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
fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. All of BC Hydro’s assets form one CGU for
the purposes of testing for impairment.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its estimated
recoverable amount. Impairment losses are recognized in net income. Impairment losses recognized
in respect of a CGU are allocated to reduce the carrying amounts of the assets in the CGU on a prorata
basis.
Impairment losses recognized in prior periods are assessed at the reporting date for any indications
that the loss has decreased or no longer exists. Impairment reversals are recognized immediately in
net income when the recoverable amount of an asset increases above the impaired net book value,
not to exceed the carrying amount that would have been determined (net of depreciation) had no
impairment loss been recognized for the asset in prior years.
(h) Cash and Cash Equivalents
Cash and cash equivalents include unrestricted cash and units of a money market fund (short-term
investments) that are redeemable on demand and are carried at amortized cost and fair value,
respectively.
(i) Restricted Cash
Restricted cash includes cash balances which the Company does not have immediate access to as they
have been pledged to counterparties as security for investments or trade obligations. These balances
are available to the Company only upon settlement of the trade obligations for which they have been
pledged as security.
(j) Inventories
Inventories are comprised primarily of natural gas, materials and supplies. Natural gas inventory is
valued at fair value less costs to sell and included in Level 2 of the fair value hierarchy (Note 19:
Financial Instruments – Fair Value Hierarchy). Materials and supplies inventories are valued at the
lower of cost determined on a weighted average basis and net realizable value. The cost of materials
and supplies comprises all costs of purchase, costs of conversion and other directly attributable costs
incurred in bringing the inventories to their present location and condition. Net realizable value is the
estimated selling price in the ordinary course of business, less the estimated selling expenses.
(k) Financial Instruments
(i) Financial Instruments – Recognition and Measurement
All financial instruments are measured at fair value on initial recognition of the instrument, except
for certain related party transactions. Measurement in subsequent periods depends on which of the
following categories the financial instrument has been classified as: fair value through profit or loss,
available-for-sale, held-to-maturity, loans and receivables, or other financial liabilities as defined by
the standard. Transaction costs are expensed as incurred for financial instruments classified or
designated as fair value through profit or loss. For other financial instruments, transaction costs are