Consolidated Financial Statements and Notes - Brookfield Asset ...

Book ValueDecember 31 December 31, 2004MILLIONS 2005 If Consolidated ActualAssetsCash and fi nancial assets $ 3 $ 52 $ —Accounts receivables and other 545 608 —Property, plant and equipment 458 474 2441,006 1,134 244LiabilitiesProperty specifi c mortgages 684 636 —Accounts payable and other liabilities 43 210 —Non-controlling interests of others in assets 37 44 —Net assets $ 242 $ 244 $ 244Year EndedDecember 31 December 31, 2004MILLIONS 2005 If Consolidated ActualRevenue less direct operating expensesPower generation $ 112 $ 135 $ 26ExpensesProperty specifi c mortgages 95 88 —Non-controlling interests of net income before the following 6 12 —11 35 26Depreciation, amortization and non-cash taxes (18) (13) —Non-controlling interests in the foregoing items 5 4 —Net income (loss) $ (2) $ 26 $ 26(ii) Liabilities and Equity, CICA Handbook Section 3860Effective January 1, 2005, the company adopted the amendment to CICA Handbook Section 3860, “Financial Instruments: Disclosureand Presentation” with retroactive restatement of prior periods. The amendment requires certain obligations that must or couldbe settled with a variable number of the issuer’s own equity instruments to be presented as a liability. Accordingly, certain of thecompany’s preferred shares and securities that were previously included in equity were reclassifi ed as liabilities under the caption“Capital Securities,” and the dividends paid on these preferred shares were reclassifi ed as interest expense. As a result of thereclassifi cation, preferred equity shares have been translated into U.S. dollars at period-end rates whereas they were previouslytranslated at historical rates of exchange and the resultant impact of changes in the foreign exchange rates have been recorded inincome on a retroactive basis. Similar reclassifi cations were adopted for the preferred equity securities issued by the company’ssubsidiaries. The retroactive adoption of this amendment resulted in a cumulative adjustment to opening retained earnings atJanuary 1, 2004 of $110 million representing the sum of the capital securities issue costs, net of amortization, and the cumulativeimpact to that date of changes in the U.S. dollar equivalent of Canadian denominated capital securities. Net income attributable tocommon shares for the year ended December 31, 2004 was reduced by $93 million refl ecting the foregoing items.(v) Future Accounting Policy ChangesThe following future accounting policy changes may have an impact on the company, although the impact, if any, has not beendetermined at this time.On January 27, 2005, the CICA issued the following three new accounting standards: Handbook Section 1530, “ComprehensiveIncome,” Handbook Section 3855, “Financial Instruments – Recognition and Measurement,” and Handbook Section 3865, “Hedges.”These standards will take effect on January 1, 2007.Brookfield Asset Management | 2005 Annual Report 69