Topic:"Depreciation Amortization" in M03154

POLICIES - 05 Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on ser...

AI summary The text outlines NSPI's accounting policies for pension obligations, including actuarial valuation methods, amortization of adjustments over the average remaining service period (ARSP), market value calculations for pension assets, and adoption of accounting standards in 2000. It details how pension expense and funding differences are recorded on balance sheets.

An example of the accumulated depreciation accounting flex field relating to buildings at the Lingan Generating Station is as follows: Company Account Activity Cost Centre Project 2 - 210 - R03 - 301 - S000 Company Account Activity 2 210 R...

AI summary The text provides an example of an accumulated depreciation accounting flex field for buildings at the Lingan Generating Station, including details such as company, account, activity, cost centre, and project.

DEPRECIATION EXPENSE - 5300

AI summary The document section titled 'Depreciation Expense - 5300' appears to focus on depreciation-related financial considerations, though the content is obscured by an image placeholder. Key themes likely involve accounting treatments and regulatory scrutiny of depreciation practices.

POLICIES - O1 The cost of property, plant and equipment should be depreciated over the estimated service lives of assets. 1 - Net salvage values should be amortized over the estimated service lives of the assets to which they relate and ei...

AI summary NSPI's policies on depreciation and asset retirement obligations include straight-line depreciation over service lives, handling net salvage values, and including ARO in depreciation when legally required, referencing Section 6320.

PROCEDURES - The life estimations, including AROs and other significant assumptions are periodically reviewed and the results filed with the UARB for its approval. - The depreciation base consists of the original cost of assets in service,...

AI summary The document outlines depreciation practices, including the inclusion of AROs in the depreciation base, exceptions for large projects, and UARB's role in approving depreciation rates and studies.

COST OF OPERATIONS DEPRECIATION EXPENSE - 5300 09 The remaining life is forecasted through the use of mortality statistics that determine the best fit Iowa Curve which gives the expected retirement characteristics. This technique is applie...

AI summary The document discusses the method used to forecast the remaining life of production plant assets, utilizing mortality statistics and the Iowa Curve technique for mass plant accounts, as well as engineering studies for production plant assets.

10 Depreciation rates are filed annually with the Annual Capital Expenditures Plan. Deleted: on the NSPI intranet AMORTIZATION - CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 5310

AI summary The document discusses depreciation rates being filed annually with the Annual Capital Expenditures Plan. It also references a section on amortization related to capital contributions in aid of construction.

POLICY 01 Capital contributions in aid of construction or Government assistance towards the acquisition of fixed assets should be amortized to income using the same depreciation rates as the assets to which they relate. 112

AI summary The text states that capital contributions or government assistance for fixed assets should be amortized using the same depreciation rates as the related assets, aligning their income recognition with asset depreciation.

PROCEDURES - 02 Amortization base equals the amount of the capital contribution by plant activity code.

AI summary The text defines the amortization base as the amount of the capital contribution by plant activity code, which relates to how capital expenditures are accounted for over time.

- 03 The timing of commencement of amortization is the same as the associated asset. 04 The journal entry used to record the amortization of contributed capital would be as follows: Deleted: 04 The following example will demonstrate the am...

AI summary The text discusses the timing of the commencement of amortization, aligning it with the associated asset. It also provides an example of journal entries for the amortization of capital contributions in aid of construction, referencing a capital contribution from the Federal Government for Unit #5 at Trenton.

AMORTIZATION - PURCHASE PRICE DISCREPANCY - 5320

AI summary The document heading references a matter concerning amortization and a purchase price discrepancy (Matter 5320), likely related to regulatory proceedings involving asset valuation or financial reporting discrepancies.

INTEREST - 5800 - 06 Debt issue costs should be deferred and amortized on a straight-line basis over the term of the related debt. - 07 Costs associated with the defeasance of NSPFC long-term debt should be deferred and amortized over the...

AI summary The text outlines two accounting treatment proposals: deferring and straight-line amortizing debt issue costs over the debt term, and deferring and amortizing NSPFC long-term debt defeasance costs over the remaining debt life. These relate to cost deferral and depreciation/amortization practices.

10 Amortization of Long-term Debt Issue Costs (Accounts 082, 089 and 090) The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These cos...

AI summary The company defers significant costs from long-term debt issuance, including commissions, discounts/premiums, legal, and audit fees, and amortizes them monthly on a straight-line basis over the debt's life. This accounting treatment is applied to accounts 082, 089, and 090.

ACCOUNTING ROUTINES 10 A monthly income tax provision is recorded by calculating the forecasted taxable income for the period and multiplying by the Company's effective combined federal and provincial income tax rate. A provision for PCT i...

AI summary The document outlines the company's accounting practices for income tax provisions and Provincial Capital Tax (PCT). Monthly income tax is calculated using forecasted taxable income and combined federal/provincial rates, while PCT is prorated based on year-end taxable capital. The company claims sufficient capital cost allowance and cumulative eligible capital to minimize taxable income, with related entries recorded in specific general ledger accounts.

GENERAL - 02 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary The text outlines criteria for capitalizing expenditures, emphasizing long-term benefits, and discusses depreciation and amortization. It references guidance from the National Association of Regulatory Commissioners and FERC.

POLICIES 07 Expenditures meeting the criteria described in Paragraphs 02 and 03 create a benefit that will be realized by the Company beyond the current year. Accordingly, they should be capitalized. Formatted: Font: Not Italic 1 CI C A H...

AI summary The document discusses the capitalization of expenditures that meet specific criteria, stating that these expenditures create benefits for the company beyond the current year and should be capitalized. It references the CICA Handbook and Section 5300 for further explanation.

WORK ORDER PROCESS Deleted: ¶ 02 The following steps portray the capital asset cycle at NSPI. a. Prepare budget item and enter into Power Plant (PP) as a Capital Item (CI); Deleted: Capital Management System b. Review and revise the CI ite...

AI summary The document outlines the work order process for capital asset management at NSPI, detailing steps from budget preparation to asset depreciation, including approval processes and cost controls.

GENERAL 01 Unlike most capital assets, land generally does not lose value over time. It is therefore, considered to have an infinite life and is not depreciated. Land must be isolated from depreciable capital assets in the financial record...

AI summary Land is not depreciated because it generally retains value over time and is considered to have an infinite life. It must be separated from depreciable capital assets in financial records once included with plant in service.

MAINTENANCE AND LICENSING AGREEMENTS 05 Maintenance or licensing agreements which extend more than one year should be recorded as prepaid expenses and charged to operations on a straight-line basis over the period covered by the agreement....

AI summary The text outlines accounting practices for maintenance and licensing agreements, stating that those exceeding one year should be recorded as prepaid expenses and amortized over the agreement period, while software maintenance labour should be expensed as incurred.

POLICIES - 05 Contributions in aid of construction should be offset against the property, plant or equipment to which they relate so that the net amount is depreciated and included in rate base.[1](#page-101-0) - 06 If a relationship to a...

AI summary The text outlines policies on how contributions in aid of construction should be accounted for, specifying that they should be offset against related property, plant, or equipment and depreciated accordingly. If no specific asset can be identified, contributions should be offset against 'Assets in Service' by function and amortized at the composite rate of the relevant asset class.

11 Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Deleted: 0 Company's capital activities must be calculated. This calculation involves prorating the eligible overhead expenses determined abo...

AI summary The document outlines the process for calculating and applying overhead expenses related to capital activities, including prorating eligible overhead expenses based on capital labour to total labour, allocating expenses to divisions, and reviewing the overhead application rate annually for reasonableness.

POLICY - 02 Purchase price discrepancies should be recorded as assets. - 03 Section 1520 states purchase price discrepancies are not included in rate base. Section 5320 discusses the amortization of purchase price discrepancies.

AI summary The document discusses the treatment of purchase price discrepancies, stating they should be recorded as assets, but Section 1520 excludes them from the rate base. Section 5320 addresses the amortization of these discrepancies.

GENERAL - 02 Effective January 1, 2004, the Company retroactively adopted the new accounting standard issued by the Canadian Institute of Chartered Accountants related to asset retirement obligations. This standard requires the Company to...

AI summary The Company adopted a new accounting standard related to asset retirement obligations effective January 1, 2004, which requires recognizing the present value of future expenditures as a liability. The UARB approved a depreciation order for the removal of generation facilities, with differences recognized as a regulated asset. Some transmission and distribution assets may also have retirement obligations, though estimates are not currently available.

PROCEDURES 10 For initial recognition of the Asset Retirement Obligations, these journal entries were recorded: DR: Plant, Property and Equipment CR: ARO Liability To set up the original cost of decommissioning the assets DR: Accumulated D...

AI summary The text outlines the accounting procedures for recognizing and recording asset retirement obligations, including initial journal entries and monthly entries related to depreciation and accretion expenses.

NOT USED AND NOT USEFUL 07 Assets meeting the following criteria are included in this category: Deleted: 09 - a. they do not currently provide service to the consuming public; and - b. they are not expected to provide a benefit to customer...

AI summary The document outlines the criteria for writing off assets that do not provide service to the consuming public or are not expected to benefit customers in the foreseeable future. It also discusses the option to amortize significant write-offs over five years or a reasonable period with UARB approval, allowing unamortized costs to remain in the rate base.

NOT USED BUT USEFUL FOR STANDBY PURPOSES 10 Assets meeting the following criteria are included in this category: Deleted: 12 - a they do not currently provide service to the consuming public; and - b. they are available for service and are...

AI summary The text discusses the treatment of standby assets in regulatory proceedings, emphasizing their inclusion in rate base and depreciation over their useful life, even if they are not currently in use. These assets provide insurance against service disruptions and are treated similarly to active assets.

ASSETS - NOT USED AND USEFUL - 6350 14 Assets not currently used, but expected to be used in providing service in the future will provide value to customers at a future date. Accordingly, the cost of the asset is to be matched to the futur...

AI summary This section discusses the treatment of assets not currently in use but expected to be used in the future. It outlines how the costs of these assets should be matched with future periods when they provide value to customers, and how excess costs may be written off or deferred with UARB approval. It also covers depreciation, capital costs, and maintenance expenses during the out-of-service period.

- b. Fair value at the date of the decision not to sell CI C A H a n d b o o k 3 4 7 5. 0 8 ACCUMULATED DEPRECIATION - 6400

AI summary The text references accumulated depreciation under account number 6400 and includes a table labeled 'CI C A Hand book 3475.08' with no additional content. The context is related to accounting policies and depreciation practices.

DEFINITION 01 Accumulated depreciation, or depreciation reserves, are capital asset contra accounts that are offset against gross capital asset accounts to provide the net book value of the assets at a particular point in time.

AI summary Accumulated depreciation refers to contra accounts that offset gross capital asset accounts to determine the net book value of assets at a given time.

POLICY 04 Accumulated depreciation should be netted against assets' costs so that the assets are reported at their net book values.

AI summary The text states that accumulated depreciation should be netted against assets' costs to report assets at their net book values.

ACCUMULATED DEPRECIATION - 6400 06 When conducting a depreciation rate study, the balances in these accounts are taken into consideration when setting the final rate. If the assets in an individual depreciable group have been over/under de...

AI summary The document discusses the process of conducting a depreciation rate study, emphasizing the importance of considering accumulated depreciation balances. It explains that over or under depreciation of assets may lead to reserve differences, which must be written off over the remaining asset life, requiring an adjustment in the depreciation rate.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420 13 When a work order has received final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated depreciation.

AI summary The document outlines the process for making an entry in the accounting system when a work order has received final cost approval, specifically for the final disposition of charges to capital assets in service and accumulated depreciation.

- 15 The following journal entries are required to record the equipment retirement and proceeds of disposal: DR CR 2-097-R72-xxx-xxxx (Original Cost) 2-200-R72-xxx-0000 (PP&E) 85,000 85,000 To record the original cost to be retired. DR 1-3...

AI summary The text outlines journal entries required for the retirement and disposal of equipment, including recording original costs, proceeds from sales, and accumulated depreciation. These entries are part of the process for closing a retirement work order after final costing.

POLICIES - 01 Gains or losses on capital assets, with the exception of land, are deferred and amortized over the estimated useful life of the assets remaining in the property unit.[1](#page-127-0) - 02 Gains or losses arising from the sale...

AI summary The document outlines policies regarding the treatment of gains and losses on capital assets. Gains or losses on capital assets, except land, are deferred and amortized over the estimated useful life of the assets. Gains or losses from the sale of land are recognized immediately.

DEFINITION 01 Current assets that will benefit more than one period will have their cost allocated over the periods they benefit.

AI summary The text defines the allocation of current assets that provide benefits over multiple periods, stating that their costs should be spread across the periods they benefit.

