EX-99.1 2 bbuq32018ex991.htm EXHIBIT 99.1 Exhibit
Brookfield Business Partners L.P.


UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF

BROOKFIELD BUSINESS PARTNERS L.P.

As at September 30, 2018 and December 31, 2017 and for the
three and nine months ended September 30, 2018 and 2017




1

INDEX TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS OF BROOKFIELD BUSINESS PARTNERS L.P.

 
 
Unaudited Interim Condensed Consolidated Statements of Financial Position
3

Unaudited Interim Condensed Consolidated Statements of Operating Results
4

Unaudited Interim Condensed Consolidated Statements of Comprehensive Income (Loss)
5

Unaudited Interim Condensed Consolidated Statements of Changes in Equity
6

Unaudited Interim Condensed Consolidated Statements of Cash Flow
7

Notes to Unaudited Interim Condensed Consolidated Financial Statements
8



2

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION


(US$ MILLIONS)
 
Notes
 
September 30, 2018
 
December 31, 2017
Assets
 
 
 
 
 
 
Cash and cash equivalents
 
4
 
$
1,770

 
$
1,106

Financial assets
 
5
 
795

 
361

Accounts and other receivable, net
 
6
 
4,646

 
3,454

Inventory, net
 
7
 
1,769

 
1,068

Assets held for sale
 
8
 
145

 
14

Other assets
 
9
 
1,075

 
430

Current assets
 
 
 
10,200

 
6,433

Financial assets
 
5
 
457

 
423

Accounts and other receivable, net
 
6
 
784

 
908

Other assets
 
9
 
518

 
79

Property, plant and equipment
 
10
 
7,067

 
2,530

Deferred income tax assets
 
 
 
217

 
174

Intangible assets
 
3
 
5,427

 
3,094

Equity accounted investments
 
11
 
536

 
609

Goodwill
 
3
 
2,420

 
1,554

Total assets
 
 
 
$
27,626

 
$
15,804

Liabilities and equity
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Accounts payable and other
 
12
 
$
7,683

 
$
4,865

Liabilities associated with assets held for sale
 
8
 
12

 
—

Borrowings
 
14
 
1,172

 
825

Current liabilities
 
 
 
8,867

 
5,690

Accounts payable and other
 
12
 
1,703

 
773

Borrowings
 
14
 
9,693

 
2,440

Deferred income tax liabilities
 
 
 
887

 
837

Total liabilities
 
 
 
$
21,150

 
$
9,740

Equity
 
 
 
 
 
 
Limited partners
 
17
 
$
1,519

 
$
1,585

Non-controlling interests attributable to:
 
 
 
 
 
 
Redemption-Exchange Units, Preferred Shares and Special Limited Partnership Units held by Brookfield Asset Management Inc.
 
17
 
1,386

 
1,453

Interest of others in operating subsidiaries
 
 
 
3,571

 
3,026

Total equity
 
 
 
6,476

 
6,064

Total liabilities and equity
 
 
 
$
27,626

 
$
15,804




The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

3

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF OPERATING RESULTS


 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(US$ MILLIONS, except per unit amounts)
 
Notes
 
2018
 
2017
 
2018
 
2017
Revenues
 
20
 
$
9,990

 
$
7,640

 
$
26,959

 
$
14,444

Direct operating costs
 
19
 
(9,080
)
 
(7,295
)
 
(24,929
)
 
(13,842
)
General and administrative expenses
 
20
 
(174
)
 
(95
)
 
(434
)
 
(233
)
Depreciation and amortization expense
 
20
 
(251
)
 
(109
)
 
(462
)
 
(262
)
Interest income (expense), net
 
20
 
(148
)
 
(66
)
 
(317
)
 
(135
)
Equity accounted income (loss), net
 
11
 
(9
)
 
37

 
1

 
61

Impairment expense, net
 
10
 
(180
)
 
—

 
(180
)
 
(30
)
Gain (loss) on acquisitions/dispositions, net
 
3,8
 
247

 
(14
)
 
353

 
267

Other income (expenses), net
 
 
 
(42
)
 
(41
)
 
(63
)
 
(36
)
Income (loss) before income tax
 
 
 
353

 
57

 
928

 
234

Income tax (expense) recovery
 
 
 
 
 
 
 
 
 
 
Current
 
 
 
(43
)
 
(19
)
 
(123
)
 
(19
)
Deferred
 
 
 
(25
)
 
6

 
4

 
6

Net income (loss)
 
 
 
$
285

 
$
44

 
$
809

 
$
221

Attributable to:
 
 
 
 
 
 
 
 
 
 
Limited partners
 
 
 
$
(1
)
 
$
(8
)
 
$
4

 
$
21

Non-controlling interests attributable to:
 
 
 
 
 
 
 
 
 
 
Redemption-Exchange Units held by Brookfield Asset Management Inc.           
 
 
 
—

 
(8
)
 
4

 
23

Special Limited Partners
 
17
 
94

 
25

 
278

 
25

Interest of others in operating subsidiaries
 
 
 
192

 
35

 
523

 
152

 
 
 
 
$
285

 
$
44

 
$
809

 
$
221

Basic and diluted earnings per limited partner unit
 
17
 
$
—

 
$
(0.15
)
 
$
0.06

 
$
0.40




The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.


4

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME (LOSS)


 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
(US$ MILLIONS)
Notes
 
2018
 
2017
 
2018
 
2017
Net income (loss)
 
 
$
285

 
$
44

 
$
809

 
$
221

Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Items that may be reclassified subsequently to profit or loss:
 
 
 
 
 
 
 
 
 
Foreign currency translation
 
 
$
(38
)
 
$
179

 
$
(361
)
 
$
206

Available-for-sale securities
 
 
—

 
12

 
—

 
7

Net investment and cash flow hedges
4
 
(1
)
 
(25
)
 
79

 
(52
)
Equity accounted investment
11
 
3

 
(2
)
 
—

 
(3
)
Taxes on the above items
 
 
(8
)
 
2

 
(12
)
 
4

 
 
 
(44
)
 
166

 
(294
)
 
162

 
 
 
 
 
 
 
 
 
 
Items that will not be reclassified subsequently to profit or loss:
 
 
 
 
 
 
 
 
 
Fair value through OCI
 
 
6

 
—

 
62

 
—

Taxes on the above item
 
 
—

 
—

 
(1
)
 
—

Total other comprehensive income (loss)
 
 
(38
)
 
—

 
(233
)
 
—

Comprehensive income (loss)
 
 
$
247

 
$
210

 
$
576

 
$
383

Attributable to:
 
 
 
 
 
 
 
 
 
Limited partners
 
 
$
(7
)
 
$
17

 
$
(33
)
 
$
54

Non-controlling interests attributable to:
 
 
 
 
 
 
 
 
 
Redemption-Exchange Units held by Brookfield Asset Management Inc.
 
