Energy Transfer 2012 Annual Report Download - page 158

F - 13
recorded as an adjustment of inventory costs in the purchases component of cost of products sold and operating expenses in
the statements of operations.
Our retail marketing segment sells gasoline and diesel in addition to a broad mix of merchandise such as groceries, fast foods
and beverages at its convenience stores. In addition some of Sunoco's retail outlets provide a variety of car care services.
Revenues related to the sale of products are recognized when title passes, while service revenues are recognized when services
are provided. Title passage generally occurs when products are shipped or delivered in accordance with the terms of the
respective sales agreements. In addition, revenues are not recognized until sales prices are fixed or determinable and
collectability is reasonably assured.
Regulatory Accounting - Regulatory Assets and Liabilities
Our interstate transportation and storage segment is subject to regulation by certain state and federal authorities and has
accounting policies that conform to the accounting requirements and ratemaking practices of the regulatory authorities. The
application of these accounting policies allows certain of our regulated entities to defer expenses and revenues on the balance
sheet as regulatory assets and liabilities when it is probable that those expenses and revenues will be allowed in the ratemaking
process in a period different from the period in which they would have been reflected in the consolidated statement of operations
by an unregulated company. These deferred assets and liabilities will be reported in results of operations in the period in which
the same amounts are included in rates and recovered from or refunded to customers. Management’s assessment of the
probability of recovery or pass through of regulatory assets and liabilities will require judgment and interpretation of laws
and regulatory commission orders. If, for any reason, we cease to meet the criteria for application of regulatory accounting
treatment for these entities, the regulatory assets and liabilities related to those portions ceasing to meet such criteria would
be eliminated from the consolidated balance sheet for the period in which the discontinuance of regulatory accounting treatment
occurs.
Southern Union records regulatory assets with respect to its distribution segment operations. We recorded regulatory assets
with respect to Southern Union's distribution operations, which have been classified as discontinued operations as of December
31, 2012. At December 31, 2012, we had $123 million of regulatory assets included in the consolidated balance sheet as non-
current assets held for sale. Although Panhandle’s natural gas transmission systems and storage operations are subject to the
jurisdiction of FERC in accordance with the Natural Gas Act of 1938 and Natural Gas Policy Act of 1978, it does not currently
apply regulatory accounting policies in accounting for its operations. In 1999, prior to its acquisition by Southern Union,
Panhandle discontinued the application of regulatory accounting policies primarily due to the level of discounting from tariff
rates and its inability to recover specific costs.
Cash, Cash Equivalents and Supplemental Cash Flow Information
Cash and cash equivalents include all cash on hand, demand deposits, and investments with original maturities of three months
or less. We consider cash equivalents to include short-term, highly liquid investments that are readily convertible to known
amounts of cash and that are subject to an insignificant risk of changes in value.
We place our cash deposits and temporary cash investments with high credit quality financial institutions. At times, our cash
and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance
limit.
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