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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2019
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 12. Fair Value Measurements and Financial Instruments a) Fair Value Measurements The following methods and assumptions were used to estimate the fair value of each class of financial instruments and other non-financial assets. Cash and cash equivalents and restricted cash – The fair value of the Company’s cash and cash equivalents and restricted cash approximates their carrying amounts reported in the accompanying consolidated balance sheets. Vessels and equipment and assets held for sale – The estimated fair value of the Company’s vessels and equipment and assets held for sale was determined based on discounted cash flows, appraised values and contractual sales prices. In cases where an active second-hand sale and purchase market does not exist, the Company uses a discounted cash flow approach to estimate the fair value of an impaired vessel. In cases where an active second-hand sale and purchase market exists, an appraised value is generally the amount the Company would expect to receive if it were to sell the vessel. Such appraisal is normally completed by the Company. Other assets held for sale include working capital balances and the fair value of such amounts generally approximate their carrying value. Loans to equity-accounted investments and joint venture partners – The fair value of the Company’s loans to joint ventures and joint venture partners approximates their carrying amounts reported in the accompanying consolidated balance sheets. Long-term debt – The fair value of the Company’s fixed-rate and variable-rate long-term debt is either based on quoted market prices or estimated using discounted cash flow analyses, based on rates currently available for debt with similar terms and remaining maturities and the current credit worthiness of the Company. Alternatively, if the fixed-rate and variable-rate long-term debt is held for sale the fair value is based on the estimated sales price. Long-term obligation related to finance leases – The fair value of the Company's long-term obligation related to finance leases is estimated using discounted cash flow analyses, based on rates currently available for debt with similar terms and remaining maturities. Derivative instruments – The fair value of the Company’s derivative instruments is the estimated amount that the Company would receive or pay to terminate the agreements at the reporting date, taking into account, as applicable, fixed interest rates on interest rate swaps, current interest rates, foreign exchange rates, and the current credit worthiness of both the Company and the derivative counterparties. The estimated amount is the present value of future cash flows. The Company transacts all of its derivative instruments through investment-grade rated financial institutions at the time of the transaction and requires no collateral from these institutions. Given the current volatility in the credit markets, it is reasonably possible that the amounts recorded as derivative assets and liabilities could vary by material amounts in the near term. The Company categorizes its fair value estimates using a fair value hierarchy based on the inputs used to measure fair value. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value as follows: Level 1. Observable inputs such as quoted prices in active markets; Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The following table includes the estimated fair value and carrying value of those assets and liabilities that are measured at fair value on a recurring and non-recurring basis, as well as the estimated fair value of the Company’s financial instruments that are not accounted for at a fair value on a recurring basis.
|  |  | December 31, 2019 |  | December 31, 2018
| Fair Value Hierarchy Level |  | Carrying Amount Asset (Liability) $ |  | Fair Value Asset (Liability) $ |  | Carrying Amount Asset (Liability) $ |  | Fair Value Asset (Liability) $
Recurring |  |  |  |  |  |  |  |  |
Cash, cash equivalents and restricted cash | Level 1 |  | 454,867 |  |  | 454,867 |  |  | 505,639 |  |  | 505,639 |
Derivative instruments (note 16) |  |  |  |  |  |  |  |  |