POLICIES - 02 Expenses paid on an annual basis should be recorded as prepaid assets and amortized on a straightline basis over the months to which the expense applies. - 03 Prepaid expenses should be presented in the financial statements i...

AI summary The text outlines accounting policies for prepaid expenses, specifying that they should be recorded as prepaid assets and amortized on a straight-line basis over the relevant period, in accordance with CICA Handbook guidelines.

PROCEDURES - 04 Annual payments for items such as occupancy taxes, grants in lieu of property taxes, insurance, and computer software maintenance agreement fees are recorded as prepaid expenses. - 05 These payments are divided by the numbe...

AI summary The document outlines procedures for recording and amortizing annual payments such as occupancy taxes, grants, insurance, and software maintenance fees as prepaid expenses, with monthly journal entries to allocate these costs over the relevant period.

GENERAL - 01 The Company accrues a liability for severance programs at the date management commits to a staff reduction plan and a reasonable estimate can be made of the amounts involved. - 02 Generally accepted accounting principles presc...

AI summary The Company accrues liabilities for severance programs when management commits to staff reduction plans. Costs are expensed in the year of commitment if they are below 0.25% of annual revenue requirement, otherwise they are deferred and amortized over three years to align with future cost savings from restructuring.

POLICIES - 04 All costs associated with the development of new business should be expensed, in an operating project, until such time as it can be clearly demonstrated that the project will be viable and the Controller, NSPI has authorized...

AI summary The document outlines policies regarding the expensing and deferral of costs associated with new business development at NSPI. Costs are to be expensed until viability is confirmed and authorization is granted for deferral. Deferred costs are excluded from the regulated rate base and should be amortized over five years. Periodic reviews are required to ensure continued viability of deferred costs.

DEFINITIONS - 03 Derivative instruments designed to mitigate the risk of the Company's exposure to changes in market prices of, for example, natural gas, oil, coal & other commodities, interest rates, and foreign currency exchange rates, w...

AI summary The text defines key financial and accounting terms related to derivative instruments, hedging, and fair market value. It outlines what constitutes a derivative instrument, how hedging relationships are established, and the principles of hedge accounting.

LONG-TERM DEBT AND MATCHING NOTES - 8100 - 18 The Company will amortize the defeasance costs referred to in (i) and (iii) above over the remaining life of the Matching Notes. The Company will amortize new issue costs referred to in (ii) ab...

AI summary The Company will amortize defeasance and new issue costs over the remaining life of the Matching Notes and has the right to sell overvalued defeasance assets, provided they are replaced with qualifying assets.

- a. The front office should ensure the hedging activity is in compliance with the appropriate risk management policy; - b. The front office should document the specific risk exposure being hedged in accordance with its risk management obj...

AI summary The text outlines procedures for hedging activities, including compliance with risk management policies, documentation requirements, and the accounting treatment of derivative instruments used for hedging. It specifies how gains and losses on these instruments should be recognized and amortized depending on the type of hedged item.

Land and Land Rights - 03 Includes the cost of land owned and the rights, interests and privileges held by the Company in land owned by others. Land and land rights shall be classified within the function according to the major purpose for...

AI summary This section outlines the accounting treatment for land and land rights, including the classification, cost apportionment, and handling of special assessments, land acquisitions, and disposal proceeds. Specific rules are provided for charging costs and credits to the appropriate accounts.

GENERAL 01 Unlike most capital assets, land generally does not lose value over time. It is therefore, considered to have an infinite life and is not depreciated. Land must be isolated from depreciable capital assets in the financial record...

AI summary Land is not depreciated as it does not lose value over time and must be separated from depreciable assets in financial records when included in plant in service.

MAINTENANCE AND LICENSING AGREEMENTS - 05 Maintenance or licensing agreements which extend more than one year should be recorded as prepaid expenses and charged to operations on a straight-line basis over the period covered by the agreemen...

AI summary The text outlines accounting guidelines for maintenance and licensing agreements, specifying that long-term agreements should be recorded as prepaid expenses and amortized over their period, while software maintenance labour should be expensed as incurred.

PROPERTY, PLANT AND EQUIPMENT

AI summary The section discusses property, plant, and equipment (PPE) under accounting standards, focusing on capital expenditures, depreciation, and related financial reporting practices.

POLICY - O2 Purchase price discrepancies should be recorded as assets. - Purchase price discrepancies are not included in rate base. Purchase price discrepancies are amortized. Deleted: Section 1520 states Deleted: p Deleted: Section 5320...

AI summary The text discusses the treatment of purchase price discrepancies, stating they should be recorded as assets and are amortized, not included in the rate base. References are made to NSPI's Accounting Policy and Procedures Manuals for further details.

POLICY 01 The cost and accumulated depreciation of capital assets transferred from one function to another within Nova Scotia Power Inc. ("NSPI") should be removed from the existing function and recorded by the acquiring function.

AI summary The document states that when capital assets are transferred between functions within Nova Scotia Power Inc., their cost and accumulated depreciation should be removed from the original function and recorded by the new acquiring function.

PROCEDURE - 02 When a capital asset is transferred from one location to another within the Company, the following accounting procedures are performed: - a. original installation costs are retired; - b. costs of removal are charged to accum...

AI summary When a capital asset is moved within the company, specific accounting procedures are followed, including retiring original installation costs, charging removal costs to accumulated depreciation, transferring original costs and accumulated depreciation, and adding installation costs to the transferred original cost.

DEFINITION 01 Current assets that will benefit more than one period will have their cost allocated over the periods they benefit.

AI summary The text defines the allocation of current assets that provide benefits over multiple periods, specifying that their costs should be distributed across those periods.

Deleted: PROCEDURES ¶ 04 Annual payments for items such as occupancy taxes, grants in lieu of property taxes, insurance, and computer software maintenance agreement fees are recorded as prepaid expenses.¶ ¶ 05 These payments are divided by...

AI summary The document outlines the accounting treatment for annual payments such as occupancy taxes, grants in lieu of property taxes, insurance, and software maintenance fees, which are recorded as prepaid expenses and amortized monthly.

- a. The front office should ensure the hedging activity is in compliance with the appropriate risk management policy; - b. The front office should document the specific risk exposure being hedged in accordance with its risk management obj...

AI summary The text outlines procedures for managing and accounting for hedging activities, including documentation requirements, fair value recognition, foreign currency translation, and amortization of gains and losses on derivative instruments used for various hedging purposes.

TRANSITIONAL PROVISIONS Deleted: 25 34 This policy is effective January 1, 2011 and should be applied retroactively with restatement of prior periods except as outlined below. Deleted: Middle Office Staff will be responsible for providing...

AI summary This section outlines transitional provisions for a policy effective January 1, 2011. It specifies that prior periods should be restated except for certain adjustments, including mark-to-market adjustments and foreign exchange rate changes. Transitional adjustments are to be deferred and recognized over time, with no restatement of net earnings prior to 2011.

COMMON DIVIDENDS - 7120

AI summary The document discusses the topic of common dividends related to Nova Scotia Power Inc. (NSPI) and its affiliated entities, including Nova Scotia Power Corporation (NSPC) and Nova Scotia Power Finance Corporation (NSPFC). It includes financial information and accounting standards relevant to dividend calculations and reporting.

POLICY 02 The Company should record the cost of OM&G expenditures that do not benefit any future period as an expense in the Statement of Earnings in the period that they are incurred.

AI summary The Company is directed to expense OM&G expenditures that do not benefit future periods immediately in the Statement of Earnings, aligning with accounting standards for non-capitalized costs.

AMORTIZATION - CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 5310

AI summary The document pertains to amortization and capital contributions in aid of construction (matter 5310), involving Nova Scotia Power Inc. (NSPI) and the Utility and Review Board (UARB). The content is presented as an image, with no textual details provided.

POLICY Capital contributions in aid of construction towards the acquisition of fixed assets should be amortized to income using the same depreciation rates as the assets to which they relate.

AI summary The policy mandates that capital contributions for fixed asset acquisitions must be amortized to income using depreciation rates aligned with the related assets, ensuring consistent accounting treatment for construction aid.

PROCEDURES - The amortization base is equal to the amount of the capital contribution received for the specific asset group. - The timing of commencement of amortization is the same as the associated asset. - O4 Please refer to NSPI's Acco...

AI summary The text outlines the procedures for amortizing capital contributions received for specific asset groups, referencing NSPI's Accounting Policy and Procedures Manual Section 6220. It provides an example of a capital contribution from the Federal Government for Unit #5 at Trenton and describes the journal entry for amortizing contributed capital.

GENERAL - O2 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary The text outlines criteria for capitalizing expenditures, requiring long-term benefits beyond one year. Annual maintenance costs are expensed, while capital expenditures (e.g., extending asset life, increasing capacity) are capitalized and depreciated. Guidance references Nova Scotia Power Inc.'s Capital Expenditure Justification Criteria and U.S. regulatory bodies.

1FASB ASC 360-10-05-3 2 Please refer to NSPI's Accounting Policy & Procedures Manual Section 5300 for an explanation of depreciation and amortization expense.

AI summary The document references Nova Scotia Power Inc.'s (NSPI) Accounting Policy & Procedures Manual Section 5300 for details on depreciation and amortization expense, directing readers to this specific section for further explanation.

PROCEDURES - The cost of a capital asset includes all expenditures necessary to place the asset in service. Therefore, cost not only includes the purchase price, but also other acquisition costs such as brokers' commissions, installation c...

AI summary The text defines capital asset costs as including all expenditures to place an asset in service, such as purchase price, installation, legal fees, and carrying costs like AFUDC. It specifies that capitalization of carrying costs stops when an asset is substantially complete and ready for use, referencing NSPI's accounting policies for guidance.

POLICIES O5 Contributions in aid of construction should be offset against the property, plant or equipment to which they relate so that the net amount is depreciated and included in rate base. Deleted: 1 06 If a relationship to a specific...

AI summary The text outlines policies for accounting treatment of contributions in aid of construction, specifying that they should be offset against related property, plant, or equipment and depreciated accordingly. If no specific asset is identified, contributions should be offset against 'Assets in Service' by function and amortized at the composite rate of the relevant asset class.

POLICY - Intangible assets include land rights and computer software and are capitalized in accordance with NSPI's Accounting Policy & Procedure Manual section 6000. - Intangible assets with a finite useful life shall be amortized in accor...

AI summary The text discusses the capitalization and amortization of intangible assets, including land rights and computer software, according to NSPI's Accounting Policy & Procedure Manual sections 6000 and 5300.

GENERAL - The cost-of-capital invested in construction work in progress is included in an allowance for funds used during construction 1 ("AFUDC") as an addition to the cost of property constructed using a weighted average cost-of-capital....

AI summary The document discusses the inclusion of the cost-of-capital in the allowance for funds used during construction (AFUDC) for capital assets. This cost is capitalized and recovered over time through depreciation, ensuring equitable recovery from customers.

Deleted: ¶ The cost of an item of property, plant and equipment that is acquired, constructed, or developed over time includes carrying costs directly attributable to the acquisition, construction, or development activity such as interest...

AI summary The text discusses the cost of property, plant, and equipment, including carrying costs and interest costs when capitalized, and mentions the inclusion of directly attributable allowance for funds used during construction for rate-regulated assets.

06 Basis for Application The application base for AFUDC includes the cumulative total of all direct and indirect charges to work orders, but excludes all AFUDC related to spending subsequent to January 1 or July 1, whichever is the latest....

AI summary The application base for AFUDC includes cumulative direct and indirect charges to work orders, excluding AFUDC related to spending after January 1 or July 1, whichever is later. This exclusion leads to semi-annual compounding of AFUDC.

Deleted: Deleted: (June 30 or December 31) 3,500¶ (does not include monthly calculation for January and July) ¶ Application base $ 99,500¶ Section Break (Next Page) Deleted: 08 Accounting Entry¶ Work order D387 will be used to demonstrate...

AI summary The text discusses the accounting entry process for recording AFUDC (Allowance for Funds Used During Construction) at an annual rate of 10.2%. The monthly rate is calculated by dividing the annual rate by 12, and then multiplying by the application base of $99,500, resulting in an AFUDC of $845.75. This amount is recorded in the general ledger with specific debit and credit entries.

05 Net Salvage Value Salvage value less cost of removal is referred to as net salvage value. The amount may be either positive or negative and is charged or credited to accumulated depreciation.

AI summary Net salvage value is defined as the salvage value minus the cost of removal. This value can be positive or negative and is either charged or credited to accumulated depreciation.

PROCEDURES 69 For retirements of property, plant and equipment other than land ,the original cost plus any costs of removal less salvage proceeds is charged to accumulated depreciation, with no immediate gain or loss recognized. Deleted: a...

