Pt. 1767 7 CFR Ch. XVII (1–1–99 Edition) · Rural Utilities Service, USDA §1767.11 and demonstration costs should be rea-sonably related to the existing or fu-ture utility business,

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7 CFR Ch. XVII (1–1–99 Edition)Pt. 1767

PART 1767—ACCOUNTING RE-QUIREMENTS FOR RUS ELECTRICBORROWERS

Subpart A—General [Reserved]

Sec.1767.1—1767.9 [Reserved]

Subpart B—Uniform System of Accounts

1767.10 Definitions.1767.11 Purpose.1767.12 Accounting system requirements.1767.13 Departures from the prescribed RUS

Uniform System of Accounts.1767.14 Interpretations of the RUS Uniform

System of Accounts.1767.15 General instructions.1767.16 Electric plant instructions.1767.17 Operating expense instructions.1767.18 Assets and other debits.1767.19 Liabilities and other credits.1767.20 Plant accounts.1767.21 Operating income.1767.22 Other income and deductions.1767.23 Interest charges.1767.24 Extraordinary items.1767.25 Retained earnings.1767.26 Operating revenue.1767.27 Operation and maintenance ex-

penses.1767.28 Customer accounts expenses.1767.29 Customer service and informational

expenses.1767.30 Sales expenses.1767.31 Administrative and general ex-

penses.1767.32—1767.40 [Reserved]1767.41 Accounting methods and procedures

required of all RUS borrowers.1767.42—1767.45 [Reserved]

Subpart C—Depreciation Rates andProcedures [Reserved]

1767.46—1767.65 [Reserved]

Subpart D—Preservation of Records[Reserved]

1767.66—1767.85 [Reserved]

AUTHORITY: 7 U.S.C. 901 et seq., 1921 et seq.,6941 et seq.

SOURCE: 58 FR 59825, Nov. 10, 1993, unlessotherwise noted.

Subpart A—General [Reserved]

§§ 1767.1—1767.9 [Reserved]

Subpart B—Uniform System ofAccounts

§ 1767.10 Definitions.As used in this part:Accounting borrower is an RUS bor-

rower.Accounts are the accounts prescribed

in this system of accounts.Actually issued as applied to securi-

ties issued or assumed by the utility,are those which have been sold to bonafide purchasers for a valuable consider-ation, those issued as dividends onstock, and those which have beenissued in accordance with contractualrequirements direct to trustees of sink-ing funds.

Actually outstanding as applied to se-curities issued or assumed by the util-ity, are those which have been actuallyissued and are neither retired nor heldby or for the utility; provided, how-ever, that securities held by trusteesshall be considered as actually out-standing.

Amortization is the gradual extin-guishment of an amount in an accountby distributing such amount over afixed period, over the life of the assetor liability to which it applies, or overthe period during which it is antici-pated the benefit will be realized.

Associated (affiliated) companies arecompanies or persons that directly, orindirectly through one or more inter-mediaries, control, or are controlledby, or under common control with, theaccounting company.

Book Cost means the amount atwhich property is recorded in these ac-counts without deduction of relatedprovisions for accrued depreciation,amortization, or for other purposes.

Capital lease is a lease of propertyused in utility or nonutility oper-ations, which meets one or more of thecriteria stated in § 1767.15 (s).

CFC is the National Rural UtilitiesCooperative Finance Corporation.

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Rural Utilities Service, USDA § 1767.10

Continuing Property Records are com-pany plant records for retirement unitsand mass property that provide, as ei-ther a single record, or in separaterecords readily obtainable by ref-erences made in a single record, thefollowing information:

(1) For each retirement unit:(i) The name or description of the

unit, or both;(ii) The location of the unit;(iii) The date the unit was placed in

service;(iv) The cost of the unit as set forth

in § 1767.16 (b) and (c); and(v) The plant control account to

which the cost of the unit is charged.(2) For each category of mass prop-

erty:(i) A general description of the prop-

erty and quantity;(ii) The quantity placed in service by

vintage year;(iii) The average cost as set forth in

§ 1767.16 (b) and (c); and(iv) The plant control account to

which the costs are charged.Control (including the terms control-

ling, controlled by, and under commoncontrol with) is the possession, directlyor indirectly, of the power to direct orcause the direction of the managementand policies of a company, whethersuch power is exercised through one ormore intermediary companies, oralone, or in conjunction with, or pursu-ant to an agreement, and whether suchpower is established through a major-ity or minority ownership or throughvoting of securities; common directors,officers, or stockholders; voting trusts;holding trusts; associated companies;contracts; or any other direct or indi-rect means.

Cost is the amount of money actuallypaid for property or services. When theconsideration given is other than cashin a purchase and sale transaction, asdistinguished from a transaction in-volving the issuance of common stockin a merger or a pooling of interest, thevalue of such consideration shall be de-termined on a cash basis.

Cost of removal is the cost of demol-ishing, dismantling, tearing down orotherwise removing electric plant, in-cluding the cost of transportation andhandling incidental thereto.

Customer is a consumer or patron.

Debt expense includes all expenses in-curred in connection with the issuanceand initial sale of evidence of debt,such as fees for drafting mortgages andtrust deeds; fees and taxes for issuingor recording evidences of debt; costs ofengraving and printing bonds and cer-tificates of indebtedness; fees paid totrustees; specific costs of obtaininggovernmental authority; fees for legalservices; fees and commissions paid un-derwriters, brokers, and salesmen formarketing such evidences of debt; feesand expenses of listing on exchanges;and other like costs.

Depreciation, as applied to depre-ciable electric plant, is the loss in serv-ice value, not restored by currentmaintenance, incurred in connectionwith the consumption or prospectiveretirement of electric plant in thecourse of service from causes which areknown to be in current operation andagainst which the utility is not pro-tected by insurance. Among the causesto be given consideration are wear andtear, decay, action of the elements, in-adequacy, obsolescence, changes in theart, changes in demand and require-ments of public authorities.

Discount, as applied to the securitiesissued or assumed by the utility, is theexcess of the par (stated value of no-par stocks) or face value of the securi-ties plus interest or dividends accruedat the date of the sale over the cashvalue of the consideration receivedfrom their sale.

FASB is the Financial AccountingStandards Board.

G&T is a generation and transmissioncooperative.

Investment advances are advances,represented by notes or by book ac-counts only, with respect to which it ismutually agreed or intended betweenthe creditor and debtor that they shallbe settled by the issuance of securitiesor shall not be subject to current set-tlement.

Minor items of property are the associ-ated parts or items of which retirementunits are composed.

Net salvage value is the salvage valueof property retired less the cost of re-moval.

Nominally issued, as applied to securi-ties issued or assumed by the utility,


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7 CFR Ch. XVII (1–1–99 Edition)§ 1767.10

are those which have been signed, cer-tified, or otherwise executed, andplaced with the proper officer for saleand delivery, or pledged, or otherwiseplaced in some special funds of theutility, but which have not been sold,or issued direct to trustees of sinkingfunds in accordance with contractualrequirements.

Nominally outstanding, as applied tosecurities issued or assumed by theutility, are those which, after being ac-tually issued, have been reacquired byor for the utility under circumstanceswhich require them to be considered asheld alive and not retired, provided,however, that securities held by trust-ees shall be considered as actually out-standing.

NRECA is the National Rural ElectricCooperative Association.

Operating lease is a lease of propertyused in utility or nonutility oper-ations, which does not meet any of thecriteria stated in § 1767.15 (s).

Original cost, as applied to electricplant, is the cost of such property tothe person first devoting it to publicservice.

Person is an individual, a corpora-tion, a partnership, an association, ajoint stock company, a business trust,or any organized group of persons,whether incorporated or not, or any re-ceiver or trustee.

Premium, as applied to securitiesissued or assumed by the utility, is theexcess of the cash value of the consid-eration received from their sale overthe sum of their par (stated value ofno-par stocks) or face value and inter-est or dividends accrued at the date ofsale.

Project is a complete unit of improve-ment or development, consisting of apower house, all water conduits, alldams and appurtenant works andstructures (including navigation struc-tures) which are a part of said unit,and all storage, diverting, or forebayreservoirs directly connected there-with, the primary line or lines trans-mitting power therefrom to the pointof junction with the distribution sys-tem or with the interconnected pri-mary transmission system, all mis-cellaneous structures used and usefulin connection with said unit or anypart thereof, and all water rights,

rights of way, ditches, dams, res-ervoirs, lands, or interest in lands theuse and occupancy of which are nec-essary or appropriate in the mainte-nance and operation of such unit.

Property retired, as applied to electricplant, is property which has been re-moved, sold, abandoned, destroyed, orwhich for any cause has been with-drawn from service.

REA means the Rural ElectrificationAdministration formerly an agency ofthe United States Department of Agri-culture and predecessor agency to RUSwith respect to administering certainelectric and telephone loan programs.

Regulatory Assets and Liabilities areassets and liabilities that result fromrate actions of regulatory agencies.Regulatory assets and liabilities arisefrom specific revenues, expenses, gains,or losses that would have been includedin net income determinations in oneperiod under the general requirementsof the Uniform System of Accounts butfor it being probable:

(1) That such items will be includedin a different period(s) for purposes ofdeveloping the rates the utility is au-thorized to charge for its utility serv-ices; or

(2) In the case of regulatory liabil-ities, that refunds to customers, notprovided for in the other accounts, willbe required.

Replacing (including replacement) whennot otherwise indicated in the context,is the construction or installation ofelectric plant in place of property re-tired, together with the removal of theproperty retired.

Research, Development, and Dem-onstration (RD&D) includes all expendi-tures incurred by borrowers either di-rectly or through another person or or-ganization (such as a research insti-tute, industry association, foundation,university, engineering company orsimilar contractor) in pursuing re-search, development, and demonstra-tion activities including experiment,design, installation, construction, oroperation. This definition includes ex-penditures for the implementation ordevelopment of new and/or existingconcepts until technically feasible andcommercially feasible operations areverified. Such research, development,


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and demonstration costs should be rea-sonably related to the existing or fu-ture utility business, broadly defined,of the borrower or in the environmentin which it operates or expects to oper-ate. The term includes, but is not lim-ited to, all such costs incidental to thedesign, development or implementa-tion of an experimental facility, aplant process, a product, a formula, aninvention, a system or similar items,and the improvement of already exist-ing items of a like nature; amounts ex-pended in connection with the proposeddevelopment and/or proposed deliveryof alternate sources of electricity; andthe costs of obtaining its own patent,such as attorney’s fees expended inmaking and perfecting a patent appli-cation. The term includes preliminaryinvestigations and detailed planning ofspecific projects for securing for cus-tomers non-conventional electricpower supplies that rely on technologythat has not been verified previously tobe feasible. The term does not includeexpenditures for efficiency surveys;studies of management, managementtechniques, and organization; or con-sumer surveys, advertising, pro-motions, or items of a like nature.

Retirement units are those items ofelectric plant which, when retired withor without replacement, are accountedfor by crediting the book cost thereofto the electric plant accounts in whichincluded.

RUS means the Rural Utilities Serv-ice, an agency of the United States De-partment of Agriculture establishedpursuant to Section 232 of the FederalCrop Insurance Reform and Depart-ment of Agriculture ReorganizationAct of 1994 (Pub. L. 103–354, 108 Stat.3178), successor to REA with respect toadministering certain electric and tele-phone programs. See 7 CFR 1700.1.

RUS Form 7 is the August 1988 revi-sion (or the revision of any other datewhich may be specified) of such RUSForm 7, Financial and Statistical Re-port, or any later revision which shallhave been at the time prescribed foruse by RUS.

RUS Form 12 is the November 1979 re-vision (or the revision of any otherdate which may be specified) of suchRUS Form 12, Operating Report—Fi-nancial, or any later revision which

shall have been at the time prescribedfor use by RUS.

RUS USoA is the USoA prescribed inthis subpart.

Salvage value is the amount receivedfor property retired, less any expensesincurred in connection with the sale orin preparing the property for sale; or, ifretained, the amount at which the ma-terial recovered is chargeable to mate-rials and supplies, or other appropriateaccounts.

Service life is the time between thedate electric plant is includible in elec-tric plant in service, or electric plantleased to others, and the date of its re-tirement. If depreciation is accountedfor on a production basis rather thanon a time basis, service life should bemeasured in terms of the appropriateunit of production.

Service value is the difference betweenoriginal cost and net salvage value ofelectric plant.

State is a State admitted to theUnion, the District of Columbia, andany organized Territory of the UnitedStates.

Subsidiary company is a companywhich is controlled by the utilitythrough ownership of voting stock.(See the definition of control in§ 1767.10.) A corporate joint venture inwhich a corporation is owned by asmall group of businesses as a separateand specific business or project for themutual benefit of the members of thegroup is a subsidiary company for thepurposes of this system of accounts.

Utility is an RUS borrower.Work order is an order authorizing

the construction of utility plant. Itserves as the basis for the accounts orsubaccounts in which costs are re-corded.

[58 FR 59825, Nov. 10, 1993, as amended at 59FR 66440, Dec. 27, 1994]

§ 1767.11 Purpose.

(a) The standard form of RUS loandocuments for electric borrowers re-quires that the borrower keep books,records, and accounts in which full andtrue entries will be made of all of thedealings, business and affairs of theborrower in accordance with the meth-ods and principles of accounting of thispart.


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(b) This subpart implements theseprovisions of the RUS loan documentsby prescribing the RUS USoA for elec-tric borrowers and by providing ac-counting methodologies and procedureswhich are applicable to particular situ-ations.

§ 1767.12 Accounting system require-ments.

(a) Each RUS electric borrower mustmaintain and keep its books of ac-counts and all other books and recordsthat support the entries in such booksof accounts in accordance with§§ 1767.18–1767.31.

(b) Each RUS electric borrower shallmaintain and keep its books of ac-counts and all other books and recordswhich support the entries in suchbooks of accounts in accordance with§ 1767.41, Accounting Methods and Pro-cedures Required of All RUS Bor-rowers, herein, which prescribes ac-counting principles to be applied tospecific factual circumstances.

§ 1767.13 Departures from the pre-scribed RUS Uniform System of Ac-counts.

(a) No departures are to be made tothe prescribed RUS USoA without theprior written approval of RUS. RUSgrants a departure to any borrowerelecting to delay implementation ofthe functional (activity-based) ac-counting requirements of this partthrough December 31, 1997. Requestsfor departures from the RUS USoAshall be addressed, in writing, to theDirector, Program Accounting ServicesDivision (PASD).

(b) RUS borrowers subject to the ju-risdiction of a state regulatory author-ity with jurisdiction over rates and/oraccounting for electric utilities willnot:

(1) Request approval of such author-ity to use accounting methodologiesand principles that depart from theprovisions herein; or

(2) File with such authority, any doc-uments or information, including with-out limitation, any filings associatedwith the borrower’s rates, based uponaccounting methods and principles in-consistent with the provisions of thispart.

(c) If any state regulatory authoritywith jurisdiction over an RUS borrowerprescribes accounting methods or prin-ciples for the borrower that are incon-sistent with the provisions of this part,the borrower must immediately notifythe Director, BAD, and provide suchdocuments, information, and reports asRUS may request to evaluate the im-pact that such accounting methods orprinciples may have on the interests ofRUS.

(1) If RUS determines that the ac-counting methods and principles do notadversely impact RUS interests, RUSwill permit the borrower to use the ac-counting methods and principles asprescribed by the state regulatory au-thority to comply with the provisionsof the RUS loan documents.

(2) If RUS determines that the ac-counting methods and principles mayadversely impact RUS’s interests, RUSmay require that, for the purposes ofcomplying with provisions of RUS loandocuments, including, without limita-tion, those provisions relating to finan-cial coverage standards (e.g. ‘‘TIER’’),the borrower continue to maintainbooks, records, and accounts in accord-ance with this subpart.

