DCP SOUTHEAST TEXAS HOLDINGS, GP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Years Ended December 31, 2011, 2010 and 2009
Income Taxes
— We are treated as a partnership for federal income tax purposes. We do not pay federal
income taxes. We are subject to the Texas margin tax. We follow the asset and liability method of accounting
for state 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. We have calculated current and deferred income taxes as if we were a separate tax payer.
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 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.
ASU 2011-08 “Intangibles — Goodwill and Other (Topic 350),”
or ASU 2011-08
— In September 2011,
the FASB issued ASU 2011-08, which amends ASC Topic 350 “Intangibles — Goodwill and Other.” ASU
2011-08 provides additional guidance on the two-step test for goodwill impairment as previously described in
Topic 350 “Intangibles — Goodwill and Other.” Under the new guidance, entities may elect to first assess
qualitative factors instead of calculating the fair value of a reporting unit unless the entity determines that it is
more likely than not the fair value of the reporting unit is less than its carrying value. This ASU is effective for
annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early
adoption permitted. There was no impact from the adoption of ASU 2011-08 on our consolidated results of
operations, cash flows and financial position.
ASU 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value
Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,”
or ASU 2011-04
— In May 2011,
the FASB issued ASU 2011-04 which amends ASC Topic 820 “Fair Value Measurements and Disclosures” to
change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for
disclosing information about fair value measurements, clarify the FASB’s intent about the application of
existing fair value measurement requirements, and change a particular principle or requirement for measuring
fair value or for disclosing information about fair value measurements. The provisions of ASU 2011-04 are
effective for annual reporting periods beginning after December 15, 2011 and we are currently assessing the
impact of adoption on our consolidated results of operations, cash flows and financial position.
4. Agreements and Transactions with Affiliates
DCP Midstream, LLC
During the year ended December 31, 2011, in accordance with the partnership agreement, we were billed
for certain expenses which were paid by DCP Midstream and totaled $10.0 million for the year ended
December 31, 2011. These expenses are included in general and administrative expense — affiliates in the
consolidated statements of operations.
Prior to January 1, 2011, costs incurred by DCP Midstream on our behalf for salaries and benefits of
operating personnel, as well as capital expenditures, maintenance and repair costs, and taxes were directly
allocated to us. DCP Midstream provided centralized corporate functions on our behalf, including legal,
accounting, cash management, insurance administration and claims processing, risk management, health, safety
and environmental, information technology, human resources, credit, payroll, internal audit, taxes and
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