Tar Sands
Case analysis: Extract Tar Sands Ltd.
Background information
Extract Tar Sands is an extraction plant company located in Athabasca, Alberta. It is a leading extraction plant, and one of the worlds most global industries. Large investments are required but the future outcomes are unknown. Athabasca has the largest reservoir of crude bitumen in the world. The tar sands go through a refining process to separate the bitumen (black viscous oil) from the mixture of clay, sand and water. Extracting oil from tar sand is much more complex than pumping oil from an oil well. When the oil is separated from the mixture of sand, normally from the use of hot water, it goes through a thinning process in order to be transported through pipelines. There are many environmental concerns with regards to the mining of tar sands which include global warming, greenhouse emissions, water and air quality from the surrounding communities as well as effects to wildlife.
Extract Tar Sands Ltd. has shares on both the New York stock exchange as well as the Toronto stock exchange. They are a publicly owned company and generate high net incomes. The statement users would be potential investors, as well as current shareholders and creditors of the company.
Problem identification, issues
Extract Tar Sands is in need of additional capital in order to expand their facilities. They are contemplating whether to do this by issuing more shares of the company, getting financing or combining the two. They also have to determine how they will be valuing their assets under the new International Financial Reporting Standards. Although ETS has had a successful switch over to IFRS for the January 2011 deadline, they have still not determined the accounting policies they will be following.
The focus of the question is to determine the differences between pre-IFRS and IFRS that pertain to ETS’s accounts and what is allowable for the company.
Analyze the Data
There are many changes to the reporting, recording
Background information
Extract Tar Sands is an extraction plant company located in Athabasca, Alberta. It is a leading extraction plant, and one of the worlds most global industries. Large investments are required but the future outcomes are unknown. Athabasca has the largest reservoir of crude bitumen in the world. The tar sands go through a refining process to separate the bitumen (black viscous oil) from the mixture of clay, sand and water. Extracting oil from tar sand is much more complex than pumping oil from an oil well. When the oil is separated from the mixture of sand, normally from the use of hot water, it goes through a thinning process in order to be transported through pipelines. There are many environmental concerns with regards to the mining of tar sands which include global warming, greenhouse emissions, water and air quality from the surrounding communities as well as effects to wildlife.
Extract Tar Sands Ltd. has shares on both the New York stock exchange as well as the Toronto stock exchange. They are a publicly owned company and generate high net incomes. The statement users would be potential investors, as well as current shareholders and creditors of the company.
Problem identification, issues
Extract Tar Sands is in need of additional capital in order to expand their facilities. They are contemplating whether to do this by issuing more shares of the company, getting financing or combining the two. They also have to determine how they will be valuing their assets under the new International Financial Reporting Standards. Although ETS has had a successful switch over to IFRS for the January 2011 deadline, they have still not determined the accounting policies they will be following.
The focus of the question is to determine the differences between pre-IFRS and IFRS that pertain to ETS’s accounts and what is allowable for the company.
Analyze the Data
There are many changes to the reporting, recording