NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Cash and Cash Equivalents and Short-Term Deposits Inventories Loans Receivable Capitalized Interest  Grants and Contributions  Capital Assets Capital assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly  attributable to the acquisition of the asset. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset only when it is probable that future economic benefits associated with the item will flow to the Corporation and the cost can be measured reliably. The carrying  value of an asset is derecognized when replaced.  Major maintenance costs are capitalized in the carrying value of the assets as incurred, and depreciated over the period to the next scheduled major maintenance. Other repairs and maintenance costs are charged to the statement of income during the period incurred. Gains or losses on disposals are determined by comparing the proceeds of sale with the carrying amount and are recognized within the  consolidated statement of income. The Corporation allocates the amount initially recognized in respect of an item of capital assets to its significant parts and depreciates separately  each such part. Residual values, method of amortization and useful lives of the assets are reviewed annually and adjusted if appropriate. The major categories of capital assets are depreciated using the straight-line method as follows: Grants are recognized at their fair value when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Grants and contributions related to charges in the consolidated statement of income are netted against such expenditures as  received. The Corporation capitalizes interest and borrowing costs when activities that are necessary to prepare the asset for its intended use are in progress  and expenditures for the asset have been used or borrowed to fund the construction or development. Capitalization of interest and borrowing costs ceases when the asset is ready for its intended use. Capitalized interest is included in the statement of financial position as part of capital assets and  projects under development. The Corporation has interest-bearing financial assets that consist of a series of loans receivable from Chapais and Värmevärden. These financial  assets are carried at amortized cost.  Inventories are valued at the lower of purchase cost (calculated on a first in, first out basis) and net realizable value.  Deposits with original maturities of greater than 90 days are classified as short-term deposits on the consolidated statement of financial position. Cash and cash equivalents are composed of highly liquid investments with original maturities of 90 days or less at the date of acquisition and are recorded at fair value. The water network refers to an integrated network of impounding and pumped raw water storage reservoirs and water mains and associated  underground pipework. For accounting purposes, the water system is segmented into components representing categories of asset classes with  similar characteristics and asset lives. Expenditure on such assets relating to increases in capacity, enhancements or planned maintenance of the  network is treated as an addition to capital assets and is included at cost. The cost of the water network is the purchase cost together with incidental expenses of acquisition and directly attributable labour costs which are incremental to the Corporation. Assets financed by leasing agreements that transfer substantially all the risks and rewards of ownership of an asset to the lessee are capitalized and  depreciated over the shorter of their estimated useful lives and the lease term. The corresponding liability is recorded as borrowings. The capital  Leased Assets  60 CAPSTONE INFRASTRUCTURE CORPORATION Power Utilities – water Equipment and vehicles: Computer hardware, communications, meters and telemetry equipment 3 to 25 years 3 to 15 years Vehicles and equipment 3 to 15 years 5 to 7 years Property and plant: Operational properties and structures 20 to 45 years 15 to 100 years Treatment,pumping and general plant n/a 20 to 24 years Water network n/a 70 to 213 years