Sunoco 2015 Annual Report Download - page 76

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Capitalized Interest
The Partnership capitalizes interest incurred on funds borrowed for contributions to joint venture interests and to certain
capital projects during periods in which construction activities are in progress to bring those projects to their intended use.
Investment in Affiliates
Investment in affiliates, which consist of corporate joint ventures in which the Partnership does not have a controlling
financial interest, but over which the Partnership can exercise significant influence, are accounted for under the equity method
of accounting. Under this method, an investment is carried at cost, adjusted for the equity in income (loss), reduced for
dividends received and adjusted for changes in accumulated other comprehensive income (loss). Income recognized from the
Partnership's corporate joint venture interests is presented within other income in the consolidated statements of comprehensive
income.
The Partnership allocates the excess of its investment cost over its equity in the net assets of affiliates to the underlying
tangible and intangible assets of the corporate joint ventures. Other than land and indefinite-lived intangible assets, all amounts
allocated, principally to pipeline and related assets, are amortized using the straight-line method over their estimated useful life
of 40 years. The amortization of these amounts is also presented within other income in the consolidated statements of
comprehensive income.
Acquisitions
The Partnership records third-party business combinations at their estimated fair values as of the date of acquisition. Any
excess of consideration transferred plus the fair value of noncontrolling interest over the estimated fair value of the net assets
acquired is recorded as goodwill. To the extent the estimated fair value of the net assets acquired exceeds the purchase price
plus the fair value of the noncontrolling interest, a gain is recorded in results of current operations. The results of operations of
acquired businesses are included in the Partnership's results from the dates of acquisition.
Assets acquired and liabilities assumed in connection with acquisitions from entities under common control are recorded
by the Partnership at the common control entity's net carrying value. The Partnership records any difference between the
consideration paid and the carrying value of the net assets and liabilities as a distribution from, or contribution to, redeemable
limited partner interests or equity, as applicable.
The Partnership's asset acquisitions are recorded at the purchase price, which is allocated to the acquired assets and
assumed liabilities based on their relative estimated fair values.
Assets acquired and liabilities assumed include tangible and intangible assets, and contingent assets and liabilities. The
estimated fair values of these assets and liabilities are determined based on observable inputs such as quoted market prices,
information from comparable transactions, offers made by other prospective acquirers in the cases where the Partnership has
certain rights to acquire additional interests in existing investments, and the replacement cost of assets in the same condition or
stage of usefulness; or on unobservable inputs such as expected future cash flows or internally developed estimates of value.
The Partnership's fair value measurements are classified within the fair value hierarchy established by GAAP based on the
lowest level (least observable) input that is significant to the measurement in its entirety.
See Note 3 for additional information concerning the Partnership's recent acquisitions.
Impairment of Long-Lived Assets
Long-lived assets, other than those held for sale, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be recoverable. An asset is considered to be impaired
when the undiscounted estimated net cash flows expected to be generated by the asset are less than its carrying amount. The
impairment recognized is the amount by which the carrying amount exceeds the estimated fair value of the impaired asset.
Long-lived assets held for sale are recorded at the lower of their carrying amount or estimated fair value less cost to sell the
assets.
Goodwill
Goodwill, which represents the excess of the purchase price in a business combination over the fair value of net assets
acquired, is tested for impairment annually in the fourth quarter, or more often if events or changes in circumstances indicate
that the carrying value of goodwill may exceed its estimated fair value. The Partnership's general partner was acquired and
became a consolidated subsidiary of ETP in the fourth quarter 2012. In connection with the acquisition, the Partnership elected
to apply "push-down accounting" which required the Partnership's assets and liabilities to be adjusted to fair value on the
closing date of the acquisition, which included an increase to the Partnership's goodwill balance of approximately $1.3 billion.