 
(6
)
 
18

 
(32
)
 
58

Special Limited Partners
 
 
94

 
25

 
278

 
25

Interest of others in operating subsidiaries
 
 
166

 
150

 
363

 
246

 
 
 
$
247

 
$
210

 
$
576

 
$
383




The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.



5

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 
 
 
 
 
 
 
 
Non-controlling interests
 
 
 
 
Limited Partners
 
Redemption-Exchange Units held by
Brookfield Asset Management Inc.
 
Special Limited Partners
 
Preferred
Shares
 
 
 
 
(US$ MILLIONS)
 
Capital
Retained
earnings
Ownership
change (1)
Accumulated
other
comprehensive
income (loss) (2)
Limited
Partners
 
Capital
Retained
earnings
Ownership
change (1)
Accumulated
other
comprehensive
income (loss) (2)
Redemption-
Exchange
Units
 
Retained
earnings
 
Capital
 
Interest of
others in
operating
subsidiaries
 
Total
Equity
Balance as at January 1, 2018
 
$
1,766

$
(69
)
$
—

$
(112
)
$
1,585

 
$
1,674

$
(71
)
$
—

$
(165
)
$
1,438

 
$
—

 
$
15

 
$
3,026

 
$
6,064

Adoption of new accounting standards (3)
 
—

(132
)
—

—

(132
)
 
—

(128
)
—

—

(128
)
 
—

 
—

 
(5
)
 
(265
)
Revised opening balance January 1, 2018
 
1,766

(201
)
—

(112
)
1,453

 
1,674

(199
)
—

(165
)
1,310

 
—

 
15

 
3,021

 
5,799

Net income (loss)
 
—

4

—

—

4

 
—

4

—

—

4

 
278

 
—

 
523

 
809

Other comprehensive income (loss)
 
—

—

—

(37
)
(37
)
 
—

—

—

(36
)
(36
)
 
—

 
—

 
(160
)
 
(233
)
Total comprehensive income (loss)
 
—

4

—

(37
)
(33
)
 
—

4

—

(36
)
(32
)
 
278

 
—

 
363

 
576

Contributions
 
—

—

—

—

—

 
—

—

—

—

—

 
—

 
—

 
80

 
80

Distributions (4)
 
—

(12
)
—

—

(12
)
 
—

(12
)
—

—

(12
)
 
(278
)
 
—

 
(2,153
)
 
(2,455
)
Ownership change (1)
 
—

(93
)
205

(1
)
111

 
—

(89
)
195

(1
)
105

 
—

 
—

 
1,564

 
1,780

Acquisition of interest (5)
 
—

—

—

—

—

 
—

—

—

—

—

 
—

 
—

 
696

 
696

Balance as at September 30, 2018
 
$
1,766

$
(302
)
$
205

$
(150
)
$
1,519

 
$
1,674

$
(296
)
$
195

$
(202
)
$
1,371

 
$
—

 
$
15

 
$
3,571

 
$
6,476

Balance as at January 1, 2017
 
$
1,345

$
2

$
—

$
(141
)
$
1,206

 
$
1,474

$
3

$
—

$
(197
)
$
1,280

 
$
—

 
$
15

 
$
1,537

 
$
4,038

Net income (loss)
 
—

21

—

—

21

 
—

23

—

—

23

 
25

 
—

 
152

 
221

Other comprehensive income (loss)
 
—

—

—

33

33

 
—

—

—

35

35

 
—

 
—

 
94

 
162

Total comprehensive income (loss)
 
—

21

—

33

54

 
—

23

—

35

58

 
25

 
—

 
246

 
383

Contributions
 
—

—

—

—

—

 
—

—

—

—

—

 
—

 
—

 
4

 
4

Distributions
 
—

(11
)
—

—

(11
)
 
—

(10
)
—

—

(10
)
 
(25
)
 
—

 
(381
)
 
(427
)
Ownership change
 
—

—

—

—

—

 
—

—

—

—

—

 
—

 
—

 
—

 
—

Acquisition of interest
 
—

—

—

—

—

 
—

—

—

—

—

 
—

 
—

 
1,444

 
1,444

Unit Issuance (3)
 
392

—

—

—

392

 
200

—

—

—

200

 
—

 
—

 
—

 
592

Other
 
$
—

$
—

$
—

$
—

$
—

 
$
—

$
(3
)
$
—

$
—

$
(3
)
 
$
—

 
$
—

 
$
—

 
$
(3
)
Balance as at September 30, 2017
 
$
1,737

$
12

$
—

$
(108
)
$
1,641

 
$
1,674

$
13

$
—

$
(162
)
$
1,525

 
$
—

 
$
15

 
$
2,850

 
$
6,031

__________________________

(1)  
Includes gains or losses on changes in ownership interests of consolidated subsidiaries.
(2)  
See Note 17 for additional information.
(3)  
See Note 2(c) for additional information on adoption of new accounting standards.
(4)  
See Note 17 for additional information on distributions as it relates to the Special Limited Partners.
(5) 
See Note 3 Acquisition of businesses for additional information.



