ComEd 2006 Annual Report Download - page 207

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)
Cumulative Effect of Changes in Accounting Principles
FIN 47. In March 2005, the FASB issued FIN 47, which clarifies that the term “conditional asset
retirement obligation” as used in SFAS No. 143 refers to a legal obligation to perform an asset
retirement activity in which the timing and/or method of settlement are conditional on a future event that
may or may not be within the control of the entity. FIN 47 requires an entity to recognize a liability for
the fair value of a conditional asset retirement obligation if the fair value of the liability can be
reasonably estimated. FIN 47 was effective for the Registrants as of December 31, 2005. See
Note 13—Asset Retirement Obligations for further information. The following table shows the charge
the Registrants recorded as a cumulative effect of a change in accounting principle pursuant to the
adoption of FIN 47 in 2005.
Exelon Generation ComEd PECO
Charge recorded, net of tax ................................. $42 $30 $9 $3
Related tax impact ........................................ 27 19 6 2
EITF 03-16. In March 2004, the EITF reached a consensus on and the FASB ratified EITF Issue
No. 03-16, “Accounting for Investments in Limited Liability Companies” (EITF 03-16). The EITF
concluded that if investors in a limited liability company have specific ownership accounts, they should
follow the guidance prescribed in Statement of Position 78-9, “Accounting for Investments in Real
Estate Ventures,” and EITF Topic No. D-46, “Accounting for Limited Partnership Investments.”
Otherwise, investors should follow the significant influence model prescribed in Accounting Principles
Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” EITF
03-16 was effective for Exelon and its subsidiaries during the third quarter of 2004. Exelon recorded a
charge of $9 million (net of an income tax benefit of $5 million) as a cumulative effect of a change in
accounting principle in connection with its adoption of EITF 03-16 as of July 1, 2004. This charge
related to certain investments in limited liability partnerships held by Enterprises.
FIN 46-R. See discussion of the adoption of FIN 46-R within the “Variable Interest Entities”
discussion above.
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