ComEd 2013 Annual Report Download - page 156

the proposedmerger.Duringthethirdquarter of2011,the partiesto thesuitsreachedan agreement inprinciple to settle thesuits
through additional disclosuresto Constellation shareholders. OnJune 26, 2012,thecourt approvedthesettlement andenteredfinal
judgment.
Accounting for the Merger Transaction
Thefairvalue ofConstellation’s non-regulatedbusiness assetsacquiredandliabilitiesassumedwasdeterminedbasedon significant
estimatesandassumptionsthat are judgmental in nature,includingprojectedfuture cash flows (includingtiming); discount rates
reflectingrisk inherent inthefuture cash flows; andfuture market prices. There were alsojudgmentsmadetodetermine the
expecteduseful livesassignedto each class ofassetsacquiredandduration ofliabilitiesassumed.
Thefinancial statementsof BGE do not includefairvalue adjustmentsfor assetsor liabilitiessubject to rate-settingprovisionsfor
BGE. BGE is subjecttothe rate-settingauthorityofFERCandtheMDPSC andisaccountedfor pursuant to theaccountingguidance
for regulatedoperations. The rate-settingandcostrecoveryprovisionscurrentlyin placefor BGE providerevenue derivedfromcosts
includinga return on investment ofassetsandliabilitiesincludedin rate base. Except for debt,fuel supplycontractsandregulatory
assetsnot earninga return,thefairvaluesof BGE’s tangible andintangible assetsandliabilitiessubjecttothese rate-setting
provisionsare assumedto approximate theircarryingvaluesand, therefore,do not reflectanynet adjustmentsrelatedto these
amounts. For BGE’s debt,fuel supplycontractsandregulatoryassetsnot earninga return,thedifferencebetween fairvalue and
bookvalue of BGE’s assetsacquiredandliabilitiesassumedisrecordedasaregulatoryasset andliabilityat Exelon Corporate as
Exelon did not applypush-downaccountingto BGE. See Note 1—Significant AccountingPoliciesfor additional information on BGE’s
push-downaccountingtreatment.Alsosee Note 3—RegulatoryMattersfor additional information on BGE’s regulatoryassets.
The preliminaryvaluationsperformedinthefirstquarter of2012 were updatedinthesecond, thirdandfourthquartersof2012,with
themostsignificant adjustmentsto the preliminaryvaluation amountshavingbeen madetothefairvaluesassignedto theacquired
power supplyandfuel contracts, unregulatedproperty, plant andequipment andinvestmentsinaffiliates. There were no significant
adjustmentsto the purchaseprice allocation inthefirstquarter of2013 andthe purchaseprice allocation wasfinal asofMarch 31,
2013.
Thefinal purchaseprice allocation oftheMerger ofExelon withConstellation wasasfollows:
Preliminary Purchase Price Allocation, excluding amortization
Current assets ......................................................................................... $ 4,936
Property, plant andequipment ............................................................................ 9,342
Unamortizedenergy contracts ............................................................................ 3,218
Other intangibles, tradenameandretail relationships ......................................................... 457
Investment inaffiliates ................................................................................... 1,942
Pension and OPEB regulatoryasset ....................................................................... 740
Other assets ........................................................................................... 2,265
Total assets............................................................................................ 22,900
Current liabilities........................................................................................ 3,408
Unamortizedenergy contracts ............................................................................ 1,722
Long-termdebt,includingcurrent maturities ................................................................. 5,632
Non-controllinginterest.................................................................................. 90
Deferredcreditsandother liabilitiesandpreferredsecurities.................................................... 4,683
Total liabilities, preferredsecuritiesandnon-controllinginterest................................................. 15,535
Total purchaseprice..................................................................................... $ 7,365
Intangible Assets Recorded
For thepower supplyandfuel contractsacquiredfromConstellation,thedifferencebetween thecontractpriceandthemarket price
at thedate ofthemerger wasrecognizedaseither an intangible asset or liabilitybasedon whether thecontractswere in or out-of-
the-money. Thevaluation oftheacquiredintangible assetsandliabilitieswasestimatedbyapplyingeither themarket approach or
theincome approach dependingon the nature oftheunderlyingcontract.Themarket approach wasutilizedwhen pricesandother
relevant information generatedbymarket transactionsinvolvingcomparable transactionswere available.Otherwisetheincome
approach, which is basedupon discountedprojectedfuture cash flows associatedwiththeunderlyingcontracts, wasutilized. The
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