Consolidated Financial Statements and Notes - Brookfield Asset ...

The fair value of corporate borrowings at December 31, 2005 exceeds the company’s carrying values by $113 million(2004 – $167 million), determined by way of discounted cash fl ows using market rates adjusted for the company’s credit spreads.10. ACCOUNTS PAYABLE AND OTHER LIABILITIESMILLIONS Note 2005 2004Accounts payable (a) $ 2,707 $ 1,749Other liabilities (b) 1,629 970Future income tax liability (c) 14 —Exchangeable debentures (d) 211 —Total $ 4,561 $ 2,719(a) Accounts PayableMILLIONS 2005 2004Property $ 708 $ 578Power generation 208 100Timberlands and infrastructure 30 —Specialty funds 30 —Insurance deposits, claims and other 1,376 717Other 355 354Total $ 2,707 $ 1,749(b) Other LiabilitiesOther liabilities include the fair value of the company’s obligations to deliver securities it did not own at the time of sale andobligations pursuant to fi nancial instruments recorded as liabilities. Levelized interest expense balances related to the consolidationof Louisiana HydroElectric during the year are also included in other liabilities.(c) Future Income Tax Liabilities / AssetsMILLIONS 2005 2004Tax assets related to operating and capital losses $ (910) $ (941)Tax liabilities related to differences between tax and book base 924 885Future income tax liability $ 14 $ (56)The future income tax assets relate primarily to non-capital losses available to reduce taxable income which may arise in the future.The company and its Canadian subsidiaries have future income tax assets of $694 million (2004 – $739 million) that relate to noncapitallosses which expire over the next seven to ten years, and $72 million (2004 – $52 million) that relate to capital losses whichhave no expiry. The company’s U.S. subsidiaries have future income tax assets of $144 million (2004 – $150 million) that relate to netoperating losses which expire over the next 16 years. The amount of non-capital losses and deductible temporary differences for whichno future income tax assets have been recognized is approximately $456 million (2004 – $400 million). The tax liabilities representthe cumulative amount of tax payable on the differences between the book values and tax values of the company’s assets andliabilities at the rates expected to be effective at the time differences are anticipated to reverse.(d) Exchangeable DebenturesA subsidiary of the company issued debentures that are exchangeable for and secured by 20 million common shares of Norbordand mature on September 30, 2029. The carrying value of the debentures is adjusted to refl ect the market value of the underlyingNorbord shares, which at December 31, 2005 was $211 million, and any change in value is recorded in income. While the companywas required to deconsolidate the subsidiary that holds the exchangeable debenture under variable interest accounting, andpresents its obligation as a secured demand loan in accounts payable, the underlying obligation remains that of the exchangeabledebenture.Brookfield Asset Management | 2005 Annual Report 77