Property, Plant and Equipment

12 Months Ended

Dec. 31, 2018

Disclosure Of Property Plant And Equipment [Abstract]

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

	2018			2017
Cost	$	6,937,062		$	6,733,634
Accumulated depreciation		(3,898,450	)		(3,559,810	)
	$	3,038,612		$	3,173,824
Rig equipment		2,745,172			2,823,782
Rental equipment		43,992			60,179
Other equipment		52,195			66,560
Vehicles		12,702			16,280
Buildings		65,561			71,102
Assets under construction		84,561			102,035
Land		34,429			33,886
	$	3,038,612		$	3,173,824

Cost

	Rig Equipment			Rental Equipment			Other Equipment			Vehicles			Buildings			Assets Under Construction			Land			Total
Balance, December 31, 2016	$	6,266,991		$	159,144		$	247,073		$	45,147		$	131,361		$	126,430		$	35,032		$	7,011,178
Additions		21,268			71			49			42			235			53,158			—			74,823
Disposals		(71,014	)		(9,758	)		(785	)		(339	)		(930	)		—			—			(82,826	)
Reclassifications		67,779			84			216			113			—			(68,566	)		—			(374	)
Effect of foreign currency exchange differences		(250,858	)		(1,530	)		(1,603	)		(1,762	)		(3,281	)		(8,987	)		(1,146	)		(269,167	)
Balance, December 31, 2017		6,034,166			148,011			244,950			43,201			127,385			102,035			33,886			6,733,634
Additions		7,013			—			347			—			569			106,647			—			114,576
Disposals		(32,153	)		(18,227	)		(59,865	)		(228	)		(3,663	)		—			(893	)		(115,029	)
Reclassifications		127,668			—			507			—			—			(128,175	)		—			—
Reclassification to assets held for sale		(135,398	)		—			—			—			—			—			—			(135,398	)
Effect of foreign currency exchange differences		321,240			679			5,351			2,483			4,036			4,054			1,436			339,279
Balance, December 31, 2018	$	6,322,536		$	130,463		$	191,290		$	45,456		$	128,327		$	84,561		$	34,429		$	6,937,062

Accumulated Depreciation

	Rig Equipment			Rental Equipment			Other Equipment			Vehicles			Buildings			Assets Under Construction		Land		Total
Balance, December 31, 2016	$	3,056,058		$	79,746		$	161,342		$	23,117		$	49,026		$	—	$	—	$	3,369,289
Depreciation expense		334,896			15,159			19,914			5,064			8,488			—		—		383,521
Disposals		(67,304	)		(6,331	)		(592	)		(320	)		(208	)		—		—		(74,755	)
Impairment		15,313			—			—			—			—			—		—		15,313
Effect of foreign currency exchange differences		(128,579	)		(742	)		(2,274	)		(940	)		(1,023	)		—		—		(133,558	)
Balance, December 31, 2017		3,210,384			87,832			178,390			26,921			56,283			—		—		3,559,810
Depreciation expense		335,215			9,418			15,993			4,820			8,126			—		—		373,572
Disposals		(28,399	)		(11,249	)		(59,857	)		(220	)		(3,161	)		—		—		(102,886	)
Reclassification to assets held for sale		(115,740	)		—			—			—			—			—		—		(115,740	)
Effect of foreign currency exchange differences		175,904			470			4,569			1,233			1,518			—		—		183,694
Balance, December 31, 2018	$	3,577,364		$	86,471		$	139,095		$	32,754		$	62,766		$	—	$	—	$	3,898,450

Impairment Test

Precision reviews the carrying value of its long-lived assets at each reporting period for indications of impairment. Precision completed its review as at December 31, 2018 and impairment charges of $207.5 million were recorded against goodwill. Refer to Note 9 for additional discussion of impairment testing performed in the current year.

As at December 31, 2017, the Corporation determined that the uncertainty around future activity levels within Mexico was an indication of impairment and a comprehensive assessment of the carrying values of property, plant and equipment of the Mexico drilling CGU within the Contract Drilling Services segment was performed.

The recoverable amount of the Mexico drilling CGU was determined using a value in use calculation. Projected cash flows covered a five-year period and were based on future expected outcomes taking into account existing contracts, past experience and management’s expectation of future market conditions. The primary source of cash flow information was the strategic plan approved by executives of the Corporation. The strategic plan was developed based on benchmark commodity prices and industry supply-demand fundamentals.

Cash flows used in the calculation were discounted using a discount rate specific to the Mexico drilling CGU. The after-tax discount rate derived from Precision’s weighted average cost of capital, adjusted for risk factors specific to the CGU and used in determining the recoverable amount for the Mexico drilling CGU was 17.1%. The test resulted in an impairment charge of $15.3 million as the carrying value of the CGU’s assets exceeded its value in use of $26.3 million.