| Accounting Policies (Policies) | 12 Months Ended |
| Dec. 31, 2017 |
| Disclosure - Accounting Policies [Abstract] | |
| Segment Information | Accounting Policies
Accounting Estimates and
Judgments
Accounting policies of the segments are:
• the same as those described in Note 2 and Note 31;
and
• measured in a manner consistent with the financial
statements.
Sales revenue is recognized when:
• product is shipped;
• the sale price and costs incurred or to be incurred
can be measured reliably; and
• collectibility is probable.
Sales revenue is recorded and measured based on:
• the FOB mine, plant, warehouse or terminal price
(except for certain vessel sales or specific product sales that are
shipped and recorded on a delivered basis); and
• the fair value of the consideration received or
receivable (net of any trade discounts and volume rebates
allowed).
Inter-segment sales are made under terms that approximate market
value.
Transportation costs are recovered from the customer through sales
pricing.
Segments are determined
based on reports, used to make strategic decisions, that are
reviewed by the Chief Executive Officer, assessed to be the
company’s chief operating decision-maker. |
| Cost of goods sold | Cost of goods sold is costs primarily incurred at, and charged to,
an active producing facility. |
| Selling and administrative expenses | The primary components of selling and administrative expenses are
compensation, other employee benefits, supplies, communications,
travel, professional services and depreciation and
amortization. |
| Income Taxes | Accounting Policies
The company operates in a specialized industry and in several
tax jurisdictions. As a result, its income is subject to various
rates of taxation. Taxation on items recognized in the statements
of income, other comprehensive income (“OCI”) or
contributed surplus is recognized in the same location as those
items.
Taxation on earnings is comprised of current and deferred income
tax.
Current income tax is:
Deferred income tax is:
• the expected tax payable on the taxable income for
the year;
• calculated using rates enacted or substantively
enacted at the consolidated statements of financial position date
in the countries where the company’s subsidiaries, held for
sale investees and equity-accounted investees operate and generate
taxable income; and
• inclusive of any adjustment to income tax payable or
recoverable in respect of previous years.
• recognized using the liability method;
• based on temporary differences between financial
statements’ carrying amounts of assets and liabilities and
their respective income tax bases; and
• determined using tax rates that have been enacted or
substantively enacted by the statements of financial
position date and are expected to apply when the related
deferred income tax asset is realized or the deferred income tax
liability is settled.
The realized and unrealized excess tax benefit from share-based
payment arrangements is recognized in contributed surplus as
current and deferred tax, respectively.
Uncertain income tax positions are accounted for using the
standards applicable to current income tax liabilities and assets;
i.e., both liabilities and assets are recorded when probable
and measured at the amount expected to be paid to (recovered from)
the taxation authorities using the company’s best estimate
of the amount.
Deferred income tax is not accounted for:
• with respect to investments
in subsidiaries and equity-accounted investees where the
company is able to control the reversal of the temporary difference
and that difference is not expected to reverse in the foreseeable
future; and
• if arising from initial recognition
of an asset or liability in a transaction, other than a business
combination, that at the time of the transaction affects neither
accounting nor taxable profit or loss.
Deferred income tax assets are reviewed at each statements of
financial position date and amended to the extent that it is no
longer probable that the related tax benefit will be realized.
Accounting Estimates and
Judgments
Estimates and judgments to determine the company’s taxes are
impacted by:
• the breadth of the
company’s operations; and
• global complexity of tax
regulations.
The final taxes paid, and potential adjustments to tax assets and
liabilities, are dependent upon many factors including:
• negotiations with taxing authorities
in various jurisdictions;
• outcomes of tax litigation; and
• resolution of disputes arising from
federal, provincial, state and local tax audits.
Estimates and judgments are used to recognize the amount of
deferred tax assets, which:
• includes the probability that future
taxable profit will be available to use deductible temporary
differences; and
• could be reduced if projected income
is not achieved or increased if income previously not projected
becomes probable.
Accounting Policies continued
Income tax assets and liabilities are offset when:
For current income taxes, the company
has:
For deferred income taxes:
• a legally enforceable right 1
• the intention to settle on a net basis or realize the
asset and settle the liability simultaneously.
