ComEd 2013 Annual Report Download - page 129

Disclosures About Offsetting Assets and Liabilities
InDecember 2011 (andamendedinJanuary2013), theFASB issuedauthoritativeguidancerequiringentitiesto disclosebothgross
andnet information about recognizedderivativeinstruments, including bifurcatedembeddedderivatives, repurchaseandreverse
repurchaseagreements, andsecuritiesborrowingor lendingtransactionsthat are offset on thebalancesheet or subjecttoan
enforceable master nettingarrangement or similar agreement,irrespectiveofwhether theyare offset on thebalancesheet.The
guidancewaseffectivefor Exelon for periods beginningon or after January1,2013 andwasrequiredto be appliedretrospectively.
This guidanceis primarilyapplicable to certainderivative transactionsfor Exelon andGeneration.Asthis guidance providesonly
disclosure requirements, theadoption ofthis standard did not impactExelon’s resultsofoperations, cash flows or financial positions.
See Note 12—DerivativeFinancial Instrumentsfor thenew disclosures.
Inclusion of the Fed Funds Effective Swap Rate as a Benchmark Interest Rate for Hedge Accounting Purposes
InJuly2013,theFASB issuedauthoritativeguidance permittingentitiesto designate theFedFunds EffectiveSwap Rate asaU.S.
benchmarkinterest rate for hedgeaccountingpurposes. Prior to theissuanceofthis guidance,onlyinterest rateson direct treasury
obligationsoftheU.S. government andtheLIBORswap rate were consideredbenchmarkinterest ratesintheU.S. This guidance
waseffectiveimmediatelyandcan be appliedprospectivelyfor qualifyingnewor redesignatedhedgingrelationshipsenteredinto on
or after July17, 2013.Currently, Exelon doesnot usetheFedFunds EffectiveSwap Rate asabenchmarkinterest rate,but mayin
thefuture.
Thefollowingrecently issuedaccountingstandardisnot yet requiredto bereflectedinExelon’s combinedfinancial statements.
Presentation of Unrecognized Tax Benefits When Net Operating Loss Carryforwards, Similar Tax Losses or Tax Credit
Carryforwards Exist
InJuly2013,theFASB issuedauthoritativeguidancerequiringentitiesto present unrecognizedtaxbenefitsasareduction to
deferredtaxassetsfor lossesor other taxcarryforwards that wouldbeavailable to offset theuncertaintaxpositionsat the reporting
date.Currently, Exelon presentstheir unrecognizedtaxbenefitsasliabilitieson a gross basis unless an unrecognizedtaxbenefitis
directlyassociatedwithataxposition taken inataxyear that resultsintherecognition ofa net operatingloss or other tax
carryforwardfor that year. This guidanceis effectivefor Exelon for periods beginningafter December 15, 2013 andisrequiredto be
appliedprospectively, withretroactive application permitted. Exelon will not retroactivelyadopt this guidance. This guidanceis
currentlynot expectedto haveanimpactonExelon upon adoption withtheexception ofExelon andGeneration inwhich
approximately$11 million ofunrecognizedtaxbenefitswill beoffset againstcurrent deferredincomeassets. Theadoption ofthis
standardwill not impactExelon’s resultsofoperations.
2. Variable Interest Entities
Under the applicable authoritativeguidance,aVIE is alegal entitythat possessesanyofthefollowingcharacteristics: an insufficient
amount ofequityat risk to financeitsactivities, equityownerswhodo not havethepower to directthesignificant activitiesofthe
entity(or havevotingrightsthat are disproportionate to theirownershipinterest), or equityownerswhodo not havetheobligation to
absorbexpectedlossesor therighttoreceivetheexpectedresidual returnsofthe entity. Companiesare requiredto consolidate a
VIE if theyare itsprimarybeneficiary, which is the enterprisethat hasthepower to directtheactivitiesthat mostsignificantlyimpact
the entity’s economic performance.
At December 31,2013 and2012,theExelon,Generation,and BGE consolidatedfour and fiveVIEs or VIE groups, respectively, for
which the applicable Registrant wastheprimarybeneficiary. AsofDecember 31,2013,theRegistrantshadone VIE for which the
Registrantswere theprimarybeneficiary, however,theVIE is immaterial andwasnot includedintheconsolidatedfinancial
statementsor intheconsolidated VIE table below. AsofDecember 31,2013 and2012,theRegistrantshad significant interestsin
eightandnine other VIEs for which theRegistrantsdo not havethepower to directthe entities’ activities, respectively, and
accordingly, were not theprimarybeneficiary.
123