dja, Westshore Terminals Ltd. Notes to Financial Statements December 31, 2002 and 2001 (Figures in tables are expressed in thousands of dollars) of assets and liabilities and are measured using the substantially enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in income in the period in which the change occurs. The Company operates a coal storage and loading facility at Roberts Bank, British Columbia. On January 30, 1997, Westar Group Ltd. (Westar) completed the sale of the Company to the Westshore Terminals Income Fund (the Fund). The sale had an effective date of January 1, 1997. Westar continues to provide management services to the Company (note 7). The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect certain amounts reported in the financial statements and accompanying notes. Accordingly, actual results could differ from those estimates. The Company prepares its accounts in accordance with Canadian generally accepted accounting principles. Cash and cash equivalents consist of cash on deposit with banks and highly liquid short-term interest-bearing securities with maturities at their purchase date of three months or less. The carrying values of cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities approximate fair values based on the short- term maturity of those instruments. The fair value of the notes payable is not practicable to determine given the many factors, terms and conditions that would influence such a determination. Inventories of spare parts and supplies are valued at average cost less a provision for obsolescence. Plant and equipment are stated at cost less accumulated depreciation. Depreciation 1s calculated using the unit-of-production method over the estimated useful production life of the assets. The estimated useful lives of plant and equipment range from 3 to 30 years. Coal handling revenue is recognized when a customer’s coal is loaded onto a ship and ready for export from the terminal site. The Company accrues its obligations under employee benefit plans, net of plan assets, and applies the following policies: ‘The Company accounts for income taxes using the liability method. Under this method, current income taxes ate recognized for the estimated income taxes payable or recoverable for the current period. Future income tax assets and liabilities are determined based on differences between the financial reporting and tax bases 21 e Past setvice costs from plan amendments are amortized on a sttaight-line basis over the average remaining service period of employees active at the date of amendment. ¢ For the purpose of calculating the expected return on plan assets, those assets are valued at fair value. ¢ The cost of pensions and other retirement benefits eatned by employees is actuarially determined using the projected accrued benefit method pro-rated on length of service and best estimates of expected plan investment performance, salary escalation, retirement ages of employees and expected health care costs. 1. Organization and basis of presentation Use of estimates 2. Significant accounting policies Accounting principles Cash and cash equivalents Financial instruments Inventories Employee future benefits Plant and equipment Revenue recognition Income taxes