PBF Energy 2013 Annual Report Download - page 120

PBF ENERGY INC. AND
PBF HOLDING COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)
F- 24
Precious metals catalyst and linefill are considered indefinite-lived assets as they are not expected to deteriorate
in their prescribed functions. Such assets are assessed for impairment in connection with the Company’s review
of its long-lived assets as indicators of impairment develop.
Deferred financing costs are capitalized when incurred and amortized over the life of the loan (1 to 8 years).
Intangible assets with finite lives primarily consist of catalyst, emission credits and permits and are amortized over
their estimated useful lives of 1 to 10 years.
Long-Lived Assets and Definite-Lived Intangibles
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate
the carrying value may not be recoverable. Impairment is evaluated by comparing the carrying value of the long-
lived assets to the estimated undiscounted future cash flows expected to result from use of the assets and their
ultimate disposition. If such analysis indicates that the carrying value of the long-lived assets is not considered to
be recoverable, the carrying value is reduced to the fair value.
Impairment assessments inherently involve judgment as to assumptions about expected future cash flows and the
impact of market conditions on those assumptions. Although management would utilize assumptions that it believes
are reasonable, future events and changing market conditions may impact management’s assumptions, which could
produce different results.
Asset Retirement Obligations
The Company records an asset retirement obligation at fair value for the estimated cost to retire a tangible long-
lived asset at the time the Company incurs that liability, which is generally when the asset is purchased, constructed,
or leased. The Company records the liability when it has a legal or contractual obligation to incur costs to retire
the asset and when a reasonable estimate of the fair value of the liability can be made. If a reasonable estimate
cannot be made at the time the liability is incurred, the Company will record the liability when sufficient information
is available to estimate the liability’s fair value. Certain of the Company’s asset retirement obligations are based
on its legal obligation to perform remedial activity at its refinery sites when it permanently ceases operations of
the long-lived assets. The Company therefore considers the settlement date of these obligations to be indeterminable.
Accordingly, the Company cannot calculate an associated asset retirement liability for these obligations at this
time. The Company will measure and recognize the fair value of these asset retirement obligations when the
settlement date is determinable.
Environmental Matters
Liabilities for future remediation costs are recorded when environmental assessments and/or remedial efforts are
probable and the costs can be reasonably estimated. Other than for assessments, the timing and magnitude of these
accruals generally are based on the completion of investigations or other studies or a commitment to a formal plan
of action. Environmental liabilities are based on best estimates of probable future costs using currently available
technology and applying current regulations, as well as the Company’s own internal environmental policies. The
measurement of environmental remediation liabilities may be discounted to reflect the time value of money if the
aggregate amount and timing of cash payments of the liabilities are fixed or reliably determinable. The actual
settlement of the Company’s liability for environmental matters could materially differ from its estimates due to
a number of uncertainties such as the extent of contamination, changes in environmental laws and regulations,
potential improvements in remediation technologies and the participation of other responsible parties.
Stock-Based Compensation
Stock-based compensation includes the accounting effect of options to purchase PBF Energy Class A common
stock granted by the Company to certain employees, Series A warrants issued or granted by PBF LLC to employees
in connection with their acquisition of PBF LLC Series A units, options to acquire Series A units of PBF LLC