AI summary The text outlines procedures for retiring property, plant, and equipment, including the accounting treatment for removal costs, salvage proceeds, and the use of retirement work orders. It specifies that no immediate gain or loss is recognized and refers to NSPI's Accounting Policy & Procedures Manual for further details.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420 When a work order has received final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated depreciation.

AI summary The document outlines the process for recording the final disposition of charges to capital assets and accumulated depreciation after a work order has received final cost approval.

POLICIES - O1 Gains or losses on capital assets, with the exception of land, are deferred to accumulated depreciation. - O2 Gains or losses arising from the sale of land are recognized immediately.

AI summary The policies outline that gains or losses on capital assets (excluding land) are deferred to accumulated depreciation, while gains or losses from the sale of land are recognized immediately.

PROCEDURES O3 Please refer to NSPI's Accounting Policy & Procedures Manual Section 6420 for the procedures to record the retirement of capital assets. Deleted: and amortized over the estimated useful life of the assets remaining in the pro...

AI summary The document refers to NSPI's Accounting Policy & Procedures Manual Section 6420 for procedures to record the retirement of capital assets. A deleted note mentions amortization over the estimated useful life of the assets remaining in the property unit.

Materials - Materials are accounted for using a computerized perpetual inventory system. Purchases are recorded at cost and issues are charged to capital or operating accounts at average cost. - 05 Physical counts are performed on a rotati...

AI summary The document describes the inventory accounting practices of the Company, including the use of a perpetual inventory system, cost-based recording of purchases, average cost allocation for issues, periodic physical counts, and the application of an annual interest charge to storerooms to cover inventory carrying costs.

Appendix A: 1530 ofEquity Regulated Return 2400 Employee Future Benefits 4200 Other Revenue 5300 Depreciation Expense 5800 Interest 5900 Income Taxes 6230 of Application Administrative and Vehicle Overhead (Self-constructed Assets) 6235 of...

AI summary The text presents a table with various financial and accounting-related categories, including equity, employee benefits, revenue, depreciation, interest, taxes, and asset retirement obligations. It also includes a heading for 'GENERAL INFORMATION' indicating additional content may follow.

POLICIES - Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on servic...

AI summary The text discusses the accounting policies related to pension obligations and post-retirement benefits for Nova Scotia Power Inc. It outlines how these obligations are actuarially determined, the amortization of adjustments, and the recognition of plan surpluses and deficits on the balance sheet.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300

AI summary The document section titled 'Depreciation and Amortization Expense - 5300' appears to be related to financial accounting practices, likely discussing the treatment of depreciation and amortization expenses under accounting standards such as GAAP. However, the content is not visible due to an image placeholder.

POLICIES - O1 The cost of property, plant and equipment and intangibles should be depreciated or amortized over the useful life of the assets. 1 - Net salvage values should be amortized over the useful lives of the assets to which they rel...

AI summary The text outlines policies for the depreciation and amortization of property, plant, equipment, and intangibles, emphasizing straight-line methods and the inclusion of asset retirement obligations in depreciation expense where legally required by NSPI.

PROCEDURES - The life estimations and policies, including AROs and other significant assumptions are periodically reviewed and the results filed with the Nova Scotia Utility and Review Board ("UARB") for its approval. - The depreciation or...

AI summary The document outlines procedures for depreciation and amortization policies, including the handling of asset retirement obligations (AROs) and the approval process by the Nova Scotia Utility and Review Board (UARB). It specifies when depreciation begins and ends, exceptions for large projects, and the basis for depreciation rates.

03 Debt Issue Costs The issue of long-term debt is usually an involved process in which the Company may retain the services of brokers, lawyers and auditors. Since the cost of using these services can be significant and provide future bene...

AI summary The text discusses the accounting treatment of long-term debt issuance costs under US GAAP, including the deferral and amortization of costs such as broker fees, legal expenses, and audit costs over the life of the debt instrument. Other costs are expensed immediately in account 084 bank charges.

07 Amortization of Long-term Debt Issue Costs The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These costs are amortized monthly usi...

AI summary The Company defers significant costs associated with the issuance of long-term debt, such as commissions, discounts/premiums, and legal and audit fees, and amortizes them monthly using the effective interest rate method over the life of the debt.

Deleted: (Account 078) Page 2: [1] Deleted AI141 8/30/2010 1:41:00 PM 05 Interest expense should be recorded on an accrual basis. 06 the related debt. Debt issue costs should be deferred and amortized on a straight-line basis over the term...

AI summary The text discusses accounting practices related to interest expense, debt issue costs, and the defeasance of long-term debt, including the deferral and amortization of these costs. It also references Canadian dollar denominated long-term debt accounts and income taxes under category 5900.

POLICY - 01 Income tax expense should be categorized as current or deferred income tax expense as appropriate. - The Company uses the applicable enacted tax rate when measuring current and deferred income tax expense. - The Company follows...

AI summary The document outlines the Company's approach to accounting for income tax expenses, including the use of enacted tax rates, treatment of investment tax credits, and recognition of deferred regulatory assets and liabilities, particularly in relation to the Fuel Adjustment Mechanism (FAM).

PROCEDURES - A monthly income tax provision is recorded by multiplying the Company's effective combined federal and provincial income tax rate forecasted for the year (calculated without inclusion of the forecasted FAM adjustment) by the n...

AI summary The document outlines procedures for recording income tax provisions, including the use of effective combined federal and provincial tax rates, the calculation of PCT expense based on taxable capital forecasts, and the treatment of Part VI.1 tax as an additional cost of preferred share dividends. It also describes the recording of taxes in specific general ledger accounts.

Deleted: December 1, 2009 Deleted: December 31, 2009 Deleted: March 24, 2009 Page 1: [1] Deleted Renee Boudreau 9/8/2010 10:45:00 PM 01 The taxes payable method should be used to record income tax expense except as outlined in paragraph 02...

AI summary The text discusses the accounting treatment of income tax expense and the Fuel Adjustment Mechanism (FAM) related to deferred regulatory assets and liabilities. It outlines how future income tax expenses and assets are recognized based on statutory income tax rates when the FAM reverses. The text also references the application of administrative and vehicle overhead for self-constructed assets.

GENERAL - Overhead expenses are integral costs associated with the construction of capital assets. As per NSPI's Accounting Policy & Procedure Manual Section 6100 Cost, the cost of a capital asset not only includes direct construction or d...

AI summary Overhead expenses are considered integral to the construction of capital assets and must be allocated to capital projects. NSPI's accounting policy includes overhead costs in capital asset costs, and the UARB has approved the use of direct labour costs as a basis for allocating these expenses.

GENERAL - Overhead expenses are integral costs associated with the construction of capital assets. As per NSPI's Accounting Policy & Procedure Manual Section 6100 Cost, the cost of a capital asset not only includes direct construction or d...

AI summary The text discusses the treatment of overhead expenses in capital asset construction, noting that these costs are real and substantial but not directly attributable to specific projects. NSPI's accounting policy outlines how these costs are allocated to capital projects, based on labour costs for externally contracted projects.

DETERMINATION OF CAPITAL-RELATED OVERHEAD EXPENSES - Once the Eligible Overhead Expenses have been determined, the overhead expenses related to the Company's capital activities must be calculated. This calculation involves prorating the re...

AI summary The document outlines the process for determining capital-related overhead expenses, which involves prorating eligible overhead expenses based on contractor labour and adjusting for self-constructed overhead costs to avoid double application. This ensures accurate allocation of overhead expenses to capital activities.

POLICY - O2 Purchase price discrepancies should be recorded as assets. - O3 Purchase price discrepancies are not included in rate base 1 . Deleted: Section 1520 states Deleted: August 10, 2006 Deleted: p Deleted: Section 5320 discusses the...

AI summary The document discusses the treatment of purchase price discrepancies, stating they should be recorded as assets but not included in the rate base. A reference is made to Section 1520 of the NSPI Accounting Policy and Procedures Manual, though the specific content of this section is deleted.

GENERAL - 02 The present value of this estimated future expenditure is recognized as a liability with an equivalent amount added to the carrying amount of the associated fixed asset consistent with FASB ASC 410-20. - The Nova Scotia Utilit...

AI summary The text discusses the recognition of future expenditures related to asset removal as a liability and the adjustment of fixed assets under FASB ASC 410-20. It also mentions the UARB's depreciation order from 2004 and the treatment of differences between UARB-approved depreciation and GAAP calculations as a regulated asset.

POLICY - A liability for an asset retirement obligation should be recognized when a reasonable estimate of fair value can be made.2 - 05 Upon initial recognition, the carrying amount of the related long-lived asset will be increased by the...

AI summary The text discusses the recognition and accounting for asset retirement obligations, including the adoption of new accounting standards by the Company effective January 1, 2004. It outlines how liabilities for asset retirement obligations should be estimated and recognized over time, and how changes to these estimates affect financial reporting.

PROCEDURES 10 For initial recognition of the Asset Retirement Obligations, these journal entries were recorded: DR: Plant, Property and Equipment CR: ARO Liability To set up the original cost of decommissioning the assets DR: Accumulated D...

AI summary The text outlines the journal entries for the initial recognition and monthly recording of Asset Retirement Obligations (ARO), including entries related to Plant, Property and Equipment, ARO Liability, Accumulated Depreciation, and Accretion Expense.

GENERAL - When an asset no longer provides a benefit, and is not expected to provide any benefit in the future, its undepreciated cost should be written off in the period that it is recognized as being neither used nor useful. In determini...

AI summary The text outlines accounting treatment for assets that are no longer useful or not currently in use, emphasizing the need to write off undepreciated costs when assets lose future benefit, and the treatment of assets in standby capacity. It also mentions that transfers between asset categories occur at book value and that gains or losses are included in the rate base.

POLICY - O5 Assets that are not both used and useful should be classified in one of the following categories: - a. Not used and not useful; - b. Not used but useful for standby purposes; or - c. Not used but useful for future service. Dele...

AI summary The policy outlines the classification of assets that are not both used and useful, and discusses depreciation practices for regulated assets. It also mentions the handling of significant write-offs and the deferral of operating costs for assets out of service, subject to UARB approval.

NOT USED AND NOT USEFUL Assets meeting the following criteria are included in this category: Deleted: 09 - a. they do not currently provide service to the consuming public; and - they are not expected to provide a benefit to customers in t...

AI summary Assets that are not currently in use and do not provide future benefits should be written off. However, if the write-off is significant, the UARB may allow amortization over five years or a reasonable period, with unamortized costs remaining in the rate base and capital costs expensed as incurred.

NOT USED BUT USEFUL FOR STANDBY PURPOSES O9 Assets meeting the following criteria are included in this category: Deleted: 12 - a they do not currently provide service to the consuming public; and - b. they are available for service and are...

AI summary The text discusses the treatment of standby assets in rate base calculations. Assets not currently in service but available for standby capacity are to be depreciated over their useful life, with their undepreciated cost included in the rate base and the related cost of capital recognized as an expense.

ASSETS - NOT USED AND USEFUL - 6350 Assets not currently used, but expected to be used in providing service in the future will provide value to customers at a future date. Accordingly, the cost of the asset is to be matched to the future p...

AI summary The document discusses accounting treatment for assets not currently used but expected to be used in the future. It outlines how costs associated with these assets should be matched with future periods, how excess costs may be written off or deferred, and how depreciation and maintenance costs are handled during the out-of-service period.

DEFINITION O1 Accumulated depreciation, or depreciation reserves, are capital asset contra accounts that are offset against gross capital asset accounts to provide the net book value of the assets at a particular point in time.

AI summary Accumulated depreciation refers to contra accounts that reduce the value of capital assets to show their net book value at a specific time.

GENERAL The accounts for accumulated depreciation summarize data relating to the depreciation, retirement of capital assets, and capital contributions. These accounts reflect the accumulated activity for a particular asset group from the d...

AI summary The text discusses the accounts for accumulated depreciation, detailing how they summarize data related to depreciation, retirement of capital assets, and capital contributions. These accounts are maintained by cost centre in Production Plant and by activity in mass plant, with exceptions for the sale of land and retirement of production plant.

POLICY O4 Accumulated depreciation should be netted against the assets so that the assets are reported at their net book values.

AI summary The text states that accumulated depreciation should be netted against assets to report them at their net book values, reflecting their current value on the balance sheet.

PROCEDURES - O5 At a particular point in time, the balance in the accumulated depreciation accounts is comprised of the following amounts: - a. total depreciation expense taken to date; - b. total depreciation associated with the original...

AI summary The text outlines the components of the accumulated depreciation accounts, including total depreciation expense, decommissioning asset depreciation, accretion related to asset retirement obligations as approved by the UARB, and adjustments for salvage allowances and retired asset costs.

PROPERTY, PLANT AND EQUIPMENT ACCUMULATED DEPRECIATION - 6400 When conducting a depreciation rate study to set depreciation rates 2 , the balances in the accounts are taken into consideration when setting the final rate. If the assets in a...

