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14.6 Presentation and disclosure considerations for nuclear power plants
Publication date: 19 Jan 2024
us Utilities guide
The following details the specific considerations relating to the financial statement presentation of nuclear fuel and decommissioning trust fund assets.
14.6.1 Nuclear fuel
Nuclear fuel should be included as a component of property, plant, and equipment. Nuclear fuel in the fabrication and installation phase should be classified as construction work in progress. Leased nuclear fuel should also be classified as property, plant, and equipment.
14.6.2 Nuclear decommissioning trust funds
14.6.2.1 Balance sheet presentation
Nuclear decommissioning trust fund investments typically will be used to fund the future decommissioning of a nuclear facility. Thus, despite their marketability or maturity dates, the purpose for holding them is usually not for short-term use. Therefore, investments held in a nuclear decommissioning trust fund would generally not meet the definition of a current asset in ASC 210-10-45-1 because the investments are not available for current operations. Furthermore, ASC 210-10-45-4(a) excludes certain amounts from current assets.
Excerpt from ASC 210-10-45-4
The concept of the nature of current assets contemplates the exclusion from that classification of such resources as the following:
- Cash and claims to cash that are restricted as to withdrawal or use for other than current operations, are designated for expenditure in the acquisition or construction of noncurrent assets, or are segregated for the liquidation of long-term debts…
Thus, securities held in nuclear decommissioning trust funds should be classified as non-current until the securities are used to fund decommissioning.
14.6.2.2 Income statement presentation
Amounts recorded in the income statement related to nuclear decommissioning trust funds should be recognized as part of other income and expense, not part of operating income. Amounts so classified may include realized gains and losses, impairment losses, and unrealized gains and losses on investments that are carried at fair value. It would not be appropriate to offset trust earnings against charges for asset retirement costs or other operating expenses.
For a regulated utility, any regulatory recovery or refund payable related to the decommissioning trust funds should be recorded as an offset to the amounts recorded in other income and expense.
14.6.2.3 Statement of cash flows
The classification of purchases, sales, and maturities of investments held in nuclear decommissioning trust funds in the statement of cash flows will partially depend on the accounting designation of those securities, as summarized in Figure UP 14-6.
Figure UP 14-6
Statement of cash flows — classification of purchases, sales, and maturities of debt and equity securities
Statement of cash flows — classification of purchases, sales, and maturities of debt and equity securities
Investment classification |
Guidance |
Statement of cash flows classification |
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Trading securities
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Purchases, sales, and maturities of trading securities should be classified based on the nature and purpose for which the securities were acquired. In general, we would expect nuclear decommissioning trust fund activity to be presented as part of investing activities.
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Available-for-sale and held-to-maturity debt securities
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Purchases, sales, and maturities of available-for-sale and held-to-maturity securities should be classified as cash flows from investing activities and reported gross for each security classification (i.e., activity related to available-for-sale and held-to-maturity securities should not be combined).
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Equity securities
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Purchases and sales of equity securities should be classified based on the nature and purpose for which they were acquired. Cash flows from equity securities purchased to generate profits on short-term price differences will be classified as operating. Otherwise, these cash flows should be classified as investing activities. In general, we would expect cash flows from nuclear decommissioning trust fund investments in equity securities to be classified as investing activities.
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Fair value option
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Purchases, sales, and maturities of nuclear decommissioning trust fund securities should generally be presented on a gross basis. In addition, unrealized gains and losses on nuclear decommissioning trust fund securities that are not reported in accumulated other comprehensive income should be reported as a non-cash adjustment to operating activities in the statement of cash flows
14.6.2.4 Disclosure
Investments held in nuclear decommissioning trust funds are subject to all of the disclosure requirements in ASC 320 and ASC 321 (addressed in FSP 9.6 and FSP 9.7, respectively). Furthermore, the additional fair value disclosure requirements in ASC 820, including the specific disclosures required for investments, would apply to debt and equity securities accounted for using the fair value option (addressed in FSP 20).
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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