Notes to Consolidated Financial Statements

1. Description of TransCanada's Business
2. Accounting Policies
3. Accounting Changes
4. Segmented Information
5. Plant, Property and Equipment
6. Goodwill
7. Rate-Regulated Businesses
8. Joint Venture Investments
9. Intangibles and Other Assets
10. Notes Payable
11. Deferred Amounts
12. Income Taxes
13. Long-Term Debt
14. Long-Term Debt of Joint Ventures
15. Junior Subordinated Notes
16. Non-Controlling Interests
17. Common Shares
18. Preferred Shares
19. Asset Retirement Obligations
20. Employee Future Benefits
21. Risk Management and Financial Instruments
22. Changes in Operating Working Capital
23. Acquisitions and Dispositions
24. Commitments, Contingencies and Guarantees
25. United States Accounting Principles and Reporting

Note 9: Intangibles and Other Assets

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December 31 (millions of dollars) 2011 2010
Employee benefit plans (Note 20) 499 473
PPAs(1) 482 539
Loans and advances(2) 224 241
Fair value of derivative contracts (Note 21) 213 374
Future income tax assets (Note 12) 133 112
Margin calls 104 76
Equity investments(3) 41 78
Other 342 245
  2,038 2,138
(1) The following amounts related to PPAs are included in Intangibles and Other Assets:
 
  2011 2010
December 31 (millions of dollars) Cost Accumulated Amortization Net Book Value Cost Accumulated Amortization Net Book Value
Sheerness 585 234 351 585 195 390
Sundance A 225 148 77 224 133 91
Sundance B 110 56 54 110 52 58
PPAs 920 438 482 919 380 539
Amortization expense for the PPAs was $58 million for the year ended December 31, 2011 (2010 and 2009 – $58 million). The expected annual amortization expense in each of the next five years is $58 million. The $77 million net book value related to Sundance A is expected to remain fully recoverable under the terms of the PPA regardless of the outcome of the arbitration process discussed in Note 24 "Commitments, Contingencies and Guarantees".
(2) As at December 31, 2011, TransCanada held a $265 million (2010 – $281 million) note receivable from the seller of Ravenswood which bears interest at 6.75 per cent and matures in 2039. This represents the long–term portion of that note.
(3) The balance primarily relates to the Company's 46.5 per cent ownership interest in TransGas.

Advances to Aboriginal Pipeline Group

The Mackenzie Delta gas producers, the Aboriginal Pipeline Group (APG) and TransCanada have an agreement governing TransCanada's role in the Mackenzie Gas Project (MGP). The project, if successful, would result in a natural gas pipeline being constructed from Inuvik, Northwest Territories to the northern border of Alberta, where it would connect to the Alberta System. Under the agreement, TransCanada agreed to finance the APG for its one-third share of project pre-development costs.

The MGP proponents continue to pursue the required regulatory approvals for the project and the Canadian government's support of an acceptable fiscal framework. In December 2010, the NEB released a decision granting approval of the project's application for a Certificate of Public Convenience and Necessity. The approval contained 264 conditions including the requirement to file an updated cost estimate and report on the decision to construct by the end of 2013 and, further, that construction must commence by December 31, 2015.

At December 31, 2010, due to uncertainty with respect to the project's ultimate commercial structure and fiscal framework, the timeframes under which the project would proceed and if and when the Company's advances to the APG will be repaid, a valuation provision of $146 million was recorded on the loan to the APG. Amounts advanced to the APG in furtherance of the MGP in 2011 have been expensed.