BRITISH COLUMBIA HYDRO AND POWER AUTHORITY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2016 AND 2015
British Columbia Hydro and Power Authority
foreign exchange losses and realized hedging instrument losses that are recognized in the statement of
comprehensive income. All borrowing costs are recognized using the effective interest rate method.
Finance costs exclude borrowing costs attributable to the construction of qualifying assets, which are
assets that take more than six months to prepare for their intended use.
Finance recoveries comprises income earned on sinking fund investments held for the redemption of
long-term debt, foreign exchange gains and realized hedging instrument gains that are recognized in
the statement of comprehensive income, excluding energy trading contracts.
(d) Foreign Currency
Foreign currency transactions are translated into the respective functional currencies of BC Hydro and
its subsidiaries, using the exchange rates prevailing at the dates of the transactions. Monetary assets
and liabilities denominated in foreign currencies at the reporting date are re-translated to the functional
currency at the exchange rate in effect at that date. The foreign currency gains or losses on monetary
items is the difference between the amortized cost in the functional currency at the beginning of the
period, adjusted for effective interest and payments during the period, and the amortized cost in the
foreign currency translated at the exchange rate at the end of the reporting period. Non-monetary items
that are measured in terms of historical cost in a foreign currency are translated using the exchange
rate at the date of the transaction.
For purposes of consolidation, the assets and liabilities of Powerex, whose functional currency is the
U.S. dollar, are translated to Canadian dollars using the rate of exchange in effect at the reporting date.
Revenue and expenses of Powerex are translated to Canadian dollars at exchange rates at the date of
the transactions. Foreign currency differences resulting from translation of the accounts of Powerex are
recognized directly in other comprehensive income and are accumulated in the cumulative translation
reserve. Foreign exchange gains or losses arising from a monetary item receivable from or payable to
Powerex, the settlement of which is neither planned nor likely in the foreseeable future and which in
substance is considered to form part of a net investment in Powerex by BC Hydro, are recognized
directly in other comprehensive income in the cumulative translation reserve.
(e) Property, Plant and Equipment
(i) Recognition and Measurement
Property, plant and equipment in service are measured at cost less accumulated depreciation and
accumulated impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of
self-constructed assets includes the cost of materials, direct labour and any other costs directly
attributable to bringing the asset into service. The cost of dismantling and removing an item of
property, plant and equipment and restoring the site on which it is located is estimated and
capitalized only when, and to the extent that, the Company has a legal or constructive obligation to
dismantle and remove such asset. Property, plant and equipment in service include the cost of plant
and equipment financed by contributions in aid of construction. Borrowing costs that are directly
attributable to the acquisition or construction of a qualifying asset are capitalized as part of the cost
of the qualifying asset. Upon retirement or disposal, any gain or loss is recognized in the statement
of comprehensive income.