CenterPoint Energy 2015 Annual Report Download - page 91

CenterPointEnergy’spoliciesprohibittheuseofleveragedfinancialinstruments.Aleveragedfinancialinstrument,forthispurpose,isatransactioninvolving
aderivativewhosefinancialimpactwillbebasedonanamountotherthanthenotionalamountorvolumeoftheinstrument.
(l) Investments in Other Debt and Equity Securities
CenterPointEnergyreportssecuritiesclassifiedastradingatestimatedfairvalueinitsConsolidatedBalanceSheets,andanyunrealized holdinggains and
lossesarerecordedasotherincome(expense)initsStatementsofConsolidatedIncome.
(m) Environmental Costs
CenterPoint Energy expenses or capitalizes environmental expenditures, as appropriate, depending on their future economic benefit. CenterPoint Energy
expensesamountsthatrelatetoanexistingconditioncausedbypastoperationsthatdonothavefutureeconomicbenefit.CenterPointEnergyrecordsundiscounted
liabilitiesrelatedtothesefuturecostswhenenvironmentalassessmentsand/orremediationactivitiesareprobableandthecostscanbereasonablyestimated.
(n) Statements of Consolidated Cash Flows
For purposes of reporting cash flows, CenterPoint Energy considers cash equivalents to be short-term, highly-liquid investments with maturities of three
monthsorlessfromthedateofpurchase.Inconnectionwiththeissuanceoftransitionbondsandsystemrestorationbonds,CenterPointEnergywasrequiredto
establishrestricted cashaccountstocollateralize thebondsthatwereissued inthese financingtransactions. Theserestricted cashaccounts arenotavailablefor
withdrawaluntilthematurityofthebondsandarenotincludedincashandcashequivalents.Theserestrictedcashaccountsof$35millionand$47millionasof
December31,2015and2014,respectively,areincludedinothercurrentassetsinCenterPointEnergy’sConsolidatedBalanceSheets.Cashandcashequivalents
included$264millionand$290millionasofDecember31,2015and2014,respectively,that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 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$53millionand$61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
85