ComEd 2015 Annual Report Download - page 122

Table of Contents
The Registrants evaluate quarterly the probability of realizing deferred tax assets by reviewing a forecast of future taxable income and their
intent and ability to implement tax planning strategies, if necessary, to realize deferred tax assets. The Registrants also assess their ability to
utilize tax attributes, including those in the form of carryforwards, for which the benefits have already been reflected in the financial statements.
The Registrants record valuation allowances for deferred tax assets when the Registrants conclude it is more-likely-than-not such benefit will not
be realized in future periods.
Actual income taxes could vary from estimated amounts due to the future impacts of various items, including changes in income tax laws,
the Registrants’ forecasted financial condition and results of operations, failure to successfully implement tax planning strategies, as well as
results of audits and examinations of filed tax returns by taxing authorities. While the Registrants believe the resulting tax balances as of
December 31, 2015 and 2014 are appropriately accounted for in accordance with the applicable authoritative guidance, the ultimate outcome of tax
matters could result in favorable or unfavorable adjustments to their consolidated financial statements and such adjustments could be material.
See Note 15—Income Taxes of the Combined Notes to Consolidated Financial Statements for additional information regarding taxes.
Accounting for Loss Contingencies (Exelon, Generation, ComEd, PECO and BGE)
In the preparation of their financial statements, the Registrants make judgments regarding the future outcome of contingent events and
record liabilities for loss contingencies that are probable and can be reasonably estimated based upon available information. The amounts recorded
may differ from the actual expense incurred when the uncertainty is resolved. The estimates that the Registrants make in accounting for loss
contingencies and the actual results that they record upon the ultimate resolution of these uncertainties could have a significant effect on their
consolidated financial statements.
Environmental Costs. Environmental investigation and remediation liabilities are based upon estimates with respect to the number of sites
for which the Registrants will be responsible, the scope and cost of work to be performed at each site, the portion of costs that will be shared with
other parties, the timing of the remediation work, changes in technology, regulations and the requirements of local governmental authorities.
Periodic studies are conducted at ComEd, PECO and BGE to determine future remediation requirements and estimates are adjusted accordingly.
In addition, periodic reviews are performed at Generation to assess the adequacy of its environmental reserves. These matters, if resolved in a
manner different from the estimate, could have a significant effect on the Registrants’ results of operations, financial position and cash flows. See
Note 23—Commitments and Contingencies of the Combined Notes to Consolidated Financial Statements for further information.
Other, Including Personal Injury Claims. The Registrants are self-insured for general liability, automotive liability, workers’ compensation,
and personal injury claims to the extent that losses are within policy deductibles or exceed the amount of insurance maintained. The Registrants
have reserves for both open claims asserted and an estimate of claims incurred but not reported (IBNR). The IBNR reserve is estimated based on
actuarial assumptions and analysis and is updated annually. Future events, such as the number of new claims to be filed each year, the average
cost of disposing of claims, as well as the numerous uncertainties surrounding litigation and possible state and national legislative measures could
cause the actual costs to be higher or lower than estimated. Accordingly, these claims, if resolved in a manner different from the estimate, could
have a material effect on the Registrants’ results of operations, financial position and cash flows.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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