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Associated Electric Cooperative, Inc.

Notes to Consolidated Financial Statements
December 31, 2022 and 2021
(In Thousands of Dollars)

Note 1: Summary of Significant Accounting Policies

Associated Electric Cooperative, Inc. (Associated) is an electric generation and transmission
cooperative that provides wholesale service to six members, all of which are generation and
transmission cooperatives. Each of the members in turn provides wholesale electric power to their
member distribution cooperatives located in Missouri, Iowa, and Oklahoma.

Associated maintains its accounting records in accordance with the U.S. Department of Agriculture
Rural Utilities Services (RUS) Uniform System of Accounts. The accompanying consolidated
financial statements and the related notes have been prepared on the basis of U.S. generally
accepted accounting principles (GAAP).

Principles of Consolidation

Associated’s wholly owned subsidiaries include AECI Land, LLC (Land), AECI Land 2, LLC
(Land 2) and St. Jude Industrial Park Services, Inc. (SJIPS). Land holds property not used for
utility purposes. Land 2 owns the water and wastewater treatment facilities that serve the St. Jude
Industrial Park in New Madrid, Missouri. SJIPS provides contracted services for management of
the St. Jude Industrial Park. For purposes of these consolidated financial statements, the activity of
all of these entities is consolidated and all intercompany balances have been eliminated.

Utility Plant, Property, and Equipment

Utility plant, property and equipment are stated at cost. Generally, ordinary utility plant asset
retirements and disposals are charged against accumulated depreciation with no gain or loss
recognized. Gains and losses are recorded for retirements of general plant assets and entire asset
groups. Maintenance and repairs are charged to expense as incurred.

The cost of utility plant is generally depreciated on a straight-line basis over the estimated
economic useful lives:
Composite
Estimated Depreciation
Useful Life Rate

Generation plant 32–33 years 3.00%–3.10%
Transmission plant 36 years 3.00%
General plant 3–42 years 2.40%–33.33%

Upon indication of possible impairment, Associated evaluates the recoverability of long-lived
assets by comparing the carrying amount of the relevant asset group against the related estimated
undiscounted future cash flows expected over the remaining useful life of the asset group. When
an evaluation indicates the future undiscounted cash flows are not sufficient to recover the carrying
value of the asset group, the carrying value of the asset group is reduced to its estimated fair value.
No impairment was recognized in 2022 or 2021.

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