(i) RUS may, however, approve re-quests by the borrower to maintainsuch additional books, records, and ac-counts as necessary to comply with therequirements of the state regulatoryauthority.

(ii) Such approval will not waive,modify or amend the requirements ofthe RUS loan documents or of this sub-part.

(d) RUS borrowers will not imple-ment the provisions of Statement ofFinancial Accounting Standards(SFAS) No. 71, Accounting for the Ef-fects of Certain Types of Regulation,SFAS No. 90, Regulated Enterprises—Accounting for Abandonments and Dis-allowances of Plant Costs, SFAS No.92, Regulated Enterprises—Accountingfor Phase-in Plans, without the priorwritten approval of RUS except as pro-vided for in paragraphs (d)(1) through(d)(5) of this section. Requests for ap-proval shall be addressed, in writing, tothe Director, PASD. The specific defer-rals set forth in paragraphs (d)(1)through (d)(5) of this section may beimplemented without the prior written


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approval of RUS provided that the de-ferrals comply with Statement No. 71and that the RUS borrowers imple-menting such deferrals continue tomeet the requirements set forth inStatement No. 71 for doing so:

(1) The deferral and amortization ofprior service pension costs (See§ 1767.41, Interpretation No. 606, Pen-sion Costs), remapping expenses (See§ 1767.41, Interpretation No. 613, Map-ping Costs), and preliminary surveyand investigation charges (See § 1767.17,Interpretation No. 111, EngineeringContracts for System Planning);

(2) The deferral of any current periodexpense or expenses, on a cumulativebasis for the fiscal year, only if a bor-rower would have met each of its finan-cial tests or coverage ratios that it hascovenanted with RUS to meet for thatfiscal year, had the deferral not beenmade;

(3) The deferral of any cost that willbe fully amortized within the next 12succeeding months;

(4) The accelerated amortization ofany previously deferred expense; and

(5) The deferral of revenues coinci-dent with a moratorium imposed bythe National Rural Electric Coopera-tive Association on its Retirement andSecurity Program, provided, however,that the deferral is for the sole purposeof offsetting future pension costs.

(e) RUS will consider approval of spe-cific departures from this part uponsubmission of:

(1) A detailed description of the pro-posed departure;

(2) The specific accounting journalentries that will be used including theaccount number and title, and the dol-lar amounts where appropriate;

(3) The total dollar amount of the de-parture and the impact on marginsduring the time period of the depar-ture; and

(4) Any additional information RUSmay deem necessary to adequatelyevaluate the borrower’s request.

(f) RUS will, within 90 days of finalreceipt of this information, render adecision on the borrower’s request for adeparture from the prescribed RUSUSoA.

(1) If, due to extenuating cir-cumstances, RUS is unable to reach adecision within the required time pe-

riod, RUS will notify the borrower ofthe delay within this same 90-day pe-riod, and provide a projected decisiondate.

(2) The requested departure from theprescribed RUS USoA must not be im-plemented until final approval isgranted by RUS.

[58 FR 59825, Nov. 10, 1993, as amended at 60FR 55429, Nov. 1, 1995; 62 FR 42289, Aug. 6,1997]

§ 1767.14 Interpretations of the RUSUniform System of Accounts.

To maintain uniformity in account-ing, borrowers must submit questionsconcerning interpretations of the RUSUSoA, in writing, to the Director,BAD, for consideration and decision.

(Approved by the Office of Management andBudget under control number 0572–0002)

[60 FR 55429, Nov. 1, 1995]

§ 1767.15 General instructions.(a) Records. (1) Each utility shall

keep its books of account, and all otherbooks, records, and memoranda whichsupport the entries in such books of ac-count so as to be able to furnish read-ily full information as to any item in-cluded in any account.

(2) Each entry shall be supported bysuch detailed information as will per-mit ready identification, analysis, andverification of all facts relevant there-to.

(3) The books and records referred toherein include not only accountingrecords in a limited technical sense,but all other records, such as minutebooks, stock books, reports, cor-respondence, memoranda, etc., whichmay be useful in developing the historyof or facts regarding any transaction.

(4) No utility shall destroy any suchbooks or records unless the destructionthereof is permitted by the rules andregulations of RUS in 7 CFR chapterXVII.

(5) In addition to the prescribed ac-counts, clearing accounts, temporaryor experimental accounts, and subdivi-sions of any accounts, may be kept,provided the integrity of the prescribedaccounts is not impaired.

(6) All amounts included in the ac-counts prescribed herein for electricplant and operating expenses shall be


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just and reasonable and any paymentsor accruals by the utility in excess ofjust and reasonable charges shall be in-cluded in Account 426.5, Other Deduc-tions.

(7) The arrangement or sequence ofthe accounts prescribed herein shallnot be controlling as to the arrange-ment or sequence in report formswhich may be prescribed by RUS.

(b) Numbering system. (1) The accountnumbering plan used herein consists ofa system of three-digit whole numbersas follows:100–199 Assets and other debits.200–299 Liabilities and other credits.300–399 Plant accounts.400–432, 434–435 Income accounts.433, 436–439 Retained earnings accounts.440–459 Revenue accounts.500–599 Production, transmission, and dis-

tribution expenses.900–949 Customer accounts, customer serv-

ice and informational, sales, and generaland administrative expenses.

(2) In certain instances, numbershave been skipped in order to allow forpossible later expansion or to permitbetter coordination with the num-bering system for other utility depart-ments.

(3) The numbers prefixed to accounttitles are to be considered as parts ofthe titles.

(i) Each utility, however, may adopt,for its own purposes, a different systemof account numbers provided that thenumbers herein prescribed shall appearin the descriptive headings of the ledg-er accounts and in the various sourcesof original entry.

(ii) If a utility uses a different groupof account numbers and it is not prac-ticable to show the prescribed accountnumbers in the various sources oforiginal entry, such reference to theprescribed account numbers may beomitted from the various sources oforiginal entry.

(iii) Each utility using different ac-count numbers for its own purposesshall keep readily available, a list ofsuch account numbers which it usesand a reconciliation of such accountnumbers with the account numbersprovided herein.

(iv) The utility’s records shall be sokept as to permit ready analysis byprescribed accounts (by direct ref-erence to sources of original entry to

the extent practicable) and to permitpreparation of financial and operatingstatements directly from such recordsat the end of each accounting periodaccording to the prescribed accounts.

(c) Accounting period. (1) Each utilityshall keep its books on a monthly basisso that for each month, all trans-actions applicable thereto, as nearly asmay be ascertained, shall be entered inthe books of the utility.

(2) Amounts applicable or assignableto specific utility departments shall beso segregated monthly.

(3) Each utility shall close its booksat the end of each fiscal year unlessotherwise authorized by RUS.

(d) Submission of questions. To main-tain uniformity of accounting, utilitiesshall submit questions of doubtful in-terpretation to RUS for considerationand decision.

(e) Item lists. (1) Lists of ‘‘items’’ ap-pearing in the texts of the accounts orelsewhere herein are for the purpose ofmore clearly indicating the applicationof the prescribed accounting.

(2) The lists are intended to be rep-resentative, but not exhaustive.

(3) The appearance of an item in alist warrants the inclusion of the itemin the account mentioned only whenthe text of the account also indicatesinclusion inasmuch as the same itemfrequently appears in more than onelist.

(4) The proper entry in each instancemust be determined by the texts of theaccounts.

(f) Extraordinary items. (1) Net incomeshall reflect all items of profit and lossduring the period with the exception ofprior period adjustments as describedin § 1767.15 (g) and long-term debt as de-scribed in § 1767.15 (q).

(2) Those items related to the effectsof events and transactions which haveoccurred during the current period andwhich are not typical or customarybusiness activities of the companyshall be considered extraordinaryitems.

(3) They will be events and trans-actions of significant effect whichwould not be expected to recur fre-quently and which would not be consid-ered as recurring factors in any evalua-tion of the ordinary operating proc-esses of business.


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(i) In determining significance, itemsof a similar nature should be consid-ered in the aggregate.

(ii) Dissimilar items should be con-sidered individually; however, if theyare few in number, they may be consid-ered in the aggregate.

(iii) To be considered as extraor-dinary under the above guidelines, anitem should be more than approxi-mately 5 percent of income, computedbefore extraordinary items.

(iv) RUS approval must be obtainedto treat an item of less than 5 percent,as extraordinary. (See Accounts 434and 435.)

(g) Prior period items. (1) Items of prof-it and loss related to the followingshall be accounted for as prior periodadjustments and excluded from the de-termination of net income for the cur-rent year:

(i) Correction of an error in the fi-nancial statements of a prior year

(ii) Adjustments that result from re-alization of income tax benefits ofpreacquisition operating losscarryforwards of purchased subsidi-aries.

(2) All other items of profit and lossrecognized during the year shall be in-cluded in the determination of net in-come for that year.

(h) Unaudited items. (1) Whenever a fi-nancial statement is required by RUS,if it is known that a transaction hasoccurred which affects the accountsbut the amount involved in the trans-action and its effect upon the accountscannot be determined with absolute ac-curacy, the amount shall be estimatedand such estimated amount included inthe proper accounts.

(2) The utility is not required to an-ticipate minor items which would notappreciably affect the accounts.

(i) Distribution of pay and expenses ofemployees. Charges to electric plant, op-erating expense, and other accounts forservices and expenses of employees en-gaged in activities chargeable to var-ious accounts, such as construction,maintenance, and operations, shall bebased upon the actual time engaged inthe respective classes of work, or incase that method is impracticable,upon the basis of a study of the timeactually engaged during a representa-tive period.

(j) Payroll distribution. (1) Underlyingaccounting data shall be maintained sothat the distribution of the cost oflabor charged direct to the various ac-counts will be readily available.

(2) Such underlying data shall permita reasonably accurate distribution tobe made of the cost of labor chargedinitially to clearing accounts so thatthe total labor cost may be classifiedamong construction, cost of removal,electric operating functions (steamgeneration, nuclear generation, hy-draulic generation, transmission, dis-tribution, etc.) and nonutility oper-ations.

(k) Accounting on an accrual basis. (1)The utility is required to keep its ac-counts on the accrual basis.

(i) This requires the inclusion, in itsaccounts, of all known transactions ofappreciable amount which affect theaccounts.

(ii) If bills covering such transactionshave not been received or rendered, theamounts shall be estimated and appro-priate adjustments made when the billsare received.

(2) When payments are made in ad-vance for items such as insurance,rents, taxes, or interest, the amountapplicable to future periods shall becharged to Account 165, Prepayments,and spread over the periods to whichapplicable, by credits to Account 165,and charges to the accounts appro-priate for the expenditure.

(l) Records for each plant. (1) Separaterecords shall be maintained by electricplant accounts of the book cost of eachplant owned, including additions by theutility to plant leased from others, andof the cost of operating and maintain-ing each plant owned or operated.

(2) The term ‘‘plant’’ as used hereinincludes each generating station andeach transmission line or appropriategroup of transmission lines.

(m) Accounting for other departments.(1) If the utility also operates otherutility departments, such as gas orwater, it shall keep such accounts forthe other departments as may be pre-scribed by proper authority and in theabsence of prescribed accounts, it shallkeep such accounts as are proper ornecessary to reflect the results of oper-ating each such department.


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(2) It is not intended that proprietaryand similar accounts which apply tothe utility as a whole shall be depart-mentalized.

(n) Transactions with associated compa-nies. (1) Each utility shall keep its ac-counts and records so as to be able tofurnish accurately and expeditiouslystatements of all transactions with as-sociated companies.

(2) The statements may be requiredto show the general nature of thetransactions, the amounts involvedtherein and the amounts included ineach account prescribed herein with re-spect to such transactions. Trans-actions with associated companiesshall be recorded in the appropriate ac-counts for transactions of the same na-ture. Nothing herein contained, how-ever, shall be construed as restrainingthe utility from subdividing accountsfor the purpose of recording separatelytransactions with associated compa-nies.

(o) Contingent assets and liabilities. (1)Contingent assets represent a possiblesource of value to the utility contin-gent upon the fulfillment of conditionsregarded as uncertain.

(2) Contingent liabilities includeitems which may, under certain condi-tions, become obligations of the utilitybut which are neither direct nor as-sumed liabilities at the date of thebalance sheet. The utility shall be pre-pared to give a complete statement ofsignificant contingent assets and li-abilities (including cumulative divi-dends on preference stock) in its au-dited financial statements; its RUSForm 7, Financial and Statistical Re-port, or its RUS Form 12, OperatingReport—Financial; and at such othertimes as may be requested by RUS.

(p) Separate accounts or records foreach licensed project. The accounts orrecords of each borrower shall be sokept as to show for each project (in-cluding pumped storage) under license:

(1) The actual legitimate originalcost of the project, including the origi-nal cost of the original project, theoriginal cost of additions thereto andbetterments thereof, and credits forproperty retired from service, as deter-mined under RUS’s regulations in 7CFR chapter XVII;

(2) The charges for operation andmaintenance of the project property di-rectly assignable to the project;

(3) The credits and debits to the de-preciation and amortization accounts,and the balances in such accounts; and

(4) The credits and debits to the oper-ating revenue, income, and retainedearnings accounts that can be identi-fied with and directly assigned to theproject.

NOTE: The purpose of this instruction is toinsure that accounts or records are currentlymaintained by each borrower from which re-ports may be made to RUS for use in deter-mining the net investment in each licensedproject. The instruction covers only thedebit and credit items appearing in the bor-rower’s accounts which may be identifiedwith and assigned directly to any project. Inthe determination of the net investment, al-locations of items affecting the net invest-ment may be required where direct assign-ment is not practicable.

(q) Long-term debt: premium, discountand expense, and gain or loss on reacqui-sition—(1) Premium, discount and ex-pense. (i) A separate premium, discountand expense account shall be main-tained for each class and series of long-term debt (including receivers’ certifi-cates) issued or assumed by the utility.

(ii) The premium will be recorded inAccount 225, Unamortized Premium onLong-Term Debt, the discount will berecorded in Account 226, UnamortizedDiscount on Long-Term Debt—Debit,and the expense of issuance shall be re-corded in Account 181, UnamortizedDebt Expense.

(iii) The premium, discount and ex-pense shall be amortized over the lifeof the respective issues under a planwhich will distribute the amounts equi-tably over the life of the securities.

(A) The amortization shall becharged or credited on a monthly basiswith the amounts relating to discountand expense charged to Account 428,Amortization of Debt Discount and Ex-pense.

(B) The amounts relating to premiumshall be credited to Account 429, Amor-tization of Premium on Debt—Credit.

(2) Reacquisition, without refunding. (i)When long-term debt is reacquired orredeemed without being converted intoanother form of long-term debt andwhen the transaction is not in connec-tion with a refunding operation (pri-marily redemptions for sinking fund


725


purposes), the difference between theamount paid upon reacquisition andthe face value; plus any unamortizedpremium less any related unamortizeddebt expense and reacquisition costs;or less any unamortized discount, re-lated debt expense and reacquisitioncosts applicable to the debt redeemed,retired and cancelled, shall be includedin Account 189, Unamortized Loss onReacquired Debt, or Account 257,Unamortized Gain on Reacquired Debt,as appropriate.

(ii) The utility shall amortize the re-corded amounts equally on a monthlybasis over the remaining life of the re-spective security issues (old originaldebt).

(iii) The amount so amortized shallbe charged to Account 428.1, Amortiza-tion of Loss on Reacquired Debt, orcredited to Account 429.1, Amortizationof Gain on Reacquired Debt—Credit, asappropriate.