The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

6

BROOKFIELD BUSINESS PARTNERS L.P.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
 
 
 
 
Nine Months Ended
September 30,
(US$ MILLIONS)
 
Notes
 
2018
 
2017
Operating Activities
 
 
 
 
 
 
Net income (loss)
 
 
 
$
809

 
$
221

Adjusted for the following items:
 
 
 
 
 
 
Share of undistributed equity accounted earnings
 
 
 
23

 
(61
)
Impairment expense, net
 
 
 
180

 
30

Depreciation and amortization expense
 
 
 
462

 
262

Gain on acquisitions/dispositions, net
 
 
 
(353
)
 
(267
)
Provisions and other items
 
 
 
14

 
27

Deferred income tax expense (recovery)
 
 
 
(4
)
 
(6
)
Changes in non-cash working capital, net
 
21
 
(775
)
 
(165
)
Cash from operating activities
 
 
 
356

 
41

Financing Activities
 
 
 
 
 
 
Proceeds from borrowings
 
 
 
6,539

 
1,423

Repayment of borrowings
 
 
 
(1,973
)
 
(768
)
Proceeds from other credit facilities, net
 
 
 
416

 
339

Capital provided by limited partners and Redemption-Exchange Unitholders
 
 
 
—

 
592

Capital provided by others who have interests in operating subsidiaries
 
 
 
1,386

 
699

Distributions to limited partners and Redemption-Exchange Unitholders
 
 
 
(24
)
 
(21
)
Distributions to Special Limited Partners Unitholders
 
 
 
(232
)
 
(25
)
Distributions to others who have interests in operating subsidiaries
 
17
 
(1,792
)
 
(381
)
Cash from (used in) financing activities
 
 
 
4,320

 
1,858

Investing Activities
 
 
 
 
 
 
Acquisitions
 
 
 
 
 
 
Subsidiaries, net of cash acquired
 
3
 
(3,354
)
 
(1,575
)
Property, plant and equipment and intangible assets
 
 
 
(345
)
 
(168
)
Equity accounted investments
 
 
 
(8
)
 
(208
)
Financial assets
 
 
 
(417
)
 
(198
)
Dispositions
 
 
 
 
 
 
Subsidiaries, net of cash disposed
 
 
 
—

 
382

Property, plant and equipment
 
 
 
66

 
16

Equity accounted investments
 
 
 
143

 
21

Financial assets
 
 
 
9

 
259

Net settlement of foreign exchange hedges
 
 
 
4

 
(6
)
Restricted cash and deposits
 
 
 
(59
)
 
84

Cash from (used in) investing activities
 
 
 
(3,961
)
 
(1,393
)
Cash
 
 
 
 
 
 
Change during the period
 
 
 
715

 
506

Impact of foreign exchange on cash
 
 
 
(51
)
 
17

Balance, beginning of year
 
 
 
1,106

 
1,050

Balance, end of period
 
 
 
$
1,770

 
$
1,573


Supplemental cash flow information is presented in Note 21  


The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

7

NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017
NOTE 1.    NATURE AND DESCRIPTION OF THE PARTNERSHIP
Brookfield Business Partners L.P. and its subsidiaries, (collectively, "the partnership") own and operate business services and industrial operations ("the Business") on a global basis. Brookfield Business Partners L.P. was registered as a limited partnership established under the laws of Bermuda, and organized pursuant to a limited partnership agreement as amended on May 31, 2016, and as further amended on June 17, 2016. Brookfield Business Partners L.P. is a subsidiary of Brookfield Asset Management Inc. ("Brookfield Asset Management" or "Brookfield" or the "parent company"). Brookfield Business Partners L.P.'s limited partnership units are listed on the New York Stock Exchange and the Toronto Stock Exchange under the symbols "BBU" and "BBU.UN", respectively. The registered head office of Brookfield Business Partners L.P. is 73 Front Street, 5th Floor, Hamilton HM 12, Bermuda.
NOTE 2.    SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of presentation
These unaudited interim condensed consolidated financial statements of the partnership have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, or IAS 34, as issued by the International Accounting Standards Board, or the IASB, and using the accounting policies the partnership applied in its annual consolidated financial statements as at and for the year ended December 31, 2017, except for the impact of the adoption of the accounting standards described below. The accounting policies the partnership applied in its annual consolidated financial statements as at and for the year ended December 31, 2017 are disclosed in Note 2 of such consolidated financial statements, with which reference should be made in reading these unaudited interim condensed consolidated financial statements. All defined terms are also described in the annual consolidated financial statements. The unaudited interim condensed consolidated financial statements are prepared on a going concern basis and have been presented in U.S. dollars rounded to the nearest million unless otherwise indicated.
The preparation of financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the accounting policies. The critical accounting estimates and judgments have been set out in Note 2 to the partnership's consolidated financial statements as at and for the year ended December 31, 2017. There have been no significant changes to the method of determining significant estimates and judgments since December 31, 2017, other than changes required as a result of adopting new standards as discussed below.
These unaudited interim condensed consolidated financial statements were approved by the partnership's Board of Directors and authorized for issue on November 1, 2018.
Revision of Comparatives

The comparative cash flow figures for the nine month period ended September 30, 2017, have been revised for the correction of an immaterial error identified by management related to the reclassification of cash flows from bank overdrafts, from an acquisition completed in May 2017 in our business services segment, within the unaudited interim condensed consolidated statements of cash flow. As a result, for the nine month period ended September 30, 2017, $339 million (year ended December 31, 2017: $360 million; and three month period ended March 31, 2018: $177 million), which was previously reported in accounts payable and other within the operating activities line item entitled changes in non-cash working capital, net, is now being reported within the financing activities line item entitled proceeds from credit facilities, net. The 2017 comparative figures in the supplemental cash flow information within Note 21 have also been updated to remove the bank overdraft which was previously recorded within accounts payable and other. The correction of the classification in the statement of cash flow is immaterial and had no impact on the partnership’s historical unaudited interim condensed statements of financial position, statements of operating results, statements of comprehensive income, and statements of changes in equity.

Segment Change

In connection with the acquisition of Westinghouse Electric Company ("Westinghouse"), we have realigned the organizational and governance structure of our businesses and have changed how the partnership presents information for financial reporting and management decision making which has resulted in a change in the construction services and business services segments presentation and the creation of a new infrastructure services segment.


