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2) Derecognition of nancial liabilities
The difference between the carrying amount of the financial liability derecognized and the consideration paid, including
any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.
c. Derivative nancial instruments
The Corporation enters into a variety of derivative financial instruments to manage its exposure to price changes and foreign
exchange rate risks, including foreign exchange forward contracts and petroleum swap contracts.
Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss
immediately. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial
asset; when the fair value of derivative financial instruments in negative, the derivative is recognized as a financial liability.
Hedge Accounting
a. Fair value hedges
Changes in the fair value of derivatives that are designated and quality as fair value hedges are recognized in profit or loss
immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedge-
related risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the
hedged risk are recognized in profit or loss in the line item relating to the hedged item.
Hedge accounting is discontinued prospectively when the Corporation revokes the designated hedging relationship, or
when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the criteria for hedge
accounting.
b. Cash ow hedges
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in
profit or loss.
The associated gains or losses recognized in other comprehensive income are reclassified from equity to profit or loss as
a reclassification adjustment in the line item relating to the hedged item in the same period when the hedged item affects
profit or loss. If a hedge of a forecast transaction subsequently results in the recognition of a non-financial asset or a liability,
the associated gains and losses recognized in other comprehensive income are removed from equity and are included in
the initial cost of the nonfinancial asset or liability.
Hedge accounting is discontinued prospectively when the Corporation revokes the designated hedging relationship,
or when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer meets the criteria for
hedge accounting. The cumulative gain or loss on the hedging instrument that has been previously recognized in other
comprehensive income from the period when the hedge was effective remains separately in equity until the forecast
transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is
recognized immediately in profit or loss.
Provisions
Provisions, including those arising from the contractual obligation specified in a service concession arrangement to maintain
or restore the infrastructure before it is handed over to the grantor, are measured at the best estimate of the discounted cash
flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the
risks and uncertainties surrounding the obligation.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer
returns, rebates and similar allowances. Allowance for sales returns and liability for returns are recognized at the time of sale
based on the seller's reliable estimate of future returns and based on past experience and other relevant factors.
a. Sale of goods
Revenue from the sale of goods is recognized when all the following conditions are satisfied:
1) The Corporation has transferred to the buyer the significant risks and rewards of ownership of the goods;
2) The Corporation retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
3) The amount of revenue can be measured reliably;
4) It is probable that the economic benefits associated with the transaction will flow to the Corporation; and
5) The costs incurred or to be incurred in respect of the transaction can be measured reliably.
52 CPC 2016