(3) Reacquisition, with refunding. (i)When the redemption of one issue orseries of bonds or other long-term obli-gations is financed by another issue orseries before the maturity date of thefirst issue, the difference between theamount paid upon refunding and theface value; plus any unamortized pre-mium less related debt expense or lessany unamortized discount and relateddebt expense, applicable to the debt re-funded, shall be included in Account189, Unamortized Loss on ReacquiredDebt, or Account 257, UnamortizedGain on Reacquired Debt, as appro-priate.

(ii) The utility may elect to accountfor such amounts as follows:

(A) Write them off immediately whenthe amounts are insignificant;

(B) Amortize them by equal monthlyamounts over the remainder of theoriginal life of the issue retired; or

(C) Amortize them by equal monthlyamounts over the life of the new issue.

(iii) Once an election is made, it shallbe applied on a consistent basis.

(iv) The amounts in paragraphs(q)(3)(ii)(A), (B), or (C) of this sectionshall be charged to Account 428.1, Am-ortization of Loss on Reacquired Debt,or credited to Account 429.1, Amortiza-tion of Gain on Reacquired Debt—Cred-it, as appropriate.

(4) Under methods in paragraphs(q)(3)(ii)(B) and (C) of this section, theincrease or reduction in current in-come taxes resulting from the reacqui-sition should be apportioned over theremainder of the original life of theissued retired or over the life of thenew issue, as appropriate, as directedmore specifically in paragraphs (q)(5)and (6) of this section.

(5) When the utility recognizes theloss in the year of reacquisition as atax deduction, Account 410.1, Provisionfor Deferred Income Taxes, Utility Op-erating Income, shall be debited andAccount 283, Accumulated Deferred In-come Taxes—Other, shall be creditedwith the amount of the related tax ef-fect, such amount to be allocated tothe periods affected in accordance withthe provisions of Account 283.

(6) When the utility chooses to recog-nize the gain in the year of reacquisi-tion as a taxable gain, Account 411.1,Provision for Deferred Income Taxes—Credit, Utility Operating Income, shallbe debited with the amount of the re-lated tax effect, such amount to be al-located to the periods affected in ac-cordance with the provisions of Ac-count 190, Accumulated Deferred In-come Taxes.

(7) When the utility chooses to usethe optional privilege of deferring thetax on the gain attributable to the re-acquisition of debt by reducing the de-preciable basis of utility property fortax purposes, pursuant to Section 108of the Internal Revenue Code (26 U.S.C.108), the related tax effects shall be de-ferred as the income is recognized foraccounting purposes, and the deferredamounts shall be amortized over thelife of the associated property on a vin-tage year basis.

(i) Account 410.1, Provision for De-ferred Income Taxes, Utility OperatingIncome, shall be debited, and Account282, Accumulated Deferred IncomeTaxes—Other Property, shall be cred-ited with an amount equal to the esti-mated income tax effect applicable tothe portion of the income, attributableto reacquired debt, recognized for ac-counting purposes during the period.

(ii) Account 282 shall be debited andAccount 411.1, Provision for DeferredIncome Taxes—Credit, Utility Oper-ating Income, shall be credited with an


726


amount equal to the estimated incometax effects, during the life of the prop-erty, attributable to the reduction inthe depreciable basis for tax purposes.

(8) The tax effects relating to gain orloss shall be allocated as above to util-ity operations except in cases where aportion of the debt reacquired is di-rectly applicable to nonutility oper-ations.

(i) In that event, the related portionof the tax effects shall be allocated tononutility operations.

(ii) Where it can be established thatreacquired debt is generally applicableto both utility and nonutility oper-ations, the tax effects shall be allo-cated between utility and nonutilityoperations based on the ratio of net in-vestment in utility plant to net invest-ment in nonutility plant.

(9) Premium, discount, or expense ondebt shall not be included as an ele-ment in the cost of construction or ac-quisition of property (tangible or in-tangible), except under the provisionsof Account 432, Allowance for BorrowedFunds Used During Construction—Credit.

(10) Alternate method. Where a regu-latory authority or a group of regu-latory authorities having prime ratejurisdiction over the utility specifi-cally disallows the rate principle ofamortizing gains or losses on reacquisi-tion of long-term debt without refund-ing, and does not apply the gain or lossto reduce interest charges in com-puting the allowed rate of return forrate purposes, the following alternatemethod may be used to account forgains or losses relating to reacquisitionof long-term debt, with or without re-funding:

(i) The difference between theamount paid upon reacquisition of anylong-term debt and the face value, ad-justed for unamortized discount, ex-penses or premium, as the case may be,applicable to the debt redeemed shallbe recognized currently in income andrecorded in Account 421, MiscellaneousNonoperating Income, or Account 426.5,Other Deductions.

(ii) When this alternate method of ac-counting is used, the utility shall in-clude a footnote to each financialstatement, prepared for public use, ex-plaining why this method is being used

along with the treatment given forratemaking purposes.

(r) Comprehensive interperiod incometax allocation. (1) Where there are tim-ing differences between the periods inwhich transactions affect taxable in-come and the periods in which theyenter into the determination of pretaxaccounting income, the income tax ef-fects of such transactions are to be rec-ognized in the periods in which the dif-ferences between book accounting in-come and taxable income arise and inthe periods in which the differences re-verse using the deferred tax method.

(2) Comprehensive interperiod tax al-location should be followed whenevertransactions enter into the determina-tion of pretax accounting income forthe period even though some trans-actions may affect the determinationof taxes payable in a different period.

(3) Utilities are not required to uti-lize comprehensive interperiod incometax allocation until the deferred in-come taxes are included as an expensein the rate level by the regulatory au-thority having rate jurisdiction overthe utility.

(4) Where comprehensive interperiodtax allocation accounting is not prac-ticed the utility shall include as a noteto each financial statement, preparedfor public use, a footnote explanationsetting forth the utility’s accountingpolicies with respect to interperiod taxallocation and describing the treat-ment for rate making purposes of thetax timing differences by regulatoryauthorities having rate jurisdiction.

(5) Should the utility be subject tomore than one agency having rate ju-risdiction, its accounts shall appro-priately reflect the ratemaking treat-ment (deferral or flow through) of eachjurisdiction.

(6) Once comprehensive interperiodtax allocation has been initiated eitherin whole or in part it shall be practicedon a consistent basis and shall not bechanged or discontinued without priorRUS approval.

(7) Tax effects deferred currently willbe recorded as deferred debits or de-ferred credits in Accounts 190, Accumu-lated Deferred Income Taxes; 281, Accu-mulated Deferred Income Taxes—Ac-celerated Amortization Property; 282,Accumulated Deferred Income Taxes—


727


Other Property, and 283, AccumulatedDeferred Taxes—Other, as appropriate.

(8) The resulting amounts recorded inthese accounts shall be disposed of asprescribed in this system of accountsor as otherwise authorized by RUS.

(s) Criteria for classifying leases. (1) If,at its inception, a lease meets one ormore of the following criteria, thelease shall be classified as a capitallease:

(i) The lease transfers ownership ofthe property to the lessee by the end ofthe lease term.

(ii) The lease contains a bargain pur-chase option.

(iii) The lease term is equal to 75 per-cent or more of the estimated eco-nomic life of the leased property. How-ever, if the beginning of the lease termfalls within the last 25 percent of thetotal estimated economic life of theleased property, including earlier yearsof use, this criterion shall not be usedfor purposes of classifying the lease.

(iv) The present value at the begin-ning of the lease term of the minimumlease payments, excluding that portionof the payments representing execu-tory costs such as insurance, mainte-nance, and taxes to be paid by the les-sor, including any profit thereon,equals or exceed 90 percent of the ex-cess of the fair value of the leased prop-erty to the lessor at the inception ofthe lease over any related investmenttax credit retained by the lessor andexpected to be realized by lessor.

(A) However, if the beginning of thelease term falls within the last 25 per-cent of the total estimated economiclife of the leased property, includingearlier years of use, this criterion shallnot be used for purposes of classifyingthe lease.

(B) The lessee utility shall computethe present value of the minimumlease payments using its incrementalborrowing rate, unless it is practicablefor the utility to learn the implicitrate computed by the lessor, and theimplicit rate computed by the lessor isless than the lessee’s incremental bor-rowing rate. If both of those conditionsare met, the lessee shall use the im-plicit rate.

(2) If, at any time, the lessee and les-sor agree to change the provisions ofthe lease, other than by renewing the

lease or extending its term, in a man-ner that would have resulted in a dif-ferent classification of the lease underthe criteria in paragraph (s)(1) of thissection had the changed terms been ineffect at the inception of the lease, therevised agreement shall be consideredas a new agreement over its term, andthe criteria in paragraph (s)(1) of thissection shall be applied for purposes ofthe expiration of the existing leaseterm, such as the exercise of a lease re-newal option other than those alreadyincluded in the lease term, shall beconsidered as a new agreement andshall be classified according to theabove provision. Changes in estimates(for example, changes in estimates ofthe economic life or of the residualvalue of the leased property) orchanges in circumstances (for example,default by the lessee) shall not giverise to a new classification of a leasefor accounting purposes.

(t) Accounting for leases. (1) All leasesshall be classified as either capital oroperating leases.

(2) The utility shall record a capitallease as an asset in Account 101.1,Property Under Capital Leases, and Ac-count 120.6, Nuclear Fuel Under CapitalLeases; as appropriate, and an obliga-tion in Account 227, Obligations UnderCapital Leases—Noncurrent, or Ac-count 243, Obligations Under CapitalLeases—Current, at an amount equalto the present value at the beginning ofthe lease term of minimum lease pay-ments during the lease term, excludingthat portion of the payments rep-resenting executory costs such as in-surance, maintenance, and taxes to bepaid by the lessor, together with anyprofit thereon. However, if the amountso determined exceeds the fair value ofthe leased property at the inception ofthe lease, the amount recorded as theasset and obligation shall be the fairvalue.

(3) Rental payments on all leasesshall be charged to rent expense, fuelexpense, construction work in progress,or other appropriate accounts as theybecome payable.

(4) For a capital lease, for each periodduring the lease term, the amounts re-corded for the asset and obligationshall be reduced by an amount equal tothe portion of each lease payment that


728


would have been allocated to the reduc-tion of the obligation, if the paymenthad been treated as a payment on aninstallment obligation (liability) andallocated between interest expense anda reduction of the obligation so as toproduce a constant periodic rate of in-terest on the remaining balance.

(u) Allowances. (1) Title IV of theClean Air Act Amendments of 1990,Pub. L. 101–549, 104 Stat. 2399, 2584 (42U.S.C. 7407 and 42 U.S.C. 7651), providesfor the issuance of allowances as ameans to limit the emissions of certainairborne pollutants by various entities,including utilities. Utilities owning al-lowances, other than those acquired forspeculative purposes, shall account forsuch allowances at cost in Account158.1, Allowance Inventory, or Account158.2, Allowances Withheld, as appro-priate. Allowances acquired for specu-lative purposes and identified as suchin contemporaneous records at thetime of purchase shall be accounted forin Account 124, Other Investments.

(2) When purchased, allowances be-come eligible for use in different years,and the allocation of the purchase costcannot be determined by fair value, thepurchase cost allocated to allowancesof each vintage shall be determinedthrough use of a present-value basedmeasurement. The interest rate used inthe present-value measurement shallbe the utility’s incremental borrowingrate, in the month in which the allow-ances are acquired, for a loan with aterm similar to the period that it willhold the allowances and in an amountequal to the purchase price.

(3) The underlying records supportingAccount 158.1 and Account 158.2 shallbe maintained in sufficient detail so asto provide the number of allowancesand the related cost by vintage year.

(4) Issuances from inventory includedin Account 158.1 and Account 158.2 shallbe accounted for on a vintage basisusing a monthly weighted-averagemethod of cost determination. The costof eligible allowances not used in thecurrent year shall be transferred to thevintage for the immediately followingyear.

(5) Account 158.1 shall be credited andAccount 509, Allowances, debited sothat the cost of the allowances to beremitted for the year is charged to ex-

pense monthly based on each month’semissions. This may, in certain cir-cumstances, require allocation of thecost of an allowance between monthson a fractional basis.

(6) In any period in which actualemissions exceed the amount allowablebased on eligible allowances owned, theutility shall estimate the cost to ac-quire the additional allowances neededand charge Account 158.1 with the esti-mated cost. This estimated cost of fu-ture allowance acquisitions shall becredited to Account 158.1 and chargedto Account 509 in the same accountingperiod as the related charge to Account158.1. Should the actual cost of theseallowances differ from the estimatedcost, the differences shall be recognizedin the then-current period’s inventoryissuance cost.

(7) Any penalties assessed by the En-vironmental Protection Agency for theemission of excess pollutants shall becharged to Account 426.3, Penalties.

(8) Gains on dispositions of allow-ances, other than allowances held forspeculative purposes, shall be ac-counted for as follows. First, if there isuncertainty as to the regulatory treat-ment, the gain shall be deferred in Ac-count 254, Other Regulatory Liabil-ities, pending resolution of the uncer-tainty. Second, if there is certainty asto the existence of a regulatory liabil-ity, the gain will be credited to Ac-count 254, with subsequent recognitionin income when reductions in chargesto customers occur or the liability isotherwise satisfied. Third, all othergains will be credited to Account 411.8,Gains from Disposition of Allowances.Losses on disposition of allowances,other than allowances held for specula-tive purposes, shall be accounted for asfollows. Losses that qualify as regu-latory assets shall be charged directlyto Account 182.3, Other Regulatory As-sets. All other losses shall be chargedto Account 411.9, Losses from Disposi-tion of Allowances. (See the definitionof regulatory assets and liabilities.)Gains or losses on disposition of allow-ances held for speculative purposesshall be recognized in Account 421, Mis-cellaneous Nonoperating Income, orAccount 426.5, Other Deductions, as ap-propriate.


729


(9) The costs and benefits of ex-change-traded allowance futures con-tracts used to protect the utility fromthe risk of unfavorable price changes(‘‘hedging transactions’’) shall be de-ferred in Account 186, MiscellaneousDeferred Debits, or Account 253, OtherDeferred Credits, as appropriate. Suchdeferred amounts shall be included inAccount 158.1, Allowance Inventory, inthe month in which the related allow-ances are acquired, sold or otherwisedisposed of. Where the costs or benefitsof hedging transactions are not identi-fiable with specific allowances, theamounts shall be included in Account158.1 when the futures contract isclosed. The costs and benefits of ex-change-traded allowance futures con-tracts entered into as a speculating ac-tivity shall be charged or credited toAccount 421, Miscellaneous Nonop-erating Income, or Account 426.5, OtherDeductions, as appropriate.

§ 1767.16 Electric plant instructions.(a) Classification of electric plant at ef-

fective date of system of accounts. (1) Theelectric plant accounts provided hereinare the same as those contained in theprior system of accounts except for in-clusion of accounts for nuclear produc-tion plant and some changes in classi-fication in the general equipment ac-counts. Except for these changes, thebalances in the various plant accounts,as determined under the prior systemof accounts, should be carried forward.Any remaining balance of plant whichhas not yet been classified, pursuant tothe requirements of the prior system,shall be classified in accordance withthe following instructions.

(2) The cost to the utility of its un-classified plant shall be ascertained byanalysis of the utility’s records. Ad-justments shall not be made to recordin utility plant accounts amounts pre-viously charged to operating expensesor to income deductions in accordancewith the USoA in effect at the time orin accordance with the discretion ofmanagement as exercised under aUSoA, or under accounting practicespreviously followed.

