Notes to the Consolidated Financial Statements
8. FINANCIAL AND DERIVATIVE INSTRUMENTS For recurring and non-recurring fair value measurements, the Corporation estimates the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the reporting date under current market conditions. This requires the Corporation to make certain assumptions, including the principal (or most advantageous) market, the most appropriate valuation technique and the most appropriate valuation premise. The Corporation’s own credit risk and the credit risk of the counterparty have been taken into account in determining the fair value of financial assets and liabilities, including derivative instruments. In measuring fair value, the Corporation classifies items according to the fair value hierarchy based on the amount of observable inputs. Level 1 valuations use quoted prices (unadjusted) that are available in active markets for identical assets or liabilities as at the reporting date. Active markets are those in which transactions occur in sufficient frequency and volume to provide ongoing pricing information. Level 2 valuations are based on inputs that are either directly or indirectly observable for the asset or liability as at the reporting date. Inputs include quoted market prices, time value, volatility factors and broker quotations which can be substantially observed or corroborated in the marketplace. Level 3 inputs are unobservable for the particular assets and liabilities as at the reporting date. The Corporation did not classify any of its fair value measurements within Level 3.
2020
2019
Classifi- cation
Fair Value Hierarchy
Carrying Amount
Fair Value
Carrying Amount
Fair Value
(millions)
FINANCIAL AND DERIVATIVE ASSETS Cash
$
1 $
1 $
FVTPL
Level 1
6 $
6
155 136
155 136
Trade and other receivables
AC Level 2
156 121
156 121
Debt retirement funds
FVOCI FVTPL
Level 2 Level 2
15
15
Fair value of derivative instrument assets
41
41
FINANCIAL AND DERIVATIVE LIABILITIES Bank indebtedness
-
-
FVTPL
Level 1
-
-
279 120
279 120
Short-term debt
AC Level 2 AC Level 2 AC Level 2 AC Level 2
260 117
260 117
Trade and other payables
2
2
Dividends payable Long-term debt
43
43
1,359
1,532
1,180
1,332
Fair value of derivative instrument liabilities
21
21
FVTPL
Level 2
17
17
Classification details: FVTPL - fair value through profit or loss
AC - amortized cost FVOCI - fair value through other comprehensive income
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