Exelon 2015 Annual Report Download - page 244

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Realized and unrealized gains and losses, net of tax, on Generation’s NDT funds associated with the Regulatory Agreement Units are included in
regulatory liabilities at Exelon, ComEd and PECO and in noncurrent payables to affiliates at Generation and in noncurrent receivables from
affiliates at ComEd and PECO. Realized and unrealized gains and losses, net of tax, on Generation’s NDT funds associated with the Non-
Regulatory Agreement Units are included in earnings at Exelon and Generation. Unrealized gains and losses, net of tax, for Exelon’s available-for-
sale securities are reported in OCI. Any decline in the fair value of Exelon’s available-for-sale securities below the cost basis is reviewed to
determine if such decline is other-than-temporary. If the decline is determined to be other-than-temporary, the cost basis of the available-for-sale
securities is written down to fair value as a new cost basis and the amount of the write-down is included in earnings. See Note 16—Asset
Retirement Obligations for information regarding marketable securities held by NDT funds and Note 24—Supplemental Financial Information for
additional information regarding ComEd’s and PECO’s regulatory assets and liabilities.
Property, Plant and Equipment (Exelon, Generation, ComEd, PECO and BGE)
Property, plant and equipment is recorded at original cost. Original cost includes construction-related direct labor and material costs. ComEd,
PECO and BGE also include indirect construction costs including labor and related costs of departments associated with supporting construction
activities. When appropriate, original cost also includes capitalized interest for Generation and Exelon Corporate and AFUDC for regulated property
at ComEd, PECO and BGE. The cost of repairs and maintenance, including planned major maintenance activities and minor replacements of
property, is charged to maintenance expense as incurred.
Third parties reimburse ComEd, PECO and BGE for all or a portion of expenditures for certain capital projects. Such contributions in aid of
construction costs (CIAC) are recorded as a reduction to Property, Plant and Equipment. DOE SGIG funds reimbursed to PECO and BGE have
been accounted for as CIAC.
For Generation, upon retirement, the cost of property is charged to accumulated depreciation in accordance with the composite method of
depreciation. Upon replacement of an asset, the costs to remove the asset, net of salvage, are capitalized to gross plant when incurred as part of
the cost of the newly-installed asset and recorded to depreciation expense over the life of the new asset. Removal costs, net of salvage, incurred
for property that will not be replaced is charged to operating and maintenance expense as incurred.
For ComEd, PECO and BGE, upon retirement, the cost of property, net of salvage, is charged to accumulated depreciation in accordance
with the composite method of depreciation. ComEd’s and BGE’s depreciation expense includes the estimated cost of dismantling and removing
plant from service upon retirement, which is consistent with each utility’s regulatory recovery method. ComEd’s and BGE’s actual incurred removal
costs are applied against a related regulatory liability. PECO’s removal costs are capitalized to accumulated depreciation when incurred, and
recorded to depreciation expense over the life of the new asset constructed consistent with PECO’s regulatory recovery method.
Generation’s oil and gas exploration and production activities consist of working interests in gas producing fields. Generation accounts for
these activities under the successful efforts method of accounting. Acquisition, development and exploration costs are capitalized. Costs of
drilling exploratory wells are initially capitalized and later charged to expense if reserves are not discovered or deemed not to be commercially
viable. Other exploratory costs are charged to expense when incurred.
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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