• the company has a legally enforceable right to set
off current tax assets against current tax liabilities;
and
• they relate to income taxes levied by the same
taxation authority on either: (1) the same taxable entity; or
(2) different taxable entities intending to settle current tax
liabilities and assets on a net basis, or realize assets and settle
liabilities simultaneously in each future period. 2
1
2 |
| Cash Flow | Accounting Policy
Highly liquid
investments with a maturity of three months or less from the date
of purchase are considered to be cash equivalents. |
| Trade Receivables | Accounting Policies
Trade receivables are recognized initially at
fair value and subsequently measured at amortized cost less
provision for impairment of trade accounts receivable. When a trade
receivable is uncollectible, it is written off against the
provision. Subsequent recoveries of amounts previously written off
are credited to the consolidated statements of income. |
| Inventories | Accounting Policies
Inventories are valued monthly at the lower of cost and net
realizable value. Costs, allocated to inventory using the weighted
average cost method, include direct acquisition costs, direct
costs related to the units of production and a systematic
allocation of fixed and variable production overhead, as
applicable.
Net realizable value is based on:
For
products and raw materials For materials and supplies
• selling price of the finished product (in ordinary
course of business);
• less the estimated costs of completion; and
• less the estimated costs to make the sale.
• replacement cost, considered to be the best available
measure of net realizable value.
A writedown is
recognized if carrying amount exceeds net realizable value, and may
be reversed if the circumstances which caused it no longer
exist. |
| Property, Plant and Equipment | Accounting Policies
Property, plant and equipment (which include certain mine
development costs, pre-stripping
Cost includes all expenditures directly attributable to bringing
the asset to the location and installing it in working condition
for its intended use, including:
• income or expenses; 1
• a reduction for investment tax credits to which the
company is entitled;
• additions, betterments and renewals; and
• borrowing costs during construction. 2
Each component of an item of property, plant and equipment with a
cost that is significant in relation to the item’s total cost
is depreciated separately. When the cost of replacing part of an
item of property, plant and equipment is capitalized, the carrying
amount of the replaced part is derecognized. The cost of major
inspections and overhauls is capitalized and depreciated over the
period until the next major inspection or overhaul. Maintenance and
repair expenditures that do not improve or extend productive life
are expensed in the period incurred.
Any gain or loss arising on the disposal or retirement of an item
of property, plant and equipment is determined as the difference
between the sale proceeds and the carrying amount of the asset, and
is recognized in operating income.
1
2
Accounting
Estimates and Judgments
Judgment involves determining:
• which costs are directly attributable
(e.g., labor, overhead) and when income or expenses derived from an
asset under construction are recognized as part of the asset
cost;
• appropriate timing for cessation of
cost capitalization 1
• the appropriate level of
componentization (for individual components for which different
depreciation methods or rates are appropriate);
• which repairs and maintenance
constitute major inspections and overhauls; and
• the appropriate life over which such
costs should be amortized.
Certain mining and milling assets are depreciated using
the units-of-production Pre-stripping units-of-production
The following estimated useful lives have been applied to the
majority of property, plant and equipment assets as at
December 31, 2017:
Useful Life Range (years) Weighted Average Useful Life (years) 3
Land improvements 8 to
69 38
Buildings and improvements 9 to
60 38
Machinery and
equipment 2 3 to 60 25
Asset residual values and useful lives are reviewed, and adjusted
if appropriate, at the end of each reporting period. Changes in the
expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are accounted for by
changing the depreciation period or method, as appropriate, and are
treated as changes in accounting estimates.
The company assesses its existing assets and their depreciable
lives in connection with the review of mine and plant operating
plans at the end of each reporting period. When it is determined
that assigned asset lives do not reflect the expected remaining
period of benefit, prospective changes are made to their
depreciable lives. Uncertainties are inherent in estimating reserve
quantities, particularly as they relate to assumptions regarding
future prices, the geology of the company’s mines, the mining
methods used and the related costs incurred to develop and mine its
reserves. Changes in these assumptions could result in
material adjustments to reserve estimates, which could result
in impairments or changes to depreciation expense in future
periods, particularly if reserve estimates
are reduced.
1
2
3
Accounting policies, estimates and judgments related to impairment
of long-lived assets are included within Note 31 on Page 121. |
| Intangible Assets and Goodwill | Accounting
Policies
Accounting Estimates
and Judgments
An intangible asset is recognized when it is:
• reliably measurable;
• identifiable (separable or arises from contractual
rights);
• probable that expected future economic benefits will
flow to the company; and
• controllable by the company.
Intangible assets are recorded initially at cost, including
development and applicable employee costs, and relate primarily
to:
• production and technology rights;
• contractual customer relationships;
• computer software;
• goodwill; and
• computer software and other developed projects
(internally generated).
The following expenses are never recognized as an asset in current
or subsequent periods:
• costs to maintain software programs; and
• development costs previously recognized as an
expense.
