DTE Energy 2009 Annual Report Download - page 14

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Property, Retirement and Maintenance, and Depreciation, Depletion and Amortization
Property is stated at cost and includes construction-related labor, materials, overheads and an allowance for funds used during
construction (AFUDC). The cost of properties retired, less salvage value, is charged to accumulated depreciation. Expenditures for
maintenance and repairs are charged to expense when incurred.
MichCon bases depreciation provisions on straight-line and units-of- production rates approved by the MPSC.
Capitalized software costs are classified as Property, plant and equipment and the related amortization is included in Accumulated
depreciation and amortization, on the Consolidated Statements of Financial Position. The Company capitalizes the costs associated
with computer software it develops or obtains for use in its business. The Company amortizes capitalized software costs on a straight-
line basis over the expected period of benefit, primarily 15 years.
Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset
may not be recoverable. If the carrying amount of the asset exceeds the expected future cash flows generated by the asset, an
impairment loss is recognized resulting in the asset being written down to its estimated fair value. Assets to be disposed of are
reported at the lower of the carrying amount or fair value, less costs to sell.
Excise and Sales Taxes
The Company records the billing of excise and sales taxes as a receivable with an offsetting payable to the applicable taxing authority,
with no impact on the Consolidated Statements of Operations.
Deferred Debt Costs
The costs related to the issuance of long-term debt are deferred and amortized over the life of each debt issue. In accordance with
MPSC regulations, the unamortized discount, premium and expense related to debt redeemed with a refinancing are amortized over
the life of the replacement issue.
Investments in Debt and Equity Securities
The Company generally classifies investments in debt and equity securities as trading and has recorded such investments at market
value with unrealized gains or losses included in earnings.
Stock-Based Compensation
The Company received an allocation of costs from DTE Energy associated with stock-based compensation. Our allocation for 2009,
2008 and 2007 for stock-based compensation expense was approximately $7 million, $5 million and $3 million, respectively.
Asset Gains, net
In 2009, MichCon sold certain gathering and processing assets resulting in a gain of $21 million and recognized a gain of $9 million
on the sale of base gas. In 2008 and 2007, MichCon sold base gas resulting in gains of $22 million and $5 million, respectively. Also
in 2008 and 2007, the Company sold land for gains of $2 million and $1 million, respectively. The 2007 gain was partially offset by
$3 million for the disallowance of certain costs related to the acquisition of pipeline assets. Proceeds from each of the base gas sales
were received in January of the subsequent year.