8
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

Accordingly, effective for the third quarter of fiscal 2018, our construction services and business services segment are presented as a single operating segment called business services. Infrastructure services is a new operating segment, which includes our investment in Westinghouse. The infrastructure services segment had no operations prior to the acquisition of Westinghouse in the third quarter of fiscal 2018. The partnership has retrospectively applied these segment changes for all periods presented.

(b)
New accounting policies adopted
The partnership has applied new and revised standards issued by the IASB that are effective for the period beginning on or after January 1, 2018.
(i)
Revenue from Contracts with Customers
IFRS 15, Revenue from Contracts with Customers ("IFRS 15") specifies how and when revenue should be recognized as well as requiring additional disclosures. IFRS 15 requires disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. IFRS 15 supersedes IAS 18, Revenue, IAS 11, Construction Contracts and a number of revenue-related interpretations. IFRS 15 applies to nearly all contracts with customers: the main exceptions are leases, financial instruments and insurance contracts.
The partnership adopted the standard using the modified retrospective approach, in which a cumulative catch-up adjustment is recorded through opening retained earnings on January 1, 2018 as if the standard had always been in effect and whereby comparative periods are not restated. The partnership elected to use the practical expedient for contract modifications. On adoption, the partnership recorded a reduction in opening retained earnings of approximatively $260 million, attributable to the partnership net of taxes, mainly from our construction services business. Under IFRS 15, revenue from the partnership’s construction services contracts will continue to be recognized over time; however, a higher threshold of probability must be achieved prior to recognizing revenue from variable consideration such as incentives and claims and variations resulting from contract modifications. Under IAS 18 and IAS 11, revenue was recognized when it is probable that work performed will result in revenue whereas under IFRS 15, revenue is recognized when it is highly probable that a significant reversal of revenue will not occur for these modifications. Refer to Note 2(c) for impact on adoption of IFRS 15.
(ii)
Financial Instruments
In July 2014, the IASB issued the final publication of IFRS 9, Financial Instruments ("IFRS 9") superseding the current IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 establishes principles for the financial reporting of financial assets and financial liabilities that will present relevant and useful information to users of financial statements for their assessment of the amounts, timing and uncertainty of an entity's future cash flows. This new standard also includes a new general hedge accounting standard which will align hedge accounting more closely with an entity's risk management activities. It does not fully change the types of hedging relationships or the requirement to measure and recognize ineffectiveness, however, it will provide more hedging strategies that are used for risk management to qualify for hedge accounting and introduce greater judgment to assess the effectiveness of a hedging relationship. The partnership adopted the standard using the retrospective approach without restatement, in which a cumulative catch-up adjustment is recorded through opening retained earnings on January 1, 2018 as if the standard had always been in effect and whereby comparative periods are not restated. On adoption, the partnership recorded an adjustment in opening retained earnings of $nil attributable to the partnership net of taxes. Refer to Note 2(e) for impact on adoption of IFRS 9.
(iii)
Foreign Currency Transactions and Advance Consideration
In December 2016, the IASB issued IFRIC 22, Foreign Currency Transactions and Advance Consideration ("IFRIC 22"), effective for annual reporting periods beginning on or after January 1, 2018. The interpretation clarifies that the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income (or part of it) is the date on which an entity initially recognizes the non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration. The interpretation may be applied either retrospectively or prospectively. The adoption of IFRIC 22 did not have a significant impact on the unaudited interim condensed consolidated financial statements.

9
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

(c)
Impact on adoption of new IFRS standards

On adoption of IFRS 15, we recorded a total reduction in opening retained earnings of $260 million, attributable to the partnership net of taxes, mainly associated with our construction services business. The partnership also recorded the associated reduction of $125 million in accounts and other receivable, net, and an increase of $121 million in accounts payable and other.
(US$ MILLIONS)
 
 
Opening balance January 1, 2018
 
Adoption of new accounting standards
 
Revised opening balance January 1, 2018
Assets
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
$
1,106

 
$
—

 
$
1,106

Financial assets
 
 
361

 
—

 
361

Accounts and other receivable, net
 
 
3,454

 
(98
)
 
3,356

Inventory, net
 
 
1,068

 
4

 
1,072

Assets held for sale
 
 
14

 
—

 
14

Other assets
 
 
430

 
(60
)
 
370

Current assets
 
 
6,433

 
(154
)
 
6,279

Financial assets
 
 
423

 
—

 
423

Accounts and other receivable, net
 
 
908

 
(27
)
 
881

Other assets
 
 
79

 
1

 
80

Property, plant and equipment
 
 
2,530

 
—

 
2,530

Deferred income tax assets
 
 
174

 
42

 
216

Intangible assets
 
 
3,094

 
—

 
3,094

Equity accounted investments
 
 
609

 
(6
)
 
603

Goodwill
 
 
1,554

 
—

 
1,554

Total assets
 
 
$
15,804

 
$
(144
)
 
$
15,660

Liabilities and equity
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Accounts payable and other
 
 
$
4,865

 
$
126

 
$
4,991

Liabilities associated with assets held for sale
 
 
—

 
—

 
—

Borrowings
 
 
825

 
—

 
825

Current liabilities
 
 
5,690

 
126

 
5,816

Accounts payable and other
 
 
773

 
(5
)
 
768

Borrowings
 
 
2,440

 
—

 
2,440

Deferred income tax liabilities
 
 
837

 
—

 
837

Total liabilities
 
 
$
9,740

 
$
121

 
$
9,861

Equity
 
 
 
 
 
 
 
Limited partners
 
 
$
1,585

 
$
(132
)
 
$
1,453

Non-controlling interests attributable to:
 
 
 
 
 
 
 
Redemption-Exchange Units, Preferred Shares and Special Limited Partnership Units held by Brookfield Asset Management Inc.
 
