CenterPoint Energy 2014 Annual Report Download - page 91

was held by CenterPoint Energy’
s transition and system restoration bond subsidiaries solely to support servicing the transition and system
restoration bonds.
CenterPoint Energy considers distributions received from equity method investments which do not exceed cumulative equity in earnings
subsequent to the date of investment to be a return on investment and classifies these distributions as operating activities in the Statements of
Consolidated Cash Flows. CenterPoint Energy considers distributions received from equity method investments in excess of cumulative equity
in earnings subsequent to the date of investment to be a return of investment and classifies these distributions as investing activities in the
Statements of Consolidated Cash Flows.
(o) New Accounting Pronouncements
In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-08,
Presentation of
Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of
Disposals of Components of an Entity
(ASU 2014-
08), which significantly changes the existing accounting guidance on discontinued operations.
Under ASU 2014-
08, only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an
entity’s operations and financial results should be reported as a discontinued operation. ASU 2014-
08 is effective for fiscal years, and interim
periods within those years, beginning after December 15, 2014. ASU 2014-
08 should be applied to components classified as held for sale after
its effective date. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial
statements previously issued or available for issuance. The adoption is expected to reduce the number of disposals that meet the definition of a
discontinued operation.
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ( Topic 606 ) (ASU 2014-
09), which supersedes
most current revenue recognition guidance. ASU 2014-
09 provides a comprehensive new revenue recognition model that requires revenue to be
recognized in a manner that depicts the transfer of goods or services to a customer at an amount that reflects the consideration expected to be
received in exchange for those goods or services. ASU 2014-
09 is effective for fiscal years, and interim periods within those years, beginning
after December 15, 2016. Early adoption is not permitted, and entities have the option of using either a full retrospective or a modified
retrospective adoption approach. Accordingly, CenterPoint Energy will adopt ASU 2014-
09 on January 1, 2017, and is currently evaluating the
impact that this standard will have on its financial position, results of operations, cash flows and disclosures.
In November 2014, the FASB issued ASU No. 2014-16,
Determining Whether the Host Contract in a Hybrid Financial Instrument Issued
in the Form of a Share Is More Akin to Debt or to Equity (ASU 2014-16). ASU 2014-
16 clarifies how current guidance should be interpreted in
evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share.
Specifically, the amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature
being evaluated for bifurcation, in evaluating the nature of a host contract. ASU 2014-
16 is effective for fiscal years and interim periods
beginning after December 15, 2015. CenterPoint Energy is currently assessing the impact, if any, that this standard will have on its financial
position, results of operations, cash flows and disclosures.
In January 2015, the FASB issued ASU No. 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20)-
Simplifying
Income Statement Presentation by Eliminating the Concept of Extraordinary Items
(ASU 2015-
01), which eliminates the concept of
extraordinary items. ASU 2015-
01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, and
may be applied either prospectively or retrospectively. CenterPoint Energy will adopt ASU 2015-
01 on January 1, 2016 and does not anticipate
the adoption to have a material impact on its consolidated financial statements.
Management believes that other recently issued standards, which are not yet effective, will not have a material impact on CenterPoint
Energy’s consolidated financial position, results of operations or cash flows upon adoption.
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