long-term power sales contract

This subtopic applies Topic 350's goodwill and intangibles guidance to entities with regulated operations. Its core rule is that goodwill is not amortized and is tested for impairment under Topic 350 unless a regulator permits amortization of goodwill as an allowable cost for rate-making purposes, in which case the regulator's action provides reasonable assurance of a regulatory asset that is amortized over the period allowed for rate-making. It also addresses long-term power sales contracts acquired in a business combination and the need to review such contracts for loss-contract status.

ASC 815-980 addresses long-term power sales contracts, including those entered into by nonutility generators that sell power (often to rate-regulated utilities) under contracts with stated prices, formula-based prices, or a combination. The core rule is that if such a contract meets the definition of a derivative, it is marked to fair value through earnings unless designated in a qualifying hedging relationship; otherwise Topic 606 applies. Contracts that qualify for the normal purchases and normal sales scope exception in 815-10-15-13(b) are accounted for under this Section rather than as derivatives.