Exelon 2014 Annual Report Download - page 187

Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
(a) Generation also owns a proportionate share in the fossil fuel combustion turbine at Salem, which is fully depreciated. The gross book value was $3 million at
December 31, 2014 and 2013.
(b) PECO and BGE own a 22% and 7% share, respectively, in 127 miles of 500kV lines located in Pennsylvania; PECO and BGE also own a 20.7% and 10.56% share,
respectively, of a 500kV substation immediately outside of the Conemaugh fossil generating station which supplies power to the 500kV lines including, but not limited
to, the lines noted above.
(c) PECO owns a 42.55% share in 131 miles of 500kV lines located in Delaware and New Jersey as well as a 42.55% share in a 500kV substation immediately outside
of the Salem nuclear generating station in New Jersey which supplies power to the 500kV lines including, but not limited to, the lines noted above.
(d) Generation has a 44.24% ownership interest in assets located at Merrill Creek Reservoir located in New Jersey.
(e) Excludes asset retirement costs.
(f) As of December 31, 2014, Generation sold its ownership interest in Keystone and Conemaugh. At December 31, 2013, Generation held 41.98% and 31.28%
ownership interest in Keystone and Conemaugh, respectively. See Note 4—Mergers, Acquisitions, and Dispositions for additional information.
(g) On April 1, 2014, Generation assumed operational control of CENG’s nuclear fleet, and as of that date, CENG’s operations are consolidated into Generation’s
financial statements. As of December 31, 2013, Generation’s ownership interest in CENG, including Nine Mile Point, was treated as an equity method investment,
and thus did not represent an undivided Interest. See Note 5 - Investment in Constellation Energy Nuclear Group, LLC for additional information.
Exelon’s, Generation’s, PECO’s and BGE’s undivided ownership interests are financed with their funds and all operations are
accounted for as if such participating interests were wholly owned facilities. Exelon’s, Generation’s, PECO’s and BGE’s share of
direct expenses of the jointly owned plants are included in Purchased power and fuel and Operating and maintenance expenses on
Exelon’s Consolidated Statements of Operations and Comprehensive Income.
10. Intangible Assets
Goodwill
Exelon’s gross amount of goodwill, accumulated impairment losses and carrying amount of goodwill for the years ended
December 31, 2014 and 2013 were as follows:
Gross
Amount(a)
Accumulated
Impairment
Losses
Carrying
Amount
Balance, January 1, 2013 ............................................................. $4,608 $1,983 $2,625
Goodwill from business combination .................................................... 47 — 47
Balance, December 31, 2014 .......................................................... $4,655 $1,983 $2,672
(a) Reflects goodwill recorded in 2000 from the PECO/Unicom (predecessor parent company of ComEd) merger net of amortization, resolution of tax matters and other
non-impairment-related changes as allowed under previous authoritative guidance.
Goodwill is not amortized, but is subject to an assessment for impairment at least annually, or more frequently if events occur or
circumstances change that would more likely than not reduce the fair value of the ComEd reporting unit below its carrying amount.
Under the authoritative guidance for goodwill, a reporting unit is an operating segment or one level below an operating segment
(known as a component) and is the level at which goodwill is tested for impairment. A component of an operating segment is a
reporting unit if the component constitutes a business for which discrete financial information is available and its operating results are
regularly reviewed by segment management. ComEd has a single operating segment for its combined business. There is no level
below this operating segment for which operating results are regularly reviewed by segment management. Therefore, ComEd’s
operating segment is considered its only reporting unit.
Entities assessing goodwill for impairment have the option of first performing a qualitative assessment before calculating the fair
value of the reporting unit (i.e., step one of the two-step fair value based impairment test). If an entity determines, on the basis of
qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step fair value
based impairment test is required. Otherwise, no further testing is required.
If an entity bypasses the qualitative assessment or performs the qualitative assessment, but determines that it is more likely than not
that its fair value is less than its carrying amount, a quantitative two-step, fair value based test is performed. The first step compares
the fair value of the reporting unit to its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its
fair value, the second step is performed. The second step requires an allocation of fair value to the individual assets and liabilities
using purchase price allocation in order to determine the implied fair value of goodwill. If the implied fair value of goodwill is less than
the carrying amount, an impairment loss is recorded as a reduction to goodwill and a charge to operating expense. Any goodwill
impairment charge at ComEd will affect Exelon’s consolidated results of operations.
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