CenterPoint Energy 2015 Annual Report Download - page 137

CENTERPOINT ENERGY, INC.
SCHEDULE I — NOTES TO CONDENSED FINANCIAL INFORMATION (PARENT COMPANY)
(1) Background. The condensed parent company financial statements and notes of CenterPoint Energy, Inc. (CenterPoint Energy) should be read in
conjunction with the consolidated financial statements and notes of CenterPoint Energy, Inc. and subsidiaries appearing in the Annual Report on Form 10-K.
CreditfacilitiesatCenterPointEnergyHoustonElectric,LLC(CenterPointHouston)andCenterPointEnergyResourcesCorp.,indirectwholly-ownedsubsidiaries
ofCenterPointEnergy,limitdebt,excludingtransitionandsystemrestorationbonds,asapercentageoftheirconsolidatedcapitalizationto65%.Thesecovenants
couldrestricttheabilityofthesesubsidiariestodistributedividendstoCenterPointEnergy.
(2)New Accounting Pronouncements. InFebruary2015,theFinancialAccountingStandardsBoard(FASB)issuedAccountingStandardsUpdateNo.2015-
02,Consolidation (Topic 810): Amendments to the Consolidation Analysis (ASU2015-02).ASU2015-02changestheanalysisthatreportingorganizationsmust
performtoevaluatewhethertheyshouldconsolidatecertainlegalentities,suchaslimitedpartnerships.Thechangesinclude,amongothers,modificationofthe
evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities and elimination of the
presumptionthatageneralpartnershouldconsolidatealimitedpartnership.ASU2015-02doesnotamendtherelatedpartyguidanceforsituationsinwhichpower
issharedbetweentwoormoreentitiesthatholdinterestsinaVIE.ASU2015-02iseffectiveforfiscalyears,andinterimperiodswithinthoseyears,beginning
afterDecember15,2015.CenterPointEnergydoesnotbelievethatASU2015-02willhaveamaterialimpactonitsfinancialposition,resultsofoperations,cash
flowsanddisclosures.
InApril2015,theFASBissuedAccountingStandardsUpdateNo.2015-03,Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of
Debt Issuance Cost (ASU2015-03). ASU2015-03requiresthatdebtissuancecostsrelatedtoarecognizeddebtliabilitybepresentedinthebalancesheetasa
directdeductionfromthecarryingamountofthatdebtliability,consistentwithdebtdiscounts.Therecognitionandmeasurementguidancefordebtissuancecosts
arenotaffectedbyASU2015-03.CenterPointEnergywilladoptASU2015-03retrospectivelyonJanuary1,2016,whichwillresultinareductionofbothother
long-termassetsandlong-termdebtonitsConsolidatedBalanceSheets.CenterPointEnergyhaddebtissuancecostsof$15millionand$18millionincludedin
otherlong-termassetsonitsConsolidatedBalanceSheetsasofDecember31,2015and2014,respectively.
InApril2015,theFASBissuedAccountingStandardsUpdateNo.2015-05,Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40 )(ASU
2015-05).  ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing
arrangementincludesasoftwarelicense,thecustomershouldaccountforthesoftwarelicenseelementofthearrangementconsistentwiththeacquisitionofother
softwarelicenses.Ifacloudcomputingarrangementdoesnotincludeasoftwarelicense,thecustomershouldaccountforthearrangementasaservicecontract.
Theguidancewillnotchangeacustomer’saccountingforservicecontracts.ASU2015-05iseffectiveforfiscalyears,andinterimperiodswithinthefiscalyears,
beginningafterDecember15,2015andmay beadoptedeitherprospectively orretrospectively. CenterPoint Energywill adoptASU2015-05prospectivelyon
January1,2016.CenterPointEnergydoesnotbelievethatASU2015-05willhaveamaterialimpactonitsfinancialposition,resultsofoperations,cashflowsand
disclosures.
In May 2014, the FASB issued Accounting Standards Update 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wasinitially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.InAugust2015,theFASB
issuedAccountingStandardUpdateNo.2015-14,Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date ,whichdelaystheeffective
date of ASU 2014-09 by one year.  CenterPoint Energy is currently evaluating the impact that ASU 2014-09 will have on its financial position, results of
operations,cashflowsanddisclosures,andwilladoptASU2014-09onJanuary1,2018aspermittedbythenewguidance.
InJuly2015,theFASBissuedAccountingStandardsUpdateNo.2015-11,Inventory (Topic 330) Simplifying the Measurement of Inventory (ASU2015-11).
ASU 2015-11 changes the subsequent measurement guidance for inventory accounted for using methods other than the last in, first out (LIFO) and Retail
Inventorymethods.Companieswillsubsequentlymeasureinventoryatthelowerofcostandnetrealizablevalue.Netrealizablevalueistheestimatedsellingprice
in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for
inventorymeasuredusingLIFOortheretailinventorymethod.ASU2015-11iseffectiveforfiscalyears,andinterimperiodswithinthoseyears,beginningafter
December15,2016,withearlyadoptionpermitted.CenterPointEnergydoesnotbelievethatASU2015-11willhaveamaterialimpactonitsfinancialposition,
resultsofoperations,cashflowsanddisclosures.
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