XML 50 R14.htm IDEA: XBRL DOCUMENT v3.24.1
FAIR VALUE OF FINANCIAL INSTRUMENTS
 12 Months Ended
Dec. 31, 2023
Disclosure of detailed information about financial instruments [abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS FAIR VALUE OF FINANCIAL INSTRUMENTS
a)    Financial Instruments Classification
The following tables list the company’s financial instruments by their respective classification as at December 31, 2023 and 2022:
AS AT DEC. 31, 2023
(MILLIONS)
Fair Value Through
Profit or Loss		Fair Value Through OCIAmortized CostTotal
Financial assets1
Cash and cash equivalents$— $— $11,222 $11,222 
Other financial assets
Government bonds— 1,600 — 1,600 
Corporate bonds866 1,573 2 2,441 
Fixed income securities and other4,451 1,865 2,882 9,198 
Common shares and warrants3,354 1,827 — 5,181 
Loans and notes receivable63 — 9,841 9,904 
8,734 6,865 12,725 28,324 
Accounts receivable and other2
2,615 — 16,849 19,464 
$11,349 $6,865 $40,796 $59,010 
Financial liabilities
Corporate borrowings$— $— $12,160 $12,160 
Non-recourse borrowings of managed entities
Property-specific borrowings— — 205,336 205,336 
Subsidiary borrowings— — 16,214 16,214 
— — 221,550 221,550 
Accounts payable and other2
8,387 — 41,622 50,009 
Subsidiary equity obligations263 — 3,882 4,145 
$8,650 $— $279,214 $287,864 
1.Financial assets include $9.4 billion of assets pledged as collateral.
2.Includes derivative instruments which are elected for hedge accounting, totaling $2.1 billion included in accounts receivable and other and $3.3 billion included in accounts payable and other, for which changes in fair value are recorded in other comprehensive income.
AS AT DEC. 31, 2022
(MILLIONS)
Fair Value Through
Profit or Loss		Fair Value Through OCIAmortized CostTotal
Financial assets1
Cash and cash equivalents$— $— $14,396 $14,396 
Other financial assets
Government bonds— 1,566 — 1,566 
Corporate bonds426 1,717 4 2,147 
Fixed income securities and other4,170 1,798 2,794 8,762 
Common shares and warrants4,953 1,519 — 6,472 
Loans and notes receivable53 — 7,899 7,952 
9,602 6,600 10,697 26,899 
Accounts receivable and other2
3,749 — 16,131 19,880 
$13,351 $6,600 $41,224 $61,175 
Financial liabilities
Corporate borrowings$— $— $11,390 $11,390 
Non-recourse borrowings of managed entities
Property-specific borrowings— — 187,544 187,544 
Subsidiary borrowings— — 15,140 15,140 
— — 202,684 202,684 
Accounts payable and other2
6,895 — 41,664 48,559 
Subsidiary equity obligations1,114 — 3,074 4,188 
$8,009 $— $258,812 $266,821 
1.Financial assets include $14.0 billion of assets pledged as collateral.
2.Includes derivative instruments which are elected for hedge accounting, totaling $3.0 billion included in accounts receivable and other and $2.1 billion included in accounts payable and other, for which changes in fair value are recorded in other comprehensive income.
Gains or losses arising from changes in fair value through profit or loss (“FVTPL”) financial assets are presented in the Consolidated Statements of Operations in the period in which they arise. Dividends from FVTPL and fair value through other comprehensive income (“FVTOCI”) financial assets are recognized in the Consolidated Statements of Operations when the company’s right to receive payment is established. Interest on FVTOCI financial assets is calculated using the effective interest method and reported in the Consolidated Statements of Operations.
FVTOCI debt and equity securities are recorded on the balance sheet at fair value with changes in FVTOCI. As at December 31, 2023, the unrealized gains and losses relating to the fair value of FVTOCI securities amounted to $500 million (2022 – $78 million) and $278 million (2022 – $1.1 billion), respectively.
During the year ended December 31, 2023, net deferred income of $27 million (2022 – $10 million) previously recognized in accumulated other comprehensive income was reclassified to net income as a result of the disposition or impairment of certain of our FVTOCI financial assets that are not equity instruments.
