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## CAPITAL POWER CORPORATION 

Notes to the Consolidated Financial Statements 

(Tabular amounts in millions of Canadian dollars, except share and per share amounts) 

## 8. Disposal of assets: 

The gains recognized on disposals of assets were as follows: 

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On October 12, 2012, the Company completed a transaction with a third party, pursuant to which the third party acquired all of the partnership units of the indirect subsidiary of the Company which held its remaining hydro plant assets, consisting of the Brown Lake and Miller Creek power generation plants (the hydro assets), for gross proceeds of $69 million less transaction costs of $1 million. 

Upon close of the transaction, $59 million of the gross proceeds was received by the Company in cash and $10 million of the gross proceeds was paid to a third party escrow agent. These funds will be held in escrow pending the issuance of a new lease, by the Province of British Columbia to the purchaser, in respect of certain lands included in the hydro assets. As long as the new lease does not contain variations from the previous lease that significantly impact the economic value of the hydro assets, the full amount will be released to the Company. Subsequent to the end of 2012, the third party to the transaction has indicated that, in their opinion, the new lease is substantially different from the previous lease. The Company does not agree with this assessment and expects to receive the full amount of the escrow payment. 

The carrying amounts of the assets and liabilities of the hydro assets at the time of disposal were as follows: 

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## 9. Business combinations: 

## Prior year acquisitions of Bridgeport, Tiverton and Rumford 

The purchase price allocations pertaining to the 2011 acquisitions of Bridgeport Energy, LLC (Bridgeport Energy) and Tiverton Power Inc. and Rumford Power Inc. (Tiverton and Rumford) were finalized during 2012 resulting in a decrease of $2 million in trade and other receivables and an increase in goodwill of $2 million related to Bridgeport Energy, and an increase of $2 million in deferred tax assets and a decrease of $2 million in goodwill related to Tiverton and Rumford, from the amounts reported at December 31, 2011. 

## 10. Impairment testing: 

The Company reviews its CGUs that contain goodwill on an annual basis, generally in the third quarter, to determine whether an impairment should be recognized. The last impairment review was completed in the second quarter of 2012 for the North East U.S. commercial plants and portfolio optimization CGU (North East U.S. CGU), and in the third quarter of 2012 for the Southport CGU. 

Impairments recognized in the years ended December 31, 2012 and 2011, respectively, were as follows: 

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