 
1,453

 
(128
)
 
1,325

Interest of others in operating subsidiaries
 
 
3,026

 
(5
)
 
3,021

Total equity
 
 
6,064

 
(265
)
 
5,799

Total liabilities and equity
 
 
$
15,804

 
$
(144
)
 
$
15,660

 
 
 
 
 
 
 
 



10
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

(d)
Revenue from contracts with customers

Business Services

Construction Services

Our construction services business provides end-to-end design and development solutions for our customers. The work performed on these contracts creates or enhances an asset that our customer controls and accordingly we recognize revenue on these contracts over a period of time. The partnership uses an input method, the cost-to-cost method, to measure progress towards complete satisfaction of the performance obligations under IFRS 15.

As work is performed, a contract asset in the form of work-in-progress is recognized, which is reclassified to accounts receivable when invoiced to the customer. If payment is received in advance of work being completed, a contract liability is recognized. There is not considered to be a significant financing component in construction contracts as the period between the recognition of revenue under the cost-to-cost method and when payment is received is typically less than one year.

IFRS 15 requires a highly probable criterion with regards to recognizing revenue arising from variable consideration and contract modification and claims. For variable consideration, revenue is only to be recognized to the extent that it is highly probable that a significant reversal in the amount of revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Fuel Distribution & Marketing

The fees and related costs for providing road fuel distribution and marketing are recognized at a point in time when the services are provided.

Revenue from the sale of goods in our UK road fuel service operation represents net invoiced sales of fuel products and Renewable Transport Fuel Obligation ("RTFO") certificates, excluding value added taxes but including excise duty, which has been assessed to be a production tax and recorded as part of consideration received. Revenue is recognized at the point that title passes to the customer.

Facilities Management

The fees and related costs for providing facilities management services are recognized over the time in which the services are provided.

Real Estate Services

The fees and related costs for providing real estate and logistics services are recognized over the time in which the services are provided.

Associated with the delivery of certain service contracts, our partnership also earns revenue from home sale transactions and referral fees from suppliers utilized in servicing these contracts. These revenue transactions are recognized as follows:

•
Home Sale: The partnership earns home sale revenue from two types of contracts: cost-plus home sale and fixed fee home sale contracts. Under a cost-plus home sale contract, the partnership earns a performance fee and bears no risk of loss with respect to costs incurred. Revenues and related costs associated with the purchase and resale of residences under cost-plus contracts are recognized on a net basis over the period in which services are provided as control over the home does not pass onto the partnership. Under a fixed fee home sale contract, the partnership earns a fixed fee based upon a percentage of the acquisition cost of the residential property. This fee revenue is recognized when the home is acquired by the customer as the partnership’s performance obligation is complete at this time. The revenues and expenses related to the home sale itself are recorded on a gross basis.


11
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

•
Referral fees: The partnership earns referral fees from various suppliers who provide services to customers through our service offerings. A significant portion of the referral fee revenue is generated from the closing of a home sale or purchase transaction, under which the partnership earns a percentage of the commissions received by the real estate agent on the purchase or sale of a home by the customer. Referral fees from home purchases or sales are recognized upon the closing date of the real estate transaction. The partnership recognizes referral fees from other suppliers upon completion of the services.

Infrastructure Services
    
Products and Services

Sales of products are recognized at a point in time when the product is shipped and control passes to the customer. Revenue from contracts to provide engineering, design or other services are recognized and reported over-time based on an appropriate measure of progress. The partnership uses an input method, the cost-to-cost method, to measure progress towards complete satisfaction of the performance obligations under IFRS 15.

IFRS 15 requires a highly probable criterion with regards to recognizing revenue arising from variable consideration and contract modification and claims. For variable consideration, revenue is only to be recognized to the extent that it is highly probable that a significant reversal in the amount of revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Industrial Operations
    
Manufacturing

Sales of goods are recognized at a point in time when the product is shipped and control passes to the customer. Services revenues are recognized over time when the services are provided.
        
Mining

Revenue from our mining business is made under provisional pricing arrangements. Revenue from the sale of palladium and by-product metals is provisionally recognized based on quoted market prices upon the delivery of concentrate to the smelter or designated shipping point, which is when significant rights and obligations of ownership pass and title and control is transferred. The business’ smelter contract provides for final prices to be determined by quoted market prices in a period subsequent to the date of concentrate delivery. The period between provisional invoicing and final pricing, or settlement period, is typically between 30 and 150 days. The fair value of the final sales price adjustment is re-estimated by reference to forward market prices at each period end and changes in fair value are recognized as an adjustment to revenue. As a result, the accounts receivable amounts related to this business are recorded at fair value.

Energy

Energy Commodities and Services

Revenue from the sale of oil and gas is recognized at a point in time when title and control of the product passes to an external party, based on volumes delivered and contractual delivery points and prices. Revenue for the production in which the partnership has an interest with other producers is recognized based on the partnership’s working interest. Revenue is measured net of royalties to reflect the deduction for other parties’ proportionate share of the revenue. Revenue from the rendering of services is recognized at a point in time when significant rights and obligations of ownership pass and title and control is transferred.

Marine Energy Services
    
The partnership primary source of revenues is chartering its vessels and offshore units to its customers. The partnership's primary forms of contracts, consists of floating production storage and offloading (or "FPSO") contracts and contracts of affreightment (or "CoA").


12
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

•
FPSO contracts: Pursuant to an FPSO contract, the partnership charters an FPSO unit to a customer for a fixed period of time, generally more than one year. The performance obligations within an FPSO contract, which will include the use of the FPSO unit to the charterer as well as the operation of the FPSO unit, are satisfied as services are rendered over the duration of such contract, as measured using the time that has elapsed from commencement of performance.

Some FPSO contacts include variable consideration components in the form of expense adjustments or reimbursements, incentive compensation and penalties. Variable consideration under the partnership’s contracts is typically recognized as incurred as either such revenues are allocated and accounted for under lease accounting requirements or alternatively such consideration is allocated to the distinct period in which such variable consideration was earned.

•
Contracts of Affreightment: Voyages performed pursuant to a CoA for the partnership’s shuttle tankers are priced based on the pre-agreed terms in the CoA. The performance obligations within a voyage performed pursuant to a CoA, which typically include the use of the vessel to the charterer as well as the operation of the vessel, are satisfied as services are rendered over the duration of the voyage, as measured using the time that has elapsed from commencement of performance. The duration of a single voyage will typically be less than two weeks.
 