(3) The detailed electric plant ac-counts (301 to 399, inclusive) shall bestated on the basis of cost to the util-ity of plant constructed by it and the

original cost, estimated if not known,of plant acquired as an operating unitor system. The difference between theoriginal cost, as above, and the cost tothe utility of electric plant after givingeffect to any accumulated provision fordepreciation or amortization shall berecorded in Account 114, Electric PlantAcquisition Adjustments. The originalcost of electric plant shall be deter-mined by analysis of the utility’srecords or those of the predecessor orvendor companies with respect to elec-tric plant previously acquired as oper-ating units or systems and the dif-ference between the original cost so de-termined, less accumulated provisionsfor depreciation and amortization andthe cost to the utility with necessaryadjustments for retirements from dateof acquisition, shall be entered in Ac-count 114, Electric Plant AcquisitionAdjustments. Any difference betweenthe cost of electric plant and its bookcost, when not properly includible inother accounts, shall be recorded in Ac-count 116, Other Electric Plant Adjust-ments.

(b) Electric plant to be recorded at cost.(1) All amounts included in the ac-counts for electric plant acquired as anoperating unit or system, except asotherwise provided in the texts of theintangible plant accounts, shall bestated at the cost incurred by the per-son who first devoted the property toutility service. All other electric plantshall be included in the accounts at thecost incurred by the utility except forproperty acquired by lease which quali-fies as capital lease property under§ 1767.15 (s), Criteria for ClassifyingLeases, and is recorded in Account101.1, Property Under Capital Lease, orAccount 120.6, Nuclear Fuel Under Cap-ital Leases. Where the term ‘‘cost’’ isused in the detailed plant accounts, itshall have the meaning stated in thisparagraph (b).

(2) When the consideration given forproperty is other than cash, the valueof such consideration shall be deter-mined on a cash basis (see, however,the definition of cost in § 1767.10). Inthe entry recording such transition,the actual consideration shall be de-scribed with sufficient particularity toidentify it. The utility shall be pre-pared to furnish RUS the particulars of


730


its determination of the cash value ofthe consideration if other than cash.

(3) When property is purchased undera plan involving deferred payments, nocharge shall be made to the electricplant accounts for interest, insurance,or other expenditures occasioned solelyby such form of payment.

(4) The electric plant accounts shallnot include the cost or other value ofelectric plant contributed to the com-pany. Contributions in the form ofmoney or its equivalent toward theconstruction of electric plant shall becredited to accounts charged with thecost of such construction. Plant con-structed from contributions of cash orits equivalent shall be shown as a re-duction to gross plant constructedwhen assembling cost data in work or-ders for posting to plant ledgers of ac-counts. The accumulated gross costs ofplant accumulated in the work ordershall be recorded as a debit in the plantledger of accounts along with the re-lated amount of contributions concur-rently be recorded as a credit.

(c) Components of construction cost.The cost of construction properly in-cludible in the electric plant accountsshall include, where applicable, the di-rect and overhead costs as listed anddefined hereunder:

(1) Contract work includes amountspaid for work performed under contractby other companies, firms, or individ-uals, costs incident to the award ofsuch contracts, and the inspection ofsuch work.

(2) Labor includes the pay and ex-penses of employees of the utility en-gaged on construction work, and re-lated workmen’s compensation insur-ance, payroll taxes, and similar itemsof expense. It does not include the payand expenses of employees which aredistributed to construction throughclearing accounts nor the pay and ex-penses included in other items here-under.

(3) Materials and supplies includes thepurchase price at the point of free de-livery plus customs duties, excisetaxes, the cost of inspection, loadingand transportation, the related storesexpenses, and the cost of fabricatedmaterials from the utility’s shop. Indetermining the cost of materials andsupplies used for construction, proper

allowance shall be made for unusedmaterials and supplies, for materialsrecovered from temporary structuresused in performing the work involved,and for discounts allowed and realizedin the purchase of materials and sup-plies.

NOTE: The cost of individual items ofequipment of small value (for example, $500or less) or of short life, including small port-able tools and implements, shall not becharged to utility plant accounts unless thecorrectness of the accounting therefor isverified by current inventories. The costshall be charged to the appropriate operatingexpense or clearing accounts, according tothe use of such items, or, if such items areconsumed directly in construction work, thecost shall be included as part of the cost ofthe construction.

(4) Transportation includes the cost oftransporting employees, materials andsupplies, tools, purchased equipment,and other work equipment (when notunder own power) to and from points ofconstruction. It includes amounts paidto others as well as the cost of oper-ating the utility’s own transportationequipment. (See Item in paragraph(c)(5) of this section.)

(5) Special machine service includes thecost of labor (optional), materials andsupplies, depreciation, and other ex-penses incurred in the maintenance,operation and use of special machines,such as steam shovels, pile drivers, der-ricks, ditchers, scrapers, materialunloaders, and other labor saving ma-chines; also expenditures for rental,maintenance and operation of ma-chines of others. It does not include thecost of small tools and other individualitems of small value or short life whichare included in the cost of materialsand supplies. (See Item in paragraph(c)(3) of this section.) When a par-ticular construction job requires theuse for an extended period of time ofspecial machines, transportation orother equipment, the net book costthereof, less the appraised or salvagevalue at time of release from the job,shall be include in the cost of construc-tion.

(6) Shop service includes the propor-tion of the expense of the utility’s shopdepartment assignable to constructionwork except that the cost of fabricatedmaterials from the utility’s shop shallbe included in ‘‘materials and sup-plies.’’


731


(7) Protection includes the cost of pro-tecting the utility’s property from fireor other casualties and the cost of pre-venting damages to others, or to theproperty of others, including paymentsfor discovery or extinguishment offires, cost of apprehending and pros-ecuting incendiaries, witness fees in re-lation thereto, amounts paid to mu-nicipalities and others for fire protec-tion, and other analogous items of ex-penditures in connection with con-struction work.

(8) Injuries and damages includes ex-penditures or losses in connection withconstruction work on account of inju-ries to persons and damages to theproperty of others; also the cost of in-vestigation of and defense against ac-tions for such injuries and damages. In-surance recovered or recoverable on ac-count of compensation paid for injuriesto persons incident to constructionshall be credited to the account or ac-counts to which such compensation ischarged. Insurance recovered or recov-erable on account of property damagesincident to construction shall be cred-ited to the account or accountscharged with the cost of the damages.

(9) Privileges and permits includes pay-ments for and expenses incurred in se-curing temporary privileges, permits orrights in connection with constructionwork, such as for the use of private orpublic property, streets, or highways,but it does not include rents, oramounts chargeable as franchises andconsents for which see Account 302,Franchises and Consents.

(10) Rents includes amounts paid forthe use of construction quarters and of-fice space occupied by constructionforces and amounts properly includiblein construction costs for such facilitiesjointly used.

(11) Engineers and supervision includesthe portion of the pay and expenses ofengineers, surveyors, draftsmen, in-spectors, superintendents and their as-sistants applicable to constructionwork.

(12) General administration capitalizedincludes the portion of the pay and ex-penses of the general officers and ad-ministrative and general expenses ap-plicable to construction work.

(13) Engineering services includesamounts paid to other companies,firms, or individuals engaged by theutility to plan, design, prepare esti-mates, supervise, inspect, or give gen-eral advice and assistance in connec-tion with construction work.

(14) Insurance includes premiums paidor amounts provided or reserved asself-insurance for the protectionagainst loss and damages in connectionwith construction, by fire or other cas-ualty, injuries or deaths of personsother than employees, damages toproperty of others, defalcation of em-ployees and agents, and the non-performance of contractual obligationsof others. It does not include work-men’s compensation or similar insur-ance on employees included as ‘‘labor’’in Item in paragraph (c)(2) of this sec-tion.

(15) Law expenditures includes thegeneral law expenditures incurred inconnection with construction and thecourt and legal costs directly relatedthereto, other than law expenses in-cluded in ‘‘Protection,’’ Item in para-graph (c)(7) of this section, and in Inju-ries and damages, Item in paragraph(c)(8) of this section.

(16) Taxes includes taxes on physicalproperty (including land) during theperiod of construction and other taxesproperly includible in constructioncosts before the facilities become avail-able for service.

(17) Allowance for funds used duringconstruction includes the net cost forthe period of construction of borrowedfunds used for construction purposesand a reasonable rate on other fundswhen so used, not to exceed, withoutprior approval of RUS, allowances com-puted in accordance with the formulaprescribed in Item in paragraph(c)(17)(i) of this section. No allowancefor funds used during constructioncharges shall be included in these ac-counts upon expenditures for construc-tion projects which have been aban-doned.

(i) The formula and elements for thecomputation of the allowance for fundsused during construction shall be:


732


i

c

A s SW

d DD P C

SW

A SW

P PD P C

c CD P C

= + + + −

= − + + + + +

1

1

Where:

Ai =Gross allowance for borrowed funds usedduring construction rate.

Ac =Allowance for other funds used duringconstruction rate.

S=Average short-term debt.s=Short-term debt interest rate.D=Long-term debt.d=Long-term debt interest rate.P=Preferred stock.p=Preferred stock cost rate.C=Patronage capital assigned.c=Entity’s incremental borrowing rate.W=Average balance in construction work in

progress plus nuclear fuel in process of re-finement, conversion, enrichment, and fab-rication.

(ii) The rate shall be determined an-nually.

(A) The balance for long-term debt,preferred stock, and patronage capitalassigned shall be the actual bookbalances as of the end of the prior year.

(B) The cost rate for long-term debtand preferred stock shall be theweighted average cost.

(C) The cost rate for patronage cap-ital assigned shall be the entity’s in-cremental borrowing rate.

(D) The short-term debt balances andrelated cost and the average balancefor construction work in progress plusnuclear fuel in process of refinement,conversion, enrichment, and fabrica-tion shall be estimated for the currentyear with appropriate adjustments asactual data becomes available.

NOTE: When only a portion of a plant orproject is placed in operation or is completedand ready for service but the constructionwork as a whole is incomplete, that part ofthe cost of the property placed in operationor ready for service shall be treated as ‘‘Elec-tric Plant in Service,’’ and an allowance forfunds used during construction thereon as acharge to construction shall cease. Allow-ance for funds used during construction onthat part of the cost of the plant which is in-complete may continue to be charged to con-struction until such time as it is placed inoperation or is ready for service, except as

limited in Item in paragraph (c)(17) of thissection.

(18) Earnings and expenses during con-struction. The earnings and expensesduring construction shall constitute acomponent of construction costs.

(i) The earnings shall include reve-nues received or earned for power pro-duced by generating plants during theconstruction period and sold or used bythe utility.

(A) Where such power is sold to anindependent purchaser before inter-mingling with power generated byother plants, the credit shall consist ofthe selling price of the energy.

(B) Where the power generated by aplant under construction is deliveredto the utility’s electric system for dis-tribution and sale, or is delivered to anassociated company, or is delivered toand used by the utility for purposesother than distribution and sale (formanufacturing or industrial use, forexample), the credit shall be the fairvalue of the energy so delivered.

(C) Revenue shall also include rentalsfor lands, buildings, and other prop-erty, and miscellaneous receipts notproperly includible in other accounts.

(ii) Expenses shall consist of the costof operating the power plant, and othercosts incident to the production anddelivery of the power for which con-struction is credited under paragraph(c)(18)(i) of this section, including thecost of repairs and other expenses ofoperating and maintaining lands,buildings, and other property, andother miscellaneous and like expensesnot properly includible in other ac-counts.

(19) Training costs. (i) When it is nec-essary that employees be trained to op-erate or maintain plant facilities thatare being constructed and such facili-ties are not conventional in nature, orare new to the company’s operations,


733


these costs may be capitalized as acomponent of construction cost.

(ii) Once plant is placed in service,the capitalization of training costsshall cease and subsequent trainingcosts shall be expensed. (See § 1767.17(d).)

(20) Studies. (i) Studies include thecosts of studies such as nuclear oper-ational, safety, or seismic studies, orenvironmental studies mandated byregulatory bodies relative to plantunder construction.

(ii) Studies relative to facilities inservice shall be charged to Account 183,Preliminary Survey and InvestigationCharges.

(d) Overhead construction costs. (1) Alloverhead construction costs, such asengineering, supervision, general officesalaries and expenses, construction en-gineering and supervision performed byothers than the accounting utility, lawexpenses, insurance, injuries and dam-ages, relief and pensions, taxes and in-terest, shall be charged to particularjobs or units on the basis of theamounts of such overheads reasonablyapplicable thereto, to the end that eachjob or unit shall bear its equitable pro-portion of such costs and that the en-tire cost of the unit, both direct andoverhead, shall be deducted from theplant accounts as the time the prop-erty is retired.

(2) As far as practicable, the deter-mination of payroll charges includiblein construction overheads shall bebased on time card distributions there-of.

(i) Where this procedure is imprac-tical, special studies shall be made pe-riodically of the time of supervisoryemployees devoted to construction ac-tivities to the end that only such over-head costs as have a definite relationto construction shall be capitalized.

(ii) The addition to direct construc-tion cost of arbitrary percentages oramounts to cover assumed overheadcosts is not permitted.

(3) The records supporting the entriesfor overhead constructions costs shallbe so kept as to show:

(i) The total amount of each over-head for each year;

(ii) The nature and amount of eachoverhead expenditure charged to each

construction work order and to eachelectric plant account; and

(iii) The bases of distribution of suchcosts.

(e) Electric plant purchased or sold. (1)When electric plant constituting an op-erating unit or system is acquired bypurchase, merger, consolidation, liq-uidation, or otherwise, after the effec-tive date of this system of accounts,the costs of acquisition, including ex-penses incidental thereto properly in-cludible in electric plant, shall becharged to Account 102, Electric PlantPurchased or Sold.

(2) The accounting for the acquisitionshall then be completed as follows:

(i) The original cost of plant, esti-mated if not known, shall be creditedto Account 102, Electric Plant Pur-chased or Sold, and concurrentlycharged to the appropriate electricplant in service accounts and to Ac-count 104, Electric Plant Leased toOthers; Account 105, Electric PlantHeld for Future Use; and Account 107,Construction Work in Progress—Elec-tric, as appropriate.

(ii) The depreciation and amortiza-tion applicable to the original cost ofthe properties purchased shall becharged to Account 102, Electric PlantPurchased or Sold, and concurrentlycredited to the appropriate account foraccumulated provision for depreciationor amortization.

(iii) The cost to the utility of anyproperty includible in Account 121,Nonutility Property, shall be trans-ferred thereto.

(iv) The amount remaining in Ac-count 102, Electric Plant Purchased orSold, shall then be closed to Account114, Electric Plant Acquisition Adjust-ments.

(3) If property acquired in the pur-chase of an operating unit or system isin such physical condition when ac-quired that it is necessary to substan-tially rehabilitate it in order to bringthe property up to the standards of theutility, the cost of such work, exceptreplacements, shall be accounted for asa part of the purchase price of theproperty.

(4) When any property acquired as anoperating unit or system includes du-plicate or other plant which will be re-tired by the accounting utility in the


734


reconstruction of the acquired propertyor its consolidation with previouslyowned property, the proposed account-ing for such property shall be presentedto RUS.

(5) In connection with the acquisitionof electric plant constituting an oper-ating unit or system, the utility shallprocure, if possible, all existing recordsrelating to the property acquired orcertified copies thereof, and shall pre-serve such records in conformity withregulations or practices governing thepreservation of records of its own con-struction.

(6) When electric plant constitutingan operating unit or system is sold,conveyed, or transferred to another bysale, merger, consolidation, or other-wise, the book cost of the property soldor transferred to another shall be cred-ited to the appropriate utility plant ac-counts, including amounts carried inAccount 114, Electric Plant AcquisitionAdjustments, and the amounts (esti-mated if not known) carried with re-spect thereto in the accounts for accu-mulated provision for depreciation andamortization and in Account 252, Cus-tomer Advances for Construction, shallbe charged to such accounts and contraentries made to Account 102, ElectricPlant Purchased or Sold. Unless other-wise ordered by RUS, the difference, ifany, between:

(i) The net amount of debits andcredits, and

(ii) The consideration received forthe property (less commissions andother expenses of making the sale)shall be included in Account 421.1, Gainon Disposition of Property, or Account421.2, Loss on Disposition of Property.(See Account 102, Electric Plant Pur-chased or Sold.)

