Exelon 2015 Annual Report Download - page 243

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Variable Interest Entities (Exelon, Generation, ComEd, PECO and BGE)
Exelon accounts for its investments in and arrangements with VIEs based on the authoritative guidance which includes the following specific
requirements:
• requires an entity to qualitatively assess whether it should consolidate a VIE based on whether the entity (1) has the power to direct
matters that most significantly impact the activities of the VIE, and (2) has the obligation to absorb losses or the right to receive benefits
of the VIE that could potentially be significant to the VIE,
• requires an ongoing reconsideration of this assessment instead of only upon certain triggering events, and
• requires the entity that consolidates a VIE (the primary beneficiary) to disclose (1) the assets of the consolidated VIE, if they can be
used to only settle specific obligations of the consolidated VIE, and (2) the liabilities of a consolidated VIE for which creditors do not
have recourse to the general credit of the primary beneficiary.
Based on the above accounting guidance, Exelon has adopted the following policies related to variable interest entities:
• Exelon has disclosed, to the extent material, the assets of its consolidated VIEs that can only be used to settle specific obligations of
the consolidated VIE, and the liabilities of Exelon’s consolidated VIEs for which creditors do not have recourse to Exelon’s general
credit.
• Exelon has qualitatively assessed whether the equity holders of the entity have the power to direct matters that most significantly
impact the entity.
See Note 2—Variable Interest Entities for additional information.
Inventories (Exelon, Generation, ComEd, PECO and BGE)
Inventory is recorded at the lower of weighted average cost or market. Provisions are recorded for excess and obsolete inventory.
Fossil Fuel. Fossil fuel inventory includes the weighted average costs of stored natural gas, propane and oil. The costs of natural gas,
propane and oil are generally included in inventory when purchased and charged to fuel expense when used or sold.
Materials and Supplies. Materials and supplies inventory generally includes the weighted average costs of transmission, distribution and
generating plant materials. Materials are generally charged to inventory when purchased and expensed or capitalized to property, plant and
equipment, as appropriate, when installed or used.
Emission Allowances. Emission allowances are included in inventory (for emission allowances exercisable in the current year) and other
deferred debits (for emission allowances that are exercisable beyond one year) and are carried at the lower of weighted average cost or market and
charged to fuel expense as they are used in operations.
Marketable Securities (Exelon, Generation, ComEd, PECO and BGE)
All marketable securities are reported at fair value. Marketable securities held in the NDT funds are classified as trading securities and all
other securities are classified as available-for-sale securities.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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