118 29. Financial instruments, continued: Fair values, continued The classification, carrying amount and fair value of the Company’s other financial instruments are summarized as follows: The fair values of the Company’s finance lease receivables and other loans and receivables are estimated by discounting the expected future cash flows of these instruments at current market interest rates for comparable instruments with similar terms, plus an estimated credit spread based on the counterparty credit risk as at December 31, 2012 and December 31, 2011. The fair value of the Company’s loans and borrowings is based on determining a current yield for the Company’s loans and borrowings as at December 31, 2012 and December 31, 2011. This yield is based on an estimated credit spread for the Company over the yields of long-term Government of Canada and U.S. Government bonds that have similar maturities to the Company’s loans and borrowings. The estimated credit spread is based on the Company’s indicative spread as published by independent financial institutions. Fair value represents the Company’s estimate of the price at which a financial instrument could be exchanged between knowledgeable and willing parties in an orderly arm’s length transaction under no compulsion to act. Fair value measurements recognized in the consolidated statement of financial position are categorized into levels within a fair value hierarchy based on the nature of the valuation inputs and precedence is given to those fair value measurements calculated using observable inputs over those using unobservable inputs. The determination of fair value requires judgment and is based on market information where available and appropriate. The following levels were established for each input:  Level 1: Fair value is based on quoted prices (unadjusted) in active markets for identical instruments. Financial instruments classified in Level 1 include highly liquid short-term investments, and traded commodities obtained from active exchanges such as the New York Mercantile Exchange (NYMEX) whereby the Company can obtain quoted prices for identically traded commodities. Loans and receivables Loans and borrowings Fair value hierarchy December 31, 2012 December 31, 2011 Carrying amount Fair value Carrying amount Fair value Other financial assets (note 16) Loans and receivables $ 55 $ 55 $ 38 $ 37 Financial assets designated at fair value through income or loss (note 16) - - 53 53 Finance lease receivable (note 15) Loans and receivables 461 374 58 50 Loans and borrowings (note 22) Other financial liabilities (includes current portion) 1,659 1,676 1,480 1,571 CAPITAL POWER CORPORATION Notes to the Consolidated Financial Statements (Tabular amounts in millions of Canadian dollars, except share and per share amounts)