ComEd 2015 Annual Report Download - page 253

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Simplifying the Measurement of Inventory
In July 2015, the FASB issued authoritative guidance that requires inventory to be measured at the lower of cost or net realizable value. The
new guidance defines net realizable value as the estimated selling price in the ordinary course of business, less reasonably predictable costs of
completion, disposal and transportation. This definition is consistent with existing authoritative guidance. Current guidance requires inventory to be
measured at the lower of cost or market where market could be replacement cost, net realizable value or net realizable value less an
approximately normal profit margin. The guidance is effective for periods beginning after December 15, 2016 with early adoption permitted. The
guidance is required to be applied prospectively. The Registrants do not expect that this guidance will have a significant impact on their
Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income, Consolidated Statements of Cash Flows and
disclosures. The Registrants are currently assessing the potential to early adopt the guidance.
Disclosures for Investments in Certain Entities that Calculate Net Asset Value per Share
In May 2015, FASB issued authoritative guidance that removes the requirement to categorize within the fair value hierarchy all investments
for which fair value is measured using the net asset value per share practical expedient. Investments measured at net asset value per share using
the practical expedient will be presented as a reconciling item between the fair value hierarchy disclosure and the investment line item on the
statement of financial position. The guidance also removes the requirement to make certain disclosures for all investments that are eligible to be
measured at fair value using the net asset value per share practical expedient. Rather, those disclosures are limited to investments for which the
entity has elected to measure the fair value using the practical expedient. The guidance is effective for the Registrants for fiscal years beginning
after December 15, 2015 with early adoption permitted. The guidance is required to be applied retrospectively to all prior periods presented. The
Registrants are currently assessing the impacts this guidance may have on their disclosures. There will be no impact to the Registrants’
Consolidated Balance Sheets, Consolidated Statements of Operations and Comprehensive Income and Consolidated Statements of Cash Flows.
Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement
In April 2015, the FASB issued authoritative guidance that clarifies the circumstances under which a cloud computing customer would
account for the arrangement as a license of internal-use software. A cloud computing arrangement would include a software license if (1) the
customer has a contractual right to take possession of the software at any time during the hosting period without significant penalty and (2) it is
feasible for the customer to either run the software on its own hardware or contract with another party unrelated to the vendor to host the software.
If the arrangement does not contain a software license, it would be accounted for as a service contract. Beginning January 1, 2016, the
Registrants will apply the standard prospectively and do not expect that this guidance will have a significant impact on their Consolidated Balance
Sheets, Consolidated Statements of Operations and Comprehensive Income, Consolidated Statements of Cash Flows and disclosures.
Amendments to the Consolidation Analysis
In February 2015, the FASB issued authoritative guidance that amends the consolidation analysis for variable interest entities (VIEs) as well
as voting interest entities. The new guidance primarily (1) changes the assessment of limited partnerships as VIEs, (2) amends the effect that
fees paid to a decision maker or service provider have on the VIE analysis, (3) amends how variable interests held by
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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