Algonquin Power & Utilities Corp. – Consolidated Financial Statements ALGONQUIN POWER & UTILITIES CORP.  1.  Significant accounting policies (continued) Notes to the Consolidated Financial Statements  December 31  2012 and 2011   (in thousands of Canadian dollars except as noted and amounts per share)  Contributions in aid of construction represent amounts contributed by customers and governments and developers for the cost of utility capital assets. It also includes amounts  initially recorded as advances in aid of construction (note 1(o)) but where the advance  repayment period has expired. These contributions are recorded as a reduction in the cost of  utility assets and are amortized at the rate of the related asset as a reduction to depreciation  expense. In accordance with regulator-approved accounting policies  when depreciable property  plant  and equipment of Liberty Utilities are replaced or retired  the original cost plus any removal  costs incurred (net of salvage) are charged to accumulated depreciation with no gain or loss  reflected in results of operations. Gains and losses will be charged to results of operation in the  future through adjustments to depreciation expense. In the absence of regulator-approved  accounting policies  gains and losses on the disposition of property  plant and equipment are  charged to earnings as incurred.  The fair value of power sales contracts acquired in business combinations are amortized on a  straight-line basis over the remaining term of the contract. These periods range from 6 to 25  years from date of acquisition.  Customer relationships acquired in business combinations are amortized on a straight-line basis  over their estimated life of 40 years. Goodwill represents the excess of the purchase price of an acquired business over the fair  value of the net assets acquired. Goodwill is not included in the rate-base on which regulated  utilities are allowed to earn a return and is not amortized. The Company annually assesses qualitative factors to determine whether it is more likely  than not that the fair value of a reporting unit is less than its carrying amount. If it is more  likely than not that a reporting unit’s fair value is less than its carrying amount  the Company  calculates the fair value of the reporting unit. The carrying amount of the reporting unit’s  goodwill is considered not recoverable if the carrying amount of the reporting unit as a whole  exceeds the reporting unit’s fair value. An impairment charge is recorded for any excess of  the carrying value of the goodwill over the implied fair value. Goodwill is tested for  impairment between annual tests if an event occurs or circumstances change that would  more likely than not reduce the fair value of a reporting unit below its carrying amount.  2012 Annual Report 81 (k) Goodwill  (j) Intangibles  (i) Property  plant and equipment (continued) 