Included in cash and cash equivalents is cash of $8.8 billion (2022 – $12.0 billion) and short-term deposits of $2.4 billion (2022 – $2.4 billion) as at December 31, 2023.
b)    Carrying and Fair Value
The following table lists the company’s financial instruments by their respective classification as at December 31, 2023 and 2022:
20232022
AS AT DEC. 31
(MILLIONS)
Carrying
Value		Fair
Value		Carrying
Value		Fair
Value
Financial assets
Cash and cash equivalents$11,222 $11,222 $14,396 $14,396 
Other financial assets
Government bonds1,600 1,600 1,566 1,566 
Corporate bonds2,441 2,441 2,147 2,147 
Fixed income securities and other9,198 9,198 8,762 8,762 
Common shares and warrants5,181 5,181 6,472 6,472 
Loans and notes receivable9,904 9,904 7,952 7,952 
28,324 28,324 26,899 26,899 
Accounts receivable and other19,464 19,464 19,880 19,880 
$59,010 $59,010 $61,175 $61,175 
Financial liabilities
Corporate borrowings$12,160 $11,350 $11,390 $9,599 
Non-recourse borrowings of managed entities
Property-specific borrowings205,336 205,003 187,544 184,254 
Subsidiary borrowings16,214 16,030 15,140 14,708 
221,550 221,033 202,684 198,962 
Accounts payable and other50,009 50,009 48,559 48,559 
Subsidiary equity obligations4,145 4,145 4,188 4,188 
$287,864 $286,537 $266,821 $261,308 
The current and non-current balances of other financial assets are as follows:
AS AT DEC. 31
(MILLIONS)
20232022
Current$5,670 $7,565 
Non-current22,654 19,334 
Total$28,324 $26,899 
c)    Fair Value Hierarchy Levels
The following table categorizes financial assets and liabilities, which are carried at fair value, based upon the fair value hierarchy levels:
 20232022
AS AT DEC. 31
(MILLIONS)
Level 1
Level 2
Level 3
Level 1Level 2Level 3
Financial assets
Other financial assets
Government bonds$25 $1,575 $— $91 $1,475 $— 
Corporate bonds— 1,662 777 65 1,754 324 
Fixed income securities and other455 958 4,903 493 2,099 3,376 
Common shares and warrants857 1,309 3,015 3,975 377 2,120 
Loans and notes receivables— 46 17 22 26 5 
1,337 5,550 8,712 4,646 5,731 5,825 
Accounts receivable and other6 2,520 89 12 3,731 6 
$1,343 $8,070 $8,801 $4,658 $9,462 $5,831 
Financial liabilities
Accounts payable and other$9 $5,119 $3,259 $7 $4,469 $2,419 
Subsidiary equity obligations4 — 259 — 441 673 
$13 $5,119 $3,518 $7 $4,910 $3,092 
Fair values of financial instruments are determined by reference to quoted bid or ask prices, as appropriate. If bid and ask prices are unavailable, the closing price of the most recent transaction of that instrument is used. In the absence of an active market, fair values are determined based on prevailing market rates for instruments with similar characteristics and risk profiles or internal or external valuation models, such as option pricing models and discounted cash flow analysis, using observable market inputs.
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
Dec. 31, 2023
Valuation Techniques and Key Inputs
Other financial assets$5,550 Valuation models based on observable market data
Derivative assets/Derivative liabilities (accounts receivable/accounts payable)
             2,520 / (5,119)
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
Fair values determined using valuation models requiring the use of unobservable inputs (Level 3 financial assets and liabilities) include assumptions concerning the amount and timing of estimated future cash flows and discount rates. In determining those unobservable inputs, the company uses observable external market inputs such as interest rate yield curves, currency rates and price and rate volatilities, as applicable, to develop assumptions regarding those unobservable inputs.
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
Dec. 31, 2023		Valuation
Techniques		Significant
Unobservable Inputs		Relationship of Unobservable
Inputs to Fair Value
Corporate bonds$777 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
Fixed income securities and other4,903 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 and warrants3,015 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
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
Derivative assets/Derivative liabilities (accounts receivable/payable)
89 /
(3,259)
  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
Limited-life funds (subsidiary equity obligations)(259)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
The following table presents the changes in the balance of financial assets and liabilities classified as Level 3 for the years ended December 31, 2023 and 2022:
 20232022
AS AT AND FOR THE YEARS ENDED DEC. 31
(MILLIONS)
Financial
Assets		Financial
Liabilities		Financial 
Assets 		Financial 
Liabilities 
Balance, beginning of year$5,831 $3,092 $2,232 $2,714 
Fair value changes in net income317 (444)95 (394)
Fair value changes in other comprehensive income (loss)1
654 (108)(13)(3)
Transfers in773 — 460 — 
Transfers out(44)(56)— — 
Additions, net of disposals1,270 1,034 3,057 775 
Balance, end of year$8,801 $3,518 $5,831 $3,092 
1.Includes foreign currency translation.
