SEC Filings

10-K
NRG ENERGY, INC. filed this Form 10-K on 02/29/2016
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NRG Home Solar
The Company determined the fair value of the NRG Home Solar reporting unit using an income approach applying a discounted cash flow methodology to the long-term budgets for the reporting unit. The carrying amount of the reporting unit was higher than the fair value, and accordingly, the Company recognized an impairment loss of $125 million during the fourth quarter of 2015 to reduce the carrying value of the goodwill that was recognized in connection with the acquisition.
The significant assumptions utilized in determining the fair value of the reporting unit included the Company’s estimates of lease growth, revenue and operating expenses, capital expenditures based on the Company’s view of the cost of solar installations, working capital requirements, general and administrative expenses and customer acquisition costs. Cash flows were discounted using a discount rate applied to the internally developed cash flow projections for the NRG Home Solar reporting unit which represents the weighted average cost of capital consistent with the risk inherent in future cash flows and based upon an assumed capital structure, cost of long-term debt and cost of equity consistent with comparable companies in the residential solar industry.
Goal Zero
During the third quarter of 2015, the Company determined that there was an indication of goodwill impairment and performed a two-step goodwill impairment test. The carrying amount of the reporting unit was higher than the fair value, and accordingly, the Company recognized an impairment loss of $36 million during the third quarter of 2015 to reduce the carrying value of the goodwill that was recognized in connection with the acquisition. The significant assumptions utilized in determining the fair value of the reporting unit included the Company’s estimates of customer acquisition and related revenue, which reflect a decrease in estimated customer growth as compared to estimates at the time of the acquisition, as well as estimated operating expenses. The discount rate applied to the internally developed cash flow projects represents the weighted average cost of capital consistent with the risk inherent in future cash flows and consistent with the purchase price of the acquisition.
Contingencies
NRG records a loss contingency when management determines it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Gain contingencies are not recorded until management determines it is certain that the future event will become or does become a reality. Such determinations are subject to interpretations of current facts and circumstances, forecasts of future events, and estimates of the financial impacts of such events. NRG describes in detail its contingencies in Item 15 — Note 22, Commitments and Contingencies, to the Consolidated Financial Statements.
Recent Accounting Developments
See Item 15 — Note 2, Summary of Significant Accounting Policies, to the Consolidated Financial Statements for a discussion of recent accounting developments.

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