DCP MIDSTREAM PARTNERS, LP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2011, 2010 and 2009 — (Continued)
that accounted for approximately 17% of total operating revenues of the Wholesale Propane Logistics segment
for the years ended December 31, 2011 and 2010, respectively, and approximately 12% of revenues for the year
ended December 31, 2009. We also had significant transactions with affiliates.
Environmental Expenditures
— Environmental expenditures are expensed or capitalized as appropriate,
depending upon the future economic benefit. Expenditures that relate to an existing condition caused by past
operations and that do not generate current or future revenue are expensed. Liabilities for these expenditures are
recorded on an undiscounted basis when environmental assessments and/or clean-ups are probable and the costs
can be reasonably estimated. Environmental liabilities as of December 31, 2011 and 2010, included in the
consolidated balance sheets as other current liabilities amounted to $0.8 million and $0.6 million, respectively,
and as other long-term liabilities amounted to $1.2 million and $1.3 million, respectively.
Equity-Based Compensation
— Equity classified stock-based compensation cost is measured at fair value,
based on the closing common unit price at grant date, and is recognized as expense over the vesting period.
Liability classified stock-based compensation cost is remeasured at each reporting date at fair value, based on
the closing common unit price, and is recognized as expense over the requisite service period. Compensation
expense for awards with graded vesting provisions is recognized on a straight-line basis over the requisite
service period of each separately vesting portion of the award. Awards granted to non-employees for acquiring,
or in conjunction with selling, goods and services are measured at the estimated fair value of the goods or
services, or the fair value of the award, whichever is more reliably measured.
Allowance for Doubtful Accounts
— Management estimates the amount of required allowances for the
potential non-collectability of accounts receivable generally based upon the number of days past due, past
collection experience and consideration of other relevant factors. However, past experience may not be
indicative of future collections and therefore additional charges could be incurred in the future to reflect
differences between estimated and actual collections.
Income Taxes
— We are structured as a master limited partnership which is a pass-through entity for
federal income tax purposes. Our income tax expense includes certain jurisdictions, including state, local,
franchise and margin taxes of the master limited partnership and subsidiaries. We follow the asset and liability
method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax
consequences of temporary differences between the financial statement carrying amounts and the tax basis of
the assets and liabilities. Our taxable income or loss, which may vary substantially from the net income or loss
reported in the consolidated statements of operations, is proportionately included in the federal returns of each
partner.
Net Income or Loss per Limited Partner Unit
— Basic and diluted net income or loss per limited partner
unit, or LPU, is calculated by dividing limited partners’ interest in net income or loss, by the weighted-average
number of outstanding LPUs during the period. Diluted net income per limited partner unit is computed based
on the weighted average number of units plus the effect of dilutive potential units outstanding during the period
using the two-class method.
3. Recent Accounting Pronouncements
Financial Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, 2011-11
“Balance Sheet (Topic 210) Disclosures about Offsetting Assets and Liabilities,”
or ASU 2011-11
— In
December 2011, the FASB issued ASU 2011-11, which amends Accounting Standards Codification, or ASC,
Topic 210 “Balance Sheet.” ASU 2011-11 will require entities to disclose information about offsetting and
related arrangements to enable financial statement users to understand the effect of such arrangements on the
statement of financial position. The provisions of ASU 2011-11 are effective for us in interim and annual
reporting periods beginning on or after January 1, 2013 and we are currently assessing the impact of adoption
on our consolidated results of operations, cash flows and financial position.
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