ACCOUNTING POLICIES AND INTERNAL CONTROLS Significant Changes in Accounting Standards The consolidated financial statements have been prepared in accordance with IFRS. Capstone has adopted the new and revised standards, along with consequential amendments, effective January 1, 2013. These changes include: • IFRS 10, Consolidated Financial Statements and IAS 27, Separate Financial Statements; • IFRS 11, Joint Arrangements and IAS 28, Investments in Associates and Joint Ventures; • IFRS 12, Disclosure of Interests in Other Entities; • IFRS 13, Fair Value Measurement; • IAS 1, Amendment, Presentation of Items of Other Comprehensive Income; and • IAS 19, Employee Benefits. Refer to note 2 (Summary of Significant Accounting Policies) to the December 31, 2013 annual consolidated financial statements for detail of the  nature and impact of these changes to Capstone financial statements. Certain comparative figures in this MD&A have been adjusted as if these accounting policies had always been applied. No adjustments were made  to the periods before September 30, 2011, prior to the acquisition of Bristol Water. Future Accounting Changes The IASB has previously issued the following standard which has not yet been adopted by the Corporation: (1) See note 2 to the consolidated financial statement for the year ended December 31, 2013 for further detail about the nature of these future  accounting changes. Accounting Estimates Title of the New IFRS (1) Impact to Capstone IFRS 9 , Jan 1, 2015 - Financial Instruments Capstone's assessment of the impact of this standard is ongoing. The consolidated financial statements are prepared in accordance with IFRS, which requires the use of estimates and judgment in reporting assets,  liabilities, revenues, expenses and contingencies. Refer to note 2 (Summary of Significant Accounting Policies) to the December 31, 2013 annual consolidated financial statements for greater detail  of the areas of significance and the related critical estimates and judgments. Capstone's significant accounting estimates and judgments used in the preparation of the consolidated financial statements were: Area of Significance Critical Estimates and Judgments Capital assets, projects under development and intangible assets: • Purchase price allocations • Initial fair value of net assets. • Depreciation on capital assets • Estimated useful lives and residual value. • Amortization on intangible assets • Estimated useful lives. • Asset retirement obligations • Expected settlement date, amount and discount rate. • Impairment assessments of capital assets, projects under development, intangibles and goodwill • Future cash flows and discount rate. Retirement benefits • Future cash flows and discount rate. Deferred income taxes • Timing of reversal of temporary differences, tax rates and current and future taxable income. Financial instruments and fair value measurements • Interest rate, natural gas price, and direct consumer rate. Accounts receivable • Probability of failing to recover amounts when they fall into arrears. Accounting for investments in non-wholly owned subsidiaries • Determine how relevant activities are directed (either through voting rights or contracts); • Determine if Capstone has substantive or protective rights; and • Determine Capstone's ability to influence returns. Management’s estimates and judgements were based on historical experience, trends and various other assumptions that are believed to be reasonable under the circumstances. Actual results could materially differ from those estimates. 2013 ANNUAL REPORT  49