Eversource 2015 Annual Report Download - page 71

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redemption, have been presented as noncontrolling interests in the financial statements of Eversource. The Preferred Stock of CL&P and the
Preferred Stock of NSTAR Electric are considered to be temporary equity and have been classified between liabilities and permanent shareholders’
equity on the balance sheets of Eversource, CL&P and NSTAR Electric due to a provision in the preferred stock agreements of both CL&P and
NSTAR Electric that grant preferred stockholders the right to elect a majority of the CL&P and NSTAR Electric Boards of Directors, respectively,
should certain conditions exist, such as if preferred dividends are in arrears for a specified amount of time. The Net Income reported in the
statements of income and cash flows represents net income prior to apportionment to noncontrolling interests, which is represented by dividends on
preferred stock of CL&P and NSTAR Electric.
As of December 31, 2015 and 2014, Eversource’s carrying amount of goodwill was approximately $3.5 billion. Eversource performs an assessment
for possible impairment of its goodwill at least annually. Eversource completed its annual goodwill impairment test for each of its reporting units as
of October 1, 2015 and determined that no impairment exists. See Note 21, “Goodwill,” for further information.
C. Accounting Standards
Accounting Standards Issued but not Yet Effective: In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standards
Update (ASU) 2014-09, Revenue from Contracts with Customers, which amends existing revenue recognition guidance and is required to be applied
retrospectively (either to each reporting period presented or cumulatively at the date of initial application). In August 2015, the FASB issued ASU
2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which defers the effective date of ASU 2014-09 to the first
quarter of 2018, with 2017 application permitted. The Company is reviewing the requirements of ASU 2014-09 and will implement the standard in
the first quarter of 2018. The ASU is not expected to have a material impact on the financial statements of Eversource, CL&P, NSTAR Electric,
PSNH or WMECO.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Liabilities,
which is required to be implemented in the first quarter of 2018. The Company is reviewing the requirements of the ASU. The ASU will remove the
available-for-sale designation for equity securities, whereby changes in fair value are recorded in other comprehensive income in shareholders’
equity, and will require changes in fair value of all equity securities to be recorded in earnings beginning on January 1, 2018, with the unrealized gain
or loss on available-for-sale equity securities as of that date reclassified to retained earnings as a cumulative effect of adoption. The fair value of
available-for-sale equity securities subject to this guidance as of December 31, 2015 was approximately $52 million. The remaining available-for-
sale equity securities included in marketable securities on the balance sheet are held in nuclear decommissioning trusts and are subject to regulatory
accounting treatment and will not be impacted by this guidance. Implementation of the ASU for other financial instruments is not expected to have a
material impact on the financial statements of Eversource, CL&P, NSTAR Electric, PSNH or WMECO.
On February 25, 2016, the FASB issued ASU 2016-02, Leases, which changes existing lease accounting guidance and is required to be applied in the
first quarter of 2019, with earlier application permitted. The ASU is required to be implemented for leases beginning on the date of initial
application. For prior periods presented, leases are required to be recognized and measured using a modified retrospective approach. The Company
is reviewing the requirements of ASU 2016-02.
Recently Adopted Accounting Standards: In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, that
changed the balance sheet presentation of debt issuance costs. Under the ASU, issuance costs related to debt are presented on the balance sheet as a
direct deduction from the carrying amount of the debt liability rather than as a deferred cost. The new accounting guidance is effective for interim
and annual periods beginning in the first quarter of 2016 with early adoption permitted and is required to be applied retrospectively. On
December 31, 2015, the Company adopted the new accounting guidance and applied it retrospectively to all prior periods presented in the financial
statements. The adoption of this ASU did not have a material effect on the balance sheets and had no impact on the results of operations or cash
flows of Eversource, CL&P, NSTAR Electric, PSNH or WMECO. See Note 8, “Long-Term Debt,” for the prior year amounts that have been
retrospectively adjusted.
On November 20, 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, that required all deferred tax liabilities and
assets, along with any related valuation allowance, be classified as noncurrent on the balance sheet. This new accounting guidance is effective for
interim and annual periods beginning in the first quarter of 2017 with early adoption permitted and may be applied either prospectively or
retrospectively. On December 31, 2015, the Company adopted the new accounting guidance and applied it prospectively. The adoption of this ASU
did not have a material effect on the balance sheets and had no impact on the results of operations or cash flows of Eversource, CL&P, NSTAR
Electric, PSNH or WMECO. The current portion of Accumulated Deferred Income Taxes as of December 31, 2014, which was included in Total
Current Liabilities on the balance sheets, was $160.3 million for Eversource, $34.1 million for CL&P, $55.1 million for NSTAR Electric, $36.2
million for PSNH, and $18.1 million for WMECO.
D. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and short-term cash investments that are highly liquid in nature and have original maturities of three
months or less. At the end of each reporting period, any overdraft amounts are reclassified from Cash and Cash Equivalents to Accounts Payable on
the balance sheets.
E. Provision for Uncollectible Accounts
Eversource, including CL&P, NSTAR Electric, PSNH and WMECO, presents its receivables at estimated net realizable value by maintaining a
provision for uncollectible accounts. This provision is determined based upon a variety of judgments and factors, including the application of an
estimated uncollectible percentage to each receivable aging category. The estimate is based upon historical collection and write-off experience and
management’s assessment of collectability from customers. Management continuously assesses the collectability of receivables and adjusts
collectability estimates based on actual experience. Receivable balances are written off against the provision for uncollectible accounts when the
customer accounts are terminated and these balances are deemed to be uncollectible.