Amortization is recognized in net income as an expense related to
the function of the intangible asset.
Useful lives are reviewed, and adjusted if appropriate, at the end
of each reporting period.
All business combinations are accounted for using the acquisition
method. Identifiable intangible assets are recognized separately
from goodwill. Goodwill is carried at cost, is no longer amortized
and represents the excess of the cost of an acquisition over the
fair value of the company’s share of the net identifiable
assets of the acquired subsidiary or equity method investee at the
date of acquisition.
Separately recognized goodwill is carried at cost less accumulated
amortization (recognized prior to 2002) and impairment losses.
Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
Judgment is applied to determine non-tangible
Estimation is applied to determine expected useful lives used in
the straight-line amortization of intangible assets with
finite lives. Changes in accounting estimates can result from
changes in useful life or the expected pattern of consumption of an
asset (taken into account by changing the amortization period
or method, as appropriate).
Goodwill is allocated to CGUs or groups of CGUs for the
purpose of impairment testing based on the level at which it
is monitored by management, and not at a level higher than an
operating segment. The allocation is made to those CGUs or groups
of CGUs expected to benefit from the business combination in which
the goodwill arose. |
| Derivative instruments | Accounting
Policies
Accounting Estimates and Judgments
Derivative financial instruments are used to lock in commodity
prices, exchange rates and interest rates. Contracts to buy or sell
a non-financial 1
For designated and qualified cash flow hedges:
• the effective portion of the change in the fair value
of the derivative is accumulated in OCI until the variability
in cash flows being hedged is recognized in net income in future
accounting periods; and
• the ineffective portions of hedges are recorded
in net income in the current period.
The change in fair value of derivative instruments, not
designated or not qualified as hedges, is recorded in
net income in the current period.
The company’s policy is not to use derivative instruments for
trading or speculative purposes. The company may choose not to
designate a qualifying derivative instrument in an economic hedging
relationship as an accounting hedge.
For natural gas derivative instruments designated as accounting
hedges, the company formally documents:
• all relationships between hedging instruments and
hedged items;
• its risk management objective and strategy for
undertaking the hedge transaction; and
• the linkage of derivatives to specific assets and
liabilities or to specific firm commitments or forecast
transactions.
The company also assesses whether the natural gas derivatives used
in hedging transactions are expected to be or were highly
effective, both at the hedge’s inception and on an ongoing
basis, in offsetting changes in fair values of hedged items. Hedge
effectiveness related to the company’s natural gas hedges is
assessed on a prospective and retrospective basis using
regression analyses.
A hedging relationship is terminated if:
• the hedge ceases to be effective;
• the underlying asset or liability being hedged is
derecognized; or
• the derivative instrument is no longer designated as
a hedging instrument.
In such instances, the difference between the fair value and the
accrued value of the hedging derivatives upon termination is
deferred and recognized in net income on the same basis that gains,
losses, revenue and expenses of the previously hedged item are
recognized. If a cash flow hedging relationship is terminated
because it is no longer probable that the anticipated transaction
will occur, then the net gain or loss accumulated in OCI is
recognized in current period net income.
Uncertainties, estimates and use of judgment include
the assessment of contracts as derivative instruments and for
embedded derivatives, application of hedge accounting and valuation
of derivatives at fair value (discussed further in Note 29).
For derivatives or embedded derivatives, the most significant area
of judgment is whether the contract can be settled net,
one of the criteria in determining whether a contract for a
non-financial
The process to test effectiveness and meet stringent documentation
standards requires the application of judgment and estimation.
1 non-financial |
| Provisions for Asset Retirement, Environmental and Other Obligations | Accounting
Policies
Accounting Estimates
and Judgments
Provisions are recognized when:
• there is a present legal or constructive obligation
as a result of past events;
• it is probable an outflow of resources will be
required to settle the obligation; and
• the amount has been reliably estimated.
Provisions are not recognized for costs that need to be incurred to
operate in the future or expected future operating losses.
The company recognizes provisions for termination benefits at the
earlier of when it can no longer withdraw the offer of the
termination benefits and when it recognizes any related
restructuring costs.
Provisions are measured at the present value of the cash
flow 1
Estimates for provisions take into account:
• most provisions will not be settled for a number of
years;
• environmental laws and regulations and
interpretations by regulatory authorities could change or
circumstances affecting the company’s operations could
change, either of which could result in significant changes to
current plans; and
• the nature, extent and timing of current and proposed
reclamation and closure techniques in view of present environmental
laws and regulations.
