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Summary of Significant Accounting Policies | 3 Months Ended
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Mar. 31, 2020
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Organization and Basis of Presentation Edison International is the parent holding company of Southern California Edison Company ("SCE") and Edison Energy Group, Inc. ("Edison Energy Group"). SCE is an investor-owned public utility primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of southern California. Edison Energy Group is a holding company for Edison Energy, LLC ("Edison Energy") which is engaged in the competitive business of providing energy services to commercial and industrial customers. Edison Energy's business activities are currently not material to report as a separate business segment. These combined notes to the consolidated financial statements apply to both Edison International and SCE unless otherwise described. Edison International's consolidated financial statements include the accounts of Edison International, SCE, and other wholly owned and controlled subsidiaries. References to Edison International refer to the consolidated group of Edison International and its subsidiaries. References to "Edison International Parent and Other" refer to Edison International Parent and its competitive subsidiaries and "Edison International Parent" refer to Edison International on a stand-alone basis, not consolidated with its subsidiaries. SCE's consolidated financial statements include the accounts of SCE and its wholly owned and controlled subsidiaries. All intercompany transactions have been eliminated from the consolidated financial statements. Edison International's and SCE's significant accounting policies were described in the "Notes to Consolidated Financial Statements" included in Edison International's and SCE's combined Annual Report on Form 10-K for the year ended December 31, 2019 (the "2019 Form 10-K"). This quarterly report should be read in conjunction with the financial statements and notes included in the 2019 Form 10-K. In the opinion of management, all adjustments, consisting only of adjustments of a normal recurring nature, have been made that are necessary to fairly state the consolidated financial position, results of operations, and cash flows in accordance with accounting principles generally accepted in the United States ("GAAP") for the periods covered by this quarterly report on Form 10-Q. The results of operations for the three-month periods ended March 31, 2020 are not necessarily indicative of the operating results for the full year. Certain prior period amounts have been conformed to the current period's presentation. The December 31, 2019 financial statement data was derived from audited financial statements but does not include all disclosures required by GAAP. Cash, Cash Equivalents and Restricted Cash Cash equivalents include investments in money market funds. Generally, the carrying value of cash equivalents equals the fair value, as these investments have original maturities of three months or less. The cash equivalents were as follows:
|  | Edison International |  | SCE
(in millions) |  | March 31, 2020 |  | December 31, 2019 |  | March 31, 2020 |  | December 31, 2019
Money market funds |  | $ | 1,305 |  |  | $ | 31 |  |  | $ | 427 |  |  | $ | — |
Cash is temporarily invested until required for check clearing. Checks issued, but not yet paid by the financial institution, are reclassified from cash to accounts payable at the end of each reporting period as follows:
|  | Edison International |  | SCE
(in millions) |  | March 31, 2020 |  | December 31, 2019 |  | March 31, 2020 |  | December 31, 2019
Book balances reclassified to accounts payable |  | $ | 60 |  |  | $ | 75 |  |  | $ | 60 |  |  | $ | 74 |
The following table sets forth the cash, cash equivalents and restricted cash included in the consolidated statements of cash flows:
(in millions) |  | March 31, 2020 |  | December 31, 2019
Edison International: |  |  |  |
Cash and cash equivalents |  | $ | 1,337 |  |  | $ | 68 |
Short-term restricted cash 1 |  | 1 |  |  | 2 |
Total cash, cash equivalents, and restricted cash |  | $ | 1,338 |  |  | $ | 70 |
SCE: |  |  |  |
Cash and cash equivalents |  | $ | 451 |  |  | $ | 24 |
Short-term restricted cash 1 |  | 1 |  |  | — |
Total cash, cash equivalents, and restricted cash |  | $ | 452 |  |  | $ | 24 |
1 | Reflected in "Other current assets" on Edison International's and SCE's consolidated balance sheets.