AI summary This section discusses the process of setting depreciation rates based on accumulated depreciation data, noting that over or under depreciation may result in reserve differences that must be written off over the remaining life of the assets, thus affecting the depreciation rate.

POLICY - O1 Long-term debt issued by the Company is reported net of long-term debt payable in one year, as long-term debt on the balance sheet of its financial statements. Detail of the long-term debt issued by the Company are reported in...

AI summary The text discusses the accounting treatment of long-term debt issued by the Company, including commercial paper and debentures, and mentions the deferring of debt defeasance costs by the Company with the approval of the Nova Scotia Utility and Review Board. It also references the reorganization and privatization of Nova Scotia Power Corporation in 1992.

MATCHING NOTES - 11 Matching Notes will remain on the books of the Company until such time as it makes payment of the principal amount of Matching Notes that mature or are redeemable prior to December 31, 1997, to NSPFC. NSPFC, upon receip...

AI summary The document outlines the accounting and management procedures for Matching Notes held by the Company, including their handling upon maturity, defeasance, and the role of NSPFC in repaying obligations. The process involves transferring funds, releasing assets, and ensuring proper accounting treatment.

Page 1: [6] Deleted AI141 9/15/2010 1:53:00 PM - 17 Depending on interest rates prevailing at the time of defeasance of the Matching Notes, the Company may incur costs to effect such defeasance including, but not limited to, (i) the differ...

AI summary The text discusses the potential costs incurred by the Company during the defeasance of Matching Notes, including the difference between the cost of acquiring Defeasance Assets and the principal amount of the notes, issuance costs for new debt, and transaction costs. It also outlines the amortization of these costs and the Company's right to sell and replace Defeasance Assets under certain conditions.

PROPERTY, PLANT AND EQUIPMENT CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service an...

AI summary The text outlines procedures for managing capital work orders in CWIP, including transitioning work orders to operational status, final cost approval, and depreciation of PPE. It also mentions the requirement for an ATO when project spending exceeds specified thresholds.

PROCEDURES 69 For retirements of property, plant and equipment other than land ,the original cost plus any costs of removal less salvage proceeds is charged to accumulated depreciation, with no immediate gain or loss recognized. Deleted: a...

AI summary The document outlines procedures for retiring property, plant, and equipment, specifying that the original cost plus removal costs less salvage proceeds is charged to accumulated depreciation. Retirement work orders must be submitted and follow the same approval procedures as new capital work orders. Salvage proceeds from insurance claims are handled differently, with the total claim credited to the work order and only the deductible charged to operations.

PROPERTY, PLANT AND EQUIPMENT RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420 When a work order has received final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated depreciat...

AI summary The document outlines the process for recording the final disposition of charges to capital assets in service and accumulated depreciation once a work order has received final cost approval.

Retirement of Assets Other than Land - When assets are disposed of, a retirement work order is set up or retirement accounts are set up within a capital work order. - Asset retirement obligations have been set up for the decommissioning of...

AI summary The document outlines the process for retiring assets other than land, including the setup of retirement work orders or accounts within capital work orders. It also mentions the establishment of asset retirement obligations in accordance with FASB ASC 410-20, which governs asset retirement and environmental obligations.

Retirement of Land - When land is disposed of, retirement accounts within a work order are used to remove its cost from the capital asset records. - 17 If the proceeds from the sale of land are greater than the cost of the land plus the re...

AI summary The text discusses the accounting process for retiring land and other capital assets, including how gains or losses are recognized based on the proceeds from the sale. It outlines journal entries for asset retirement and references NSPI's accounting manual for further details on asset retirement obligations.

DR 2-098-R01-xxx-xxxx (Salvage) 50,000 CR 2-066-R01-xxx-xxxx (Other Goods & Services) 10,000 CR 2-097-R01-xxx-xxxx (Original Cost) 5,000 CR 1-195-000-000-0000(Gain / Lost on Asset Sales 35,000

AI summary The document text presents a table with various entries related to financial matters, including salvage, other goods and services, original cost, and gain or loss on asset sales, with associated figures and references.

The following was noted: - .. A minor change in management judgment and assumptions could materially impact the amounts capitalized. - .. Changes in judgment or assumption and a resulting increase or decrease in costs capitalized is not ne...

AI summary The text highlights that minor changes in management judgment and assumptions could significantly affect capitalized amounts, and that variations in these judgments do not necessarily reflect greater or lesser accuracy.

POLICIES - 04 Expenditures for amounts less than the stated capitalization limits should be charged to operations as they are incurred. - 05 When additional costs associated with capitalizing immaterial amounts exceed the benefits of provi...

AI summary The policies outline that expenditures below specified capitalization limits should be charged to operations as incurred, and that expensing all costs may be appropriate if the benefits of providing detailed information do not outweigh the additional costs.

GENERAL - 01 Nova Scotia Power Inc. ("NSPI") is the primary operating subsidiary of Emera Inc, a diversified energy company based in Halifax, Nova Scotia - 02 For financial reporting purposes, NSPI is organized into cost centers and has sp...

AI summary Nova Scotia Power Inc. (NSPI) is a subsidiary of Emera Inc. and operates under a Cost Allocation Policy that ensures fair distribution of corporate support services and general expenses between NSPI and its affiliates, aligning with accounting principles.

DEFINITIONS - 28 For the purpose of the Cost Allocation Policy and interpretation of this Policy, the following definitions will apply. - 29 Affiliate The Nova Scotia Companies Act defines an Affiliate as: - (1) A company shall be deemed t...

AI summary This section defines key terms related to cost allocation and corporate structure under the Cost Allocation Policy. It outlines definitions such as 'Affiliate,' 'Corporate Support Service,' 'Cost Allocation,' 'Cost Driver,' 'Common Costs,' and 'Direct Costs' to ensure clarity in interpreting and applying the policy.

FORMAT - 06 Cash flows from operating activities generally involve producing and delivering goods and providing services. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into...

AI summary The text outlines the classification of cash flows in financial reporting, distinguishing between operating, financing, and investing activities. It describes the nature of each category and references FASB standards for accounting guidelines.

POLICIES - 05 Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on ser...

AI summary The text outlines Nova Scotia Power Inc.'s policies for actuarially determining pension obligations, handling adjustments, calculating pension fund asset values, and accounting for surpluses and deficits. It also mentions the adoption of US accounting standards for employee future benefits.

FINANCIAL REPORTING SYSTEM ACCOUNT STRUCTURE - 3100

AI summary The document discusses the financial reporting system's account structure under category 3100, which likely pertains to financial reporting standards and practices. It references accounting principles and entities involved in regulatory proceedings in Nova Scotia.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300

AI summary The document section titled 'Depreciation and Amortization Expense - 5300' includes an image reference, likely depicting details related to depreciation and amortization expenses, though the content is not explicitly described in the text provided.

POLICIES - 01 The cost of property, plant and equipment and intangibles should be depreciated or amortized over the useful life of the assets. 1 - 02 Net salvage values should be amortized over the useful lives of the assets to which they...

AI summary The text outlines Nova Scotia Power Inc.'s policies on depreciation and amortization, including the treatment of asset retirement obligations, the exclusion of certain assets from depreciation, and the approval process by the Nova Scotia Utility and Review Board.

AMORTIZATION - CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 5310

AI summary This section of the document discusses the amortization of capital contributions in aid of construction, likely in the context of regulatory proceedings involving Nova Scotia Power and related entities. It may involve accounting standards, capital expenditures, and regulatory considerations.

POLICY 01 Capital contributions in aid of construction towards the acquisition of fixed assets should be amortized to income using the same depreciation rates as the assets to which they relate. - 02 The amortization base is equal to the a...

AI summary The text outlines the policy for amortizing capital contributions toward fixed assets, specifying that they should be amortized using the same depreciation rates as the related assets, with the amortization base equal to the contribution amount and timing aligned with the asset.

03 Debt Issue Costs The issue of long-term debt is usually an involved process in which the Company may retain the services of brokers, lawyers and auditors. Since the cost of using these services can be significant and provide future bene...

AI summary The document discusses how long-term debt issuance costs, including those from brokers, lawyers, and auditors, are treated under US GAAP. These costs are deferred and amortized over the life of the debt, while premiums, discounts, and commissions are also deferred. Other costs are expensed in account 084 bank charges.

FINANCING CHARGES - 5800 04 Debt issue costs should be deferred and amortized using the effective interest rate method over the term of the related debt.

AI summary The text discusses the proper accounting treatment for debt issue costs, recommending that they be deferred and amortized using the effective interest rate method over the term of the related debt.

07 Amortization of Long-term Debt Issue Costs The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These costs are amortized monthly usi...

AI summary The Company defers significant costs related to the issuance of long-term debt, such as commissions, discounts/premiums, and legal and audit fees. These costs are amortized monthly using the effective interest rate method over the life of the related debt.

08 Short-term Interest Short-term interest includes all interest, commissions, stamping fees, overdraft charges associated with the issuance of commercial paper, banker's acceptances, hedge settlements, and prime loans These costs are expe...

AI summary Short-term interest encompasses various financial costs related to debt instruments such as commercial paper and banker's acceptances, which are expensed or amortized monthly based on the number of days of the associated debt.

INCOME TAXES - 5900 - 10 A monthly income tax provision is recorded by multiplying the Company's effective combined federal and provincial income tax rate forecasted for the year (calculated without inclusion of the forecasted FAM adjustme...

AI summary The document outlines the methodology for recording income tax provisions, including the calculation of monthly income tax provisions, taxable capital estimates, and the treatment of Part VI.1 tax expenses. It also describes the use of capital cost allowance and cumulative eligible capital to minimize taxable income.

GENERAL - 02 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary The text outlines criteria for capitalizing expenditures, stating that only those providing benefits beyond one year qualify as capital. It details factors such as extending asset life, increasing capacity, improving production quality, and reducing operating costs. Guidance is provided by Nova Scotia Power Inc.'s Capital Expenditure Justification Criteria and regulatory bodies like the Federal Energy Regulatory Commission.

- 06 In order to capitalize an expenditure, there must be reasonable assurance that the benefit will actually be realized by the Company. 1FASB ASC 360-10-05-3 2 Please refer to NSPI's Accounting Policy & Procedures Manual Section 5300 for...

AI summary The text states that for an expenditure to be capitalized, there must be reasonable assurance that the benefit will be realized by the company. It also references FASB ASC 360-10-05-3 and directs readers to NSPI's Accounting Policy & Procedures Manual for details on depreciation and amortization.

PROPERTY, PLANT AND EQUIPMENT

AI summary The section discusses property, plant, and equipment, which are critical assets for utility operations. It highlights the importance of accounting standards and regulations in managing these assets effectively.

CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - I. Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service and is being used to generate...

AI summary The document outlines procedures for managing construction work in progress (CWIP), including setting up capital work orders, controlling charges, changing work order status, final cost approval, depreciation, and retirement of assets. These steps ensure proper accounting and regulatory compliance.

POLICIES - 05 Contributions in aid of construction should be offset against the property, plant or equipment to which they relate so that the net amount is depreciated and included in rate base. - 06 If a relationship to a specific asset c...

AI summary The text outlines policies for accounting for contributions in aid of construction, specifying that they should be offset against related assets and depreciated, or against 'Assets in Service' if no specific asset is identified. It also mentions that contributions from customers are determined internally and documented with details such as the date, contributor name, and work order reference.

POLICY - 02 Intangible assets include land rights and computer software and are capitalized in accordance with NSPI's Accounting Policy & Procedures Manual section 6000. - 03 Intangible assets with a finite useful life shall be amortized i...

AI summary The document outlines NSPI's accounting policies for intangible assets, specifying that land rights and computer software are capitalized and amortized according to specific sections of the Accounting Policy & Procedures Manual.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document discusses the application of administrative overhead for contracted assets, focusing on accounting and financial considerations related to Nova Scotia Power Inc. and other relevant entities. It includes references to accounting standards and financial mechanisms.

GENERAL - 02 The present value of this estimated future expenditure is recognized as a liability with an equivalent amount added to the carrying amount of the associated fixed asset consistent with FASB ASC 410-20. - 03 The Nova Scotia Uti...

AI summary The text discusses the recognition of future expenditures related to the removal of long-lived assets as a liability and the associated adjustment to the carrying value of fixed assets under FASB ASC 410-20. It also notes the UARB's depreciation order from 2004 and how differences between UARB-approved depreciation and GAAP calculations are treated as regulated assets.

POLICY - 04 A liability for an asset retirement obligation should be recognized when a reasonable estimate of fair value can be made. 2 - 05 Upon initial recognition, the carrying amount of the related long-lived asset will be increased by...