1 pre-tax
Accounting Policies
continued
Environmental costs related to current operations are:
Capitalized as an asset, if
Expensed, if
Recorded as a provision, when
• property life is extended;
• capacity is increased;
• contamination from future operations
is mitigated or prevented; or
• related to legal or constructive asset retirement
obligations.
• related to existing conditions caused by past
operations; and
• they do not contribute to current or future revenue
generation.
• environmental remedial efforts are likely; and
• the costs can be reasonably estimated.
The company uses the most current information available, including
similar past experiences, available technology, regulations in
effect, the timing of remediation, and cost-sharing
arrangements.
The company recognizes provisions for decommissioning obligations
(also known as asset retirement obligations) primarily related to
mining and mineral activities. The major categories of asset
retirement obligations are:
• reclamation and restoration costs at its potash and
phosphate mining operations, including management of materials
generated by mining and mineral processing, such as various mine
tailings and gypsum;
• land reclamation and revegetation programs;
• decommissioning of underground and surface operating
facilities;
• general cleanup activities aimed at returning the
areas to an environmentally acceptable condition; and
• post-closure care and maintenance.
The present value of a liability for a decommissioning obligation
is recognized in the period in which it is incurred if a reasonable
estimate can be made. The associated costs are:
• capitalized as part of the carrying amount of any
related long-lived asset and then amortized over its estimated
remaining useful life;
• recorded as inventory; or
• expensed in the period.
The best estimate of the amount required to settle the obligation
is reviewed at the end of each reporting period and updated to
reflect changes in the discount and foreign exchange rates and the
amount or timing of the underlying cash flows. When there is a
change in the best estimate, an adjustment is recorded against the
carrying amount of the provision and any related asset, and the
effect is then recognized in net income over the remaining life of
the asset. The increase in the provision due to the passage of time
is recognized as a finance cost. A gain or loss may be incurred
upon settlement of the liability.
Accounting Estimates and Judgments
continued
It is reasonably possible that the ultimate costs could change in
the future and that changes to these estimates could have a
material effect on the company’s consolidated financial
statements.
Estimates for asset retirement obligation costs depend on the
development of environmentally acceptable closure and post-closure
plans. In some cases, this may require significant research and
development to identify preferred methods for such plans that are
economically sound and that, in most cases, may not be implemented
for several decades. The company uses appropriate technical
resources, including outside consultants, to develop specific site
closure and post-closure plans in accordance with the requirements
of the various jurisdictions in which it operates. Other than
certain land reclamation programs, settlement of the obligations is
typically correlated with mine life estimates. |
| Non-current Assets Held for Sale and Discontinued Operations | Investments Held for Sale and Discontinued
Operations
Accounting
Policies
Accounting Estimates
and Judgments
The company classifies assets and liabilities as held for sale if
it is highly probable that the carrying value will be recovered
through a sale transaction within one year rather than through
continuing use.
The company’s significant policies include:
• cessation of equity accounting for associates and
joint ventures at the date the investments were classified as held
for sale;
• measurement of assets at the lower of carrying amount
and fair value less costs to sell, with the exception of financial
assets (including investments classified as available-for-sale);
• recognition of impairment losses on the statement of
operations for equity-accounted investees when fair value less
costs to sell is below the carrying amount;
• reversal of impairment losses for equity-accounted
investees if the recoverable amount subsequently exceeds the
carrying amount;
• unrealized gains and losses on remeasurement of
available-for-sale
• dividends received are recorded on the statement of
operations; and
• discontinued operations represent a component of the
company’s business that either has been disposed of, or is
classified as held for sale, and represents a separate major line
of business or geographic area of operations or is a part of a
single co-ordinated
Estimation is used to determine fair value less cost to sell.
Judgment is used in determining if objective evidence of impairment
exists, and if so, the amount of impairment.
Judgment is used to assess highly probable and the date when equity
accounting ceases.
Judgment is also used in determining if the discontinued operations
are a component of the company. |
| Investments in Equity-Accounted Investees | Investments in Equity-Accounted
Investees
Accounting
Policies
Accounting Estimates
and Judgments
Investments in which the company exercises significant influence
(but does not control) are accounted for using the equity method.
Significant influence is the power to participate in the financial
and operating policy decisions of the investee. Such investees that
are not jointly controlled are referred to as associates. All
investees the company jointly controls are classified and accounted
for as joint ventures, which are also accounted for using the
equity method. These associates and joint ventures follow similar
accounting principles and policies to PotashCorp.
