ComEd 2013 Annual Report Download - page 120

to certaininvestmentsandjoint ventures, includingthe50.01%interestinCENG, andcertainfinancingtrustsofComEd, PECO, and
BGE. Under theequitymethod, Exelon reportsitsinterestinthe entityasan investment andExelon’s percentageshare ofthe
earnings fromthe entityassingle line items initsfinancial statements. Exelon usesthecostmethodifitholds less than 20%ofthe
common stock ofan entity. Under thecostmethod, Exelon reportsitsinvestment at costandrecognizesincome onlyto theextent
Exelon receives dividends or distributions.
For theyear endedDecember 31,2013, BGE recordeda$2million (pre-tax) correctingadjustment to decreaseamortization
expense relatedto regulatoryassetsthat were originallyrecordedduring2012,an adjustment to decreaseincometaxexpenseby
$4 million relatedto therecognition andmeasurement ofregulatoryassetsthat shouldhavebeen recordedin periods prior to 2013,
anda$4 million (pre-tax) correctingadjustment to decrease operatingandmaintenanceexpensefor an overstatement of BGE’s life
insuranceobligation relatedto post-employment benefitsinprior years. For theyear endedDecember 31,2012, BGE recordeda
$2million (pre-tax) correctingadjustment to reduce electric distribution revenue relatedto decouplingof2011 electric distribution
revenue,a$3million (pre-tax) correctingadjustment to increase electric operationsandmaintenanceexpense relatedto
capitalization ofelectric transmission costs, anda$5 million (pre-tax) correctingadjustment to interestexpensetoreflecttheimpacts
ofamendmentsoftaxpositionspreviouslytaken on prior-year consolidatedincometaxreturns. Inaddition,ComEd identifieda
disclosure adjustment withinthe renewable energy creditsandalternative energy creditssection ofthe 2012 Form10-K
Note 8—Intangible Assets which hasbeen revisedinNote 10 ofthis year’s report.Exelon,ComEd and BGE haveconcludedthese
correctingadjustmentsare not material to itsresultsofoperations, cash flows, or financial positionsfor theyearsended
December 31,2013,andDecember 31,2012,or anyprior period.
Theaccompanyingconsolidatedfinancial statementshavebeen preparedinaccordancewithGAAPfor annual financial statements
andinaccordancewiththeinstructionsto Form10-K andRegulation S-X promulgatedbytheSEC.
Each oftheRegistrant’s ConsolidatedFinancial Statementsincludestheaccountsofitssubsidiaries. All intercompanytransactions
havebeen eliminated.
Use of Estimates
The preparation offinancial statementsofeach oftheRegistrantsinconformitywithGAAPrequiresmanagement to makeestimates
andassumptionsthat affecttheamountsreportedinthefinancial statementsandaccompanyingnotes. Areasinwhich significant
estimateshavebeen madeinclude,but are not limitedto,theaccountingfor nuclear decommissioningcostsandother AROs,
pension andother postretirement benefits, the application ofpurchaseaccounting, inventoryreserves, allowancefor uncollectible
accounts, goodwill andasset impairments, derivativeinstruments, unamortizedenergy contracts, fixedasset depreciation,
environmental costsandother loss contingencies, taxesandunbilledenergy revenues. Actual resultscould differ fromthose
estimates.
Reclassifications
Certainprior year amountsinExelon’s ConsolidatedStatementsofOperations, ConsolidatedStatementsofCash Flows, and
ConsolidatedBalanceSheetshavebeen reclassifiedbetween line items for comparative purposesandcorrection ofprior period
classification errorsidentifiedin 2013.Thereclassifications did not affectanyoftheRegistrants’ net incomeorcash flows from
operatingactivities.
In 2013,Exelon and BGE correctedthe presentation ofinterestexpense relatedto BGE’s financingtrustof$12 million and
$16million,respectively, to be presentedasInterestexpensetoaffiliates, net on theirStatementsofOperationsandComprehensive
Incomefor theyear endedDecember 31,2012.Exelon and BGE alsoreclassifiedthe relatedAccruedexpensesof$4million to
Payablesto affiliateson itsDecember 31,2012 BalanceSheet. Similar adjustmentsare alsoreflectedinNote 22 –RelatedParty
Transactions. Exelon andGeneration alsocorrectedamounts disclosedwithinNote 22 –RelatedPartyTransactionsto increase
Purchasedpower andfuel fromaffiliatesby$114million andto increasePayablesto affiliatesby$20 million.In 2013,Generation
correctedthe presentation ofinterestexpense relatedto certaindebtof $75 million to be presentedasInterestexpensetoaffiliates,
net on itsStatement ofOperationsandComprehensiveIncomefor theyear endedDecember 31,2012 andwithinNote 22 –Related
PartyTransactions.
Accounting for the Effects of Regulation
Exelon,ComEd, PECO and BGE applythe authoritativeguidancefor accountingfor certaintypesofregulation, which requires
ComEd, PECO and BGE to recordintheirconsolidatedfinancial statementstheeffectsofcost-basedrate regulation for entitieswith
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