Remaining Performance Obligations

Business Services

In our construction services business, backlog is defined as revenue yet to be delivered (i.e. remaining performance obligations) on construction projects that have been secured via an executed contract, work order, or letter of intent. The total backlog for our construction services operations equates to approximately two years of activity.

Industrial Operations

Our Brazilian water treatment and distribution operation is party to certain remaining performance obligations which have a duration of more than one year. The most significant remaining performance obligations at January 1, 2018 relate to the service concession arrangements with various municipalities which have an average term of 25 years.

The tables below summarize our segment revenue by geography, and timing of revenue recognition for IFRS 15 revenue for the three months ending September 30, 2018:
(US$ MILLIONS)
 
 
 
 
 
 
 
 
 
 
 
 
Timing of Revenue Recognition
 
Business Services
 
Infrastructure Services
 
Industrial Operations
 
Energy
 
Corporate
and Other
 
Total
Goods/services provided at a point in time
 
$
6,223

 
$
245

 
$
856

 
$
66

 
$
—

 
$
7,390

Services transferred over a period of time
 
1,696

 
495

 
81

 
309

 
—

 
2,581

Total IFRS 15 revenue
 
$
7,919

 
$
740

 
$
937

 
$
375

 
$
—

 
$
9,971

Other non IFRS 15 revenue
 
4

 
—

 
—

 
15

 
—

 
19

Total revenue
 
$
7,923

 
$
740

 
$
937

 
$
390

 
$
—

 
$
9,990



13
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

(US$ MILLIONS)
 
 
 
 
 
 
 
 
 
 
 
 
Geography
 
Business Services
 
Infrastructure Services
 
Industrial Operations
 
Energy
 
Corporate
and Other
 
Total (1)
United Kingdom
 
$
5,640

 
$
35

 
$
35

 
$
25

 
$
—

 
$
5,735

Canada
 
937

 
6

 
139

 
91

 
—

 
1,173

Australia
 
790

 
—

 
—

 
4

 
—

 
794

Brazil
 
102

 
1

 
232

 
71

 
—

 
406

USA
 
154

 
348

 
133

 
—

 
—

 
635

Middle East (2)
 
104

 
1

 
2

 
—

 
—

 
107

Other
 
192

 
349

 
396

 
184

 
—

 
1,121

Total IFRS 15 revenue
 
$
7,919

 
$
740

 
$
937

 
$
375

 
$
—

 
$
9,971

__________________________________

(1) 
Geography of the other non IFRS 15 revenue is as follows: United Kingdom $1 million, Canada $3 million, Australia $15 million, Brazil $nil, United States $nil, Middle East $nil and Other $nil.
(2) 
Middle East primarily consists of United Arab Emirates.

(US$ MILLIONS)
 
 
 
 
 
 
 
 
 
 
 
 
Transition
 
Business Services
 
Infrastructure Services
 
Industrial Operations
 
Energy
 
Corporate
and Other
 
Total
Revenue as if it were under former revenue standards
 
$
7,920

 
$
740

 
$
937

 
$
361

 
$
—

 
$
9,958

IFRS 15 Impact
 
(1
)
 
—

 
—

 
14

 
—

 
13

Total IFRS 15 Revenue
 
$
7,919

 
$
740

 
$
937

 
$
375

 
$
—

 
$
9,971


The tables below summarize our segment revenue by geography, and timing of revenue recognition for IFRS 15 revenue for the nine months ending September 30, 2018:
(US$ MILLIONS)
 
 
 
 
 
 
 
 
 
 
 
 
Timing of Revenue Recognition
 
Business Services
 
Infrastructure Services
 
Industrial Operations
 
Energy
 
Corporate
and Other
 
Total
Goods/services provided at a point in time
 
$
18,281

 
$
245

 
$
2,329

 
$
213

 
$
—

 
$
21,068

Services transferred over a period of time
 
4,820

 
495

 
198

 
309

 
—

 
5,822

Total IFRS 15 revenue
 
$
23,101

 
$
740

 
$
2,527

 
$
522

 
$
—

 
$
26,890

Other non IFRS 15 revenue
 
28

 
—

 
12

 
22

 
7

 
69

Total revenue
 
$
23,129

 
$
740

 
$
2,539

 
$
544

 
$
7

 
$
26,959



14
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

(US$ MILLIONS)
 
 
 
 
 
 
 
 
 
 
 
 
Geography
 
Business Services
 
Infrastructure Services
 
Industrial Operations
 
Energy
 
Corporate
and Other
 
Total (1)
United Kingdom
 
$
16,311

 
$
35

 
$
65

 
$
25

 
$
—

 
$
16,436

Canada
 
2,855

 
6

 
394

 
238

 
—

 
3,493

Australia
 
2,176

 
—

 
—

 
4

 
—

 
2,180

Brazil
 
567

 
1

 
661

 
71

 
—

 
1,300

USA
 
328

 
347

 
350

 
—

 
—

 
1,025

Middle East (2)
 
317

 
1

 
3

 
—

 
—

 
321

Other
 
547

 
350

 
1,054

 
184

 
—

 
2,135

Total IFRS 15 revenue
 
$
23,101

 
$
740

 
$
2,527

 
$
522

 
$
—

 
$
26,890

__________________________________

(1) 
Geography of the other non IFRS 15 revenue is as follows: United Kingdom $7 million, Canada $14 million, Australia $17 million, Brazil $12 million, United States $4 million, Middle East $nil and Other $15 million.
(2) 
Middle East primarily consists of United Arab Emirates.

