SEC Filings

10-K
NRG ENERGY, INC. filed this Form 10-K on 02/29/2016
Entire Document
 
                

Critical Accounting Policies and Estimates
NRG's discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and related disclosures in compliance with U.S. GAAP requires the application of appropriate technical accounting rules and guidance as well as the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. The application of these policies involves judgments regarding future events, including the likelihood of success of particular projects, legal and regulatory challenges, and the fair value of certain assets and liabilities. These judgments, in and of themselves, could materially affect the financial statements and disclosures based on varying assumptions, which may be appropriate to use. In addition, the financial and operating environment may also have a significant effect, not only on the operation of the business, but on the results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even if the nature of the accounting policies have not changed.
On an ongoing basis, NRG evaluates these estimates, utilizing historic experience, consultation with experts and other methods the Company considers reasonable. In any event, actual results may differ substantially from the Company's estimates. Any effects on the Company's business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the information that gives rise to the revision becomes known.
NRG's significant accounting policies are summarized in Item 15 — Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements. The Company identifies its most critical accounting policies as those that are the most pervasive and important to the portrayal of the Company's financial position and results of operations, and that require the most difficult, subjective and/or complex judgments by management regarding estimates about matters that are inherently uncertain.
 
 
Accounting Policy
Judgments/Uncertainties Affecting Application
Derivative Instruments
Assumptions used in valuation techniques
 
Assumptions used in forecasting generation
 
Assumptions used in forecasting borrowings
 
Market maturity and economic conditions
 
Contract interpretation
 
Market conditions in the energy industry, especially the effects of price volatility on contractual commitments
Income Taxes and Valuation Allowance for Deferred Tax Assets
Ability to be sustained upon audit examination of taxing authorities
 
Interpret existing tax statute and regulations upon application to transactions
 
Ability to utilize tax benefits through carry backs to prior periods and carry forwards to future periods
Impairment of Long Lived Assets
Recoverability of investment through future operations
 
Regulatory and political environments and requirements
 
Estimated useful lives of assets
 
Environmental obligations and operational limitations
 
Estimates of future cash flows
 
Estimates of fair value
 
Judgment about triggering events indicating impairment
Goodwill and Other Intangible Assets
Estimated useful lives for finite-lived intangible assets
 
Judgment about impairment triggering events
 
Estimates of reporting unit's fair value
 
Fair value estimate of intangible assets acquired in business combinations
Contingencies
Estimated financial impact of event(s)
 
Judgment about likelihood of event(s) occurring
 
Regulatory and political environments and requirements

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