Exelon 2002 Annual Report Download - page 85

Comprehensive Income
Comprehensive income includes all changes in equity during a
period except those resulting from investments by and distri-
butions to shareholders. Comprehensive income is reflected in
the Consolidated Statements of Changes in Shareholders’Equity
and the Consolidated Statements of Comprehensive Income.
Cash and Cash Equivalents
Exelon considers all temporary cash investments purchased with
an original maturity of three months or less to be cash equivalents.
Restricted Cash
Restricted cash reflects escrowed cash to be applied to the
principal and interest payment on the transition bonds and
transitional trust notes.
Marketable Securities
Marketable securities are classified as available-for-sale
securities and are reported at fair value, with the unrealized
gains and losses, net of tax, reported in other comprehensive
income. Under regulatory accounting practices, unrealized
gains and losses on marketable securities held in the nuclear
decommissioning trust funds are reported in accumulated
depreciation for operating units and as a reduction of regula-
tory assets for retired units. If regulatory accounting practices
are not applicable, unrealized gains and losses on marketable
securities held in the nuclear decommissioning trust funds
are reported in accumulated other comprehensive income. At
December 31, 2002 and 2001, Exelon had no held-to-maturity or
trading securities.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Exelon
evaluates the carrying value of property, plant and equipment
and other long-term assets based upon current and anticipated
undiscounted cash flows, and recognizes an impairment when
it is probable that such estimated cash flows will be less than
the carrying value of the asset. Measurement of the amount
of impairment, if any, is based upon the difference between
the carrying value and fair value. The cost of maintenance,
repairs and minor replacements of property is charged to main-
tenance expense as incurred.
Upon retirement, the cost of regulated property plus
removal costs less salvage value is charged to accumulated
depreciation by the regulated subsidiaries in accordance with
regulatory practices. For unregulated property, the cost and
accumulated depreciation of property, plant and equipment
retired or otherwise disposed of are removed from the related
accounts and included in the determination of the gain or loss
on disposition.
Depreciation, Amortization and Decommissioning
Depreciation is provided over the estimated service lives of
property, plant and equipment on a straight-line basis. Annual
depreciation provisions for financial reporting purposes,
expressed as a percentage of average service life for each
asset category, are presented in the table below. See Note 4—
Adoption of New Accounting Pronouncements and Accounting
Changes for information on service life extensions for certain
nuclear generating stations and Energy Delivery’s change in
depreciation rates.
Asset Category 2002 2001 2000
Electric—Transmission
and Distribution 3.11% 3.97% 4.16%
Electric—Generation 3.65% 3.11% 5.02%
Gas 2.13% 2.34% 2.39%
Common—Gas and Electric 6.40% 6.26% 5.09%
Other Property and Equipment 7.88% 9.53% 8.11%
Amortization of regulatory assets is provided over the recovery
period specified in the related regulatory agreement. Goodwill
associated with the Merger was amortized on a straight-line
basis over 40 years in 2001 and 2000. Goodwill associated with
other acquisitions was amortized over periods from 10 to 20
years in 2001 and 2000.Accumulated amortization of goodwill
was $185 million and $35 million at December 31, 2001 and
2000, respectively. Effective January 1, 2002, under SFAS No. 142
“Goodwill and Other Intangible Assets” (SFAS No. 142), goodwill
recorded by Exelon is no longer subject to amortization but is
subject to an annual impairment test (see Note 4—Adoption
of New Accounting Pronouncements and Accounting Changes).
Exelon currently recovers costs for decommissioning its
nuclear generating stations, excluding AmerGen, through
regulated rates. The amounts recovered from customers are
deposited in trust accounts and invested for funding of future
costs for operating and retired nuclear generating stations.The
majority of the eventual work to decommission Exelon’s nuclear
generating stations will occur after 2029.
Exelon accounts for the current period’s cost of decommis-
sioning related to generating plants previously owned by PECO
following common regulatory accounting practices by recording
a charge to depreciation expense and a corresponding liability in
accumulated depreciation concurrently with decommissioning
collections. Financial activity of the decommissioning trust (e.g.,
investment income and realized and unrealized gains and losses
on trust investments) is reflected in Nuclear Decommissioning Trust
Funds in Exelon’s Consolidated Balance Sheets with a corre-
sponding offset recorded to the liability in accumulated depre-
ciation. Under common regulatory practices, the deposit of
Notes To Consolidated Financial Statements
exelon corporation and subsidiary companies
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