The company’s significant policies include:
• its proportionate share of any net income or losses
from investees, and any gain or loss on disposal, are recorded in
net income;
• its proportionate share of post-acquisition movements
in OCI is recognized in the company’s OCI;
• the cumulative post-acquisition movements in net
income and OCI are adjusted against the carrying amount of the
investment; dividends received reduce the carrying amount of the
company’s investment;
• an impairment test is performed when there is
objective evidence of impairment, such as significant adverse
changes in the environment in which the equity-accounted investee
operates or a significant or prolonged decline in the fair value of
the investment below its carrying amount. An impairment loss is
recorded when the recoverable amount 1
• impairment losses are reversed if the recoverable
amount subsequently exceeds the carrying amount.
1
Judgment is necessary in determining when significant influence
(power to participate in the financial and operating policy
decisions of the investee but not control or joint control
over those policies) exists.
Judgment is also used in determining if objective evidence of
impairment exists, and if so, the amount of impairment. |
| Available-for-Sale Investments | Available-for-Sale
Accounting
Policies
Accounting Estimates
and Judgments
The fair value of investments designated
as available-for-sale
The company’s significant policies include:
• the cost of investments sold is based on the weighted
average method;
• realized gains and losses on these investments are
removed from AOCI and recorded in net income; and
• the company assesses at the end of each reporting
period whether there is objective evidence of impairment. A
significant or prolonged decline in the fair value of the
investment below its cost would be evidence that the asset is
impaired. If objective evidence of impairment exists, the impaired
amount (i.e., the unrealized loss) is recognized in net income; any
subsequent reversals of a previous impairment would be recognized
in OCI and not net income. Any subsequent decline in the fair value
below the carrying amount at the impairment date would represent a
further impairment to be recognized in net income.
See Note 29 for a description of how the company determines fair
value for its investments.
The company’s 22 percent ownership of Sinofert does not
constitute significant influence and its investment is therefore
accounted for as available-for-sale.
The determination of when an investment is impaired, and if so, the
amount of impairment, requires judgment. In making this judgment,
the company evaluates, among other factors, the duration and extent
to which the fair value of the investment is less than its cost at
each reporting period-end. |
| Long-Term Debt | Accounting Policy
Issue
costs of long-term debt obligations are capitalized to long-term
obligations and are amortized to expense over the term of the
related liability using the effective interest method. |
| Commitments | Accounting
Policies
Accounting Estimates
and Judgments
Leases entered into are classified as either finance or operating
leases. Leases that transfer substantially all of the risks and
rewards of ownership of property to the company are accounted for
as finance leases. They are capitalized at the commencement of
the lease at the lower of the fair value of the leased property and
the present value of the minimum lease payments. Property acquired
under a finance lease is depreciated over the shorter of the period
of expected use on the same basis as other similar property,
plant and equipment and the lease term.
Leases in which a significant portion of the risks and rewards of
ownership are retained by the lessor are classified as
operating leases. Rental payments under operating leases are
expensed in net income on a straight-line basis over the period of
the lease.
The company is party to various leases, including leases for
railcars and vessels. Judgment is required in considering a number
of factors to ensure that leases to which the company is party are
classified appropriately as operating or financing. Such factors
include whether the lease term is for the major part of the
asset’s economic life and whether the present value of
minimum lease payments amounts to substantially all of the fair
value of the leased asset.
Substantially all of the leases to which the company is party have
been classified as operating leases. |
| Guarantees | Accounting Policies
General guarantees are not recognized in the consolidated
statements of financial position but are disclosed and include:
• contracts or indemnifications that
contingently require the guarantor to make payments based on
changes in an underlying;
• contracts that contingently require
payments to a guaranteed party based on another entity’s
failure to perform under an agreement; and
• an indirect guarantee of the
indebtedness of another party.
A financial guarantee contract requires the issuer to make payments
to reimburse the holder for a loss it incurs because a debtor fails
to make payment when due. A financial guarantee contract is
recognized as a financial instrument in the consolidated statements
of financial position when the company becomes
party to the contract. |
| Defined Benefit Plans | Defined Benefit Plans
Accounting
Policies
Accounting Estimates
and Judgments
For employee retirement and other defined benefit plans:
• accrued liabilities are recorded net of plan
assets;
• costs 1
• net interest is based on the discount rate used to
measure plan obligations or assets at the beginning of the annual
period; Estimates
and judgments are required to determine discount rates, health care
cost trend rates, projected salary increases, retirement age,
longevity and termination rates. These assumptions are determined
by management and are reviewed annually
by the company’s independent actuaries.
