PART 6 – ADDITIONAL INFORMATION ACCOUNTING POLICIES AND INTERNAL CONTROLS Accounting Policies and Critical Judgments and Estimates The preparation of financial statements requires management to select appropriate accounting policies and to make judgments  and estimates that affect the carried amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date  of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could  differ from those estimates. In making critical judgments and estimates, management relies on external information and observable conditions, where  possible, supplemented by internal analysis as required. These estimates have been applied in a manner consistent with that in  the prior year and there are no known trends, commitments, events or uncertainties that we believe will materially affect the  methodology or assumptions utilized in this report. The estimates are impacted by, among other things, movements in interest  rates and other factors, some of which are highly uncertain.  For further reference on accounting policies and critical judgments and estimates, see our significant accounting policies  contained in Note 2 to the December 31, 2013 consolidated financial statements. The significant estimates used in determining the recorded amount for assets and liabilities in the consolidated financial  statements include the following: The critical assumptions and estimates used when determining the fair value of commercial properties are: the timing of rental  income from future leases reflecting current market conditions, less assumptions of future cash flows in respect of current and  future leases; maintenance and other capital expenditures; discount rates; terminal capitalization rates; and terminal valuation  dates. Properties under development are recorded at fair value using a discounted cash flow model which includes estimates in  respect of the timing and cost to complete the development.  When determining the carrying value of property, plant and equipment using the revaluation method, the company uses the  following critical assumptions and estimates: the timing of forecasted revenues, future sales prices and margins; future sales  volumes; future regulatory rates; maintenance and other capital expenditures; discount rates; terminal capitalization rates;  terminal valuation dates; useful lives; and residual values. Determination of the fair value of property, plant and equipment under  development includes estimates in respect of the timing and cost to complete the development. The fair value of standing timber and agricultural assets is based on the following critical estimates and assumptions: the timing  of forecasted revenues and prices; estimated selling costs; sustainable felling plans; growth assumptions; silviculture costs;  discount rates; terminal capitalization rates; and terminal valuation dates.  Estimates and assumptions used in determining the fair value of financial instruments are: equity and commodity prices; future  interest rates; the credit worthiness of the company relative to its counterparties; the credit risk of the company’s counterparties;  estimated future cash flows; discount rates and volatility utilized in option valuations.  The company estimates the net realizable value of its inventory using estimates and assumptions about future selling prices and  future development costs. Other estimates and assumptions utilized in the preparation of the company’s financial statements are: the assessment or  determination of net recoverable amounts; depreciation and amortization rates and useful lives; estimation of recoverable  amounts of cash-generating units for impairment assessments of goodwill and intangible assets; ability to utilize tax losses and  other tax measurements; and fair value of assets held as collateral.  Management is required to make critical judgments when applying its accounting policies. The following judgments have the  most significant effect on the consolidated financial statements: 72 BROOKFIELD ASSET MANAGEMENT  a.  Investment Properties b.  Revaluation Method for Property, Plant and Equipment c.  Sustainable Resources d.  Financial Instruments e.  Inventory f.  Other i.  Critical Estimates ii.  Critical Judgments