Interest rate swap agreements – assets (1) | Level 2 |  | 3,099 |  |  | 3,099 |  |  | 9,640 |  |  | 9,640 |
Interest rate swap agreements – liabilities (1) | Level 2 |  | (52,453 | ) |  | (52,453 | ) |  | (43,175 | ) |  | (43,175 | )
Cross currency interest swap agreements – assets (1) | Level 2 |  | — |  |  | — |  |  | — |  |  | — |
Cross currency interest swap agreements – liabilities (1) | Level 2 |  | (42,104 | ) |  | (42,104 | ) |  | (29,122 | ) |  | (29,122 | )
Foreign currency contracts | Level 2 |  | (202 | ) |  | (202 | ) |  | — |  |  | — |
Stock purchase warrants | Level 3 |  | — |  |  | — |  |  | 12,026 |  |  | 12,026 |
Freight forward agreements | Level 2 |  | (86 | ) |  | (86 | ) |  | (57 | ) |  | (57 | )
Non-recurring |  |  |  |  |  |  |  |  |
Vessels held for sale (notes 6 and 19) | Level 2 |  | 37,240 |  |  | 37,240 |  |  | — |  |  | — |
Other (2) |  |  |  |  |  |  |  |  |
Short-term debt (note 8) | Level 2 |  | (50,000 | ) |  | (50,000 | ) |  | — |  |  | — |
Long-term debt – public (note 9) | Level 1 |  | (619,794 | ) |  | (655,977 | ) |  | (856,986 | ) |  | (851,470 | )
Long-term debt – non-public (note 9) | Level 2 |  | (2,207,358 | ) |  | (2,180,440 | ) |  | (2,462,537 | ) |  | (2,395,300 | )
Obligations related to finance leases, including current portion (note 11) | Level 2 |  | (1,825,692 | ) |  | (1,877,558 | ) |  | (1,673,845 | ) |  | (1,652,345 | )
(1) | The fair value of the Company’s interest rate swap and cross currency swap agreements at December 31, 2019 includes $3.4 million (December 31, 2018 – $3.2 million) accrued interest expense which is recorded in accrued liabilities on the consolidated balance sheets.
(2) | In the consolidated financial statements, the Company’s loans to and investments in equity-accounted investments form the aggregate carrying value of the Company’s interests in entities accounted for by the equity method. The fair value of the individual components of such aggregate interests is not determinable.
Stock purchase warrants – Prior to the 2019 Brookfield Transaction, Teekay held 15.5 million common unit warrants (or the Brookfield Transaction Warrants) issued by Altera to Teekay in connection with the 2017 Brookfield Transaction (see Note 4) and 1,755,000 warrants to purchase common units of Altera issued to Teekay in connection with Altera's private placement of Series D Preferred Units in June 2016 (or the Series D Warrants). In May 2019, Teekay sold to Brookfield all of the Company’s remaining interests in Altera, which included, among other things, both the Brookfield Transaction Warrants and Series D Warrants. Changes in fair value during the years ended December 31, 2019 and 2018 for the Company’s Brookfield Transaction Warrants and the Series D Warrants, which were measured at fair value using significant unobservable inputs (Level 3), are as follows:
| Year Ended December 31,
| 2019 $ |  | 2018 $
Fair value at the beginning of the year | 12,026 |  |  | 30,749 |
Fair value on acquisition/issuance | — |  |  | 2,330 |
Unrealized gain (loss) included in earnings | 26,900 |  |  | (21,053 | )
Realized loss included in earnings | (25,559 | ) |  | — |
Settlements | (13,367 | ) |  | — |
Fair value at the end of the year | — |  |  | 12,026 |
b) Financing Receivables The following table contains the carrying value of the Company's financing receivables by type of borrower, the method by which the Company monitors the credit quality of its financing receivables on a quarterly basis, and the grade as of December 31, 2019.
|  |  |  |  | December 31,
Class of Financing Receivable | Credit Quality Indicator |  | Grade |  | 2019 $ |  | 2018 $
Direct financing leases and sales-type leases | Payment activity |  | Performing |  | 818,809 |  |  | 575,163 |
Other loan receivables |  |  |  |  |  |  |
Loans to equity-accounted investments and joint venture partners | Other internal metrics |  | Performing |  | 70,784 |  |  | 231,404 |
Long-term receivable and accrued revenue included in accounts receivable and other assets | Payment activity |  | Performing |  | 8,092 |  |  | 15,694 |
|  |  |  |  | 897,685 |  |  | 822,261 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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