NOTE: In cases where existing utilitiesmerge or consolidate because of financial oroperating reasons or statutory requirementsrather than as a means of transferring titleof purchased properties to a new owner, theaccounts of the constituent utilities, withthe approval of RUS, may be combined. Inthe event original cost has not been deter-mined, the resulting utility shall proceed todetermine such cost as outlined herein.

(f) Expenditures on leased property. (1)The cost of substantial initial improve-ments (including repairs, rearrange-ments, additions, and betterments)made in the course of preparing for

utility service property leased for a pe-riod of more than one year, and thecost of subsequent substantial addi-tions, replacements, or betterments tosuch property, shall be charged to theelectric plant account appropriate forthe class of property leased.

(i) If the service life of the improve-ments is terminable by action of thelease, the cost, less net salvage, of theimprovements shall be spread over thelife of the lease by charges to Account404, Amortization of Limited-TermElectric Plant.

(ii) If the service life is not termi-nated by action of the lease but by de-preciation proper, the cost of the im-provements, less net salvage, shall beaccounted for as depreciable plant. Theprovisions of (1) are applicable to prop-erty leased under either capital leasesor operating leases.

(2) If improvements made to propertyleased for a period of more than oneyear are of relatively minor cost, or ifthe lease is for a period of not morethan one year, the cost of the improve-ments shall be charged to the accountin which the rent is included, either di-rectly or by amortization thereof.

(g) Land and land rights. (1) The ac-counts for land and land rights shallinclude the cost of land owned in fee bythe utility and rights, interests, andprivileges held by the utility in landowned by others, such as leaseholds,easements, water and water powerrights, diversion rights, submersionrights, rights-of-way, and other like in-terests in land.

(i) Do not include in the accounts forland and land rights and rights-of-waycosts incurred in connection with firstclearing and grading of land and rights-of-way and the damage costs associatedwith the construction and installationof plant.

(ii) Such costs shall be included inthe appropriate plant accounts directlybenefited.

(2) Where special assessments forpublic improvements provide for de-ferred payments, the full amount of theassessments shall be charged to the ap-propriate land account and the unpaidbalance shall be carried in an appro-priate liability account.


735


(i) Interest on unpaid balances shallbe charged to the appropriate interestaccount.

(ii) If any part of the cost of publicimprovements is included in the gen-eral tax levy, the amount thereof shallbe charged to the appropriate tax ac-count.

(3) The net profit from the sale oftimber, cord wood, sand, gravel, otherresources or other property acquiredwith the rights-of-way or other landsshall be credited to the appropriateplant accounts to which related. Whereland is held for a considerable period oftime and timber and other natural re-sources on the land at the time of pur-chase increase in value, the net profit(after giving effect to the cost of thenatural resources) from the sale of tim-ber or its products or other natural re-sources shall be credited to the appro-priate utility operating income ac-count when such land has been re-corded in Account 105, Electric PlantHeld for Future Use, or classified asplant in service, otherwise to Account421, Miscellaneous Nonoperating In-come.

(4) Separate entries shall be made forthe acquisition, transfer, or retirementof each parcel of land, and each landright (except rights-of-way for distribu-tion lines), or water right, having a lifeof more than one year.

(i) A record shall be maintainedshowing the nature of ownership, fulllegal description, area, map reference,purpose for which used, city, county,and tax district on which situated,from whom purchased or to whom sold,payment given or received, other costs,contract date and number, date of re-cording of deed, and book and page ofrecord.

(ii) Entries transferring or retiringland or land rights shall refer to theoriginal entry recording its acquisi-tion.

(5) Any difference between theamount received from the sale of landor land rights, less agents’ commis-sions and other costs incident to thesale, and the book cost of such land orrights, shall be included in Account411.6, Gains from Disposition of UtilityPlant, or 411.7, Losses from Dispositionof Utility Plant, when such propertyhas been recorded in Account 105, Elec-

tric Plant Held for Future Use, other-wise to Account 421.1, Gain on Disposi-tion of Property, or 421.2, Loss on Dis-position of Property, as appropriate,unless a reserve therefor has been au-thorized and provided. Appropriate ad-justments of the accounts shall bemade with respect to any structures orimprovements located on land sold.

(6) The cost of buildings and otherimprovements (other than public im-provements) shall not be included inthe land accounts. If, at the time of ac-quisition of an interest in land, suchinterest extends to buildings or otherimprovements (other than public im-provements) which are then devoted toutility operations, the land and im-provements shall be separately ap-praised and a cost allocated to land andbuildings or improvements on the basisof the appraisals. If the improvementsare removed or wrecked without beingused in operations, the cost of remov-ing or wrecking shall be charged andthe salvage credited to the account inwhich the cost of land is recorded.

(7) When the purchase of land forelectric operations requires the pur-chase of more land than needed forsuch purposes, the charge to the spe-cific land account shall be based uponthe cost of the land purchased, less thefair market value of that portion of theland which is not to be used in utilityoperations. The portion of the costmeasured by the fair market value ofthe land not to be used shall be in-cluded in Account 105, Electric PlantHeld for Future Use, or Account 121,Nonutility Property, as appropriate.

(8) Provisions shall be made for am-ortizing amounts carried in the ac-counts for limited-term interest inland so as to apportion equitably thecost of each interest over the lifethereof. (See Account 111, AccumulatedProvision for Amortization of ElectricUtility Plant, and Account 404, Amor-tization of Limited-Term ElectricPlant.)

(9) The items of cost to be included inthe accounts for land and land rightsare as follows:

(i) Bulkheads, buried, not requiringmaintenance or replacement;

(ii) First cost of acquisition includ-ing mortgages and other liens assumed(but not subsequent interest thereon);


736


(iii) Condemnation proceedings, in-cluding court and counsel costs;

(iv) Consents and abutting damages;(v) Conveyancers’ and notaries’ fees;(vi) Fees, commissions, and salaries

to brokers, agents, and other in con-nection with the acquisition of theland or land rights;

(vii) Leases, cost of voiding upon pur-chase to secure possession of land;

(viii) Removing, relocating, or recon-structing property of others, such asbuildings, highways, railroads, bridges,cemeteries, churches, telephone andpower lines, etc., in order to acquirequiet possession;

(ix) Retaining walls unless identifiedwith structures;

(x) Special assessments levied bypublic authorities for public improve-ments on the basis of benefits for newroads, new bridges, new sewers, newcurbing, new pavements, and otherpublic improvements, but not taxeslevied to provide for the maintenanceof such improvements;

(xi) Surveys in connection with theacquisition, but not amounts paid fortopographical surveys and maps wheresuch costs are attributable to struc-tures or plant equipment erected or tobe erected or installed on such land;

(xii) Taxes assumed, accrued to dateof transfer of title;

(xiii) Title, examining, clearing, in-suring, and registering in connectionwith the acquisition and defendingagainst claims relating to the periodprior to the acquisition;

(xiv) Appraisals prior to closing title;(xv) Cost of dealing with distributees

or legatees residing outside of the stateor county, such as recording power ofattorney, recording will or exemplifi-cation of will, recording satisfaction ofstate tax;

(xvi) Filing satisfaction of mortgage;(xvii) Documentary stamps;(xviii) Photographs of property at ac-

quisition;(xix) Fees and expenses incurred in

the acquisition of water rights andgrants;

(xx) Cost of fill to extend bulkheadline over land under water, where ri-parian rights are held, which is not oc-casioned by the erection of a structure;

(xxi) Sidewalks and curbs con-structed by the utility on public prop-erty; and

(xxii) Labor and expenses in connec-tion with securing rights of way, whereperformed by company employees andcompany agents.

(h) Structures and improvements. (1)The accounts for structures and im-provements shall include the cost of allbuildings and facilities to house, sup-port, or safeguard property or persons,including all fixtures permanently at-tached to and made a part of buildingsand which cannot be removed there-from without cutting into the walls,ceilings, or floors, or without in someway impairing the buildings, and im-provements of a permanent characteron or to land.

(2) Also include those costs incurredin connection with the first clearingand grading of land and rights-of-wayand the damage costs associated withconstruction and installation of plant.

(3) The cost of specially providedfoundations not intended to outlast themachinery or apparatus for which pro-vided, and the cost of angle irons, andcastings installed at the base of anitem of equipment, shall be charged tothe same account as the cost of themachinery, apparatus, or equipment.

(4) Minor buildings and structures,such as valve towers, patrolmen’s tow-ers, telephone stations, fish and wild-life, and recreation facilities which areused directly in connection with orform a part of a reservoir, dam or wa-terway shall be considered a part of thefacility in connection with which con-structed or operated and the costthereof accounted for accordingly.

(5) Where furnaces and boilers areused primarily for furnishing steam forsome particular department and onlyincidentally for furnishing steam forheating a building and operating theequipment therein, the entire cost ofsuch furnaces and boilers shall becharged to the appropriate plant ac-count, and no part to the building ac-count.

(6) Where the structure of a damforms also the foundation of the powerplant building, such foundation shallbe considered a part of the dam.


737


(7) The cost of disposing of materialsexcavated in connection with construc-tion of structures shall be consideredas a part of the cost of such work, ex-cept when such material is used for fill-ing, the cost of loading, hauling, anddumping shall be equitably appor-tioned between the work in connectionwith which the removal occurs and thework in connection with which the ma-terial is used; and when such materialis sold, the net amount realized fromsuch sales shall be credited to the workin connection with which the removaloccurs. If the amount realized from thesale of excavated materials exceeds theremoval costs and the costs in connec-tion with the sale, the excess shall becredited to the land account in whichthe site is carried.

(8) Lighting or other fixtures tempo-rarily attached to building for purposesof display or demonstration shall notbe included in the cost of the buildingbut in the appropriate equipment ac-count.

(9) The items of cost to be included inthe accounts for structures and im-provements are as follows:

(i) Architects’ plans and specifica-tions including supervision;

(ii) Ash pits (when located within thebuilding);

(iii) Athletic field structures and im-provements;.

(iv) Boilers, furnaces, piping, wiring,fixtures, and machinery for heating,lighting, signaling, ventilating, and airconditioning systems, plumbing, vacu-um cleaning systems, incinerator andsmoke pipe, flues, etc;

(v) Bulkheads, including dredging,riprap fill, piling, decking, concrete,fenders, etc., when exposed and subjectto maintenance and replacement;

(vi) Chimneys;(vii) Coal bins and bunkers;(viii) Commissions and fees to bro-

kers, agents, architects and others;(ix) Conduit (not to be removed) with

its contents;(x) Damages to abutting property

during construction;(xi) Docks;(xii) Door checks and door stops;(xiii) Drainage and sewerage systems;(xiv) Elevators, cranes, hoists, etc.,

and the machinery for operating them;

(xv) Excavation, including shoring,bracing, bridging, refill and disposal ofexcess excavated material, cofferdamsaround foundation, pumping waterfrom cofferdams during constructionand test borings;

(xvi) Fences and fence curbs (not in-cluding protective fences isolatingitems of equipment, which shall becharged to the appropriate equipmentaccounts);

(xvii) Fire protection systems whenforming a part of a structure;

(xviii) Flagpole;(xix) Floor covering (permanently at-

tached);(xx) Foundations and piers for ma-

chinery, constructed as a permanentpart of a building or other item listedherein;

(xxi) Grading and clearing when di-rectly occasioned by the building of astructure;

(xxii) Intrasite communication sys-tem, poles, pole fixtures, wires, andcable;

(xxiii) Landscaping, lawns,shrubbery, etc.;

(xxiv) Leases, voiding upon purchaseto secure possession of structures;

(xxv) Leased property, expenditureson;

(xxvi) Lighting fixtures and outsidelighting system;

(xxvii) Mailchutes when part of abuilding;

(xxviii) Marquee, permanently at-tached to the building;

(xxix) Painting, first cost;(xxx) Permanent paving, concrete,

brick, flagstone, asphalt, etc., withinthe property lines;

(xxxi) Partitions, including movable;(xxxii) Permits and privileges;(xxxiii) Platforms, railings and

gratings when constructed as a part ofa structure;

(xxxiv) Power boards for services to abuilding;

(xxxv) Refrigerating systems for gen-eral use;

(xxxvi) Retaining walls except whenidentified with land;

(xxxvii) Roadways, railroads, bridges,and trestles intrasite except railroadsprovided for in equipment accounts;

(xxxviii) Roofs;(xxxix) Scales, connected to and

forming a part of a structure;


738


(xl) Screens;(xli) Sewer systems, for general use;(xlii) Sidewalks, culverts, curbs and

streets constructed by the utility onits property;

(xliii) Sprinkling systems;(xliv) Sump pumps and pits;(xlv) Stacks—brick, steel, or con-

crete, when set on foundation formingpart of general foundation and steel-work of a building;

(xlvi) Steel inspection during con-struction;

(xlvii) Storage facilities constitutinga part of a building;

(xlviii) Storm doors and windows;(xlix) Subways, areaways, and tun-

nels, directly connected to and formingpart of a structure;

(l) Tanks, constructed as part of abuilding or as a distinct structuralunit;

(li) Temporary heating during con-struction (net cost);

(lii) Temporary water connectionduring construction (net cost);

(liii) Temporary shanties and otherfacilities used during construction (netcost);

(liv) Topographical maps;(lv) Tunnels, intake and discharge,

when constructed as part of a struc-ture, including sluice gates, and thoseconstructed to house mains;

(lvi) Vaults constructed as part of abuilding;

(lvii) Watchmen’s sheds and clocksystems (net cost when used duringconstruction only);

(lviii) Water basins or reservoirs;(lix) Water front improvements;(lx) Water meters and supply system

for a building or for general companypurposes;

(lxi) Water supply piping, hydrants,and wells;

(lxii) Wharves;(lxiii) Window shades and ventilators;(lxiv) Yard drainage system;(lxv) Yard lighting system; and(lxvi) Yard surfacing, gravel, con-

crete, or oil (First cost only).NOTE: Structures and improvements ac-

counts shall be credited with the cost of coalbunkers, stacks, foundations, subways, andtunnels, the use of which has terminatedwith the removal of the equipment withwhich they are associated even though theyhave not been physically removed.

(i) Equipment. (1) The cost of equip-ment chargeable to the electric plantaccounts, unless otherwise indicated inthe text of an equipment account, in-cludes the net purchase price thereof,sales taxes, investigation and inspec-tion expenses necessary to such pur-chase, expenses of transportation whenborne by the utility, labor employed,materials, and supplies consumed, andexpenses incurred by the utility in un-loading and placing the equipment inreadiness to operate.

(2) Also include those costs incurredin connection with the first clearingand grading of land and rights-of-wayand the damage costs associated withconstruction and installation of plant.

(3) Exclude from equipment accountshand and other portable tools, whichare likely to be lost or stolen or whichhave relatively small value (for exam-ple, $500 or less) or short life, unlessthe correctness of the accountingtherefor as electric plant is verified bycurrent inventories.

(i) Special tools acquired and in-cluded in the purchase price of equip-ment shall be included in the appro-priate plant accounts.

(ii) Portable drills and similar toolequipment when used in connectionwith the operation and maintenance ofa particular plan or department, suchas production, transmission, or dis-tribution or in ‘‘stores’’, shall becharged to the plant accounts appro-priate for their use.

(4) The equipment accounts shall in-clude angle irons and similar itemswhich are installed at the base of anitem of equipment, but piers and foun-dations which are designed to be aspermanent as the buildings whichhouse the equipment, or which are con-structed as a part of the building andwhich cannot be removed without cut-ting into the walls, ceilings, or floorsor, without in some way impairing thebuilding, shall be included in the build-ing accounts.

