v3.26.1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical)
$ in Thousands
 12 Months Ended
Dec. 31, 2023
USD ($)
Proceeds from water sales $ 1,324 [1]
Profit from water sales 490 [1]
Proceeds from derivative instrument 3,715 [2]
Water  
Proceeds from water sales 1,320
Profit from water sales $ 500
[1] In determining the classification of cash inflows and outflows related to water asset activity, the Company’s practices are supported by ASC 230-10-45-22, which provides that “Certain cash receipts and payments have aspects of more than one class of cash flows…. If so, the appropriate classification shall depend on the activity that is likely to be the predominant source of cash flows for the item.” Also, at the 2006 American Institution of Certified Public Accountants Conference on Current SEC and PCAOB Developments, the SEC staff discussed that an entity should be consistent in how it classifies cash outflows and inflows related to an asset’s purchase and sale and noted that when cash flow classification is unclear, registrants must use judgment and analysis that considers the nature of the activity and the predominant source of cash flow for these items.
Given the nature of our water assets and the aforementioned authoritative guidance, the Company estimates the appropriate classification of water assets purchased based on the timing of the sale of the water. Water purchased in prior periods that was classified as investing was sold for $1.32 million in 2023. The profit of $0.5 million in 2023 related to the water purchased in prior periods is being deducted from operating activities for the respective period. The Company has and will continue to apply this methodology to water asset transactions that meet this fact pattern.
[2]
The Company had an interest rate swap agreement with Bank of America, N.A. to reduce its exposure to fluctuations in the floating interest rate tied to SOFR under the term note. The hedging relationship qualified as an effective cash flow hedge and was recorded at fair value. On October 23, 2023, the Company terminated the interest rate swap, and received a $3,715,000 cash termination fee from Bank of America, N.A.