Sunoco 2009 Annual Report Download - page 77

Sunoco, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of Sunoco, Inc. and subsidiaries (collectively, “Sunoco” or the
“Company”) contain the accounts of all entities that are controlled and variable interest entities for which the
Company is the primary beneficiary. Corporate joint ventures and other investees over which the Company has
the ability to exercise significant influence that are not consolidated are accounted for by the equity method.
A variable interest entity (“VIE”) is defined as an entity that either has investor voting rights that are not
proportional to their economic interests or has equity investors that do not provide sufficient financial resources
for the entity to support its activities. A VIE is required to be consolidated by a company if that company is the
primary beneficiary. The primary beneficiary is the company that is subject to a majority of the risk of loss from
the VIE’s activities or, if no company is subject to a majority of such risk, the company that is entitled to receive
a majority of the VIE’s residual returns.
Effective January 1, 2009, the Company adopted new accounting guidance concerning the accounting and
reporting of noncontrolling interests in the consolidated financial statements. The new guidance requires that
noncontrolling interests be reported as a component of equity and that consolidated net income (loss) include
amounts attributable to the noncontrolling interests with such amounts separately disclosed on the face of the
statements of operations. The consolidated financial statements and related footnotes have been reclassified to
reflect these changes.
On June 1, 2009, Sunoco completed the sale of its Tulsa refinery to Holly Corporation. The transaction also
included the sale of inventory attributable to the refinery. As a result of the sale of the Tulsa refinery, such
refinery has been classified as a discontinued operation for all periods presented in the consolidated statements of
operations and related footnotes (Note 2).
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual amounts could differ from these estimates.
Reclassifications
Certain amounts in the prior years’ financial statements have been reclassified to conform to the current-
year presentation.
Revenue Recognition
The Company sells various refined products (including gasoline, middle distillates, residual fuel and
petrochemicals), coke and coal and also sells crude oil in connection with the crude oil gathering and marketing
activities of its logistics operations. In addition, the Company sells a broad mix of merchandise such as groceries,
fast foods and beverages at its convenience stores, operates common carrier pipelines and provides terminalling
services through a publicly traded limited partnership and provides a variety of car care services at its retail
gasoline outlets. Revenues related to the sale of products are recognized when title passes, while service revenues
are recognized when services are provided. Title passage generally occurs when products are shipped or
delivered in accordance with the terms of the respective sales agreements. In addition, revenues are not
recognized until sales prices are fixed or determinable and collectibility is reasonably assured.
Crude oil and refined product exchange transactions, which are entered into primarily to acquire crude oil
and refined products of a desired quality or at a desired location, are netted in cost of products sold and operating
expenses in the consolidated statements of operations.
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