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Taxes
Current taxes in interim periods are accrued based on our best estimate of the annual tax rate applied to year-to-date earnings. Current taxes accrued in one interim period may be adjusted in a subsequent interim period if the estimate of the annual tax rate changes.
Employee Future Benefits
In June 2011, the International Accounting Standards Board ("IASB") amended International Accounting Standard ("IAS") 19, Employee Benefits, addressing the recognition and measurement of defined benefit pension expense and termination benefits and disclosures for all employee benefits. The key amendments are as follows:
-- Actuarial gains and losses, which are now referred to as re- measurements, are recognized immediately in "other comprehensive income" ("OCI"), eliminating the choice between immediate recognition through net income or OCI, or deferral using the corridor approach. This change does not impact Canadian Oil Sands as the Corporation previously recognized actuarial gains and losses immediately through OCI.-- The expected rate of return on plan assets is no longer calculated. Instead, the estimated rate of return on plan assets is now the same rate used to accrete the discounted accrued benefit obligation. The interest cost component of the pension expense, which previously represented accretion of the discounted accrued benefit obligation, now represents accretion of the net accrued benefit liability (the accrued benefit obligation net of the fair value of plan assets).-- The interest cost component of pension expense, which was previously presented within operating expenses, is now presented within net finance expense.Canadian Oil Sands has applied the amendments effective January 1, 2013 in accordance with the applicable transitional provisions. Certain amounts reported in the Corporation's Consolidated Statements of Income and Comprehensive Income have been adjusted as follows:
Three Months Ended March 31, 2013 Before After($ millions) Adjustments Adjustments Adjustments----------------------------------------------------------------------------Operating expenses $ 355 $ - $ 355Net finance expense $ 9 $ 4 $ 13Tax expense $ 69 $ (1) $ 68Net income $ 180 $ (3) $ 177Re-measurements of employee future benefit plans $ 11 $ 3 $ 14 ----------------------------------------------Earnings per Share $ 0.37 $ - $ 0.37-------------------------------------------------------------------------------------------------------------------------------------------------------- Three Months Ended March 31, 2012 Before After($ millions) Adjustments Adjustments Adjustments----------------------------------------------------------------------------Operating expenses $ 321 $ (1) $ 320Net finance expense $ 7 $ 5 $ 12Tax expense $ 100 $ (1) $ 99Net income $ 321 $ (3) $ 318Re-measurements of employee future benefit plans $ - $ 3 $ 3 ----------------------------------------------Earnings per Share $ 0.66 $ - $ 0.66--------------------------------------------------------------------------------------------------------------------------------------------------------