(5) The equipment accounts shall in-clude the necessary costs of testing orrunning a plant or parts thereof duringan experimental or test period prior tosuch plant becoming ready for orplaced in service.

(i) The utility shall furnish RUS withfull particulars of and justification for


739


any test or experimental run extendingbeyond a period of 120 days for nuclearplant, and a period of 90 days for allother plant.

(ii) Such particulars shall include adetailed operational and downtime logshowing days of production, gross kilo-watts generated by hourly increments,types, and periods of outages by hourswith explanation thereof, beginningwith the first date the equipment waseither tested or synchronized on theline to the end of the test period.

(6) The cost of efficiency or othertests made subsequent to the dateequipment becomes available for serv-ice shall be charged to the appropriateexpense accounts, except that tests todetermine whether equipment meetsthe specifications and requirements asto efficiency, or performance guaran-teed by manufacturers, made after op-erations have commenced and withinthe period specified in the agreementor contract of purchase, may becharged to the appropriate electricplant accounts.

(j) Additions and retirements of electricplant. (1) For the purpose of avoidingundue refinement in accounting for ad-ditions to and retirements and replace-ments of electric plant, all propertyshall be considered as consisting of re-tirement units and minor items ofproperty.

(2) The addition and retirement of re-tirement units shall be accounted foras follows:

(i) When a retirement unit is addedto electric plant, the cost thereof shallbe added to the appropriate electricplant account, except that when unitsare acquired in the acquisition of anyelectric plant constituting an oper-ating system, they shall be accountedfor as provided in paragraph (e) of thissection.

(ii) When a retirement unit is retiredfrom electric plant, with or without re-placement, the book cost thereof shallbe credited to the electric plant ac-count in which it is included, deter-mined in the manner set forth in Itemin paragraph (j)(4) of this section. If theretirement unit is of a depreciableclass, the book cost of the unit retiredand credited to electric plant shall becharged to the accumulated provisionfor depreciation applicable to such

property. The cost of removal and thesalvage shall be charged or credited, asappropriate, to such depreciation ac-count.

(3) The addition and retirement ofminor items of property shall be ac-counted for as follows:

(i) When a minor item of propertywhich did not previously exist is addedto plant, the cost thereof shall be ac-counted for in the same manner as forthe addition of a retirement unit, asset forth in Item in paragraph (j)(2)(i)of this section, if a substantial additionresults, otherwise the charge shall beto the appropriate maintenance ex-pense account.

(ii) When a minor item of property isretired and not replaced, the book costthereof shall be credited to the electricplant account in which it is included;and, in the event the minor item is apart of depreciable plant, the accountfor accumulated provision for deprecia-tion shall be charged with the bookcost and cost of removal and creditedwith the salvage. If, however, the bookcost of the minor item retired and notreplaced has been or will be accountedfor by its inclusion in the retirementunit of which it is a part when suchunit is retired, no separate credit tothe property account is required whensuch minor item is retired.

(iii) When a minor item of depre-ciable property is replaced independ-ently of the retirement unit of which itis a part, the cost of replacement shallbe charged to the maintenance accountappropriate for the item, except that ifthe replacement effects a substantialbetterment (the primary aim of whichis to make the property affected moreuseful, more efficient, of greater dura-bility, or of greater capacity), the ex-cess cost of the replacement over theestimated cost at current prices of re-placing without betterment shall becharged to the appropriate electricplant accounts.

(4) The book cost of electric plant re-tired shall be the amount at whichsuch property is included in the elec-tric plant accounts, including all com-ponents of construction costs. Thebook cost shall be determined from theutility’s records and if this cannot bedone, it shall be estimated. When it isimpracticable to determine the book


740


cost of each unit, due to the relativelylarge number or small cost thereof, anappropriate average book cost of theunits with due allowance for any dif-ferences in size and character, shall beused as the book cost of the units re-tired.

(5) The book cost of land retired shallbe credited to the appropriate land ac-counts. If the land is sold, the dif-ference between the book cost (less anyaccumulated provision for depreciationor amortization therefore which hasbeen authorized and provided) and thesale price of the land (less commissionsand other expenses of making the sale)shall be recorded in Account 411.6,Gains from Disposition of UtilityPlant, or Account 411.7, Losses fromDisposition of Utility Plant, when theproperty has been recorded in Account105, Electric Plant Held for Future Use,otherwise to Accounts 421.1, Gain onDisposition of Property, or 421.2, Losson Disposition of Property, as appro-priate. If the land is not used in utilityservice but is retained by the utility,the book cost shall be charged to Ac-count 105, Electric Plant Held for Fu-ture Use, or Account 121, NonutilityProperty, as appropriate.

(6) The book cost less net salvage ofdepreciable electric plant retired shallbe charged in its entirety to Account108, Accumulated Provision for Depre-ciation of Electric Utility Plant inService. Any amounts which, by ap-proval or order of RUS, are charged toAccount 182.1, Extraordinary PropertyLosses, shall be credited to Account108.

(7) The accounting for the retirementof amounts included in Account 302,Franchises and Consents, and Account303, Miscellaneous Intangible Plant,and the items of limited-term interestin land included in the accounts forland and land rights, shall be as pro-vided for in the text of Account 111, Ac-cumulated Provision for Amortizationof Electric Utility Plant in Service;Account 404, Amortization of Limited-Term Electric Plant; and Account 405,Amortization of Other Electric Plant.

(k) Work order and property record sys-tem required. (1) Each utility shallrecord all construction and retirementsof electric plant by means of work or-ders or job orders. Separate work or-

ders may be opened for additions toand retirements of electric plant or theretirements may be included with theconstruction work order, provided,however, that all items relating to theretirements shall be kept separatefrom those relating to constructionand provided, further, that any mainte-nance costs involved in the work shalllikewise be segregated.

(2) Each utility shall keep its workorder system so as to show the natureof each addition to or retirement ofelectric plant, the total cost thereof,the source or sources of costs, and theelectric plant account or accounts towhich charged or credited. Work orderscovering jobs of short duration may becleared monthly.

(3) Each utility shall maintainrecords in which, for each plant ac-count, the amounts of the annual addi-tions and retirements are classified soas to show the number and cost of thevarious record units or retirementunits.

(l) Transfers of property. When prop-erty is transferred from one electricplant account to another, from oneutility department to another, such asfrom electric to gas, from one oper-ating division or area to another, to orfrom Account 101, Electric Plant inService; Account 104, Electric PlantLeased to Others; Account 105, ElectricPlant Held for Future Use, and Ac-count 121, Nonutility Property, thetransfer shall be recorded by transfer-ring the original cost thereof from theone account, department, or locationto the other. Any related amounts car-ried in the accounts for accumulatedprovision for depreciation or amortiza-tion shall be transferred in accordancewith the segregation of such accounts.

(m) Common utility plant. (1) If theutility is engaged in more than oneutility service, such as electric, gas,and water, and any of its utility plantis used in common for several utilityservices or for other purposes to suchan extent and in such manner that it isimpracticable to segregate it by utilityservices currently in the accounts,such property, with the approval ofRUS, may be designated and classifiedas ‘‘common utility plant.’’

(2) The book amount of utility plantdesignated as common plant shall be


741


included in Account 118, Other UtilityPlant, and if applicable in part to theelectric department, shall be seg-regated and accounted for in sub-accounts as electric plant is accountedfor in Accounts 101 to 107, inclusive,and electric plant adjustments in Ac-count 116, Other Electric Plant Adjust-ments; any amounts classifiable ascommon plant acquisition adjustmentsor common plant adjustments shall besubject to disposition as provided inParagraphs C and B of Accounts 114and 116, respectively, for amounts clas-sified in those accounts. The originalcost of common utility plant in serviceshall be classified according to the de-tailed utility plant accounts appro-priate for the property.

(3) The utility shall be prepared toshow, at any time, and to report toRUS annually, or more frequently, ifrequired, and by utility plant accounts(301 to 399) the book cost of commonutility plant, the allocation of suchcost to the respective departmentsusing the common utility plant, andthe basis of the allocation.

(4) The accumulated provision for de-preciation and amortization of the util-ity shall be segregated so as to showthe amount applicable to the propertyclassified as common utility plant.

(5) The expenses of operation, main-tenance, rents, depreciation and amor-tization of common utility plant shallbe recorded in the accounts prescribedherein, but designated as common ex-penses, and the allocation of such ex-penses to the departments using thecommon utility plant shall be sup-ported in such manner as to reflectreadily the basis of allocation used.

(n) Transmission and distribution plant.For the purpose of this system of ac-counts:

(1) Transmission system is all land,conversion structures, and equipmentemployed at a primary source of supply(i.e. generating station, or point of re-ceipt in the case of purchased power) tochange the voltage or frequency ofelectricity for the purpose of its moreefficient or convenient transmission;all land, structures, lines, switchingand conversion stations, high tensionapparatus, and their control and pro-tective equipment between a gener-ating or receiving point and the en-

trance to a distribution center orwholesale point; and all lines andequipment whose primary purpose is toaugment, integrate or tie together thesources of power supply.

(2) Distribution system is all land,structures, conversion equipment,lines, line transformers, and other fa-cilities employed between the primarysource of supply (i.e. generating sta-tion, or point of receipt in the case ofpurchased power) and of delivery tocustomers, which are not includible intransmission system, as defined inItem in paragraph (n)(1) of this section,whether or not such land, structures,and facilities are operated as part of atransmission system or as part of a dis-tribution system.

NOTE: Stations which change electricityfrom transmission to distribution voltageshall be classified as distribution stations.

(3) Where poles or towers supportboth transmission and distributionconductors, the poles, towers, anchors,guys, and rights-of-way shall be classi-fied as transmission system. The con-ductors, cross-arms, braces, grounds,tiewire, and insulators shall be classi-fied as transmission or distribution fa-cilities, according to the purpose forwhich used.

(4) Where underground conduit con-tains both transmission and distribu-tion conductors, the underground con-duit and right-of-way shall be classi-fied as distribution system. The con-ductors shall be classified as trans-mission or distribution facilities ac-cording to the purpose for which used.

(5) Land (other than rights-of-way)and structures used jointly for trans-mission and distribution purposes shallbe classified as transmission or dis-tribution according to the major usethereof.

(o) Hydraulic production plant. Forpurpose of this system of accounts hy-draulic production plant is all land andland rights, structures and improve-ments used in connection with hydrau-lic power generation, reservoirs, damsand waterways, water wheels, turbines,generators, accessory electric equip-ment, roads, railroads, and bridges andstructures and improvements used inconnection with fish and wildlife, andrecreation.


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(p) Nuclear fuel records required. Eachutility shall keep all the necessaryrecords to support the entries to thevarious nuclear fuel plant accountsclassified under ‘‘Assets and Other Deb-its,’’ Utility Plant Accounts 120.1through 120.5, inclusive; Account 518,Nuclear Fuel Expense; and Account 157,Nuclear Materials Held for Sale. Theserecords shall be so kept as to readilyfurnish the basis of the computation ofthe net nuclear fuel costs.

§ 1767.17 Operating expense instruc-tions.

(a) Supervision and engineering. Thesupervision and engineering includiblein the operating expense accounts shallconsist of the salary, employee pen-sions and benefits, social security andother payroll taxes, injuries and dam-ages, and other expenses of super-intendents, engineers, clerks, otheremployees, and consultants engaged insupervising and directing the operationand maintenance of each utility func-tion. Whenever allocations are nec-essary in order to arrive at the amountto be included in any account, themethod and basis of allocation shall bereflected by underlying records.

(1) Labor items:(i) Special tests to determine effi-

ciency of equipment operation;(ii) Preparing or reviewing budgets,

estimates, and drawings relating to op-eration or maintenance for depart-mental approval;

(iii) Preparing instructions for oper-ations and maintenance activities;

(iv) Reviewing and analyzing oper-ating results;

(v) Establishing organizational setupof departments and executing changestherein;

(vi) Formulating and reviewing rou-tines of departments and executingchanges therein;

(vii) General training and instructionof employees by supervisors whose payis chargeable hereto. Specific instruc-tions and training in a particular typeof work is chargeable to the appro-priate functional account (See para-graph (c)(19) of this section); and

(viii) Secretarial work for super-visory personnel, but not general cler-ical and stenographic work chargeableto other accounts.

(2) Expense items:(i) Employee pensions and benefits;(ii) Social security and other payroll

taxes;(iii) Injuries and damages;(iv) Consultants’ fees and expenses;

and(v) Meals, traveling, and incidental

expenses.(b) Maintenance. (1) The cost of main-

tenance chargeable to the various oper-ating expense and clearing accounts in-cludes labor, employee pensions andbenefits, social security and other pay-roll taxes, injuries and damages, mate-rials, overheads, and other expenses in-curred in maintenance work. A list ofwork operations applicable generallyto utility plant is included in this para-graph (b). Other work operations appli-cable to specific classes of plant arelisted in functional maintenance ex-pense accounts.

(2) Materials recovered in connectionwith the maintenance of property shallbe credited to the same account towhich the maintenance cost wascharged.

(3) If the book cost of any property iscarried in Account 102, Electric PlantPurchased or Sold, the cost of main-taining such property shall be chargedto the accounts for maintenance ofproperty of the same class and use, thebook cost of which is carried in otherelectric plant in service accounts.Maintenance of property leased fromothers shall be treated as provided inparagraph (c) of this section.

(4) Items:(i) Direct field supervision of mainte-

nance;(ii) Inspecting, testing, and reporting

on condition of plant specifically to de-termine the need for repairs, replace-ments, rearrangements, and changesand inspecting and testing the ade-quacy of repairs which have been made;

(iii) Work performed specifically forthe purpose of preventing failure, re-storing serviceability or maintaininglife of plant;

(iv) Rearranging and changing the lo-cation of plant not retired;

(v) Repairing for reuse materials re-covered from plant;

(vi) Testing for, locating, and clear-ing trouble;


743


(vii) Net cost of installing, maintain-ing, and removing temporary facilitiesto prevent interruptions in service; and

(viii) Replacing or adding minoritems of plant which do not constitutea retirement unit.

(c) Rents. (1) The rent expense ac-counts provided under the several func-tional groups of expense accounts shallinclude all rents, including taxes paidby the lessee on leased property, forproperty used in utility operations, ex-cept minor amounts paid for occasionalor infrequent use of any property orequipment and all amounts paid for useof equipment that, if owned, would beincludible in plant Accounts 391 to 398inclusive, which shall be treated as anexpense item and included in the ap-propriate function account and rentswhich are chargeable to clearing ac-counts, and distributed therefrom tothe appropriate account.

(2) If rents cover property used formore than one function such as produc-tion and transmission, or by more thanone department, the rents shall be ap-portioned to the appropriate rent ex-pense or clearing accounts of each de-partment on an actual, or if necessary,an estimated basis.

(3) When a portion of property orequipment rented from others for usein connection with utility operations issubleased, the revenue derived fromsuch subleasing shall be credited to therent revenue account in operating reve-nues; provided, however, that in casethe rent was charged to a clearing ac-count, amounts received from sub-leasing the property shall be creditedto such clearing account.

(4) The cost, when incurred by thelessee, of operating and maintainingleased property, shall be charged to theaccounts appropriate for the expense ifthe property were owned.

(5) The cost incurred by the lessee ofadditions and replacements to electricplant leased from others shall be ac-count for as provided in § 1767.16 (f).

(d) Training costs. (1) When it is nec-essary that employees be trained tospecifically operate or maintain plantfacilities that are being constructed,the related costs shall be accounted foras a current operating and mainte-nance expense.

(2) These expenses shall be charged tothe appropriate functional accountscurrently as they are incurred.