(US$ MILLIONS)
 
 
 
 
 
 
 
 
 
 
 
 
Transition
 
Business Services
 
Infrastructure Services
 
Industrial Operations
 
Energy
 
Corporate
and Other
 
Total
Revenue as if it were under former revenue standards
 
$
23,102

 
$
740

 
$
2,527

 
$
508

 
$
—

 
$
26,877

IFRS 15 Impact
 
(1
)
 
—

 
—

 
14

 
—

 
13

Total IFRS 15 Revenue
 
$
23,101

 
$
740

 
$
2,527

 
$
522

 
$
—

 
$
26,890


(e)
Financial instruments and hedge accounting
Classification and measurement
The table below summarizes the partnership’s classification and measurement of financial assets and liabilities, on adoption of IFRS 9:


 
Classification
 
Measurement
 
Statement of Financial
Position Account
Financial assets
 
 
 
 
 
 
Cash and cash equivalents
 
Debt
 
Amortized cost
 
Cash and cash equivalents
Accounts receivable
 
Debt
 
Amortized cost / FVTPL
 
Accounts and other receivable, net
Restricted cash
 
Debt
 
Amortized cost
 
Financial assets
Equity securities
 
Equity
 
FVTPL / FVOCI
 
Financial assets
Debt securities
 
Debt
 
FVTPL / FVOCI / Amortized cost
 
Financial assets
Derivative assets
 
Derivatives
 
FVTPL(1)
 
Financial assets
Other financial assets
 
Debt / Equity
 
Amortized cost / FVTPL/ FVOCI
 
Financial assets
 
 
 
 
 
 
 
Financial liabilities
 
 
 
 
 
 
Borrowings
 
Debt
 
Amortized cost
 
Borrowings
Accounts payable and other
 
Debt
 
Amortized cost
 
Accounts payable and other
Derivative liabilities
 
Derivatives
 
FVTPL(1)
 
Accounts payable and other
__________________________

1) Derivatives are classified and measured at FVTPL except those designated in hedging relationships.

15
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

The classification depends on the specific business model for managing the financial instruments and the contractual terms of the cash flows. The partnership maintains a portfolio of marketable securities comprised of equity and debt securities. The marketable securities are recognized on their trade date. They are subsequently measured at fair value at each reporting date with the change in fair value recorded in either profit or loss ("FVTPL") or other comprehensive income ("FVOCI"). For investments in debt instruments, this will depend on the business model in which the investment is held.
    
At initial recognition, the partnership measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Financial assets are classified as amortized cost based on their nature and use within the partnership’s business. Financial assets classified as amortized cost are recorded initially at fair value, then subsequently measured at amortized cost using the effective interest method, less any impairment.

Impairment

The partnership assesses on a forward-looking basis the expected credit losses associated with its debt instruments carried at amortized cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Impairment charges are recognized in profit or loss based on the expected credit loss model.

Derivatives and hedging activities

The partnership selectively utilizes derivative financial instruments primarily to manage financial risks, including commodity price risk and foreign exchange risks. Derivative financial instruments are recorded at fair value. Hedge accounting is applied when the derivative is designated as a hedge of a specific exposure and there is assurance that it will continue to be highly effective as a hedge based on an expectation of offsetting cash flows or fair value. Hedge accounting is discontinued prospectively when the derivative no longer qualifies as a hedge or the hedging relationship is terminated. Once discontinued, the cumulative change in fair value of a derivative that was previously recorded in other comprehensive income by the application of hedge accounting is recognized in profit or loss over the remaining term of the original hedging relationship as amounts related to the hedged item are recognized in profit or loss. The assets or liabilities relating to unrealized mark-to-market gains and losses on derivative financial instruments are recorded in financial assets and financial liabilities, respectively.

(i) Items classified as hedges

Realized and unrealized gains and losses on foreign exchange contracts and foreign currency debt that are designated as hedges of currency risks relating to a net investment in a subsidiary with a functional currency other than the U.S. dollar are included in equity and are included in net income in the period in which the subsidiary is disposed of or to the extent partially disposed and control is not retained. Derivative financial instruments that are designated as hedges to offset corresponding changes in the fair value of assets and liabilities and cash flows are measured at estimated fair value with changes in fair value recorded in profit or loss or as a component of equity, as applicable.

Unrealized gains and losses on interest rate contracts designated as hedges of future variable interest payments are included in equity as a cash flow hedge when the interest rate risk relates to an anticipated variable interest payment. The periodic exchanges of payments on interest rate swap contracts designated as hedges of debt are recorded on an accrual basis as an adjustment to interest expense. The periodic exchanges of payments on interest rate contracts designated as hedges of future interest payments are amortized into profit or loss over the term of the corresponding interest payments.

(ii) Items not classified as hedges

Derivative financial instruments that are not designated as hedges are recorded at estimated fair value, and gains and losses arising from changes in fair value are recognized in net income in the period the changes occur. Realized and unrealized gains on other derivatives not designated as hedges are recorded in other income (expenses), net.


16
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the partnership takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

Fair value measurement is disaggregated into three hierarchical levels: Level 1, 2 or 3. Fair value hierarchical levels are directly based on the degree to which the inputs to the fair value measurement are observable. The levels are as follows:

Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 - Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the asset’s or liability’s anticipated life.

Level 3 - Inputs are unobservable and reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs in determining the estimate.

Summary of impact upon adoption of IFRS 9 - Classification and measurement

The table below illustrates the classification and measurement of financial assets under IFRS 9 and IAS 39 at the date of initial application. A similar table for financial liabilities has not been prepared because there have not been any reclassifications and remeasurements within financial liabilities.

The following table is as at January 1, 2018:
(US$ MILLIONS)
 
FVTPL
 
FVOCI
 
Amortized Cost
 
Total
Opening balance (IAS 39)
 
$
166

 
$
429

 
$
5,852

 
$
6,447

Reclassifications
 
211

 
(211
)
 
—

 
—

Revised opening balance (IFRS 9)
 
$
377

 
$
218

 
$
5,852

 
$
6,447

    
The following paragraphs explain how applying the new classification requirements of IFRS 9 led to changes in classification of certain financial assets held by the partnership as shown in the table above.

Instruments reclassified from Available for Sale (IAS 39) to FVTPL (IFRS 9):

Debt Instruments previously classified as available for sale but which fail the Solely for Payment, Principal and Interest ("SPPI") test

The partnership held secured debentures and contractual rights which were reclassified from available for sale to FVTPL for $187 million. Under IFRS 9, the debentures and contractual rights do not meet the criteria to be classified as at amortized cost or FVOCI because their cash flows do not represent solely payments of principal and interest. Related fair value gains of $3 million attributable to the partnership net of taxes were transferred from the available for sale reserve to retained earnings on January 1, 2018.