Accounting Policies continued
Accounting Estimates and Judgments
continued
• past service cost is recognized in net income at the
earlier of when i) a plan amendment or curtailment occurs; or ii)
related restructuring costs or termination benefits are
recognized;
• net interest is presented within finance costs;
and
• other components of costs are presented within cost
of goods sold or selling and administrative expenses, as
applicable.
Remeasurements, recognized immediately in OCI in the period they
occur, are comprised of actuarial gains and losses, return on plan
assets (excluding amounts included in net interest) and the effect
of the asset ceiling (if applicable).
When a plan amendment occurs before a settlement, the company
recognizes past service cost before any gain or loss on
settlement.
The company’s discount rate assumption is impacted by:
• the weighted average interest rate at which each
pension and other post-retirement plan liability could be
effectively settled at the measurement date;
• country specific rates; and
• the use of a yield curve approach. 2
2 AA-rated non-callable
1 |
| Defined contribution plan | Accounting Policy
Defined contribution plan costs are recognized in
net income for services rendered by employees during the
period. |
| Share-Based Compensation | Accounting Policies
Accounting Estimates and
Judgments
The accounting for share-based compensation plans is fair
value-based.
The grant date is the date the company and the employee have a
shared understanding of the terms and conditions of the
arrangement, at which time the company confers on the employee the
right to cash equity instruments, provided the specified vesting
conditions, if any, are met.
For those awards with performance conditions that determine the
number of options or units to which employees will be
entitled, measurement of compensation cost is based on the
company’s best estimate of the outcome of the
performance conditions.
For plans settled through the issuance of equity:
• fair value for stock options is determined on grant
date using the Black-Scholes-Merton option-pricing model;
• fair value for PSUs is determined on grant date by
projecting the outcome of performance conditions;
• compensation expense is recorded over the period the
plans vest (corresponding increase to contributed surplus);
• forfeitures are estimated throughout the vesting
period based on past experience and future expectations, and
adjusted upon actual vesting; and
• when exercised, the proceeds and amounts recorded in
contributed surplus are recorded in share capital.
For plans settled in cash or other assets:
• a liability is recorded based on the fair value of
the awards each period;
• expense accrues from the grant date over the vesting
period; and
• fluctuations in fair value of the award and related
compensation expense are recognized in the period the fluctuation
occurs.
Judgment involves determining:
• at which date the company and employee agree to a
share-based payment award, and hence what the grant date is;
and
• the fair value of share-based compensation awards at
the grant date.
Estimation involves determining:
• stock option pricing model assumptions described in
the weighted average assumptions table below;
• the number of stock option awards expected to be
forfeited;
• the projected outcome of performance conditions for
PSUs, including the relative ranking of the company’s total
shareholder return, including expected dividends, compared with a
specified peer group using a Monte Carlo simulation option-pricing
model and forecasting the company’s cash flow return on
investment compared with its weighted average cost of capital.
Actual results may significantly differ from these estimates;
and
• the number of dividend equivalent units expected to
be earned.
Prior to a POP award vesting, assumptions regarding vesting are
made during the first three years based on the relevant actual
and/or forecast financial results. As at December 31, 2017,
the awards under the 2015 POP were expected to vest at 52
percent.
PSUs vest based on the achievement of performance metrics over
performance periods ranging from one to three years. Changes to
vesting assumptions may change based on non-market
Changes to vesting assumptions are reflected in earnings
immediately for compensation cost already recognized. |
| Related Party Transactions | Accounting Policies
A person or entity is considered a related party if it is:
• an associate or joint venture of PotashCorp;
• a member of key management personnel (and their
families), which are the company’s directors and executive
officers as disclosed in its 2017 Annual Information Form and 2016
and 2015 Annual Reports on Form 10-K,
• a post-employment benefit plan for the benefit of
PotashCorp employees; or
• a person that has significant influence over
PotashCorp. |
| Financial Instruments and Related Risk Management | Accounting
Policies
Accounting Estimates and Judgments
Financial assets and financial liabilities are recognized as
follows:
• initially in the consolidated statements of financial
position at fair value (normally the transaction price) and
adjusted for transaction costs (recognized immediately in net
income for financial instruments at fair value through profit or
loss);
• regular way purchases and sales of financial assets
are accounted for on the trade date; and
• financial instruments recorded at fair value on
an ongoing basis are remeasured at each reporting date and
changes in the fair value are recorded in either net
income or OCI.
Financial assets and financial liabilities are offset and the net
amount is presented in the statements of financial position
when the company:
• currently has a legally enforceable right to offset
the recognized amounts; and
• intends either to settle on a net basis, or to
realize the assets and settle the liabilities simultaneously.
