fees, taxes, shop service and other analogous items, to the extent that they may be reasonably considered to be plant costs.

• (2) Only actual and reasonable overhead costs shall be assigned to particular jobs or units.

• (3) The records supporting the entries for cost of overhead during construction shall show the total amount of each type of overhead expenditure capitalized in the year and the bases of distribution thereof.

Allowance for Funds Used During Construction

• 27 (1) A company may, at its option, capitalize an allowance for funds used during construction.

• (2) An allowance for funds used during construction shall be calculated in accordance with the instructions set out in account 189 (Allowance for Funds Used During Construction), and may, at the option of the company, be prorated over the appropriate depreciable plant accounts.

Date Placed in Service

• 28 (1) On the date that plant is placed in service the company shall cease to capitalize interest during construction on the plant and shall compute and charge to the appropriate account an amount representing depreciation as determined under sections 48 to 55.

• (2) The date that the plant is in service, for the purpose of subsection (1), shall not be later than the first day of the month following issuance of a Leave to Open Order by the Commission.

Analogous Elements of Cost

• 29 (1) Elements of cost analogous to those defined in sections 16 to 27 may be included in the cost of plant.

• (2) The costs incurred in disposing of material excavated may be included as an element referred to in subsection (1).

Additions to Plant

General

• 30 (1) For the purposes of these Regulations, additions to plant shall include

  • (a) increases in plant through purchase or construction of additional plant,

  • (b) the replacement of existing plant units, and

  • (c) the capitalization of major renewals to plant

  and, subject to the approval of the Commission, may include substantial improvements made to existing plant in order to make such plant more useful, more efficient, more durable or of greater capacity than the plant was when it was originally placed in service.

• (2) The cost of additions referred to in subsection (1) shall be debited to the appropriate plant accounts.

• (3) Typical elements of construction are set out in sections 16 to 27 and section 29.

• (4) All expenditures relevant to new construction shall be capitalized.

• (5) After the completion of initial construction, only the costs directly connected with additions or replacements of plant shall be capitalized.

• (6) All property charged within the plant accounts shall consist of plant units or minor items of plant.

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.