Allowance for Uncollectible Accounts The allowance for uncollectible accounts is recorded based on SCE's estimate of expected credit losses and adjusted over the life of the receivables as needed. Since the customer base of SCE is concentrated in Southern California and exposes SCE to a homogeneous set of economic conditions, the allowance is measured on a collective basis on the historical amounts written-off, assessment of customer collectibility and current economic trends, including unemployment rates and any likelihood of recession for the region. At March 31, 2020, this included the estimated impacts of the COVID-19 pandemic. Earnings Per Share Edison International computes earnings per common share ("EPS") using the two-class method, which is an earnings allocation formula that determines EPS for each class of common stock and participating security. Edison International's participating securities are stock-based compensation awards, payable in common shares, which earn dividend equivalents on an equal basis with common shares once the awards are vested. See Note 13 for further information. EPS attributable to Edison International common shareholders was computed as follows:
|  | Three months ended March 31,
(in millions, except per-share amounts) |  | 2020 |  | 2019
Basic earnings per share: |  |  |  |
Net income attributable to common shareholders |  | $ | 183 |  |  | $ | 278 |
Participating securities dividends |  | — |  |  | — |
Net income available to common shareholders |  | $ | 183 |  |  | $ | 278 |
Weighted average common shares outstanding |  | 363 |  |  | 326 |
Basic earnings per share |  | $ | 0.50 |  |  | $ | 0.85 |
Diluted earnings per share: |  |  |  |
Net income attributable to common shareholders |  | $ | 183 |  |  | $ | 278 |
Participating securities dividends |  | — |  |  | — |
Net income available to common shareholders |  | $ | 183 |  |  | $ | 278 |
Income impact of assumed conversions |  | — |  |  | — |
Net income available to common shareholders and assumed conversions |  | $ | 183 |  |  | $ | 278 |
Weighted average common shares outstanding |  | 363 |  |  | 326 |
Incremental shares from assumed conversions |  | 1 |  |  | 1 |
Adjusted weighted average shares – diluted |  | 364 |  |  | 327 |
Diluted earnings per share |  | $ | 0.50 |  |  | $ | 0.85 |
In addition to the participating securities discussed above, Edison International also may award stock options, which are payable in common shares and are included in the diluted earnings per share calculation. Stock option awards to purchase 3,362,329 and 7,719,306 shares of common stock for the three months ended March 31, 2020 and 2019, respectively, were outstanding, but were not included in the computation of diluted earnings per share because the effect would have been antidilutive. New Accounting Guidance Accounting Guidance Adopted In June 2016, the Financial Accounting Standards Board ("FASB") issued an accounting standards update to require the use of the current expected credit loss model to measure impairment of financial assets measured at amortized cost, including trade and other receivables, and the use of an allowance to record estimated credit losses on available-for-sale debt securities. Edison International and SCE adopted this guidance on January 1, 2020 using the prospective adoption approach to available-for-sale debt securities and the modified retrospective approach to all other financial assets. Edison International and SCE hold available-for-sale debt securities in nuclear decommissioning trusts and due to regulatory mechanisms, investment earnings and realized gains and losses have no impact on earnings. Unrealized gains and losses on decommissioning trust funds, including impairments, increase or decrease the trust assets and the related regulatory asset or liability and have no impact on electric utility revenue or decommissioning expense. Upon adoption of this guidance, SCE reviews each fixed income security for impairment on the last day of each month. If the fair value on the last day of the month is less than the amortized cost for that security, SCE impairs the disclosed amortized cost. See Note 10 for further information. The adoption of this guidance did not have a material impact on Edison International's and SCE's other financial assets including receivables. In January 2017, the FASB issued an accounting standards update to simplify the accounting for goodwill impairment by changing the procedural steps to apply the goodwill impairment test. Edison International adopted this guidance on January 1, 2020 and any goodwill impairment will be measured as the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. At March 31, 2020, Edison International has $34 million of goodwill related to its Edison Energy reporting unit. Adoption of this guidance did not have an effect on Edison International's financial position or results of operating. In August 2018, the FASB issued an accounting standards update which aligns the requirement for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs incurred to develop or obtain internal use software. The guidance also clarified presentation requirements for reporting implementation costs in the financial statements. Edison International and SCE adopted the standard on January 1, 2020 using the prospective adoption approach. The adoption of this guidance did not have a material impact on Edison International's and SCE's financial position or result of operations. Accounting Guidance Not Yet Adopted In August 2018, the FASB issued an accounting standards update to remove, modify and add certain disclosure requirements related to employer-sponsored defined benefit pension or other postretirement plans. The guidance is effective January 1, 2021 with early adoption permitted. Edison International and SCE are currently evaluating the impact of the guidance and do not expect the adoption of this standard will materially affect disclosures. In March 2020, the FASB issued an accounting standards update to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference London Inter-Bank Offered Rate or another reference rate expected to be discontinued because of reference rate reform. The guidance may be adopted as of March 12, 2020 through December 31, 2022, and if elected, will apply to contract modifications made before December 31, 2022. SCE does not use hedge accounting for derivative transactions. Edison International and SCE are currently evaluating the remaining impact of the guidance.

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- Definition The entire disclosure for all significant accounting policies of the reporting entity. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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