AI summary The text outlines the accounting treatment for asset retirement obligations, specifying that liabilities should be recognized when a reasonable estimate of fair value can be made. It also states that the carrying amount of related long-lived assets should be increased by the same amount as the liability, with subsequent costs allocated over the asset's useful life.

GENERAL - 01 When an asset no longer provides a benefit, and is not expected to provide any benefit in the future, its undepreciated cost should be written off in the period that it is recognized as being neither used nor useful. In determ...

AI summary The text outlines principles for writing off and depreciating assets. Assets that no longer provide benefits should be written off, considering future removal costs and proceeds. Assets not currently used but available for service should be depreciated. Assets not currently used but useful for future customers should not affect current earnings. Transfers between categories are at book value, and gains or losses are included in the rate base and recovered from customers.

NOT USED AND NOT USEFUL - 06 Assets meeting the following criteria are included in this category: - a. they do not currently provide service to the consuming public; and - b. they are not expected to provide a benefit to customers in the f...

AI summary The text outlines criteria for writing off assets that no longer provide service or future benefits to customers, emphasizing rate stability and regulatory approval for amortization over five years or a reasonable period.

NOT USED BUT USEFUL FOR STANDBY PURPOSES - 09 Assets meeting the following criteria are included in this category: - a they do not currently provide service to the consuming public; and - b. they are available for service and are required...

AI summary The document discusses the treatment of standby assets in utility accounting. These assets, though not currently in use, are included in the rate base and depreciated over their useful life. They are considered essential for maintaining service reliability and are treated similarly to active assets.

NOT USED BUT USEFUL FOR FUTURE USE - 12 Assets meeting the following criteria are included in this category: - a. they do not currently provide service to the consuming public; and - b. they are expected to be used and useful in providing...

AI summary The text discusses the accounting treatment for assets not currently in service but expected to be used in the future. It outlines that costs should be matched to future periods when the asset provides value, and excess costs may be deferred and amortized over time with UARB approval.

POLICY - 03 Long-lived assets identified as being disposed of by sale, shall be classified as held for sale in the period the criteria for long-lived assets to be disposed of by sale are met. - 04 A long-lived asset classified as held for...

AI summary The text outlines the accounting treatment for long-lived assets classified as held for sale, including measurement, depreciation, and reclassification procedures based on FASB ASC guidelines.

DEFINITION 01 Accumulated depreciation, or depreciation reserves, are capital asset contra accounts that are offset against gross capital asset accounts to provide the net book value ofthe assets at a particular point in time.

AI summary Accumulated depreciation refers to contra accounts that offset gross capital asset accounts to determine the net book value of assets at a given time.

GENERAL - 02 The accounts for accumulated depreciation summarize data relating to the depreciation, retirement of capital assets, and capital contributions. These accounts reflect the accumulated activity for a particular asset group from...

AI summary The text discusses the accounting treatment of accumulated depreciation, covering data on depreciation, retirement of capital assets, and capital contributions. It notes that gains or losses are not immediately recognized except in specific cases such as the sale of land and retirement of production plant.

POLICY 04 Accumulated depreciation should be netted against the assets so that the assets are reported at their net book values. - 05 At a particular point in time, the balance in the accumulated depreciation accounts is comprised of the f...

AI summary The text outlines the proper accounting treatment of accumulated depreciation, emphasizing the need to net it against assets to report them at their net book value. It also discusses the components of accumulated depreciation and the process for adjusting depreciation rates when reserve differences arise.

01 Cost Cost is the main component of most retirement work orders. Refer to NSPl's Accounting Policy & Procedures Manual 61 00 for a more detailed description of the items included in cost. The amounts that must be removed to record the de...

AI summary The document outlines the components of cost in retirement work orders, including removal costs, salvage value, and net salvage value. It explains how asset retirement obligations (AROs) are defined and the processes for recording retirement costs and salvage values in work orders.

PROCEDURES - 09 For retirements of property, plant and equipment other than land ,the original cost plus any costs of removal less salvage proceeds is charged to accumulated depreciation, with no immediate gain or loss recognized. - 10 A r...

AI summary The procedures outlined address the accounting treatment for retiring property, plant, and equipment, specifying that original costs plus removal costs less salvage proceeds are charged to accumulated depreciation. Retirement work orders are required for significant asset retirements, and procedures for handling insurance claims and salvage proceeds are detailed.

Retirement of Assets Other than Land - 14 When assets are disposed of, a retirement work order is set up or retirement accounts are set up within a capital work order. - 15 Asset retirement obligations have been set up for the decommission...

AI summary The document outlines procedures for retiring assets other than land, including the setup of retirement work orders and accounts, and the establishment of asset retirement obligations in accordance with FASB ASC 410-20 standards.

Retirement of Land - 16 When land is disposed of, retirement accounts within a work order are used to remove its cost from the capital asset records. - 17 If the proceeds from the sale of land are greater than the cost of the land plus the...

AI summary The text outlines the accounting procedures for retiring land when it is disposed of, including the use of retirement accounts and the recognition of gains or losses based on the proceeds from the sale compared to the cost and retirement costs.

GAIN OR LOSS ON DISPOSITION OF CAPITAL ASSETS - 6440

AI summary The document discusses the gain or loss on the disposition of capital assets, referencing accounting standards and procedures for asset valuation and reporting.

DEFERRED CHARGES

AI summary The section discusses deferred charges, which are accounting treatments for costs that are recognized in one period but paid in a later period. These charges are often related to capital expenditures and long-term liabilities, and their treatment can impact financial statements and regulatory proceedings.

DEFERRED CHARGES

AI summary The section discusses deferred charges, which are accounting treatments for costs that are recognized in one period but paid in a later period. These charges are often related to capital expenditures and long-term liabilities, and their treatment can impact financial statements and regulatory proceedings.

DEFERRED CHARGES

AI summary The section discusses deferred charges, which are accounting treatments for costs that are recognized in one period but paid in a later period. These charges are often related to capital expenditures and long-term liabilities, and their treatment can impact financial statements and regulatory proceedings.

September 24, 2010 Nancy McNeil Regulatory Affairs Officer/Clerk Nova Scotia Utility and Review Board 1601 Lower Water Street 3 rd Floor Halifax, NS B3J 3S3 Re: NSPI Accounting Policy and Procedures Manual Dear Ms. McNeil, Further to NSPI'...

AI summary NSPI has submitted its third and final filing of revisions to its Accounting Policy and Procedures Manual to align with US GAAP. Key changes include updates to policies on Regulated Return on Equity and Purchase Price Discrepancy, as well as the removal of an outdated section. Two new policies affecting earnings—Income Taxes and Employee Future Benefits—are also included.

Appendix A: 1530 ofEquity Regulated Return 2400 Employee Future Benefits 4200 Other Revenue 5300 Depreciation Expense 5800 Interest 5900 Income Taxes 6230 of Application Administrative and Vehicle Overhead (Self-constructed Assets) 6235 of...

AI summary This section presents a table of financial and accounting-related line items, including equity, employee benefits, revenue, depreciation, interest, taxes, administrative overhead, asset retirement obligations, and long-term debt. It does not include detailed discussion or arguments.

POLICIES - Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on servic...

AI summary The document outlines how Nova Scotia Power Inc. (NSPI) calculates and accounts for pension obligations and post-retirement benefits, including actuarial assumptions, amortization methods, and the recognition of plan surpluses and deficits on the balance sheet.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300

AI summary The document discusses depreciation and amortization expense under the category 5300, likely relating to accounting practices and regulatory considerations for Nova Scotia Power Inc. (NSPI) and the Nova Scotia Utility and Review Board (UARB).

POLICIES - O1 The cost of property, plant and equipment and intangibles should be depreciated or amortized over the useful life of the assets. 1 - Net salvage values should be amortized over the useful lives of the assets to which they rel...

AI summary The text outlines policies related to the depreciation and amortization of property, plant, equipment, and intangibles, emphasizing straight-line methods and the inclusion of asset retirement obligations in depreciation expense when legally required.

PROCEDURES - The life estimations and policies, including AROs and other significant assumptions are periodically reviewed and the results filed with the Nova Scotia Utility and Review Board ("UARB") for its approval. - The depreciation or...

AI summary The document discusses depreciation and amortization policies, including the treatment of land, fully-depreciated assets, and the timing of depreciation for large projects. These policies are reviewed and approved by the Nova Scotia Utility and Review Board (UARB).

03 Debt Issue Costs The issue of long-term debt is usually an involved process in which the Company may retain the services of brokers, lawyers and auditors. Since the cost of using these services can be significant and provide future bene...

AI summary The document discusses the treatment of long-term debt issuance costs under US GAAP, explaining that such costs are deferred and amortized over the life of the debt instrument. It also references the NSPI Accounting Policy and Procedures Manual for further details.

07 Amortization of Long-term Debt Issue Costs The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These costs are amortized monthly usi...

AI summary The Company defers significant costs associated with the issuance of long-term debt, such as commissions, discounts/premiums, and legal and audit fees. These costs are amortized monthly using the effective interest rate method over the life of the related debt.

Deleted: (Account 078) Page 2: [1] Deleted AI141 8/30/2010 1:41:00 PM 05 Interest expense should be recorded on an accrual basis. 06 the related debt. Debt issue costs should be deferred and amortized on a straight-line basis over the term...

AI summary The text discusses accounting practices related to interest expense, debt issue costs, and defeasance costs for long-term debt, emphasizing accrual basis recording and straight-line amortization. The content includes deleted pages and timestamps but focuses on financial accounting procedures.

GENERAL - Overhead expenses are integral costs associated with the construction of capital assets. As per NSPI's Accounting Policy & Procedure Manual Section 6100 Cost, the cost of a capital asset not only includes direct construction or d...

AI summary The text discusses the inclusion of overhead expenses in the cost of capital assets, explaining that these costs are real and substantial but not directly tied to specific projects. Overhead costs are allocated to capital projects, and the method used aligns with the Public Utilities Board's ruling as outlined in NSPI's Accounting Policy and Procedures Manual.

POLICY - O2 Purchase price discrepancies should be recorded as assets. - O3 Purchase price discrepancies are not included in rate base 1 . Deleted: Section 1520 states Deleted: August 10, 2006 Deleted: p Deleted: Section 5320 discusses the...

AI summary The text discusses the treatment of purchase price discrepancies in accounting, noting that they should be recorded as assets but are not included in the rate base. References to deleted sections and a manual are also mentioned.

ASSET RETIREMENTOBLIGATIONS (ARO) - 6320

AI summary The document discusses Asset Retirement Obligations (ARO) under the Nova Scotia Power Inc. (NSPI) context, focusing on accounting standards and regulatory considerations related to long-term liabilities for asset retirement.

GENERAL - 02 The present value of this estimated future expenditure is recognized as a liability with an equivalent amount added to the carrying amount of the associated fixed asset consistent with FASB ASC 410-20. - The Nova Scotia Utilit...

AI summary The text discusses the accounting treatment of future expenditures related to asset removal, noting that the present value is recognized as a liability and added to the carrying value of fixed assets. It also references a depreciation order by the Nova Scotia Utility and Review Board (UARB) from 2004 and the recognition of differences between UARB-approved depreciation and GAAP calculations as a regulated asset.

POLICY - A liability for an asset retirement obligation should be recognized when a reasonable estimate of fair value can be made.2 - 05 Upon initial recognition, the carrying amount of the related long-lived asset will be increased by the...

AI summary The text discusses the recognition and accounting treatment of asset retirement obligations, including the adoption of a new accounting standard by the Company effective January 1, 2004, and the recognition of impairment losses when the carrying amount of a long-lived asset exceeds its fair value.

PROCEDURES 10 For initial recognition of the Asset Retirement Obligations, these journal entries were recorded: DR: Plant, Property and Equipment CR: ARO Liability To set up the original cost of decommissioning the assets DR: Accumulated D...

AI summary The text outlines the accounting procedures for recognizing and recording Asset Retirement Obligations (ARO), including initial journal entries for setting up ARO liability and monthly entries for depreciation and accretion expenses related to decommissioning assets.

GENERAL - When an asset no longer provides a benefit, and is not expected to provide any benefit in the future, its undepreciated cost should be written off in the period that it is recognized as being neither used nor useful. In determini...

AI summary The document outlines accounting practices for writing off assets that no longer provide benefits, treating standby assets as useful, and handling transfers between asset categories. It emphasizes considering future removal costs and potential proceeds, and ensuring that costs of unused but future-useful assets are not charged against current earnings.

POLICY - O5 Assets that are not both used and useful should be classified in one of the following categories: - a. Not used and not useful; - b. Not used but useful for standby purposes; or - c. Not used but useful for future service. Dele...

AI summary The document outlines policies for classifying and depreciating assets not in use, emphasizing rate stability and regulatory approval for amortization of write-offs. It also discusses the treatment of the Glace Bay plant, including deferring operating costs and charging cost of capital during periods of non-service.

