Energy Transfer 2013 Annual Report Download - page 160

Table of Contents
not recognized for crude oil exchange transactions, which are entered into primarily to acquire crude oil of a desired quality or to reduce transportation
costs by taking delivery closer to end markets. Any net differential for exchange transactions is 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 certain subsidiaries in that segment
have 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 recorded regulatory assets with respect to its distribution segment operations. At December 31, 2012, we had $123 million of regulatory
assets included in the consolidated balance sheet as non-current assets held for sale. Southern Union’s distribution operations were sold in 2013.
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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