ComEd 2015 Annual Report Download - page 239

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
policies of the investee, or the results of a model that identifies Exelon or one of its subsidiaries as the primary beneficiary of a VIE. Where Exelon
does not have a controlling financial interest in an entity, it applies proportionate consolidation, equity method accounting or cost method
accounting. Exelon applies proportionate consolidation when it has an undivided interest in an asset and is proportionately liable for its share of
each liability associated with the asset. Exelon proportionately consolidates its undivided ownership interests in jointly owned electric plants and
transmission facilities, as well as its undivided ownership interests in Upstream natural gas exploration and production activities. Under
proportionate consolidation, Exelon separately records its proportionate share of the assets, liabilities, revenues and expenses related to the
undivided interest in the asset. Exelon applies equity method accounting when it has significant influence over an investee through an ownership in
common stock, which generally approximates a 20% to 50% voting interest. Exelon applies equity method accounting to certain investments and
joint ventures, including certain financing trusts of ComEd, PECO, and BGE. Under the equity method, Exelon reports its interest in the entity as
an investment and Exelon’s percentage share of the earnings from the entity as single line items in its financial statements. Exelon uses the cost
method if it holds less than 20% of the common stock of an entity. Under the cost method, Exelon reports its investment at cost and recognizes
income only to the extent Exelon receives dividends or distributions.
The accompanying consolidated financial statements have been prepared in accordance with GAAP for annual financial statements and in
accordance with the instructions to Form 10-K and Regulation S-X promulgated by the SEC.
Use of Estimates (Exelon, Generation, ComEd, PECO and BGE)
The preparation of financial statements of each of the Registrants in conformity with GAAP requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. Areas in which significant estimates have
been made include, but are not limited to, the accounting for nuclear decommissioning costs and other AROs, pension and other postretirement
benefits, the application of purchase accounting, inventory reserves, allowance for uncollectible accounts, goodwill and asset impairments,
derivative instruments, unamortized energy contracts, fixed asset depreciation, environmental costs and other loss contingencies, taxes and
unbilled energy revenues. Actual results could differ from those estimates.
Reclassifications (Exelon, Generation, ComEd, PECO and BGE)
Certain prior year amounts in the registrants’ Consolidated Statements of Operations and Comprehensive Income, Consolidated Balance
Sheets and Consolidated Statements of Cash Flows have been reclassified between line items for comparative purposes. The reclassifications did
not affect any of the Registrants’ net income, financial positions, or cash flows from operating activities.
Exelon revised the presentation on the Statements of Operations and Comprehensive Income for PECO and BGE to reflect separately
operating revenues from the sale of electricity and operating revenues from the sale of natural gas, as well as, purchased power expense and
purchased fuel expense within the operating expenses section of the Statement of Operations and Comprehensive Income. Further, Exelon
revised the presentation from total operating revenues to “Rate-regulated utility revenues” and “Competitive businesses revenues” on the face of
Exelon’s consolidated Statement of Operations and Comprehensive Income for all periods presented. Similarly, Exelon will separately present
rate-regulated purchased power and fuel expense and non-rate regulated
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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