NOT USED AND NOT USEFUL Assets meeting the following criteria are included in this category: Deleted: 09 - a. they do not currently provide service to the consuming public; and - they are not expected to provide a benefit to customers in t...

AI summary Assets not providing service to the public or expected to benefit customers are written off. If the write-off is significant, the UARB may approve amortizing the cost over five years or a reasonable period, with unamortized costs remaining in the rate base and cost of capital expensed as incurred.

NOT USED BUT USEFUL FOR STANDBY PURPOSES O9 Assets meeting the following criteria are included in this category: Deleted: 12 - a they do not currently provide service to the consuming public; and - b. they are available for service and are...

AI summary This text discusses the treatment of standby assets in regulatory proceedings. It states that such assets, even if not currently in use, must be depreciated over their expected useful life, included in the rate base, and their cost of capital recognized as an expense.

ASSETS - NOT USED AND USEFUL - 6350 Assets not currently used, but expected to be used in providing service in the future will provide value to customers at a future date. Accordingly, the cost of the asset is to be matched to the future p...

AI summary The document discusses the accounting treatment of assets not currently used but expected to be used in the future. It outlines that the cost of such assets should be matched to future periods when they provide value. Excess costs may be written off or deferred with UARB approval, and depreciation is deferred until the asset is returned to service. Maintenance costs during the out-of-service period are expensed as incurred, with some exceptions for significant costs that may be deferred.

ACCUMULATED DEPRECIATION - 6400

AI summary The document discusses accumulated depreciation, a key accounting concept related to the value of assets over time. It includes a reference to a page with an image, likely containing detailed financial data or charts.

DEFINITION O1 Accumulated depreciation, or depreciation reserves, are capital asset contra accounts that are offset against gross capital asset accounts to provide the net book value of the assets at a particular point in time.

AI summary Accumulated depreciation refers to contra accounts that reduce the value of capital assets, showing the net book value of these assets at a specific time.

GENERAL The accounts for accumulated depreciation summarize data relating to the depreciation, retirement of capital assets, and capital contributions. These accounts reflect the accumulated activity for a particular asset group from the d...

AI summary The document discusses the accounts for accumulated depreciation, detailing how they summarize data related to depreciation, retirement of capital assets, and capital contributions. These accounts track activity for specific asset groups and are maintained by cost centre in Production Plant and by activity in mass plant.

POLICY O4 Accumulated depreciation should be netted against the assets so that the assets are reported at their net book values.

AI summary The text states that accumulated depreciation should be netted against assets to report them at their net book values, ensuring accurate financial reporting.

PROCEDURES - O5 At a particular point in time, the balance in the accumulated depreciation accounts is comprised of the following amounts: - a. total depreciation expense taken to date; - b. total depreciation associated with the original...

AI summary The document outlines the components of the accumulated depreciation accounts, including total depreciation expense, decommissioning asset depreciation, accretion related to asset retirement obligations approved by the UARB, and adjustments for salvage allowances and retired asset costs.

PROPERTY, PLANT AND EQUIPMENT ACCUMULATED DEPRECIATION - 6400 When conducting a depreciation rate study to set depreciation rates 2 , the balances in the accounts are taken into consideration when setting the final rate. If the assets in a...

AI summary The document discusses the process of setting depreciation rates based on accumulated depreciation balances, highlighting the need to adjust rates if assets are over or under depreciated. The adjustment ensures proper crediting of reserve balances over the remaining life of the assets.

MATCHING NOTES - 11 Matching Notes will remain on the books of the Company until such time as it makes payment of the principal amount of Matching Notes that mature or are redeemable prior to December 31, 1997, to NSPFC. NSPFC, upon receip...

AI summary The document outlines the accounting and procedural handling of Matching Notes by the Company and NSPFC. It details how Matching Notes are managed, including their conversion to contingent liabilities upon defeasance, the process for transferring funds upon maturity or redemption, and the release of sinking fund assets. The Company remains responsible for any deficiencies in defeasance assets.

has limits of 50/0 and $25,000 of activity amount. In light of the change of the requirement for Board approval increased to $250,000 should these tolerance levels also be changed? Document: 182152 - 7. Re: Capital Expenditures Computer Ha...

AI summary The document contains a series of questions from the Nova Scotia Power Inc. Accounting Policy and Procedures Manual related to capital expenditures, inventory policies, earnings, and asset retirement obligations. The questions seek clarification on accounting procedures and consistency in policy wording.

Tel: (416) 865-0200 Fax: (416) 865-0887 www.bdo.ca BDO Canada LLP Royal Bank Plaza, South Tower 200 Bay Street. 33rd Floor PO Box 32 Toronto, ON M5J 2J8 Canada December 9th, 2010 Nancy McNeil Regulatory Affairs Officer/Clerk Nova Scotia Ut...

AI summary BDO Canada LLP confirms that the proposed changes to Nova Scotia Power Inc.'s Accounting Policies and Procedures Manual do not appear unreasonable or provide an unfair advantage. The report highlights differences between US GAAP and Canadian GAAP, particularly regarding termination costs, employee benefits, and investment tax credits. BDO recommends monitoring the first US GAAP statements for transitional changes.

FINDINGS & CONCLUSIONS We would like to thank members of NSPI management for their cooperation and responsiveness to our questions in assessing the proposed changes. We reviewed the submissions and discussed the proposed changes to the Man...

AI summary The review of NSPI's proposed changes to the Accounting Manual found the Cost Allocation Policy to be comprehensive. Differences between CGAAP and US GAAP in areas like income taxes, employee benefits, and termination costs were noted. The report confirms that no unreasonable practices or unfair advantages were identified.

The following table summarizes the proposed changes to NSPI's Accounting Manual within Submission 3 by section: SECTION COMMENTS 5300: Depreciation Expense References to US GAAP added in paragraph 01 and 04. Useful life or lives has replac...

AI summary The document outlines proposed changes to NSPI's Accounting Manual in Submission 3, focusing on depreciation expense and financing charges. It references the addition of US GAAP in depreciation sections and the deferral and amortization of debt issuance costs under CGAAP.

POLICIES - 04 Expenditures for amounts less than the stated capitalization limits should be charged to operations as they are incurred. - 05 When additional costs associated with capitalizing immaterial amounts exceed the benefits of provi...

AI summary The policies outline that expenditures below specified capitalization limits should be charged to operations as incurred, and that expensing all costs may be appropriate if the benefits of providing detailed information do not outweigh the additional costs.

GENERAL - 01 Nova Scotia Power Inc. ("NSPI") is the primary operating subsidiary of Emera Inc, a diversified energy company based in Halifax, Nova Scotia - 02 For financial reporting purposes, NSPI is organized into cost centers and has sp...

AI summary Nova Scotia Power Inc. (NSPI) is a subsidiary of Emera Inc. and operates under a Cost Allocation Policy that ensures corporate support services and general expenses are fairly allocated between NSPI and its affiliates, in line with accounting standards.

STATEMENT OF CASH FLOW - 2100

AI summary The document presents the Statement of Cash Flow - 2100, which outlines the cash inflows and outflows for a specific period. It includes details related to operating, investing, and financing activities, as well as changes in cash and cash equivalents.

POLICY - 02 The statement of cash flows shall report the cash effects during a period of an entity's operations, its investing transactions, and its financing transactions.2 - 03 Nova Scotia Power Inc. ("NSPI") applies the indirect method...

AI summary The document outlines the requirements for the statement of cash flows under Nova Scotia Power Inc.'s accounting practices, specifying the use of the indirect method and adherence to FASB ASC 230 guidelines. It lists the mandatory disclosures, including cash from operations, discontinued operations, and debt-related transactions.

FORMAT - 06 Cash flows from operating activities generally involve producing and delivering goods and providing services. Cash flows from operating activities are generally the cash effects of transactions and other events that enter into...

AI summary The text outlines the classification of cash flows into operating, financing, and investing activities, detailing the types of transactions associated with each category. It also mentions the disclosure requirements for interest and income taxes paid, as well as the treatment of discontinued operations and extraordinary items.

POLICIES - 05 Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on ser...

AI summary The text outlines the accounting and actuarial methods used by Nova Scotia Power Inc. for pension obligations and post-retirement benefits. It describes how obligations are determined, adjusted, and amortized, as well as the recognition of plan surpluses and deficits on financial statements.

GENERIC ACCOUNT ACTIVITY CODE STM (S) GAS (G) HYD (H) TRN (T) DIST (DP) GEN (P) WIND (W) Land and Land Rights Land 001 X X X X X X Land Rights 002 X X X X X X X Buildings, Structures & Grounds Buildings, Structures & Grounds 003 X X X X X...

AI summary The document presents a table outlining various generic accounts and their associated activities, codes, and classifications across different sectors such as land, buildings, equipment, and infrastructure. It includes details on classifications for financial reporting purposes.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300

AI summary The section titled 'Depreciation and Amortization Expense - 5300' appears to be a part of a regulatory proceeding document, though the content is not visible due to an image placeholder. It likely discusses depreciation and amortization policies, accounting standards, and related financial considerations.

AMORTIZATION - CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 5310

AI summary The document discusses the topic of amortization and capital contributions in aid of construction, focusing on accounting standards and regulatory considerations. It includes references to accounting standards and regulatory bodies involved in the process.

POLICY 01 Capital contributions in aid of construction towards the acquisition of fixed assets should be amortized to income using the same depreciation rates as the assets to which they relate. - 02 The amortization base is equal to the a...

AI summary The text outlines the policy for amortizing capital contributions toward the acquisition of fixed assets, specifying that they should be amortized using the same depreciation rates as the associated assets, with the amortization base equal to the contribution amount and commencement aligned with the asset.

03 Debt Issue Costs The issue of long-term debt is usually an involved process in which the Company may retain the services of brokers, lawyers and auditors. Since the cost of using these services can be significant and provide future bene...

AI summary The text explains that under US GAAP, costs associated with issuing long-term debt, such as those for brokers, lawyers, and auditors, must be deferred and amortized over the life of the debt. Premiums, discounts, and commissions are deferred, while other costs are expensed in account 084 bank charges.

06 Long-term Debt - Interest Expense Long-term debt interest expense includes interest on Nova Scotia Power Inc. ("NSPI") debentures and medium term notes. Interest expense is accrued monthly based on a 30-day months whether interest payme...

AI summary This section discusses the accounting treatment of long-term debt interest expense for Nova Scotia Power Inc. (NSPI), including the accrual of interest monthly based on a 30-day month, regardless of the payment schedule.

07 Amortization of Long-term Debt Issue Costs The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These costs are amortized monthly usi...

AI summary The Company defers significant costs related to the issuance of long-term debt, such as commissions and legal fees, and amortizes them monthly using the effective interest rate method over the life of the debt.

GENERAL - 02 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary The text defines capital expenditures as those that create long-term benefits and are not expensed immediately but capitalized as assets. It outlines criteria for capitalizing expenditures, such as extending asset life, increasing capacity, or reducing operating costs. Capital expenditures are accounted for through depreciation and amortization over their useful life.

COST COMPONENTS AND ELEMENTS - 6140

AI summary The document outlines the cost components and elements related to utility operations, focusing on financial accounting standards, regulatory considerations, and cost recovery mechanisms. It includes discussions on capital expenditures, depreciation, and return on equity.

CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - l. Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service and is being used to generate...

AI summary The document outlines procedures for managing construction work in progress (CWIP), including setting up capital work orders, controlling charges, transitioning assets to operational status, finalizing costs, and depreciating or retiring assets once projects are complete.

POLICIES - 05 Contributions in aid of construction should be offset against the property, plant or equipment to which they relate so that the net amount is depreciated and included in rate base. - 06 If a relationship to a specific asset c...

AI summary The text outlines policies for handling contributions in aid of construction, specifying that they should be offset against related property, plant, or equipment and amortized appropriately. If no specific asset is identified, they should be offset against 'Assets in Service' by function and amortized at the composite rate of the relevant asset class.

POLICY - 02 Intangible assets include land rights and computer software and are capitalized in accordance with NSPI's Accounting Policy & Procedures Manual section 6000. - 03 Intangible assets with a finite useful life shall be amortized i...

AI summary The text discusses the capitalization and amortization of intangible assets, such as land rights and computer software, under NSPI's Accounting Policy & Procedures Manual. Section 6000 covers capitalization, while Section 5300 outlines amortization for assets with a finite useful life.

APPLICATION OF ADMINISTRATIVE OVERHEAD (CONTRACTED ASSETS) - 6235

AI summary The document discusses the application of administrative overhead for contracted assets under the Nova Scotia Utility and Review Board (UARB). It involves financial and accounting considerations related to Nova Scotia Power Inc (NSPI) and Nova Scotia Power Corporation (NSPC).