(3) When the training costs involvedrelate to facilities which are not con-ventional in nature, or are new to thecompany’s operations, see § 1767.16(c)(19), for the accounting.

[58 FR 59825, Nov. 10, 1993, as amended at 62FR 42290, Aug. 6, 1997]

§ 1767.18 Assets and other debits.The asset and other debits accounts

identified in this section shall be usedby all RUS borrowers.

ASSETS AND OTHER DEBITS

Utility Plant

101 Electric Plant in Service101.1 Property Under Capital Leases102 Electric Plant Purchased or Sold103 Experimental Electric Plant Unclassi-

fied104 Electric Plant Leased to Others105 Electric Plant Held for Future Use106 Completed Construction not Classified—

Electric107 Construction Work in Progress—Elec-

tric107.1 Construction Work in Progress—Con-

tract107.2 Construction Work in Progress—Force

Account107.3 Construction Work in Progress—Spe-

cial Equipment108 Accumulated Provision for Depreciation

of Electric Utility Plant108.1 Accumulated Provision for Deprecia-

tion of Steam Production Plant108.2 Accumulated Provision for Deprecia-

tion of Nuclear Production Plant108.3 Accumulated Provision for Deprecia-

tion of Hydraulic Production Plant108.4 Accumulated Provision for Deprecia-

tion of Other Production Plant108.5 Accumulated Provision for Deprecia-

tion of Transmission Plant108.6 Accumulated Provision for Deprecia-

tion of Distribution Plant108.7 Accumulated Provision for Deprecia-

tion of General Plant108.8 Retirement Work in Progress109 [Reserved]110 [Reserved]111 Accumulated Provision for Amortiza-

tion of Electric Utility Plant112 [Reserved]113 [Reserved]114 Electric Plant Acquisition Adjustments115 Accumulated Provision for Amortiza-

tion of Electric Plant Acquisition Ad-justments

116 Other Electric Plant Adjustments


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118 Other Utility Plant119 Accumulated Provision for Depreciation

and Amortization of Other Utility Plant120.1 Nuclear Fuel in Process of Refine-

ment, Conversion, Enrichment, and Fab-rication

120.2 Nuclear Fuel Materials and Assem-blies—Stock Account

120.3 Nuclear Fuel Assemblies in Reactor120.4 Spent Nuclear Fuel120.5 Accumulated Provision for Amortiza-

tion of Nuclear Fuel Assemblies120.6 Nuclear Fuel Under Capital Leases

Other Property and Investments

121 Nonutility Property122 Accumulated Provision for Depreciation

and Amortization of Nonutility Property123 Investment in Associated Companies123.1 Patronage Capital from Associated Co-

operatives123.3 Investment in Associated Organiza-

tions—Federal Economic DevelopmentLoans

123.4 Investment in Associated Organiza-tions—Non-Federal Economic Develop-ment Loans

123.11 Investment in Subsidiary Companies123.21 Subscriptions to Capital Term Cer-

tificates—Supplemental Financing123.22 Investments in Capital Term Certifi-

cates—Supplemental Financing123.23 Other Investments in Associated Or-

ganizations124 Other Investments124.1 Other Investments—Federal Economic

Development Loans124.2 Other Investments—Non-Federal Eco-

nomic Development Loans125 Sinking Funds126 Depreciation Fund128 Other Special Funds

Current and Accrued Assets

131 Cash131.1 Cash—General131.2 Cash—Construction Fund—Trustee131.3 Cash—Installation Loan and Collec-

tion Fund131.4 Transfer of Cash131.12 Cash—General—Economic Develop-

ment Loan Funds131.13 Cash—General—Economic Develop-

ment Grant Funds131.14 Cash—General—Economic Develop-

ment Non-Federal Revolving Funds132 Interest Special Deposits133 Dividend Special Deposits134 Other Special Deposits135 Working Funds136 Temporary Cash Investments141 Notes Receivable141.1 Accumulated Provision for

Uncollectible Notes—Credit142 Customer Accounts Receivable142.1 Customer Accounts Receivable—Elec-

tric

142.2 Customer Accounts Receivable—Other143 Other Accounts Receivable144 Accumulated Provision for

Uncollectible Accounts—Credit144.1 Accumulated Provision for

Uncollectible Customer Accounts—Cred-it

144.2 Accumulated Provision forUncollectible Merchandising Accounts—Credit

144.3 Accumulated Provision forUncollectible Accounts, Officers and Em-ployees—Credit

144.4 Accumulated Provision for OtherUncollectible Accounts—Credit 145 NotesReceivable from Associated Companies

145 Notes Receivable from Associated Com-panies

146 Accounts Receivable from AssociatedCompanies

151 Fuel Stock152 Fuel Stock Expenses Undistributed153 Residuals154 Plant Materials and Operating Supplies155 Merchandise156 Other Materials and Supplies157 Nuclear Materials Held for Sale158.1 Allowance Inventory158.2 Allowances Withheld163 Stores Expense Undistributed165 Prepayments165.1 Prepayments—Insurance165.2 Other Prepayments171 Interest and Dividends Receivable172 Rents Receivable173 Accrued Utility Revenues174 Miscellaneous Current and Accrued As-

sets

Deferred Debits

181 Unamortized Debt Expense182.1 Extraordinary Property Losses182.2 Unrecovered Plant and Regulatory

Study Costs182.3 Other Regulatory Assets183 Preliminary Survey and Investigation

Charges184 Clearing Accounts184.1 Transportation Expense—Clearing184.2 Clearing Accounts—Other185 Temporary Facilities186 Miscellaneous Deferred Debits187 Deferred Losses from Disposition of

Utility Plant188 Research, Development, and Demonstra-

tion Expenditures189 Unamortized Loss on Reacquired Debt190 Accumulated Deferred Income Taxes

ASSETS AND OTHER DEBITS

Utility Plant

101 Electric Plant in Service

A. This account shall include the originalcost of electric plant, included in Accounts301 to 399, prescribed herein, owned and used


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by the utility in its electric utility oper-ations, and having an expectation of life inservice of more than one year from date ofinstallation, including such property ownedby the utility but held by nominees.

B. (See also Account 106 for unclassifiedconstruction costs of completed plant actu-ally in service.)

C. The cost of additions to and bettermentsof property leased from others, which are in-cludible in this account, shall be recorded insubdivisions separate and distinct from thoserelating to owned property. (See § 1767.16 (f).)

101.1 Property Under Capital Leases

A. This account shall include the amountrecorded under capital leases for plant leasedfrom others and used by the utility in itsutility operations.

B. The electric property included in thisaccount shall be classified separately accord-ing to the detailed accounts (301 to 399) pre-scribed for electric plant in service.

C. Records shall be maintained with re-spect to each capital lease reflection: (1)name of lessor, (2) basic details of lease, (3)terminal date, (4) original cost or fair mar-ket value of property leased, (5) future min-imum lease payments, (6) executory costs, (7)present value of minimum lease payments,(8) the amount representing interest and theinterest rate used, and (9) expenses paid.

102 Electric Plant Purchased or Sold

A. This account shall be charged with thecost of electric plant acquired as an oper-ating unit or system by purchase, merger,consolidation liquidation, or otherwise, andshall be credited with the selling price oflike property transferred to others pendingthe distribution to appropriate accounts inaccordance with § 1767.16 (e).

B. Within 6 months from the date of acqui-sition or sale of property recorded herein,the borrower shall file with RUS the pro-posed journal entries to clear from this ac-count the amounts recorded herein.

103 Experimental Electric PlantUnclassified

A. This account shall include the cost ofelectric plant which was constructed as a re-search, development, and demonstrationplant under the provisions of Paragraph C,Account 107, Construction Work inProgress—Electric, and due to the nature ofthe plant, it is desirous to operate it for a pe-riod of time in an experimental status.

B. Amounts in this account shall be trans-ferred to Account 101, Electric Plant in Serv-ice, or Account 121, Nonutility Property, asappropriate when the project is no longerconsidered as experimental.

C. The depreciation on property in this ac-count shall be charged to Account 403, De-preciation Expense, and credited to Account

108, Accumulated Provision for Depreciationof Electric Utility Plant. The amounts here-in shall be depreciated over a period whichwould correspond to the estimated useful lifeof the relevant project considering the char-acteristics involved. However, when projectsare transferred to Account 101, ElectricPlant in Service, a new depreciation ratebased upon the remaining service life andundepreciated amounts, will be established.

D. Records shall be maintained with re-spect to each unit of experiment so that fulldetails may be obtained as to the cost, depre-ciation, and the experimental status.

E. Should it be determined that experi-mental plant recorded in this account willfail to satisfactorily perform its function,the costs thereof shall be accounted for as di-rected or authorized by RUS.

104 Electric Plant Leased to Others

A. This account shall include the originalcost of electric plant owned by the utility,but leased to others as operating units orsystems, where the lessee has exclusive pos-session.

B. The property included in this accountshall be classified according to the detailedaccounts (301 to 399) prescribed for electricplant in service and this account shall bemaintained in such detail as though theproperty were used by the owner in its util-ity operations.

105 Electric Plant Held for Future Use

A. This account shall include the originalcost of electric plant (except land and landrights) owned and held for future use in elec-tric service under a definite plan for suchuse, to include: (1) Property acquired (exceptland and land rights) but never used by theutility in electric service, but held for suchservice in the future under a definite plan,and (2) property (except land and land rights)previously used by the utility in service butretired from such service and held pendingits reuse in the future, under a definite plan,in electric service.

B. This account shall also include theoriginal cost of land and land rights ownedand held for future use in electric serviceunder a plan for such use, to include landand land rights: (1) Acquired but never usedby the utility in electric service, but held forsuch service in the future under a plan, and(2) previously held by the utility in service,but retired from such service and held pend-ing its reuse in the future under a plan, inelectric service. (See § 1767.16 (g).)

C. In the event that property recorded inthis account shall no longer be needed or ap-propriate for future utility operations, theborrower shall notify RUS of such conditionand request approval of journal entries to re-move such property from this account.


746


D. Gains or losses from the sale of land andland rights or other disposition of such prop-erty previously recorded in this account andnot placed in utility service shall be re-corded directly in Accounts 411.6 or 411.7, asappropriate, except when determined to besignificant by RUS. Upon such a determina-tion, the amounts shall be transferred to Ac-count 256, Deferred Gains from Disposition ofUtility Plant, or Account 187, DeferredLosses from Disposition of Utility Plant, andamortized to Account 411.6, Gains from Dis-position of Utility Plant, or Account 411.7,Losses from Disposition of Utility Plant, asappropriate.

E. The property included in this accountshall be classified according to the detail ac-counts (301 to 399) prescribed for electricplant in service and the account shall bemaintained in such detail as though theproperty were in service.

NOTE: Materials and supplies, meters andtransformers held in reserve, and normalspare capacity of plant in service shall notbe included in this account.

106 Completed Construction not Classified—Electric

At the end of the year or such other dateas a balance sheet may be required by RUS,this account shall include the total of thebalances of work orders for electric plantwhich has been completed and placed in serv-ice but which work orders have not beenclassified for transfer to the detailed electricplant accounts.

NOTE: For the purpose of reporting to RUS,the classification of electric plant in serviceby accounts is required, the utility shall alsoreport the balance in this account ten-tatively classified as accurately as prac-ticable according to prescribed account clas-sifications. The purpose of this provision isto avoid any significant omissions in re-ported amounts of electric plant in service.

107 Construction Work in Progress—Electric

A. This account shall include the total ofthe balances of work orders for electric plantin process of construction.

B. Work orders shall be cleared from thisaccount as soon as practicable, after comple-tion of the job. Further, if a project, such asa hydroelectric project, a steam station, or atransmission line, is designed to consist oftwo or more units or circuits which may beplaced in service at different dates, any ex-penditures which are common to and whichwill be used in the operation of the project asa whole shall be included in electric plant inservice upon the completion and the readi-ness for service of the first unit. Any expend-itures which are identified exclusively withunits of property not yet in service shall beincluded in this account.

C. Expenditures on research, development,and demonstration projects for constructionof utility facilities are to be included in aseparate subdivision in this account. Recordsmust be maintained to show separately eachproject along with complete detail of the na-ture and purpose of the research, develop-ment, and demonstration project togetherwith the related costs.

D. Account 107 shall be subaccounted asfollows:

107.1 Construction Work in Progress—Con-tract

107.2 Construction Work in Progress—ForceAccount

107.3 Construction Work in Progress—Spe-cial Equipment

108 Accumulated Provision for Depreciationof Electric Utility Plant

A. This account shall be credited with thefollowing:

1. Amounts charged to Account 403, Depre-ciation Expense, or to clearing accounts forcurrent depreciation expense for electricplant in service.

2. Amounts charged to Account 421, Mis-cellaneous Nonoperating Income, for depre-ciation expense on property included in Ac-count 105, Electric Plant Held for FutureUse. Include, also, the balance of accumu-lated provision for depreciation on propertywhen transferred to Account 105, ElectricPlant Held for Future Use, from other prop-erty accounts. Normally, Account 108 willnot be used for current depreciation provi-sion because, as provided herein, the servicelife during which depreciation is computedcommences with the date property is includ-ible in electric plant in service; however, ifspecial circumstances indicate the proprietyof current accruals for depreciation, suchcharges shall be made to Account 421, Mis-cellaneous Nonoperating Income.

3. Amounts charged to Account 413, Ex-penses of Electric Plant Leased to Others,for electric plant included in Account 104,Electric Plant Leased to Others.

4. Amounts charged to Account 416, Costsand Expenses of Merchandising, Jobbing, andContract Work, or to clearing accounts forcurrent depreciation expense.

5. Amounts of depreciation applicable toelectric properties acquired as operatingunits or systems. (See § 1767.16 (e).)

6. Amounts charged to Account 182.1, Ex-traordinary Property Losses, when author-ized by RUS.

7. Amounts of depreciation applicable toelectric plant donated to the utility.

The utility shall maintain separate sub-accounts for depreciation applicable to elec-tric plant in service, electric plant leased toothers, and electric plant held for futureuse.)


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B. At the time of retirement of depreciableelectric utility plant, this account shall becharged with the book cost of the propertyretired and the cost of removal and shall becredited with the salvage value and anyother amounts recovered, such as insurance.When retirement, costs of removal and sal-vage are entered originally in retirementwork orders, the net total of such work or-ders may be included in a separate sub-account hereunder. Upon completion of thework order, the proper distribution to sub-divisions of this account shall be made asprovided in the following paragraph.

C. Account 108 shall be subaccounted asfollows:108.1 Accumulated Provision for Deprecia-

tion of Steam Production Plant108.2 Accumulated Provision for Deprecia-

tion of Nuclear Production Plant108.3 Accumulated Provision for Deprecia-

tion of Hydraulic Production Plant108.4 Accumulated Provision for Deprecia-

tion of Other Production Plant108.5 Accumulated Provision for Deprecia-

tion of Transmission Plant108.6 Accumulated Provision for Deprecia-

tion of Distribution Plant108.7 Accumulated Provision for Deprecia-

tion of General Plant108.8 Retirement Work in Progress

These subsidiary records shall reflect thecurrent credits and debits to this account insufficient detail to show separately for eachsuch functional classification: (1) theamount of accrual for depreciation, (2) thebook cost of property retired, (3) cost of re-moval, (4) salvage, and (5) other items, in-cluding recoveries from insurance.

D. When transfers of plant are made fromone electric plant account to another, orfrom or to another utility department, offrom or to nonutility property accounts, theaccounting for depreciation shall be as pro-vided in § 1767.16 (l).

E. The utility is restricted in its use of theaccumulated provision for depreciation tothe purposes set forth above. It shall nottransfer any portion of this account to re-tained earnings or make any other use there-of without authorization by RUS.

