FORM 20-F/A Brookfield Property Partners L.P. - Brookfield Asset ...

provided in connection with a lease enhance the value of the leased property which determines whethersuch amounts are treated as additions to operating property as well as the point in time at whichrevenue recognition under the lease commences. In addition, where a lease allows a tenant to elect totake all or a portion of any unused tenant improvement allowance as a rent abatement, the Businessmust exercise judgment in determining the extent to which the allowance represents an inducement thatis amortized as a reduction of lease revenue over the term of the lease.The Business also makes judgments in determining whether certain leases, in particular those tenantleases with long contractual terms where the lessee is the sole tenant in a property and long-termground leases where the Business is lessor, are operating or finance leases. The Business hasdetermined that all of its leases are operating leases.(v)Financial instrumentsThe company’s accounting policies relating to financial instruments are described in Note 2(i). Thecritical judgments inherent in these policies relate to applying the criteria set out in IAS 39, “FinancialInstruments: Recognition and Measurement” (“IAS 39”) to designate financial instruments asamortized cost, fair value through profit or loss (“FVTPL”) or available for sale (“AFS”), assessmentof the effectiveness of hedging relationships, determining whether the Business has significantinfluence over investees with which it has contractual relationships in addition to the financialinstrument it holds and identification of embedded derivatives subject to fair value measurement incertain hybrid instruments.The Business has determined that, notwithstanding its 22% common equity interest, it does notexercise significant influence over Canary Wharf Group plc, a privately held commercial propertyinvestment and development company in the United Kingdom, as it is not able to elect a member of theboard or otherwise influence its financial and operating decisions.(vi) Level of ControlWhen determining the appropriate basis of accounting for the company’s investments, the companyuses the following critical judgments and assumptions: the degree of control or influence that thecompany exerts; the amount of potential voting rights which provide the company or unrelated partiesvoting powers; the ability to appoint directors, the ability of other investors to remove the company as amanager or general partner in a controlled partnership; and the amount of benefit that the companyreceives relative to other investors. Other critical estimates and judgments utilized in the preparation ofthe company’s financial statements are: assessment of net recoverable amounts; net realizable values;depreciation and amortization rates and useful lives; value of goodwill and intangible assets; ability toutilize tax losses and other tax measurements; and the determination of functional currency. Criticalestimates and judgments also include the determination of effectiveness of financial hedges foraccounting purposes; the likelihood and timing of anticipated transactions for hedge accounting; thefair value of assets held as collateral and the company’s ability to hold financial assets, and theselection of accounting policies.(vii) Common control transactionsIFRS does not include specific measurement guidance for transfers of businesses or subsidiariesbetween entities under common control. Accordingly, the Business has developed a policy to accountfor such transactions taking into consideration other guidance in the IFRS framework andpronouncements of other standard-setting bodies. The company’s policy is to record assets andliabilities recognized as a result of transfers of businesses or subsidiaries between entities undercommon control at the carrying value on the transferor’s financial statements. Differences between thecarrying amount of the consideration given or received, where the Business is the transferor, and thecarrying amount of the assets and liabilities transferred are recorded directly in equity.F-16