FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2019

Disclosure of detailed information about financial instruments [abstract]

Carrying and fair values of financial assets

The following table categorizes financial assets and liabilities, which are carried at fair value, based upon the fair value hierarchy levels:



	2019						2018
AS AT JUN. 30, 2019 AND DEC. 31, 2018 (MILLIONS)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Financial assets
Other financial assets
Government bonds	$	—	$	51	$	—	$	—	$	88	$	—
Corporate bonds	—		1,076		267		—		632		—
Fixed income securities and other	23		393		547		22		369		490
Common shares and warrants	2,277		356		673		1,928		229		222
Loans and notes receivables	—		95		3		—		46		4
Accounts receivable and other	13		1,666		179		44		1,990		79
	$	2,313	$	3,637	$	1,669	$	1,994	$	3,354	$	795
Financial liabilities
Accounts payable and other	$	88	$	3,071	$	642	$	81	$	2,622	$	659
Subsidiary equity obligations	—		31		1,852		—		85		1,640
	$	88	$	3,102	$	2,494	$	81	$	2,707	$	2,299

The following table list the company’s financial instruments by their respective classification as at June 30, 2019 and December 31, 2018:



	2019				2018
AS AT JUN. 30, 2019 AND DEC. 31, 2018 (MILLIONS)	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets
Cash and cash equivalents	$	7,447	$	7,447	$	8,390	$	8,390
Other financial assets
Government bonds	51		51		88		88
Corporate bonds	1,671		1,671		905		905
Fixed income securities and other	963		963		1,037		1,037
Common shares and warrants	3,306		3,306		2,379		2,379
Loans and notes receivable	1,516		1,516		1,818		1,818
	7,507		7,507		6,227		6,227
Accounts receivable and other	13,297		13,297		12,562		12,562
	$	28,251	$	28,251	$	27,179	$	27,179
Financial liabilities
Corporate borrowings	$	7,060	$	7,662	$	6,409	$	6,467
Non-recourse borrowings of managed entities
Property-specific borrowings	117,146		119,085		103,209		104,291
Subsidiary borrowings	6,225		6,413		8,600		8,557
	123,371		125,498		111,809		112,848
Accounts payable and other	27,423		27,423		23,989		23,989
Subsidiary equity obligations	4,104		4,104		3,876		3,876
	$	161,958	$	164,687	$	146,083	$	147,180

Carrying and fair values of financial liabilities

The following table list the company’s financial instruments by their respective classification as at June 30, 2019 and December 31, 2018:



	2019				2018
AS AT JUN. 30, 2019 AND DEC. 31, 2018 (MILLIONS)	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets
Cash and cash equivalents	$	7,447	$	7,447	$	8,390	$	8,390
Other financial assets
Government bonds	51		51		88		88
Corporate bonds	1,671		1,671		905		905
Fixed income securities and other	963		963		1,037		1,037
Common shares and warrants	3,306		3,306		2,379		2,379
Loans and notes receivable	1,516		1,516		1,818		1,818
	7,507		7,507		6,227		6,227
Accounts receivable and other	13,297		13,297		12,562		12,562
	$	28,251	$	28,251	$	27,179	$	27,179
Financial liabilities
Corporate borrowings	$	7,060	$	7,662	$	6,409	$	6,467
Non-recourse borrowings of managed entities
Property-specific borrowings	117,146		119,085		103,209		104,291
Subsidiary borrowings	6,225		6,413		8,600		8,557
	123,371		125,498		111,809		112,848
Accounts payable and other	27,423		27,423		23,989		23,989
Subsidiary equity obligations	4,104		4,104		3,876		3,876
	$	161,958	$	164,687	$	146,083	$	147,180

The following table categorizes financial assets and liabilities, which are carried at fair value, based upon the fair value hierarchy levels:



	2019						2018
AS AT JUN. 30, 2019 AND DEC. 31, 2018 (MILLIONS)	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Financial assets
Other financial assets
Government bonds	$	—	$	51	$	—	$	—	$	88	$	—
Corporate bonds	—		1,076		267		—		632		—
Fixed income securities and other	23		393		547		22		369		490
Common shares and warrants	2,277		356		673		1,928		229		222
Loans and notes receivables	—		95		3		—		46		4
Accounts receivable and other	13		1,666		179		44		1,990		79
	$	2,313	$	3,637	$	1,669	$	1,994	$	3,354	$	795
Financial liabilities
Accounts payable and other	$	88	$	3,071	$	642	$	81	$	2,622	$	659
Subsidiary equity obligations	—		31		1,852		—		85		1,640
	$	88	$	3,102	$	2,494	$	81	$	2,707	$	2,299

Description of valuation techniques used in fair value measurement, assets

The following table summarizes the valuation techniques and key inputs used in the fair value measurement of Level 2 financial instruments:



(MILLIONS) Type of Asset/Liability	Carrying Value June 30, 2019			Valuation Techniques and Key Inputs
Derivative assets/Derivative liabilities (accounts receivable/accounts payable)	$	1,666	/	Foreign currency forward contracts – discounted cash flow model – forward exchange rates (from observable forward exchange rates at the end of the reporting period) and discounted at credit adjusted rate Interest rate contracts – discounted cash flow model – forward interest rates (from observable yield curves) and applicable credit spreads discounted at a credit adjusted rate Energy derivatives – quoted market prices, or in their absence internal valuation models, corroborated with observable market data
	(3,071		)
Other financial assets	1,971			Valuation models based on observable market data
Redeemable fund units (subsidiary equity obligations)	(31		)	Aggregated market prices of underlying investments

