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New Accounting Guidance Pending Adoption
9 Months Ended
Sep. 30, 2011
Notes To Financial Statements [Abstract] 
New Accounting Guidance Pending Adoption

18. New Accounting Guidance Pending Adoption

 

(PPL, PPL Energy Supply, PPL Electric, LKE, LG&E and KU)

 

Fair Value Measurements

 

Effective January 1, 2012, PPL and its subsidiaries will prospectively adopt accounting guidance that was issued to clarify existing fair value measurement guidance as well as enhance fair value disclosures. The additional disclosures required by this guidance include quantitative information about significant unobservable inputs used for Level 3 measurements, qualitative information about the sensitivity of recurring Level 3 measurements, information about any transfers between Level 1 and 2 of the fair value hierarchy, information about when the current use of a non-financial asset is different from the highest and best use, and the hierarchy classification for assets and liabilities whose fair value is disclosed only in the notes to the financial statements.

 

Any fair value measurement differences resulting from the adoption of this guidance will be recognized in income in the period of adoption. The adoption of this guidance is not expected to have a significant impact on PPL and its subsidiaries.

 

Presentation of Comprehensive Income

 

Effective January 1, 2012, PPL and its subsidiaries will retrospectively adopt accounting guidance that was issued to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items that are recorded in OCI. The amendments require that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements where the first statement includes the components of net income and the second statement includes the components of OCI.

 

Regardless of whether an entity chooses to present comprehensive income in a single continuous statement or in two separate but consecutive statements, the entity is required to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented.

 

Subsequent to the issuance of this new accounting guidance, the Financial Accounting Standards Board (FASB) announced plans to propose deferral of the requirement that companies present reclassification adjustments for each component of OCI in both net income and OCI on the face of the financial statements. During the deferral period, the FASB also plans to re-evaluate the requirement. The deferral, if finalized, would not change the requirement to present items of net income, items of other comprehensive income and total comprehensive income in either one continuous statement or two separate consecutive statements.

 

Upon adoption, the change in presentation is not expected to have a significant impact on PPL and its subsidiaries.

 

Disclosures about an Employer's Participation in a Multiemployer Plan

 

Effective December 31, 2011, PPL and its subsidiaries will retrospectively adopt accounting guidance that was issued to improve the transparency about an employer's participation in a multiemployer plan. The disclosures required by this guidance include the significant multiemployer plans in which an employer participates, the level of the employer's participation in these plans, the financial health of these plans and the nature of employer commitments to these plans. For plans for which users are unable to obtain additional publicly available information outside the employer's financial statements, additional disclosures are required.

 

The adoption of this standard is not expected to have a significant impact on PPL and its subsidiaries.

 

Testing Goodwill for Impairment

 

Effective January 1, 2012, PPL and its subsidiaries will prospectively adopt accounting guidance which will allow an entity to elect the option to first make a qualitative evaluation about the likelihood of an impairment of goodwill. If, based on this assessment, the entity determines it is not more likely than not the fair value of a reporting unit is less than the carrying amount, the two-step goodwill impairment test is not necessary. However, the first step of the impairment test is required if an entity concludes it is more likely than not the fair value of a reporting unit is less than the carrying amount based on the qualitative assessment.

 

The adoption of this standard is not expected to have a significant impact on PPL and its subsidiaries.