GENERAL - 01 The cost-of-capital invested in construction work in progress is included in an allowance for funds used during construction 1 ("AFUDC") as an addition to the cost of property constructed using a weighted average cost-of-capit...

AI summary The text discusses the inclusion of the cost-of-capital in construction work in progress through the allowance for funds used during construction (AFUDC). This cost is added to the asset's value and recovered over time through depreciation and future revenues, ensuring equitable recovery of financing costs.

POLICY 01 The cost and accumulated depreciation of capital assets transferred from one function to another within Nova Scotia Power Inc. ("NSPI") should be removed from the existing function and recorded by the acquiring function. - 02 Whe...

AI summary This policy outlines the accounting procedures for transferring capital assets within Nova Scotia Power Inc. (NSPI), including the removal of costs and accumulated depreciation from the original function and recording by the acquiring function.

ASSET RETIREMENTOBLIGATIONS (ARO) - 6320

AI summary The document discusses Asset Retirement Obligations (ARO) under the Nova Scotia Utility and Review Board (UARB). It includes references to accounting standards and regulatory frameworks applicable to Nova Scotia Power Inc. (NSPI) and Nova Scotia Power Corporation (NSPC).

GENERAL - The present value of this estimated future expenditure is recognized as a liability with an equivalent amount added to the carrying amount of the associated fixed asset consistent with FASB ASC 410-20. - The Nova Scotia Utility a...

AI summary The text discusses the recognition of future expenditures as liabilities and the depreciation order issued by the Nova Scotia Utility and Review Board, aligning with FASB ASC 410-20 and GAAP standards.

GENERAL - 01 When an asset no longer provides a benefit, and is not expected to provide any benefit in the future, its undepreciated cost should be written off in the period that it is recognized as being neither used nor useful. In determ...

AI summary The text discusses the accounting treatment of assets, including when to write off undepreciated costs, how to handle unused but available assets, and the treatment of asset transfers. It emphasizes considerations like future removal costs and the importance of maintaining the asset's value in the rate base.

NOT USED AND NOT USEFUL - 06 Assets meeting the following criteria are included in this category: - a. they do not currently provide service to the consuming public; and - b. they are not expected to provide a benefit to customers in the f...

AI summary The document outlines criteria for writing off assets that no longer provide service or future benefit to customers. It suggests amortizing significant write-offs over five years with UARB approval to enhance rate stability, allowing unamortized costs to remain in the rate base.

NOT USED BUT USEFUL FOR STANDBY PURPOSES - 09 Assets meeting the following criteria are included in this category: - a they do not currently provide service to the consuming public; and - b. they are available for service and are required...

AI summary The document outlines the treatment of standby assets in rate base calculations. These assets, though not currently in use, are included in the rate base and depreciated over their expected useful life. Their undepreciated cost is recognized as an expense in the period incurred.

NOT USED BUT USEFUL FOR FUTURE USE - 12 Assets meeting the following criteria are included in this category: - a. they do not currently provide service to the consuming public; and - b. they are expected to be used and useful in providing...

AI summary The text outlines accounting treatment for assets not currently in service but expected to be used in the future. It discusses depreciation deferral, cost recovery, and the handling of excess costs and mothballing expenses, with reference to regulatory approval by the UARB.

DEFINITION 01 Accumulated depreciation, or depreciation reserves, are capital asset contra accounts that are offset against gross capital asset accounts to provide the net book value of the assets at a particular point in time.

AI summary Accumulated depreciation is defined as a contra account that offsets gross capital asset accounts to show the net book value of assets at a specific point in time.

GENERAL - 02 The accounts for accumulated depreciation summarize data relating to the depreciation, retirement of capital assets, and capital contributions. These accounts reflect the accumulated activity for a particular asset group from...

AI summary The document discusses the accounts for accumulated depreciation, summarizing data on depreciation, retirement of capital assets, and capital contributions. These accounts track activity for asset groups from inception to the current date, maintained by cost centre in Production Plant and by activity in mass plant. Gains or losses are not immediately recognized on the retirement of capital assets, except for the sale of land and production plant retirement.

PROPERTY, PLANT AND EQUIPMENT ACCUMULATED DEPRECIATION - 6400 06 When conducting a depreciation rate study to set depreciation rates 2 , the balances in the accounts are taken into consideration when setting the final rate. If the assets i...

AI summary The document discusses the process of setting depreciation rates based on account balances, noting that over or under depreciation of assets leads to a reserve difference that must be written off over the remaining asset life, adjusting the depreciation rate accordingly.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420

AI summary The document discusses the retirement and disposal of capital assets, focusing on accounting standards, asset management, and financial considerations related to capital expenditures and asset retirement obligations.

01 Cost Cost is the main component of most retirement work orders. Refer to NSPI's Accounting Policy & Procedures Manual 6100 for a more detailed description of the items included in cost.The amounts that must be removed to record the dele...

AI summary The text discusses the concept of cost in the context of retirement work orders, emphasizing that cost includes the asset's value and accumulated depreciation when an asset is removed from service. It references NSPI's Accounting Policy & Procedures Manual 6100 for further details.

05 Net Salvage Value Salvage value less cost of removal is referred to as net salvage value. The amount may be either positive or negative and is charged or credited to accumulated depreciation.

AI summary Net salvage value is defined as the salvage value minus the cost of removal. This value can be positive or negative and is recorded in accumulated depreciation.

PROPERTY, PLANT AND EQUIPMENT RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420 13 When a work order has received final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated deprec...

AI summary This section describes the process for final disposition of charges to capital assets in service and accumulated depreciation after a work order has received final cost approval.

Retirement of Assets Other than Land - 14 When assets are disposed of, a retirement work order is set up or retirement accounts are set up within a capital work order. - 15 Asset retirement obligations have been set up for the decommission...

AI summary The document outlines the procedures for retiring assets other than land, including the setup of retirement work orders and accounts. It also references FASB ASC 410-20 for determining and revising asset retirement obligations related to decommissioning.

Retirement of Land - 16 When land is disposed of, retirement accounts within a work order are used to remove its cost from the capital asset records. - 17 If the proceeds from the sale of land are greater than the cost of the land plus the...

AI summary When land is disposed of, retirement accounts in a work order are used to remove its cost from capital asset records. A gain or loss is recognized based on whether the sale proceeds exceed or fall short of the land's cost plus retirement costs. The NSPI Accounting Policy & Procedures Manual 6320 discusses asset retirement obligations.

GAIN OR LOSS ON DISPOSITION OF CAPITAL ASSETS - 6440

AI summary The document focuses on the gain or loss on the disposition of capital assets, likely involving financial accounting and asset management practices relevant to utility companies in Nova Scotia.

Materials - 04 Materials are accounted for using a computerized perpetual inventory system. Purchases are recorded at cost and issues are charged to capital or operating accounts at average cost. - 05 Physical counts are performed on a rot...

AI summary Materials are accounted for using a perpetual inventory system with purchases recorded at cost and issues charged to capital or operating accounts. Physical counts are conducted periodically, and adjustments are expensed. Storerooms are charged monthly interest based on the company's average short-term borrowing cost.

DEFINITION 01 Current assets that will benefit more than one period will have their cost allocated over the periods they benefit.

AI summary The text defines the allocation of current assets that provide benefits over multiple periods, indicating that their costs should be spread across the periods they benefit.

POLICIES - 02 Expenses paid on an annual basis should be recorded as prepaid assets and amortized on a straightline basis over the months to which the expense applies. - 03 Prepaid expenses should be presented in the financial statements i...

AI summary The text outlines accounting policies for prepaid expenses, specifying that they should be recorded as prepaid assets and amortized on a straight-line basis over the applicable months. It also references FASB ASC standards for presenting prepaid expenses as current assets in financial statements.

POLICIES - 01 The Company accrues a liability for termination costs associated with severance programs consistent with the requirements of FASB ASC Topic 420 – Exit or Disposal Cost Obligations or ASC Topic 712 – Compensation – Nonretireme...

AI summary The document outlines the Company's accounting treatment of termination costs associated with severance programs, referencing FASB ASC topics and considering the impact on revenue requirement and rate stability. It distinguishes between one-time, special, and contractual termination benefits and explains when liabilities are recognized.

- a. The front office should ensure the hedging activity is in compliance with the appropriate risk management policy; - b. The front office should document the specific risk exposure being hedged in accordance with its risk management obj...

AI summary The text outlines requirements for documenting and accounting for hedging activities, including the need for compliance with risk management policies, documentation approval, and proper recognition of derivative instruments' fair value on the balance sheet. It also specifies how gains and losses on these instruments should be amortized or included in costs based on the type of hedged item.

TRANSITIONAL PROVISIONS - 34 This policy is effective January 1, 2011 and should be applied retroactively with restatement of prior periods except as outlined below. - 35 Any item of property, plant and equipment, construction work-in-prog...

AI summary This section outlines transitional provisions for applying the new policy retroactively from January 1, 2011, with specific guidance on handling prior period items, foreign exchange rate adjustments, and transitional adjustments related to derivatives and regulatory assets.

ACCOUNTS PAYABLE AND ACCRUED CHARGES - 8220

AI summary The document discusses accounts payable and accrued charges related to Nova Scotia Power Inc. and other entities, highlighting financial obligations and accounting standards relevant to the regulatory proceeding.

Via Email: [email protected] Mr. Eric Ferguson Director, Regulatory Affairs Nova Scotia Power Inc. 14th Floor, Barrington Tower P. O. Box 910, Scotia Square Halifax, NS B3J 2W5 Dear Mr. Ferguson: Nova Scotia Power Inc. - Accounting...

AI summary Nova Scotia Power Inc. submitted a compliance filing for its Accounting Policy and Procedures Manual, which the Board reviewed and identified several discrepancies. The Board accepts some changes but requests revisions to specific sections, particularly regarding terminology and tolerance levels, and seeks further comments from NSPI before issuing an order.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300

AI summary The document discusses depreciation and amortization expense under the category 5300. It includes a reference to a picture, likely illustrating financial data or related information, though no detailed analysis is provided in the text.

POLICIES - 01 The cost of property, plant and equipment and intangibles should be depreciated or amortized over the useful life of the assets. 1 - 02 Net salvage values should be amortized over the useful lives of the assets to which they...

AI summary The document outlines policies for the depreciation and amortization of property, plant, and equipment, including the treatment of net salvage values and asset retirement obligations. NSPI is required to account for legal obligations related to asset retirement and refer to specific accounting procedures for compliance.

PROCEDURES - 05 The life estimations and policies, inclUding AROs and other significant assumptions are periodically reviewed and the results filed with the Nova Scotia Utility and Review Board ("UARB") for its approval. - 06 The depreciat...

AI summary The document outlines procedures for depreciation and amortization, including the review of asset lifetimes and assumptions by the UARB, the inclusion of AROs in the depreciation base, and the approval of depreciation rates by the UARB based on studies and agreements.

CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - I. Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service and is being used to generate...

AI summary The document outlines procedures for managing construction work in progress (CWIP), including setting up capital work orders, transitioning assets to operational status, final cost approval, and depreciation of property plant and equipment (PPE). It also mentions the need for UARB approval and authorization to overspend for large projects.

POLICIES - 04 Expenditures for amounts less than the stated capitalization limits should be charged to operations as they are incurred. - 05 When additional costs associated with capitalizing immaterial amounts exceed the benefits of provi...

AI summary The policies outlined address the treatment of expenditures below capitalization limits, directing that such amounts be charged to operations as incurred and that expensing is appropriate when additional costs of capitalizing immaterial amounts outweigh benefits to financial statement users.

OVERHEAD ALLOCATION - 22 An overhead load will be charged to NSPl's affiliates to cover indirect support costs not captured in the corporate support group cost centres. - 23 Included in the overhead load are depreciation and carrying charg...

AI summary The document discusses the allocation of overhead costs to NSPI's affiliates, including depreciation, rent, IT support, and incentives, to cover indirect support costs not captured in the corporate support group cost centres.

POLICIES - 05 Pension obligations and obligations associated with non-pension post-retirement benefits such as health benefits to retirees and retirement awards, are actuarially determined using the projected benefit method prorated on ser...

AI summary The text outlines the accounting policies related to pension obligations and post-retirement benefits for Nova Scotia Power Inc. It discusses how these obligations are actuarially determined, adjustments are amortized, and how pension fund assets are valued. It also mentions the adoption of US accounting standards and the recognition of plan surpluses and deficits.

ACCOUNT STRUCTURE - 3100

AI summary This section discusses the account structure related to Nova Scotia Power Inc. (NSPI) and includes references to accounting standards and systems used for financial reporting.