Equity instruments previously classified as available for sale and for which FVOCI election is not made

The partnership held an equity instrument which was reclassified from available for sale to FVTPL for $24 million. Related fair value losses of $3 million attributable to the partnership net of taxes were transferred from the available for sale reserve to retained earnings on January 1, 2018.


17
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

Summary of impact upon adoption of IFRS 9 - Impairment

The partnership's opening loss allowances in accordance with IAS 39 do not differ materially from the partnership's opening expected credit losses ("ECL") determined in accordance with IFRS 9, as at January 1, 2018.

Summary of impact upon adoption of IFRS 9 - Derivatives and hedging activities

In accordance with IFRS 9’s transition provisions for hedge accounting, the partnership has applied the IFRS 9 hedge accounting requirements prospectively from the date of initial application on January 1, 2018. The partnership’s qualifying hedging relationships in place as at January 1, 2018 also qualified for hedge accounting in accordance with IFRS 9 and were therefore regarded as continuing hedging relationships.

(f)
Future changes in accounting policies

(i)
Leases
In January 2016, the IASB published a new standard, IFRS 16 Leases ("IFRS 16"). The new standard brings most leases on the balance sheet, eliminating the distinction between operating and finance leases. Lessor accounting, however, remains largely unchanged and the distinction between operating and finance leases is retained. IFRS 16 supersedes IAS 17 Leases and related interpretations and is effective for periods beginning on or after January 1, 2019.
The partnership has participated in strategic planning sessions with its subsidiaries and associates in order to provide guidance regarding the key considerations and to develop an adoption project plan. Using the population of existing contractual arrangements, the partnership has substantially completed its identification of leases that are required to be capitalized under the new standard. The partnership is currently quantifying the present value of the identified lease contracts to determine the impact on the January 1, 2019 balance sheet and is assessing the expected impact to our statements of operations once the standard has been adopted. The partnership is progressing as planned in our adoption project plan. Next steps involve the finalization of the documented analysis, including assessing the impact to IT system requirements and internal controls, drafting the disclosures required by the new standard and rolling-forward the analysis to include all active leases as at year-end.
IFRS 16 can either be adopted on a full retrospective method or on a modified retrospective method whereby any transitional impact is recorded in equity as at January 1, 2019 and comparative periods are not restated. The partnership currently anticipates that the modified retrospective approach will be adopted and is currently in the process of evaluating a number of practical expedients available under the new standard.
The partnership continues to evaluate the overall impact of IFRS 16 on its consolidated financial statements.
 
(ii)
Uncertainty over Income Tax Treatments
In June 2017, the IASB published IFRIC 23, Uncertainty over Income Tax Treatments ("IFRIC 23") effective for annual periods beginning on or after January 1, 2019. The interpretation requires an entity to assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an entity in its income tax filings and to exercise judgment in determining whether each tax treatment should be considered independently or whether some tax treatments should be considered together. The decision should be based on which approach provides better predictions of the resolution of the uncertainty. An entity also has to consider whether it is probable that the relevant authority will accept each tax treatment, or group of tax treatments, assuming that the taxation authority with the right to examine any amounts reported to it will examine those amounts and will have full knowledge of all relevant information when doing so. The interpretation may be applied on either a fully retrospective basis or a modified retrospective basis without restatement of comparative information. The partnership is currently evaluating the impact of IFRIC 23 on its unaudited interim condensed consolidated financial statements.
NOTE 3.    ACQUISITION OF BUSINESSES
When determining the basis of accounting for the partnership’s investees, the partnership evaluates the degree of influence that the partnership exerts directly or through an arrangement over the investees' relevant activities. Control is obtained when the partnership has power over the acquired entities and an ability to use its power to affect the returns of these entities.

18
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS 

As at September 30, 2018 and December 31, 2017 and for the three and nine months ended
September 30, 2018 and 2017

The partnership accounts for business combinations using the acquisition method of accounting, pursuant to which the cost of acquiring a business is allocated to its identifiable tangible and intangible assets and liabilities on the basis of the estimated fair values at the date of acquisition.
(a)
Acquisitions completed in the nine months ended September 30, 2018
The following summarizes the consideration transferred, assets acquired and liabilities assumed at the applicable acquisition dates:
(US$ MILLIONS)
 
Business
Services (1)
 
Infrastructure Services (1)
 
Industrial
Operations (1)
 
Energy (1)
 
Total
Cash
 
$
6

 
$
1,686

 
$
45

 
$
—

 
$
1,737

Non-cash consideration
 
—

 
—

 
—

 
275

 
275

Total Consideration (2)
 
$
6

 
$
1,686

 
$
45

 
$
275

 
$
2,012

 
 
 
 
 
 
 
 
 
 
 
(US$ MILLIONS)
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2

 
$
286

 
$
30

 
$
342

 
$
660

Accounts and other receivable, net
 
7

 
635

 
75

 
235

 
952

Inventory, net
 
—

 
617

 
58

 
—

 
675

Equity accounted investments
 
—

 
7

 
1

 
321

 
329

Property, plant and equipment
 
7

 
933

 
187

 
3,738

 
4,865

Intangible assets
 
5

 
2,613

 
231

 
—

 
2,849

Goodwill
 
13

 
205

 
180

 
547

 
945

Deferred income tax assets
 
—

 
—

 
27

 
5

 
32

Financial assets
 
—

 
295

 
2

 
20

 
317

Other assets
 
—

 
1,076

 
—

 
69

 
1,145

Accounts payable and other
 
(7
)
 
(2,725
)
 
(199
)
 
(786
)
 
(3,717
)
Borrowings
 
—

 
(3
)
 
(266
)
 
(3,349
)
 
(3,618
)
Deferred income tax liabilities
 
—

 
(97
)
 
(72
)
 
(2
)
 
(171
)
Net assets acquired before non-controlling interest
 
27

 
3,842

 
254

 
1,140

 
5,263