CHS 2014 Annual Report Download - page 37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
intent to maintain refineries and related assets and to units. The costs related to the significant overhaul and
continue making improvements to those assets based refurbishment activities include materials and direct
on technological advances. As a result, we believe our labor costs. The costs of turnarounds are deferred when
refineries and related assets have indeterminate lives for incurred and amortized on a straight-line basis over the
purposes of estimating asset retirement obligations period of time estimated to lapse until the next turn-
because dates or ranges of dates upon which we would around occurs, which is generally 2 to 4 years. Amortiza-
retire a refinery and related assets cannot reasonably be tion expense related to turnaround costs is included in
estimated at this time. When a date or range of dates cost of goods sold in our Consolidated Statements of
can reasonably be estimated for the retirement of any Operations. The selection of the deferral method, as
component part of a refinery or other asset, we will esti- opposed to expensing the turnaround costs when
mate the cost of performing the retirement activities incurred, results in deferring recognition of the turn-
and record a liability for the fair value of that future cost. around expenditures. The deferral method also results in
the classification of the related cash outflows as
We have other assets that we may be obligated to dis- investing activities in our Consolidated Statements of
mantle at the end of corresponding lease terms subject Cash Flows, whereas expensing these costs as incurred,
to lessor discretion for which we have recorded asset would result in classifying the cash outflows as oper-
retirement obligations. Based on our estimates of the ating activities.
timing, cost and probability of removal, these obliga-
tions are not material.
We provide a wide variety of products and services,
from production agricultural inputs such as fuels, farm
Goodwill and other intangible assets are included in supplies and crop nutrients, to agricultural outputs that
other assets on our Consolidated Balance Sheets and include grain and oilseed, processed grains and oilseeds
are reviewed for impairment annually or more fre- and food products. We recognize revenue when persua-
quently if impairment conditions arise; and, if impaired, sive evidence of an arrangement exists, delivery has
are written down to fair value. For goodwill, annual occurred, the sales price is fixed or determinable, and
impairment testing occurs in our third quarter. Other collection is probable. Grain and oilseed sales are
intangible assets consist primarily of customer lists, recorded after the commodity has been delivered to its
trademarks and agreements not to compete. Intangible destination and final weights, grades and settlement
assets subject to amortization are expensed over their prices have been agreed upon. All other sales are recog-
respective useful lives (ranging from 2 to 30 years). We nized upon transfer of title, which could occur either
have no material intangible assets with indefinite useful upon shipment to or receipt by the customer,
lives. depending upon the terms of the transaction. Amounts
billed to a customer as part of a sales transaction related
We made certain immaterial acquisitions during the three to shipping and handling are included in revenues.
years ended August 31, 2014, which were accounted for
using the acquisition method of accounting. Operating
results of the acquisitions were included in our consoli- Liabilities, including legal costs, related to remediation of
dated financial statements since the respective acquisi- contaminated properties are recognized when the
tion dates. The respective purchase prices were allocated related costs are considered probable and can be rea-
to the assets, liabilities and identifiable intangible assets sonably estimated. Estimates of environmental costs are
acquired based upon the estimated fair values. The based on current available facts, existing technology,
excess purchase prices over the estimated fair values of undiscounted site-specific costs and currently enacted
the net assets acquired have been reported as goodwill. laws and regulations. Recoveries, if any, are recorded in
the period in which recovery is received. Liabilities are
In our Energy segment, major maintenance activities monitored and adjusted as new facts or changes in law or
(turnarounds) at the two refineries are accounted for technology occur. Environmental expenditures are capi-
under the deferral method. Turnarounds are the sched- talized when such costs provide future economic
uled and required shutdowns of refinery processing benefits.
CHS 2014 35
Revenue Recognition
Goodwill and Other Intangible Assets
Environmental Expenditures