Allegheny Power 2014 Annual Report Download - page 86

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71
intent to hold criteria in consideration of OTTI. In 2014, 2013 and 2012, FirstEnergy recognized $37 million, $90 million and $16
million, respectively, of OTTI. During the same periods, FES recognized OTTI of $33 million, $79 million and $14 million, respectively.
The fair values of FirstEnergy’s investments are disclosed in Note 9, Fair Value Measurements.
INVENTORY
Materials and supplies inventory includes fuel inventory and the distribution, transmission and generation plant materials, net of
reserve for excess and obsolete inventory. Materials are generally charged to inventory at weighted average cost when purchased
and expensed or capitalized, as appropriate, when used or installed. Fuel inventory is accounted for at weighted average cost when
purchased, and recorded to fuel expense when consumed.
NEW ACCOUNTING PRONOUNCEMENTS
In May 2014, the FASB issued Revenue from Contracts with Customers, requiring entities to recognize revenue by applying a five-
step model in accordance with the core principle to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the
accounting for costs to obtain or fulfill a contract with a customer is specified and disclosure requirements for revenue recognition
are expanded. This standard is effective for fiscal years beginning after December 15, 2016, with no early adoption permitted, and
shall be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. FirstEnergy
is currently evaluating the impact on its financial statements of adopting this standard.
2. ACCUMULATED OTHER COMPREHENSIVE INCOME
The changes in AOCI, net of tax, for the years ended December 31, 2014, 2013 and 2012 for FirstEnergy and FES are shown in
the following tables:
FirstEnergy
Gains &
Losses on
Cash Flow
Hedges
Unrealized
Gains on AFS
Securities
Defined
Benefit
Pension &
OPEB Plans Total
(In millions)
AOCI Balance, January 1, 2012 $ (39) $ 19 $ 446 $ 426
Other comprehensive income before
reclassifications (1) — 41 79 120
Amounts reclassified from AOCI 1 (45) (117) (161)
Net other comprehensive income (loss) 1 (4) (38) (41)
AOCI Balance, December 31, 2012 $ (38) $ 15 $ 408 $ 385
Other comprehensive income before
reclassifications (2) — 29 23 52
Amounts reclassified from AOCI 2 (35) (120) (153)
Net other comprehensive income (loss) 2 (6) (97) (101)
AOCI Balance, December 31, 2013 $ (36) $ 9 $ 311 $ 284
Other comprehensive income before
reclassifications (3) — 55 50 105
Amounts reclassified from AOCI (1) (39) (103) (143)
Net other comprehensive income (loss) (1) 16 (53) (38)
AOCI Balance, December 31, 2014 $ (37) $ 25 $ 258 $ 246
(1) Unrealized Gains on AFS Securities and Defined Benefits Pension & OPEB plans are net of tax of $25 million and $(3 million),
respectively.
(2) Unrealized Gains on AFS Securities and Defined Benefits Pension & OPEB plans are net of tax of $17 million and $12 million,
respectively.
(3) Unrealized Gains on AFS Securities and Defined Benefits Pension & OPEB plans are net of tax of $34 million and $42 million,
respectively.