Deloitte
Accounting Research Tool
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Appendix E — Industry-Specific Guidance

E.5 P&U Entities

E.5 P&U Entities

Footnotes

6
In many situations, the evaluation of whether a PPA is (or contains) a lease may be relatively simple; however, there is diversity in practice related to how this evaluation should be performed. See Section E.5.2.1.1 for additional information.
7
See discussion in Section 3.4.4.2 on ASU 2017-01, which narrowed the definition of a business. As a result of the ASU, fewer legal entities (such as single-plant entities) may meet the definition of a business on a prospective basis.
8
In this example, it is assumed that the evaluation is being performed over the entire life of the entity. See Section 7.2.10.2 for a discussion of evaluating entities that have multiple distinct stages.
9
“Net exposure to the spark spread” means that the off-taker’s contract is designed to absorb only the difference between the market price of electricity and the cost of producing that electricity.
10
The guidance in this section generally applies to single-plant legal entities in the operational phase. Before achievement of commercial operations, reporting entities should consider whether the power to direct the VIE’s most significant activities changes as the reporting entities move through discrete phases such as development and construction. In these scenarios, the relative certainty of successfully completing each stage is likely to be relevant to the analysis. See Section 7.2.10.2 for more information about assessing VIEs that go through discrete operational stages or phases of development.