Judgment is
required to determine whether the right to offset is legally
enforceable. |
| Contingencies | Accounting
Policies
Accounting Estimates
and Judgments
Generally, a contingent liability arises from past events and
is:
• a possible obligation whose existence will be
confirmed only by one or more uncertain future events or
non-events
• a present obligation not recognized because it is not
probable that an outflow of resources embodying economic benefits
will be required to settle the obligation, or the amount of the
obligation cannot be measured with sufficient reliability.
Contingent liabilities are not recognized in the financial
statements but are disclosed unless the possibility of an outflow
of resources embodying economic benefits is remote. Where the
company is jointly and severally liable for an obligation, the part
of the obligation that is expected to be met by other parties is
treated as a contingent liability.
A contingent asset is a possible asset that arises from past events
and whose existence will be confirmed only by the occurrence or
non-occurrence
The following judgments are required to determine the
company’s exposure to possible losses and gains related to
environmental matters and other various claims and lawsuits
pending:
• prediction of the outcome of uncertain
events (i.e., being virtually certain, probable, remote or
undeterminable);
• determination of whether recognition or disclosure in
the consolidated financial statements is required; and
• estimation of potential financial effects.
Where no amounts are recognized, such amounts are contingent and
disclosure may be appropriate. While the amount disclosed in the
consolidated financial statements may not be material, the
potential for large liabilities exists and therefore these
estimates could have a material impact on the company’s
consolidated financial statements. |
| Principles of Consolidation | Topic
Accounting Policies
Accounting Estimates and Judgments 1
Principles of Consolidation
These consolidated financial statements include the accounts of the
company and entities controlled by it (its subsidiaries). Control
is achieved by having each of:
• power over the investee via existing rights that give
the company the current ability to direct the relevant
activities of the investee;
• exposure, or rights, to variable returns from
involvement with the investee; and
• the ability for the company to use its power over the
investee to affect the amount of the company’s
returns.
The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing
whether the company controls another entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the company. They are deconsolidated from the
date that control ceases.
Judgment involves:
• assessing control, including if the company has the
power to direct the relevant activities of the investee; and
• determining the relevant activities and which party
controls them.
Topic
Accounting Policies
Accounting Estimates and Judgments 1
Principles of
Principal (wholly owned)
Operating Subsidiaries:
Location
Principal Activity
Consideration is given to:
• voting rights;
• the relative size and dispersion of the
• the extent of participation by those
• the right to direct the investee to enter
into
• the exposure, or rights, to variability of
• PCS Sales (Canada) Inc. Canada Marketing and sales of the
company’s products
• PCS Sales (USA), Inc. United States Marketing and sales of the company’s
products
• PCS Phosphate Company, Inc.
(“PCS Phosphate”)
– PCS Purified Phosphates United States Mining and/or processing of phosphate products in
the states of North Carolina, Illinois, Missouri and Nebraska
• White Springs Agricultural Chemicals, Inc.
(“White Springs”) United States Mining and processing of phosphate products in the
state of Florida
• PCS Nitrogen Fertilizer, L.P. United States Production of nitrogen products in the states of
Georgia and Louisiana, and of phosphate products in the state of
Louisiana
• PCS Nitrogen Ohio, L.P. United States Production of nitrogen products in the state of
Ohio
• PCS Nitrogen Trinidad Limited Trinidad Production of nitrogen products in Trinidad
• PCS Cassidy Lake Company Canada Brine pumping operations for the company’s
New Brunswick operation
Intercompany
balances and transactions are eliminated on
consolidation. |
| Long-Lived Asset Impairment | Long-Lived Asset
Impairment
At the end of each reporting period, the company reviews conditions
potentially impacting the carrying amounts of both its long-lived
assets to be held and used and its identifiable intangible assets
with finite lives to determine whether there
is any indication that they have suffered an
impairment loss. When such indicators exist, impairment testing is
performed. Regardless, goodwill is tested at least annually
(typically in the second quarter).
For assessing impairment, assets are grouped at the smallest levels
for which there are separately identifiable cash inflows that
are largely independent of the cash inflows from other
assets or groups of assets (this can be at the asset or CGU
level).
Where impairment indicators exist for the asset or CGU:
• the recoverable amount is estimated (the recoverable
amount is the higher of fair value less costs to sell and value in
use);
• to assess value in use, the estimated future cash
flows are discounted to their present value (using a pre-tax
• the impairment loss is the amount by which the
carrying amount exceeds its recoverable amount; and
• the impairment loss is allocated first to reduce the
carrying amount of any related goodwill and then pro rata
to each asset in the unit (on the basis of the carrying
amount).
