ComEd 2006 Annual Report Download - page 206

Exelon Corporation and Subsidiary Companies
Exelon Generation Company, LLC and Subsidiary Companies
Commonwealth Edison Company and Subsidiary Companies
PECO Energy Company and Subsidiary Companies
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Registrants disclose taxes that are imposed on and concurrent with a specific revenue-producing
transaction in accordance with EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal versus
Net as an Agent.” Exelon’s, ComEd’s and PECO’s utility taxes are presented on a gross basis (see
Note 19—Supplemental Financial Information and Note 20—Segment Information). As EITF 06-3
provides only disclosure requirements, the adoption of this standard did not have a material impact on
the Registrants.
SFAS No. 157
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS No. 157).
SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements but does not change the requirements to apply fair value in
existing accounting standards. Under SFAS No. 157, fair value refers to the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants in the market in which the reporting entity transacts. The standard clarifies that fair value
should be based on the assumptions market participants would use when pricing the asset or liability.
SFAS No. 157 will be effective for the Registrants as of January 1, 2008 and the Registrants are
currently assessing the impact that SFAS No. 157 may have on their financial statements.
SFAS No. 158
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and
132(R)”, which was effective for the Exelon and Generation as of December 31, 2006. SFAS No. 158
requires Exelon and Generation to recognize the overfunded or underfunded status of its defined
benefit postretirement plans as an asset or liability on its balance sheet. The adoption of this standard
did not materially impact the Registrants’ debt or credit agreement covenants. SFAS No. 158 also
prescribes the measurement date of a plan to be the date of its year-end balance sheet, which is the
measurement date Exelon and Generation already use for their plans. In addition, Exelon and
Generation are required to disclose additional information about certain effects on net periodic benefit
cost for the next fiscal year. See Note 14—Retirement Benefits for additional information. ComEd and
PECO were not impacted by SFAS No. 158.
SAB No. 108
In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (SAB No. 108) regarding
the quantification of financial statement misstatements. SAB No. 108 requires a “dual approach” for
quantifications of errors using both a method that focuses on the income statement impact, including
the cumulative effect of prior years’ misstatements, and a method that focuses on the period-end
balance sheet. SAB No. 108 will be effective for the Registrants as of January 1, 2007. The adoption of
this standard did not have a material impact on the Registrants.
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