DEPRECIATION AND AMORTIZATION EXPENSE - 5300

AI summary The document heading indicates a section related to depreciation and amortization expenses, likely discussing financial accounting practices and regulatory considerations for Nova Scotia Power Inc. (NSPI) under UARB oversight.

POLICIES - 01 The cost of property, plant and equipment and intangibles should be depreciated or amortized over the useful life of the assets. 1 - 02 Net salvage values should be amortized over the useful lives of the assets to which they...

AI summary The document outlines Nova Scotia Power Inc.'s policies on depreciation and amortization, including the treatment of asset retirement obligations, the exclusion of certain assets from depreciation, and the approval process for depreciation rates by the Nova Scotia Utility and Review Board.

AMORTIZATION - CAPITAL CONTRIBUTIONS IN AID OF CONSTRUCTION - 5310

AI summary The document discusses the topic of amortization and capital contributions in aid of construction, likely related to regulatory proceedings involving Nova Scotia Power and the Utility and Review Board.

POLICY 01 Capital contributions in aid of construction towards the acquisition of fixed assets should be amortized to income using the same depreciation rates as the assets to which they relate. - 02 The amortization base is equal to the a...

AI summary The document outlines the policy for amortizing capital contributions used in the acquisition of fixed assets, specifying that they should be amortized using the same depreciation rates as the associated assets, with the amortization base equal to the contribution amount and commencement aligned with the asset.

07 Amortization of Long-term Debt Issue Costs The Company defers costs associated with the issuance of long-term debt including commissions, discounts/premiums and legal and audit fees, if significant. These costs are amortized monthly usi...

AI summary The Company defers significant costs related to long-term debt issuance, such as commissions, discounts, premiums, and legal and audit fees, and amortizes them monthly using the effective interest rate method over the life of the debt.

INCOME TAXES - 5900 - 10 A monthly income tax provision is recorded by multiplying the Company's effective combined federal and provincial income tax rate forecasted for the year (calculated without inclusion of the forecasted FAM adjustme...

AI summary The text outlines the methodology used by the Company to record income tax provisions, including the calculation of monthly income tax provisions, taxable capital estimates, and the treatment of Part VI.1 tax. It also describes the accounting treatment for capital cost allowance and the general ledger accounts used for tax expenses.

GENERAL - 02 An expenditure must create a benefit having a life of more than one year to be considered capital. Annual fees or maintenance costs do not create an asset; they simply maintain the existing asset base and should be expensed an...

AI summary This section outlines the criteria for capitalizing expenditures, emphasizing that only those with benefits lasting more than one year are considered capital. It also explains that capital expenditures are recorded as assets and are depreciated over their useful life, impacting future net earnings.

- 06 In order to capitalize an expenditure, there must be reasonable assurance that the benefit will actually be realized by the Company. 1FASB ASC 360-10-05-3 2 Please refer to NSPI's Accounting Policy & Procedures Manual Section 5300 for...

AI summary The text discusses the requirement for reasonable assurance that an expenditure will benefit the Company in order to be capitalized. It references FASB ASC 360-10-05-3 and directs readers to NSPI's Accounting Policy & Procedures Manual for further details on depreciation and amortization.

PROPERTY, PLANT AND EQUIPMENT

AI summary The section discusses Property, Plant, and Equipment, including accounting standards, depreciation methods, and regulatory considerations related to asset management and capital expenditures.

CONSTRUCTION WORK IN PROGRESS - 6200 - k. Set up the capital work order in CWIP; - I. Summarize and control charges; - m. Change status of work order from CWIP to Operational ("OPS") when asset goes in service and is being used to generate...

AI summary The document outlines procedures for managing construction work in progress (CWIP), including setting up work orders, controlling charges, changing statuses, finalizing costs, obtaining approvals, and retiring items. These steps ensure proper accounting and regulatory compliance for capital projects.

GENERAL 01 Unlike most capital assets, land generally does not lose value over time. It is therefore, considered to have an infinite life and is not depreciated. Land must be isolated from depreciable capital assets in the financial record...

AI summary Land is not depreciated because it generally retains or increases in value over time, unlike most capital assets. It must be separated from depreciable assets in financial records once it is included with plant in service.

POLICIES - 05 Contributions in aid of construction should be offset against the property, plant or equipment to which they relate so that the net amount is depreciated and included in rate base. - 06 If a relationship to a specific asset c...

AI summary The text outlines policies for accounting treatment of contributions in aid of construction, specifying that they should be offset against related assets and depreciated. If no specific asset can be identified, contributions should be offset against 'Assets in Service' and amortized at the composite rate of the relevant asset class. The policies also mention that contributions from customers are determined by internal guidelines and procedures, with specific documentation requirements.

POLICY - 02 Intangible assets include land rights and computer software and are capitalized in accordance with NSPI's Accounting Policy & Procedures Manual section 6000. - 03 Intangible assets with a finite useful life shall be amortized i...

AI summary The text outlines NSPI's accounting policies for intangible assets, specifying that land rights and computer software are capitalized and amortized according to the NSPI Accounting Policy & Procedures Manual sections 6000 and 5300, respectively.

ASSET RETIREMENTOBLIGATIONS (ARO) - 6320

AI summary The document discusses Asset Retirement Obligations (ARO) under the Nova Scotia Utility and Review Board (UARB). It includes references to accounting standards and related financial mechanisms, though specific details are not provided in the text.

GENERAL - 02 The present value of this estimated future expenditure is recognized as a liability with an equivalent amount added to the carrying amount of the associated fixed asset consistent with FASB ASC 410-20. - 03 The Nova Scotia Uti...

AI summary The text discusses the accounting treatment of future expenditures related to the removal of long-lived assets, referencing FASB ASC 410-20 and the depreciation order issued by the Nova Scotia Utility and Review Board effective January 1, 2004. It outlines how differences between the UARB-approved depreciation expense and GAAP calculations are recognized as a regulated asset.

POLICY - 04 A liability for an asset retirement obligation should be recognized when a reasonable estimate of fair value can be made. 2 - 05 Upon initial recognition, the carrying amount of the related long-lived asset will be increased by...

AI summary The text discusses the recognition and accounting treatment of asset retirement obligations, including the initial recognition of liabilities, adjustments to long-lived assets, and the systematic allocation of retirement costs over the asset's useful life.

GENERAL - 01 When an asset no longer provides a benefit, and is not expected to provide any benefit in the future, its undepreciated cost should be written off in the period that it is recognized as being neither used nor useful. In determ...

AI summary The text outlines principles for writing off and depreciating assets, emphasizing that unused assets with future utility should not be charged against current earnings, while those no longer providing benefit should be written off considering future costs and proceeds. Transfers between categories occur at book value, with gains or losses included in the rate base.

NOT USED AND NOT USEFUL - 06 Assets meeting the following criteria are included in this category: - a. they do not currently provide service to the consuming public; and - b. they are not expected to provide a benefit to customers in the f...

AI summary Assets that are not currently providing service or expected to benefit customers in the future should be written off. However, if the write-off is significant and approved by the Nova Scotia Utility and Review Board (UARB), the cost can be amortized over five years or a reasonable period, with unamortized costs remaining in the rate base and capital costs expensed as incurred.

NOT USED BUT USEFUL FOR STANDBY PURPOSES - 09 Assets meeting the following criteria are included in this category: - a they do not currently provide service to the consuming public; and - b. they are available for service and are required...

AI summary The text discusses the treatment of standby assets in regulatory proceedings, stating that such assets, even if not currently in use, must be depreciated over their expected useful life and included in the rate base. This ensures that the cost of capital is recognized as an expense when incurred.

NOT USED BUT USEFUL FOR FUTURE USE - 12 Assets meeting the following criteria are included in this category: - a. they do not currently provide service to the consuming public; and - b. they are expected to be used and useful in providing...

AI summary This section discusses the treatment of assets not currently in service but expected to be used in the future. It outlines how costs should be matched to future periods, the handling of excess costs, and the deferral and amortization of depreciation until the assets are returned to service.

POLICY - 03 Long-lived assets identified as being disposed of by sale, shall be classified as held for sale in the period the criteria for long-lived assets to be disposed of by sale are met. - 04 A long-lived asset classified as held for...

AI summary The text outlines accounting policies for long-lived assets classified as held for sale, including measurement, depreciation, and reclassification procedures. It references FASB ASC standards and NSPI's internal accounting policy manual.

DEFINITION 01 Accumulated depreciation, or depreciation reserves, are capital asset contra accounts that are offset against gross capital asset accounts to provide the net book value ofthe assets at a particular point in time.

AI summary Accumulated depreciation refers to contra accounts that offset gross capital asset accounts to determine the net book value of assets at a specific point in time.

GENERAL - 02 The accounts for accumulated depreciation summarize data relating to the depreciation, retirement of capital assets, and capital contributions. These accounts reflect the accumulated activity for a particular asset group from...

AI summary The text discusses the accounting treatment of accumulated depreciation, including data on depreciation, retirement of capital assets, and capital contributions. It notes that gains or losses are not immediately recognized on the retirement of capital assets, except for the sale of land and production plant.

POLICY 04 Accumulated depreciation should be netted against the assets so that the assets are reported at their net book values. - 05 At a particular point in time, the balance in the accumulated depreciation accounts is comprised of the f...

AI summary The text discusses the proper accounting treatment of accumulated depreciation, including its components and the need to adjust depreciation rates when assets are over or under depreciated. It also references NSPI's and NSPl's accounting policy manuals for further details.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420

AI summary The document discusses the retirement and disposal of capital assets, including accounting standards, asset management, and related financial mechanisms. It highlights the importance of proper accounting practices and regulatory oversight in managing capital assets.

01 Cost Cost is the main component of most retirement work orders. Refer to NSPl's Accounting Policy & Procedures Manual 61 00 for a more detailed description of the items included in cost. The amounts that must be removed to record the de...

AI summary The text discusses the accounting treatment of asset retirement obligations, removal costs, salvage value, and net salvage value in the context of retirement work orders. It outlines how these costs are recorded, including the inclusion of labor, materials, and overhead, and their impact on accumulated depreciation.

PROCEDURES - 09 For retirements of property, plant and equipment other than land ,the original cost plus any costs of removal less salvage proceeds is charged to accumulated depreciation, with no immediate gain or loss recognized. - 10 A r...

AI summary The procedures outline how retired property, plant, and equipment (excluding land) are accounted for, including charging the original cost plus removal costs less salvage proceeds to accumulated depreciation. Retirement work orders are required for significant asset retirements and must follow the same approval procedures as new capital work orders. Salvage proceeds, including insurance claims, are handled with specific accounting treatments.

RETIREMENT AND DISPOSAL OF CAPITAL ASSETS - 6420 13 When a work order has received final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated depreciation.

AI summary The document discusses the process of retiring and disposing of capital assets, specifying that when a work order receives final cost approval, an entry is made for the final disposition of charges to capital assets in service and accumulated depreciation.

Retirement of Assets Other than Land - 14 When assets are disposed of, a retirement work order is set up or retirement accounts are set up within a capital work order. - 15 Asset retirement obligations have been set up for the decommission...

AI summary The document outlines procedures for retiring assets other than land, including setting up retirement work orders or accounts within capital work orders. It also mentions the setup of asset retirement obligations for decommissioning, aligned with FASB ASC 410-20 standards for initial and subsequent measurement.

Retirement of Land - 16 When land is disposed of, retirement accounts within a work order are used to remove its cost from the capital asset records. - 17 If the proceeds from the sale of land are greater than the cost of the land plus the...

AI summary The document discusses the retirement of land, outlining that when land is disposed of, retirement accounts are used to remove its cost from capital asset records. A gain or loss is recognized based on the comparison of sale proceeds to the land's cost plus retirement costs.

Materials - 04 Materials are accounted for using a computerized perpetual inventory system. Purchases are recorded at cost and issues are charged to capital or operating accounts at average cost. - 05 Physical counts are performed on a rot...

AI summary The document outlines the accounting practices for materials, including the use of a perpetual inventory system, cost recording, periodic physical counts, and the application of interest charges on inventory based on the company's short-term borrowing costs.

DEFERRED CHARGES TERMINATION COSTS - 6930 06 Regulatory decisions allowing the recovery of deferred costs through future rates create a future economic benefit or asset equal to the deferred amounts. Amortization matches the cost of that a...

AI summary The text discusses the accounting treatment of deferred charges related to severance programs, including when costs should be accrued, how they are recorded, and the amortization process over three years to align with future cost savings.

TRANSITIONAL PROVISIONS - This policy is effective January 1, 2011 and should be applied retroactively with restatement of prior periods except as outlined below. - Any item of property, plant and equipment, construction work-in-progress a...

AI summary This section outlines transitional provisions for applying the new policy retroactively from January 1, 2011, including handling of prior period asset valuations, foreign exchange adjustments, and deferral of transitional expenses.