Algonquin Power & Utilities Corp. – Consolidated Financial Statements 1.  Significant accounting policies (continued)  ALGONQUIN POWER & UTILITIES CORP.  Notes to the Consolidated Financial Statements  December 31, 2012 and 2011   (in thousands of Canadian dollars except as noted and amounts per share)  Restricted cash represent reserves and amounts set aside pursuant to requirements of various  debt agreements and requirements of ISO New England, Inc. Cash reserves segregated from  APUC’s cash balances are maintained in accounts administered by a separate agent and  disclosed separately as restricted cash in these consolidated financial statements. APUC  cannot access restricted cash without the prior authorization of parties not related to APUC. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The  Company maintains an allowance for doubtful accounts for estimated losses inherent in its  accounts receivable portfolio. In establishing the required allowance, management considers  historical losses adjusted to take into account current market conditions and customers’  financial condition, the amount of receivables in dispute, and the receivables aging and current  payment patterns. Account balances are charged against the allowance after all means of  collection have been exhausted and the potential for recovery is considered remote. The  Company does not have any off-balance-sheet credit exposure related to its customers.  Gas in storage is reflected at weighted average cost or first-in-first-out as required by the  regulators and represents natural gas and liquefied natural gas that will be utilized in the  ordinary course of business of the gas utilities. Existing rate orders allow the Company to pass  through the cost of gas purchased directly to the rate payers along with any applicable  authorized delivery surcharge adjustments. Accordingly, the recoverable value of gas in  storage does not fall below the cost to the Company (note 7).  Supplies and consumables inventory (other than capital spares and rotatable spares, which  are included in property, plant, and equipment) are charged to inventory when purchased  and then capitalized to plant or expensed, as appropriate, when installed, used or become  obsolete. These items are stated at the lower of cost and replacement cost. Property, plant and equipment, consisting of renewable and thermal generation assets,  electrical, gas, water and wastewater distribution assets, equipment and land, are recorded at  cost. The costs of acquiring or constructing property, plant and equipment include the following:  materials, labour, contractor and professional services, construction overhead directly attributable to the capital project (where applicable), interest for non-regulated property and  allowance for equity funds used during construction (“AFUDC”) for regulated property. Plant and  equipment under capital leases are initially recorded at cost determined as the present value of  minimum lease payments.  2012 Annual Report 79  (e) Restricted cash   (f) Accounts receivable  (g) Gas in storage  (h) Supplies and consumables inventory  (i) Property, plant and equipment 