Eversource 2009 Annual Report Download - page 116

FS-31
 SECI (including Reeds Ferry Supply Co., Inc.).
Included in discontinued operations for the year ended December 31, 2007 is a net gain of $2.1 million related to the favorable
resolution of legal and contract issues from businesses sold of $4.2 million, partially offset by a purchase price adjustment of $1.9
million and other charges from the sale of the competitive generation business. Included in the 2007 income tax expense for
discontinued operations is a $0.8 million charge recognized to adjust the estimated income tax accrual for actual taxes paid on the gains
related to businesses sold in 2006. No intercompany revenues were included in discontinued operations for the years ended
December 31, 2009, 2008 or 2007.
C. Accounting Standards Issued But Not Yet Adopted
In June 2009, the FASB issued guidance on the consolidation of variable interest entities (VIEs) that requires an enterprise to perform
an analysis to determine whether the enterprise's variable interest or interests give it a controlling financial interest in a VIE. This
analysis identifies the party that must consolidate a VIE, referred to as the primary beneficiary, as the enterprise that has both of the
following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the entity's economic performance
and (b) the obligation to absorb losses of or receive benefits from the entity that could potentially be significant to the VIE. The
guidance reduces emphasis on the quantitative analyses for determining the primary beneficiary of a VIE, which was based on
identifying which party absorbs the majority of the entity's expected losses, receives a majority of the entity's expected residual returns,
or both. This guidance is effective as of January 1, 2010, for interim and annual reporting periods beginning in 2010. Earlier application
was prohibited. NU, including CL&P, PSNH, and WMECO, does not currently consolidate any VIEs with which the Company is
associated and does not expect implementation of this guidance to have a material effect on the accompanying consolidated financial
statements.
D. Accounting Standards Recently Adopted
On January 1, 2009, NU, including CL&P, PSNH and WMECO, adopted fair value measurement guidance for nonrecurring fair value
measurements of nonfinancial assets and liabilities, including asset retirement obligations (AROs) and goodwill and other impairment
analyses. Implementation of this guidance did not affect the accompanying consolidated financial statements.
In the second quarter of 2009, NU, including WMECO, adopted guidance related to the recognition and presentation of other-than-
temporary impairments. This guidance changes the indicators for determining if unrealized losses on debt securities (the excess of
amortized cost over fair value) should be recorded in Net income as other-than-temporary impairments. Beginning in the second
quarter of 2009, other-than-temporary impairments of debt securities in NU's Trust Under Supplemental Executive Retirement Plan
(SERP) (NU supplemental benefit trust) are reflected in the Company's consolidated statement of income if the Company either intends
to sell the security or would more likely than not be required to sell the security before recovery of its amortized cost, or if the Company
does not expect to recover the amortized cost as a result of a credit loss. For securities that the Company does not intend to sell and it
is not more likely than not that it will be required to sell before recovery, only the credit loss component of an impairment is recognized
in Net income, and the remainder is recognized in Accumulated other comprehensive income/(loss). NU recorded an after-tax
cumulative effect of a change in accounting principle of $0.7 million as an increase to the April 1, 2009 balance of Retained earnings
with an offset to Accumulated other comprehensive income/(loss) relating to the reversal of unrealized losses previously recorded in Net
income on debt securities held in the NU supplemental benefit trust, which did not meet the criteria described above. The after-tax
cumulative effect had a de minimus impact to CL&P, PSNH and WMECO. The guidance had no impact on unrealized losses in
WMECO's spent nuclear fuel trust as unrealized losses including impairments are recorded in Deferred debits and other assets - other
on the accompanying consolidated balance sheets due to the regulatory accounting treatment of this trust.
In 2009, NU, including CL&P, PSNH and WMECO, adopted guidance regarding subsequent events, which incorporates into FASB
authoritative literature accounting guidance that originated as auditing standards about events or transactions that occur after the
balance sheet date but before financial statements are issued. This guidance retains the auditing standard requirements to recognize in
the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed as of the
balance sheet date and to disclose but not recognize in the financial statements subsequent events that provide evidence about
conditions that arose after the balance sheet date but before the financial statements are issued. In preparing the accompanying
consolidated financial statements, NU has evaluated events subsequent to December 31, 2009 through the issuance of the financial
statements. See Note 19, "Subsequent Event" for further information.
In the second quarter of 2009, NU, including CL&P, PSNH and WMECO, adopted guidance which clarifies how to estimate fair value
when the volume and level of activity for an asset or liability have significantly decreased and how to identify transactions that are not
orderly. This guidance requires additional disclosures related to fair value measurements. Implementation of this guidance did not
affect the companies' valuation of assets or liabilities that are measured at fair value.
In December 2009, NU, including CL&P, PSNH and WMECO, adopted accounting guidance on measuring liabilities at fair value, which
provides guidance on how to measure the fair value of a liability when a quoted price for the liability is not available. The guidance
reaffirms existing guidance requiring that fair values reflect the price that NU would expect to pay to transfer the liabilities in the current
market. The guidance did not affect the financial statements of NU, CL&P, PSNH, or WMECO upon adoption.
In December 2009, NU, including CL&P, PSNH and WMECO, adopted accounting guidance on using net asset values in determining
the fair values of alternative investments. NU holds alternative investments, such as private equity partnerships, real estate
partnerships and hedge funds, in its Pension Plan and postretirement benefits other than pension (PBOP) plan. This guidance did not
affect the financial statements of NU, CL&P, PSNH or WMECO upon adoption.