Exelon 2014 Annual Report Download - page 141

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Equity Investment Earnings (Losses) of Unconsolidated Affiliates
Exelon and Generation include equity in earnings from equity method investments in qualifying facilities, power projects and joint
ventures, in equity in earnings (losses) of unconsolidated affiliates. Equity in earnings (losses) of unconsolidated affiliates also
includes any adjustments to amortize the difference, if any, except for goodwill and land, between their cost in an equity method
investment and the underlying equity in net assets of the investee at the date of investment.
Exelon and Generation continuously monitor for issues that potentially could impact future profitability of these equity method
investments and which could result in the recognition of an impairment loss if such investment experiences an other than temporary
decline in value.
New Accounting Pronouncements
Exelon has identified the following new accounting pronouncements that have been recently adopted or issued that management
believes may significantly affect the Registrants.
Presentation of Unrecognized Tax Benefits When Net Operating Loss Carryforwards, Similar Tax Losses or Tax Credit
Carryforwards Exist
In July 2013, the FASB issued authoritative guidance requiring entities to present unrecognized tax benefits as a reduction to
deferred tax assets for losses or other tax carryforwards that would be available to offset the uncertain tax positions at the reporting
date. This guidance was effective for the Registrants for periods beginning after December 15, 2013 and was required to be applied
prospectively. The adoption of this standard had an immaterial effect on the presentation of deferred tax assets at Exelon and
Generation and no effect on ComEd, PECO and BGE. There was no effect on the Registrants’ results of operations or cash flows.
Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force)
In November 2014, the FASB issued authoritative guidance that allows acquired entities to apply pushdown accounting (i.e.,
reflecting the acquirer’s basis of accounting for the acquired entity’s assets and liabilities) when an acquirer obtains control of them.
At the same time, the SEC rescinded its guidance on pushdown accounting. The SEC’s guidance had required pushdown
accounting in certain circumstances, made it optional in others and prevented it in still other circumstances. The new guidance is
effective immediately for any future transaction or to the most recent event in which an acquirer obtains or obtained control of the
acquired entity. The adoption of the guidance had no impact to the financial statements of the Registrants; however, the Registrants
will assess the potential impact of the guidance on future acquisitions.
The following recently issued accounting standard is not yet required to be reflected in the combined financial statements of the
Registrants.
Revenue from Contracts with Customers
In May 2014, the FASB issued authoritative guidance that changes the criteria for recognizing revenue from a contract with a
customer. The new guidance replaces existing guidance on revenue recognition, including most industry specific guidance, with a
five step model for recognizing and measuring revenue from contracts with customers. The objective of the new standard is to
provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within
industries, across industries and across capital markets. The underlying principle is that an entity will recognize revenue to depict the
transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or
services. The guidance also requires a number of disclosures regarding the nature, amount, timing and uncertainty of revenue and
the related cash flows. The guidance is effective for the Registrants for the first interim period within annual reporting periods
beginning on or after December 15, 2016. Early adoption is not permitted. The guidance can be applied retrospectively to each prior
reporting period presented (full retrospective method) or retrospectively with a cumulative effect adjustment to retained earnings for
initial application of the guidance at the date of initial adoption (modified retrospective method). The Registrants are currently
assessing the impacts this guidance may have on their financial positions, results of operations, cash flows and disclosures as well
as the transition method that they will use to adopt the guidance.
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