Non-financial
Judgment involves:
• identifying the appropriate asset or CGU;
• determining the appropriate discount rate for
assessing value in use; and
• making assumptions about future sales, margins and
market conditions over the long-term life of the assets
or CGUs.
The company cannot predict if an event that triggers impairment
will occur, when it will occur or how it will affect reported
asset amounts. It is reasonably possible that the amounts reported
for asset impairments could be different if different assumptions
were used or if market and other conditions change. The
changes could result in non-cash
Impairments were recognized during 2017 and 2016 as shown in
Note 13. |
| Fair Value Measurements | Topic
Accounting Policies
Accounting Estimates and Judgments 1
Fair Value
Measurements
Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another
valuation technique.
Fair value measurements are categorized into levels based on the
degree to which inputs are observable and their significance:
Fair values estimates:
• are at a point-in-time
• can be determined using multiple methods, which can
cause values (or a range of reasonable values) to differ; and
• may require assumptions about costs/prices over time,
discount and inflation rates, defaults and other relevant
variables.
Level 1 Level 2 Level 3
Unadjusted quoted prices (in
active markets accessible at the
measurement date for identical
assets or liabilities). Quoted prices (in markets that are
not active or based on inputs that
are observable for substantially the
full term of the asset or liability). Prices or valuation techniques that
require inputs that are both
unobservable and significant to the
overall measurement.
Determination of the level hierarchy is based on the
company’s assessment of the lowest level input that is
significant to the fair value measurement and is subject to
estimation and judgment. |
| Prepaid Expenses | Prepaid Expenses Freight, transportation and
distribution costs related to product inventory stored at warehouse
and terminal facilities are classified as
prepaid expenses. Not applicable. |
| Restructuring Charges | Restructuring
Charges
Plant shutdowns, sales of business units or other corporate
restructurings may trigger restructuring costs. Incremental costs
for employee termination, contract termination and other exit costs
are recognized as a liability and an expense when:
• a detailed formal plan for restructuring has been
demonstrably committed to;
• withdrawal is without realistic possibility; and
• a reliable estimate can be made. Restructuring activities are complex, can take
several months to complete and usually involve reassessing
estimates throughout the process. |
| Foreign Currency Transactions | Foreign
Currency Transactions
Items included in the consolidated financial statements of the
company and each of its subsidiaries are measured using the
currency of the primary economic environment in which the
individual entity operates (“the functional
currency”).
Foreign currency transactions are generally translated to US
dollars at the average exchange rate for the previous month.
Monetary assets and liabilities are translated at period-end period-end
Non-monetary non-monetary available-for-sale Non-monetary The consolidated financial statements
are presented in United States dollars
(“US dollars”), which was determined to
be the functional currency of the company and the
majority of its subsidiaries. |
| Business Combination | Accounting
Policies
Accounting Estimates and Judgments
Business combinations are recognized as follows:
• Acquisitions of subsidiaries and businesses are
accounted for using the acquisition method.
• Consideration for each acquisition is measured at the
aggregate of the fair values of assets given, liabilities incurred
or assumed, and equity instruments issued in exchange for control
of the acquiree at the acquisition date.
• The acquisition date is the date the company obtains
control over the acquiree and is generally the day the purchase
consideration transfers.
• At the acquisition date, the identifiable assets
acquired and liabilities assumed are recognized at their fair
values with the exception of deferred taxes, employee benefit
arrangements, replaced acquiree share-based payment awards and
assets held for sale, where IFRS provides exceptions to recording
amounts at fair value.
• Acquisition-related costs are recognized in earnings
as incurred.
• On an acquisition-by-acquisition non-controlling
• The excess of total consideration for each
acquisition plus non-controlling non-controlling
• If the initial accounting for a business combination
is incomplete by the end of the reporting period in which the
combination occurs, provisional amounts are recorded for the
incomplete items. The measurement period is the period from the
date of acquisition to the date complete information about facts
and circumstances that existed as of the acquisition date is
received, subject to a maximum of one year. Provisional amounts are
retrospectively adjusted during the measurement period, or
recognized as additional assets or liabilities to reflect new
information obtained about facts and circumstances that existed as
of the acquisition date that, if known, would have affected the
amounts recognized as of that date.
Estimation is required to allocate the purchase consideration to
the fair value of the identifiable tangible and intangible assets
acquired and liabilities assumed.
Judgment is required to determine which entity is the acquirer in a
merger of equals. |
