Energy Transfer 2015 Annual Report Download - page 184

Table of Contents
Accrued and Other Current Liabilities
Accrued and other current liabilities consisted of the following:
December 31,
2015
2014
Interest payable $ 425
$ 382
Customer advances and deposits 95
103
Accrued capital expenditures 743
673
Accrued wages and benefits 218
233
Taxes payable other than income taxes 76
236
Other 386
373
Total accrued and other current liabilities $ 1,943
$ 2,000
Deposits or advances are received from our customers as prepayments for natural gas deliveries in the following month. Prepayments and security
deposits may also be required when customers exceed their credit limits or do not qualify for open credit.
Redeemable Noncontrolling Interests
The noncontrolling interest holders in one of Sunoco Logistics’ consolidated subsidiaries have the option to sell their interests to Sunoco Logistics. In
accordance with applicable accounting guidance, the noncontrolling interest is excluded from total equity and reflected as redeemable interest on ETP’s
consolidated balance sheet.
Environmental Remediation
We accrue environmental remediation costs for work at identified sites where an assessment has indicated that cleanup costs are probable and reasonably
estimable. Such accruals are undiscounted and are based on currently available information, estimated timing of remedial actions and related inflation
assumptions, existing technology and presently enacted laws and regulations. If a range of probable environmental cleanup costs exists for an identified
site, the minimum of the range is accrued unless some other point in the range is more likely in which case the most likely amount in the range is
accrued.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate their fair value.
Based on the estimated borrowing rates currently available to us and our subsidiaries for loans with similar terms and average maturities, the aggregate
fair value and carrying amount of our debt obligations as of December 31, 2015 was $25.71 billion and $28.68 billion, respectively. As of December 31,
2014, the aggregate fair value and carrying amount of our debt obligations was $26.91 billion and $25.84 billion, respectively. The fair value of our
consolidated debt obligations is a Level 2 valuation based on the observable inputs used for similar liabilities.
We have commodity derivatives, interest rate derivatives and embedded derivatives in our preferred units that are accounted for as assets and liabilities
at fair value in our consolidated balance sheets. We determine the fair value of our assets and liabilities subject to fair value measurement by using the
highest possible “level” of inputs. Level 1 inputs are observable quotes in an active market for identical assets and liabilities. We consider the valuation
of marketable securities and commodity derivatives transacted through a clearing broker with a published price from the appropriate exchange as a Level
1 valuation. Level 2 inputs are inputs observable for similar assets and liabilities. We consider OTC commodity derivatives entered into directly with
third parties as a Level 2 valuation since the values of these derivatives are quoted on an exchange for similar transactions. Additionally, we consider our
options transacted through our clearing broker as having Level 2 inputs due to the level of activity of these contracts on the exchange in which they
trade. We consider the valuation of our interest rate derivatives as Level 2 as the primary input, the LIBOR curve, is based on quotes from an active
exchange of Eurodollar futures for the same period as the future interest swap settlements. Level 3 inputs are unobservable. Derivatives related to the
embedded derivatives in our preferred units are valued using a binomial lattice model. The market inputs utilized in the model include credit spread,
probabilities of the occurrence of certain events, common unit price, dividend yield, and expected value, and are considered Level 3. During the year
ended December 31, 2015, no transfers were made between any levels within the fair value hierarchy.
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