DTE Energy 2007 Annual Report Download - page 14

Investments in Debt and Equity Securities
We generally classify investments in debt and equity securities as trading and have recorded such investments at market value with
unrealized gains or losses included in earnings. Our investments are reviewed for impairment each reporting period. If the assessment
indicates that the impairment is other than temporary, a loss is recognized resulting in the investment being written down to its
estimated fair value.
Asset (Gains) and Losses, net
In 2007, we sold base gas resulting in a gain of $5 million and we sold land for a gain of $1 million, partially offset by $3 million for
the disallowance of certain costs related to the acquisition of pipeline assets. In 2006, we sold certain investment rights related to
storage field construction for a $3 million pre-tax gain. This gain was offset by a $3 million loss as a result of a reduction to
MichCon’ s 2004 GCR underrecovery related to the accounting treatment of the injected base gas remaining in the New Haven storage
field when it was sold in early 2004. In 2005, we received a gas rate order from the MPSC which resulted in disallowances of
approximately $42 million of costs related to a computer billing system and $6 million of certain computer equipment and related
depreciation.
See the following notes for other accounting policies impacting our financial statements:
Note Title
2 New Accounting Pronouncements
4 Regulatory Matters
5 Income Taxes
9 Financial and Other Derivative Instruments
11 Retirement Benefits and Trusteed Assets
NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS
Fair Value Accounting
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value
measurements. It emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Fair value
measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability. SFAS
No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company
adopted SFAS No. 157 effective January 1, 2008. The FASB deferred the effective date of SFAS No. 157 as it pertains to non-
financial assets and liabilities to January 1, 2009. The adoption of SFAS No. 157 will not have a material impact to the January 1,
2008 balance of retained earnings.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including
an Amendment of FASB Statement No. 115. This standard permits an entity to choose to measure many financial instruments and
certain other items at fair value. The fair value option established by SFAS No. 159 permits all entities to choose to measure eligible
items at fair value at specified election dates. An entity will report in earnings unrealized gains and losses on items, for which the fair
value option has been elected, at each subsequent reporting date. The fair value option: (a) may be applied instrument by instrument,
with a few exceptions, such as investments otherwise accounted for by the equity method; (b) is irrevocable (unless a new election
date occurs); and (c) is applied only to entire instruments and not to portions of instruments. SFAS No. 159 is effective as of the
beginning of an entity’ s first fiscal year that begins after November 15, 2007. The adoption of SFAS No. 159 is not expected to have a
material impact to the Company’ s financial statements. At January 1, 2008, the Company has not elected to use the fair value option
for financial assets and liabilities held at that date.
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