Schedule of significant unobservable inputs used and change in balance of financial assets

The following table summarizes the valuation techniques and significant unobservable inputs used in the fair value measurement of Level 3 financial instruments:



(MILLIONS) Type of Asset/Liability	Carrying Value June 30, 2019			Valuation Techniques	Significant Unobservable Inputs	Relationship of Unobservable Inputs to Fair Value
Fixed income securities and other	$	547		Discounted cash flows	• Future cash flows	• Increases (decreases) in future cash flows increase (decrease) fair value
					• Discount rate	• Increases (decreases) in discount rate decrease (increase) fair value
Corporate bonds	267			Discounted cash flows	• Future cash flows	• Increases (decreases) in future cash flows increase (decrease) fair value
					• Discount rate	• Increases (decreases) in discount rate decrease (increase) fair value
Common shares (common shares and warrants)	673			Black-Scholes model	• Volatility	• Increases (decreases) in volatility increase (decreases) fair value
					• Term to maturity	• Increases (decreases) in term to maturity increase (decrease) fair value
					• Risk free interest rate	• Increases (decreases) in the risk-free interest rate increase (decrease) fair value
Limited-life funds (subsidiary equity obligations)	(1,852		)	Discounted cash flows	• Future cash flows	• Increases (decreases) in future cash flows increase (decrease) fair value
					• Discount rate	• Increases (decreases) in discount rate decrease (increase) fair value
					• Terminal capitalization rate	• Increases (decreases) in terminal capitalization rate decrease (increase) fair value
					• Investment horizon	• Increases (decreases) in the investment horizon decrease (increase) fair value
Derivative assets/Derivative liabilities (accounts receivable/payable)	179		/	Discounted cash flows	• Future cash flows	• Increases (decreases) in future cash flows increase (decrease) fair value
	(642		)	Discounted cash flows	• Future cash flows
					• Discount rate	• Increases (decreases) in discount rate decrease (increase) fair value

Schedule of significant unobservable inputs used and change in balance of financial liabilities

The following table summarizes the valuation techniques and significant unobservable inputs used in the fair value measurement of Level 3 financial instruments:



(MILLIONS) Type of Asset/Liability	Carrying Value June 30, 2019			Valuation Techniques	Significant Unobservable Inputs	Relationship of Unobservable Inputs to Fair Value
Fixed income securities and other	$	547		Discounted cash flows	• Future cash flows	• Increases (decreases) in future cash flows increase (decrease) fair value
					• Discount rate	• Increases (decreases) in discount rate decrease (increase) fair value
Corporate bonds	267			Discounted cash flows	• Future cash flows	• Increases (decreases) in future cash flows increase (decrease) fair value
					• Discount rate	• Increases (decreases) in discount rate decrease (increase) fair value
Common shares (common shares and warrants)	673			Black-Scholes model	• Volatility	• Increases (decreases) in volatility increase (decreases) fair value
					• Term to maturity	• Increases (decreases) in term to maturity increase (decrease) fair value
					• Risk free interest rate	• Increases (decreases) in the risk-free interest rate increase (decrease) fair value
Limited-life funds (subsidiary equity obligations)	(1,852		)	Discounted cash flows	• Future cash flows	• Increases (decreases) in future cash flows increase (decrease) fair value
					• Discount rate	• Increases (decreases) in discount rate decrease (increase) fair value
					• Terminal capitalization rate	• Increases (decreases) in terminal capitalization rate decrease (increase) fair value
					• Investment horizon	• Increases (decreases) in the investment horizon decrease (increase) fair value
Derivative assets/Derivative liabilities (accounts receivable/payable)	179		/	Discounted cash flows	• Future cash flows	• Increases (decreases) in future cash flows increase (decrease) fair value
	(642		)	Discounted cash flows	• Future cash flows
					• Discount rate	• Increases (decreases) in discount rate decrease (increase) fair value

Disclosure of changes in level 3 financial assets

The following table presents the changes in the balance of financial assets and liabilities classified as Level 3 for the period ended June 30, 2019:



	Three Months Ended					Six Months Ended
AS AT AND FOR THE PERIODS ENDED JUN. 30, 2019	Financial Assets		Financial Liabilities			Financial Assets		Financial Liabilities
Balance, beginning of period	$	1,314	$	2,349		$	795	$	2,299
Fair value changes in net income	115		(28		)	135		6
Fair value changes in other comprehensive income¹	35		1			37		2
Additions, net of disposals	205		172			702		187
Balance, end of period	$	1,669	$	2,494		$	1,669	$	2,494


1.	Includes foreign currency translation.

Disclosure of changes in level 3 financial liabilities

The following table presents the changes in the balance of financial assets and liabilities classified as Level 3 for the period ended June 30, 2019:



	Three Months Ended					Six Months Ended
AS AT AND FOR THE PERIODS ENDED JUN. 30, 2019	Financial Assets		Financial Liabilities			Financial Assets		Financial Liabilities
Balance, beginning of period	$	1,314	$	2,349		$	795	$	2,299
Fair value changes in net income	115		(28		)	135		6
Fair value changes in other comprehensive income¹	35		1			37		2
Additions, net of disposals	205		172			702		187
Balance, end of period	$	1,669	$	2,494		$	1,669	$	2,494


1.	Includes foreign currency translation.