EFTA01367012.pdf

Amendment #4 Page 583 of 868 1ahlt M ('mncnl• co. Income taxes Income taxes we accounted for unrkv tee asset and hadrty method Deferred income tax assets and Iodates we recognized for the tutee tax consequences attnbutabe to difference/ between the financial Staterrents carryng amounts of energ assets and lifinlitieS and then respective tax bases and tax losses and tax emit carryforwards Deferred inCOMe lax assets and totalities are measured sing enacted tax rates expected to appty to taxable income in the years in which nese temporary offerences are expected to be recovered or settled The effect on deterred meanie tax assets and habitat of a change in tax rates is recognized in the comtined statements of comprehensive loss ri the period that includes the enactment date. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets d it es considered more ',key than rot that some porton or all d the deferred income tax assets Vie not be realized The Combined Entity recognizes in Ire combined financial statements the impact of a tax position, a test beaten is more Moly then not of being sustained upon examination. based on the technical merits of the postai Recognized Income tax sc.:sneers are measured at Ire largest rout that is greater than 50% "oh/ of being realized Georges in recognition or measixernent we reflected in the pared in which the change in Judgment occurs The Combined Entity has elected to classify interest and penalties rated to unrecognized tax benefts, if and when requied as part of income tax expense in the combined statements of comprehensive loss p Commitments end contingencies In the normal course of !Veneta. the Combined Entity is subsea to toss contingencies, such as legal proceedings and claims snug out of the &many coirse of its heiress An accrual fix a loss contrgency is recognized when if * rateable that a liability has been retired and the email of loss can be reasonably estimated if a potential material loss contingency s not probable but is reasonably possible, or is probable but cannat be estimated, men the nature of the contingent liability. together with an estimate of the range of possible loss if (*terminable and material. is dnschased. q. noir value me dun The Combined Entry tippled the provisions of accorneng Standards Colecation ( •ASC)Topc 820. Fan Vakee Measurements and DOclosures CASC Tope 8201. for far value measurements of financial assets and financial liatalibes and for !SW value meassernents of nonfinancial items tot are recognized or disclosed at far value in the financial statements on a recurnrg and nonrecurring basis ASC Topic 820 defines far value as the price that *odd be received to sea an asset or pad to transfer a labiliy n an orderly transaction between market participants at the measurement date Wien determtnng the fat value measurements for assets and liabilities reaured or permitted to be recorded at fat value the Combined Entity considers the principal or new advantageous market in which it would Mine-ad and it considers assurnaore that market participants would use when enema the asset or liability. ASC Topic 820 also establishes a framework for measunng fair value and expands dtSCk)SUreS about far value measurements MC Topic 820 establishes a far value hierarchy that regimes an entity to maximze the use of observable inputs and wawa° the use of unobservable inputs when measuring far value ASC Topic 820 establishes thee levels d inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadyuated quoted paces n active markets for conical assets a imtchtsrs (Level 1 measurements) and the lowest money to measisements Invoking significaM unobservable inputs (Level 3 measurements) The three levels of the far vas.* hierarchy are as follows • Level 1 inputs are carded paces (iso4usted) in active markets fa identical assets ce liabilities the the Combined Entity has the ability to access at the measkrement date F-263 http://cfdocs.btogo.com:27638/cf/drv7/pub/edgar/2015/07/20/0001193125-15-256461/d78... 7/20/2015 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0058540 CONFIDENTIAL SDNY_GM_00204724 EFTA01367012