During the year ended December 31, 2023, $773 million of direct investments in equity securities within our Asset Management segment were transferred from Level 2 to Level 3 of the fair value hierarchy due to the implied price or cost previously used in the fair valuation of the investments not being observable due to minimal market activity for the securities. No other significant transfers were made between Levels 1, 2, or 3 during the year ended December 31, 2023.
During the year ended December 31, 2022, there was a transfer of $460 million to Level 3 of the fair value hierarchy, reflecting a change in valuation technique to a discounted cash flow approach driven by assumptions concerning the amount and timing of estimated future cash flows and discount rates. No other transfers were made between Levels 1, 2, or 3 during the year ended December 31, 2022.
The following table categorizes financial liabilities measured at amortized cost, but for which fair values are disclosed based upon the fair value hierarchy levels:
 20232022
AS AT DEC. 31
(MILLIONS)
Level 1Level 2Level 3Level 1Level 2Level 3
Corporate borrowings$11,280 $70 $— $9,524 $75 $— 
Property-specific borrowings8,526 108,076 88,401 6,742 87,764 89,748 
Subsidiary borrowings7,527 — 8,503 7,547 2,100 5,061 
Subsidiary equity obligations— 1,211 2,671 — 689 2,385 
Fair values of Level 2 and Level 3 liabilities measured at amortized cost but for which fair values are disclosed are determined using valuation techniques such as adjusted public pricing and discounted cash flows.
d)    Hedging Activities
The company uses derivatives and non-derivative financial instruments to manage or maintain exposures to interest, currency, credit and other market risks. Derivative financial instruments are recorded at fair value. For certain derivatives which are used to manage exposures, the company determines whether hedge accounting can be applied. 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 liabilities, respectively.
i.    Cash Flow Hedges
The company uses the following cash flow hedges: energy derivative contracts to hedge the sale of power; interest rate swaps to hedge the variability in cash flows or future cash flows related to a variable rate asset or liability; and equity derivatives to hedge long-term compensation arrangements. For the year ended December 31, 2023, pre-tax net unrealized loss of $754 million (2022 – $2.1 billion of gains) were recorded in other comprehensive income for the effective portion of the cash flow hedges. As at December 31, 2023, there was an unrealized derivative asset balance of $1.0 billion (2022 – $1.6 billion liability) relating to derivative contracts designated as cash flow hedges.
ii.    Net Investment Hedges
The company uses foreign exchange contracts and foreign currency denominated debt instruments to manage its foreign currency exposures arising from net investments in foreign operations. For the year ended December 31, 2023, unrealized pre-tax net loss of $1.2 billion (2022 – $3.0 billion of gains) were recorded in other comprehensive income for the effective portion of hedges of net investments in foreign operations. As at December 31, 2023, there was an unrealized derivative liability balance of $2.2 billion (2022 – $756 million) relating to derivative contracts designated as net investment hedges.
e)    Netting of Financial Instruments
Financial assets and liabilities are offset with the net amount reported in the Consolidated Balance Sheets, where the company currently has a legally enforceable right to offset and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
The company enters into derivative transactions under International Swaps and Derivatives Association (“ISDA”) master netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day are aggregated into a single net amount that is payable by one party to the other. The agreements provide the company with the legal and enforceable right to offset these amounts and accordingly the following balances are presented net in the consolidated financial statements:
 
Accounts Receivable
and Other
Accounts Payable
and Other
AS AT DEC. 31
(MILLIONS)
2023202220232022
Gross amounts of financial instruments before netting$3,204 $4,638 $5,305 $4,703 
Gross amounts of financial instruments set-off in the Consolidated Balance Sheets(589)(889)(506)(861)
Net amounts of financial instruments in the Consolidated Balance Sheets$2,615 $3,749 $4,799 $3,842