APS 2015 Annual Report Download - page 103

Table of Contents
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our investments in the nuclear decommissioning trust fund are accounted for in accordance with guidance on accounting for
certain investments in debt and equity securities. See Note 13 and Note 19 for more information on these investments.
Business Segments
Pinnacle West’s reportable business segment is our regulated electricity segment, which consists of traditional regulated retail
and wholesale electricity businesses (primarily electricity service to Native Load customers) and related activities and includes
electricity generation, transmission and distribution. All other segment activities are insignificant.
Preferred Stock
At December 31, 2015, Pinnacle West had 10 million shares of serial preferred stock authorized with no par value, none of
which was outstanding, and APS had 15,535,000 shares of various types of preferred stock authorized with $25, $50 and $100 par
values, none of which was outstanding.
2. New Accounting Standards
In May 2014, new revenue recognition guidance was issued. This guidance provides a single comprehensive model for entities
to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The
new revenue standard will be effective for us on January 1, 2018. The guidance may be adopted using a full retrospective application
or a simplified transition method that allows entities to record a cumulative effect adjustment in retained earnings at the date of initial
application. We are currently evaluating this new guidance and the impacts it may have on our financial statements.
In February 2015, new consolidation accounting guidance was issued that amends many aspects of the guidance relating to the
analysis and consolidation of variable interest entities. The new guidance is effective for us, and will be adopted, during the first
quarter of 2016; and may be adopted using either a full retrospective or modified retrospective approach. We do not expect the
adoption of this guidance to have a material impact on our financial statements.
In January 2016, new guidance was issued relating to the recognition and measurement of financial instruments. The amended
guidance will require certain investments in equity securities to be measured at fair value with changes in fair value recognized in net
income, and modifies the impairment assessment of certain equity securities. The new guidance is effective for us on January 1, 2018.
Certain aspects of the guidance may require a cumulative-effect adjustment and other aspects of the guidance are required to be
adopted prospectively. We are currently evaluating this new accounting standard and the impacts it may have on our financial
statements.
During the fourth quarter of 2015 we elected to early adopt the following accounting standard updates:
• Balance sheet presentation of deferred income taxes. See Note 4.
• Balance sheet presentation of debt issuance costs: Adopted on a retrospective basis, the new guidance requires debt issuance
costs to be presented on the balance sheets as a direct reduction to the related debt liabilities. Prior to the adoption of this
guidance we were required to present debt issuance costs as an asset on the balance sheets. As a result of adopting this
guidance, our December 31, 2015 Consolidated Balance Sheet includes $28 million of debt issuance costs as a reduction to our
long-term
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