109 [Reserved]

110 [Reserved]

111 Accumulated Provision forAmortization of Electric Utility Plant

A. This account shall be credited with thefollowing:

1. Amounts charged to Account 404, Amor-tization of Limited-Term Electric Plant, forthe current amortization of limited-termelectric plant investments.

2. Amounts charged to Account 421, Mis-cellaneous Nonoperating Income, for amorti-zation expense on property included in Ac-

count 105, Electric Plant Held for FutureUse. Include also the balance of accumulatedprovision for amortization on property whentransferred to Account 105, Electric PlantHeld for Future Use, from other property ac-counts. See also Paragraph A(2), Account108, Accumulated Provision for Depreciationof Electric Utility Plant.

3. Amounts charged to Account 405, Amor-tization of Other Electric Plant.

4. Amounts charged to Account 413, Ex-penses of Electric Plant Leased to Others,for the current amortization of limited-termor other investments subject to amortizationincluded in Account 104, Electric PlantLeased to Others.

5. Amounts charged to Account 425, Mis-cellaneous Amortization, for the amortiza-tion of intangible or other electric plantwhich does not have a definite or terminablelife and is not subject to charges for depre-ciation expense, with RUS approval.

(The utility shall maintain subaccounts ofthis account for the amortization applicableto electric plant in service, electric plantleased to others and electric plant held forfuture use.)

B. When any property to which this ac-count applies is sold, relinquished, or other-wise retired from service, this account shallbe charged with the amount previously cred-ited in respect to such property. The bookcost of the property so retired less theamount chargeable to this account and lessthe net proceeds realized at retirement shallbe included in Account 421.1, Gain on Dis-position of Property, or Account 421.2, Losson Disposition of Property, as appropriate.

C. For general ledger and balance sheetpurposes, this account shall be regarded andtreated as a single composite provision foramortization. For purposes of analysis, how-ever, each utility shall maintain subsidiaryrecords in which this account is segregatedaccording to the following functional classi-fication for electric plant: (1) Steam produc-tion, (2) Nuclear production, (3) Hydraulicproduction, (4) Other production, (5) Trans-mission, (6) Distribution, and (7) General.These subsidiary records shall reflect thecurrent credits and debits to this account insufficient detail to show separately for eachsuch functional classification: (1) theamount of accrual for amortization, (2) thebook cost of property retired, (3) cost of re-moval, (4) salvage, and (5) other items, in-cluding recoveries from insurance.

D. The utility is restricted in its use of theaccumulated provision for amortization tothe purposes set forth above. It shall nottransfer any portion of this account to re-tained earnings or make any other use there-of without authorization by RUS.


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112 [Reserved]

113 [Reserved]

114 Electric Plant Acquisition Adjustments

A. This account shall include the dif-ference between the cost to the accountingutility of electric plant acquired as an oper-ating unit or system by purchase, merger,consolidation, liquidation, or otherwise, andthe original cost, estimated, if not known, ofsuch property, less the amount or amountscredited by the accounting utility at thetime of acquisition to accumulated provi-sions for depreciation and amortization andcontributions in aid of construction with re-spect to such property.

B. With respect to acquisitions after the ef-fective date of this system of accounts, thisaccount shall be subdivided so as to show theamounts included herein for each propertyacquisition and to electric plant in service,electric plant held for future use, and elec-tric plant leased to others. (See § 1767.16 (e).)

C. Debit amounts recorded in this accountrelated to plant and land acquisition may beamortized to Account 425, Miscellaneous Am-ortization, over a period not longer than theestimated remaining life of the properties towhich such amounts relate. Amounts relatedto the acquisition of land only may be amor-tized to Account 425 over a period of notmore than 15 years. Should a utility wish toaccount for debit amounts in this account inany other manner, it shall petition RUS forauthority to do so. Credit amounts recordedin this account shall be accounted for as di-rected by RUS.

115 Accumulated Provision for Amortiza-tion of Electric Plant Acquisition Adjust-ments

This account shall be credited or debitedwith amounts which are includible in Ac-count 406, Amortization of Electric Plant Ac-quisition Adjustments, or Account 425, Mis-cellaneous Amortization, for the purpose ofproviding for the extinguishment of amountsin Account 114, Electric Plant AcquisitionAdjustments, in instances where the amorti-zation of Account 114 is not being made bydirect write-off of the account.

116 Other Electric Plant Adjustments

A. This account shall include the dif-ference between the original cost, estimatedif not known, and the book cost of electricplant to the extent that such difference isnot properly includible in Account 114, Elec-tric Plant Acquisition Adjustments. (See§ 1767.16 (a)(3))

B. Amounts included in this account shallbe classified in such manner as to show theorigin of each amount and shall be disposedof as RUS may approve or direct.

NOTE: The provisions of this account shallnot be construed as approving or authorizingthe recording of appreciation of electricplant.

118 Other Utility Plant

This account shall include the balances inaccounts for utility plant, other than elec-tric plant, such as gas, or railway.

119 Accumulated Provision for Depreciationand Amortization of Other Utility Plant

This account shall include the accumu-lated provision for depreciation and amorti-zation applicable to utility property otherthan electric plant.

120.1 Nuclear Fuel in Process of Refine-ment, Conversion, Enrichment, and Fab-rication

A. This account shall include the originalcost to the utility of nuclear fuel materialswhile in process of refinement, conversion,enrichment, and fabrication into nuclearfuel assemblies and components, includingprocessing, fabrication, and necessary ship-ping costs. This account shall also includethe salvage value of nuclear materials whichare actually being reprocessed for use andwere transferred from Account 120.5, Accu-mulated Provision for Amortization of Nu-clear Fuel Assemblies. (See § 1767.10 (a)(27).)

B. This account shall be credited and Ac-count 120.2, Nuclear Fuel Materials and As-semblies—Stock Account, shall be debitedfor the cost of completed fuel assemblies de-livered for use in refueling or to be held asspares. In the case of the initial core loading,the transfer shall be made directly to Ac-count 120.3, Nuclear Fuel Assemblies in Re-actor, upon the conclusion of the experi-mental or test period of the plant prior to itsbecoming available for service.

Items

1. Cost of natural uranium, uranium oresconcentrates or other nuclear fuel sources,such as thorium, plutonium, and U–233.

2. Value of recovered nuclear materialsbeing reprocessed for use.

3. Milling process costs.4. Sampling and weighing, and assaying

costs.5. Purification and conversion process

costs.6. Costs of enrichment by gaseous diffusion

or other methods.7. Costs of fabrication into fuel forms suit-

able for insertion in the reactor.8. All shipping costs of materials and com-

ponents, including shipping of fabricated fuelassemblies to the reactor site.

9. Use charges on leased nuclear materialswhile in process of refinement, conversion,enrichment, and fabrication.


749


120.2 Nuclear Fuel Materials andAssemblies—Stock Account

A. This account shall be debited and Ac-count 120.1, Nuclear Fuel in Process of Re-finement, Conversion, Enrichment and Fab-rication, shall be credited with the cost offabricated fuel assemblies delivered for usein refueling or to be carried in stock asspares. It shall also include the original costof fabricated fuel assemblies purchased incompleted form. This account shall also in-clude the original cost of partially irradiatedfuel assemblies being held in stock for re-insertion in a reactor which had been trans-ferred from Account 120.3, Nuclear Fuel As-semblies in Reactor.

B. When fuel assemblies included in thisaccount are inserted in a reactor, this ac-count shall be credited and Account 120.3,Nuclear Fuel Assemblies in Reactor, debitedfor the cost of such assemblies.

C. This account shall also include the costof nuclear materials and byproduct mate-rials being held for future use and not actu-ally in process in Account 120.1, Nuclear Fuelin Process of Refinement, Conversion, En-richment and Fabrication.

120.3 Nuclear Fuel Assemblies in Reactor

A. This account shall include the cost ofnuclear fuel assemblies when inserted in areactor for the production of electricity. Theamounts included herein shall be transferredfrom Account 120.2, Nuclear Fuel Materialsand Assemblies—Stock Account, except forthe initial core loading which will be trans-ferred directly from Account 120.1, NuclearFuel in Process of Refinement, Conversion,Enrichment and Fabrication.

B. Upon removal of fuel assemblies from areactor, the original cost of the assembliesremoved shall be transferred to Account120.4, Spent Nuclear Fuel, or Account 120.2,Nuclear Fuel Materials and Assemblies—Stock Account, as appropriate.

120.4 Spent Nuclear Fuel

A. This account shall include the originalcost of nuclear fuel assemblies, in the proc-ess of cooling, transferred from Account120.3, Nuclear Fuel Assemblies in Reactor,upon removal from a reactor pending reproc-essing.

B. This account shall be credited and Ac-count 120.5, Accumulated Provision for Am-ortization of Nuclear Fuel Assemblies, deb-ited for fuel assemblies, after the cooling pe-riod is over, at the cost recorded in this ac-count.

120.5 Accumulated Provision forAmortization of Nuclear Fuel Assemblies

A. This account shall be credited and Ac-count 518, Nuclear Fuel Expense, shall bedebited for the amortization of the net costof nuclear fuel assemblies used in the pro-

duction of energy. The net cost of nuclearfuel assemblies subject to amortization shallbe the original cost of nuclear fuel assem-blies, plus or less the expected net salvagevalue of uranium, plutonium, and other by-products.

B. This account shall be credited with thenet salvage value of uranium, plutonium,and other nuclear by-products when suchitems are sold, transferred or otherwise dis-posed. Account 120.1, Nuclear Fuel in Processof Refinement, Conversion, Enrichment andFabrication, shall be debited with the netsalvage value of nuclear materials to be re-processed. Account 157, Nuclear MaterialsHeld for Sale, shall be debited for the net sal-vage value of nuclear materials not to be re-processed but to be sold or otherwise dis-posed of and Account 120.2, Nuclear Fuel Ma-terials and Assemblies—Stock Account, willbe debited with the net salvage value of nu-clear materials that will be held for futureuse and not actually in process, in Account120.1, Nuclear Fuel in Process of Refinement,Conversion, Enrichment, and Fabrication.

C. This account shall be debited and Ac-count 120.4, Spent Nuclear Fuel, shall becredited with the cost of fuel assemblies atthe end of the cooling period.

120.6 Nuclear Fuel Under Capital Leases

A. This account shall include the amountrecorded under capital leases for nuclear fuelleased from others for use by the utility inits utility operations.

B. Records shall be maintained with re-spect to each capital lease reflecting: (1)name of lessor, (2) basic details of lease, (3)terminal date, (4) original cost or fair mar-ket value of nuclear fuel leased, (5) futureminimum lease payments, (6) the amountrepresenting interest and the interest rateused, and (7) expenses paid.

Other Property and Investments

121 Nonutility Property

A. This account shall include the book costof land, structures, equipment, or other tan-gible or intangible property owned by theutility, but not used in utility service andnot properly includible in Account 105, Elec-tric Plant Held for Future Use.

B. This account shall also include theamount recorded under capital leases forproperty leased from others and used by theutility in its nonutility operations. Recordsshall be maintained with respect to eachlease reflecting: (1) name of lessor, (2) basicdetails of lease, (3) terminal date, (4) originalcost or fair market value of property leased,(5) future minimum lease payments, (6) exec-utory costs, (7) present value of minimumlessee payments, (8) the amount representinginterest and the interest rate used, and (9)expenses paid.


750


C. This account shall be subdivided so as toshow the amount of property used in oper-ations which are nonutility in character butnevertheless constitute a distinct operatingactivity of the company (such as operationof an ice department where such activity isnot classed as a utility) and the amount ofmiscellaneous property not used in oper-ations. The records in support of each sub-account shall be maintained so as to show anappropriate classification of the property.

NOTE: The gain from the sale or other dis-position of property included in this accountwhich had been previously recorded in Ac-count 105, Electric Plant Held for FutureUse, shall be accounted for in accordancewith Paragraph C of Account 105.

122 Accumulated Provision for Depreciationand Amortization of Nonutility Property

This account shall include the accumu-lated provision for depreciation and amorti-zation applicable to nonutility property.

123 Investment in Associated Companies

A. This account shall include the book costof investments in securities issued or as-sumed by associated companies and invest-ment advances to such companies, includinginterest accrued thereon when such interestis not subject to current settlement, pro-vided that the investment does not relate toa subsidiary company. (If the investment re-lates to a subsidiary company, it shall be in-cluded in Account 123.11, Investment in Sub-sidiary Companies.) Include herein the off-setting entry to the recording of amortiza-tion of discount or premium on interestbearing investments. (See Account 419, Inter-est and Dividend Income.)

B. This account shall be maintained insuch manner as to show the investment insecurities of, and advances to, each associ-ated company together with full particularsregarding any of such investments that arepledged.

NOTE A: Securities and advances of associ-ated companies owned and pledged shall beincluded in this account, but such securities,if held in special deposits or in special funds,shall be included in the appropriate depositor fund account. A complete record of securi-ties pledged shall be maintained.

NOTE B: Securities of associated companiesheld as temporary cash investments are in-cludible in Account 136, Temporary Cash In-vestments.

NOTE C: Balances in open accounts with as-sociated companies, which are subject tocurrent settlement, are includible in Ac-count 146, Accounts Receivable from Associ-ated Companies.

NOTE D: The utility may write down thecost of any security in recognition of a de-cline in the value thereof. Securities shall bewritten off or written down to a nominal

value if there is no reasonable prospect ofsubstantial value. Fluctuations in marketvalue shall not be recorded but a permanentimpairment in the value of securities shallbe recognized in the accounts. When securi-ties are written off or written down, theamount of the adjustment shall be chargedto Account 426.5, Other Deductions, or to anappropriate account for accumulated provi-sions for loss in value established as a sepa-rate subdivision of this account.

C. Account 123 shall be subaccounted asfollows:

123.1 Patronage Capital from Associated Co-operatives

123.3 Investment in Associated Organiza-tions—Federal Economic DevelopmentLoans


123.11 Investment in Subsidiary Companies123.21 Subscriptions to Capital Term Cer-

tificates—Supplemental Financing123.22 Investment in Capital Term Certifi-

cates—Supplemental Financing123.23 Other Investments in Associated Or-

ganizations

123.1 Patronage Capital from AssociatedCooperatives

This account shall include patronage cap-ital credits allocated to the accounting bor-rower by G&T cooperatives. It shall also in-clude capital credits, deferred patronage re-funds, or like items from other associatedcooperatives. The account shall be main-tained so as to reflect separately, the alloca-tions of patronage capital and patronage re-funds from each organization that makessuch allocations to the borrower.

123.3 Investment in Associated Organiza-tions—Federal Economic DevelopmentLoans

This account shall include investment ad-vances of Federal funds received from aRural Economic Development Grant to asso-ciated organizations for authorized ruraleconomic development projects.


This account shall include investment ad-vances of non-Federal funds from the RuralEconomic Development Grant revolving fundto associated organizations for authorizedrural economic development projects.

123.11 Investment in Subsidiary Companies

A. This account shall include the cost ofinvestments in securities issued or assumedby subsidiary companies and investment ad-vances to such companies, including interest


751


accrued thereon when such interest is notsubject to current settlement, plus the eq-uity in undistributed earnings or losses ofsuch subsidiary companies since acquisition.This account shall be credited with any divi-dends declared by such subsidiaries.

B. This account shall be maintained insuch a manner as to show separately for eachsubsidiary: the cost of such investments inthe securities of the subsidiary at the timeof acquisition; the amount of equity in thesubsidiary’s undistributed net earnings ornet losses since acquisition; advances orloans to such subsidiary; and full particularsregarding any such investments that arepledged.

123.21 Subscriptions to Capital TermCertificates—Supplemental Financing

This account shall include the total sub-scriptions to capital term certificates ofCFC. When subscriptions are paid, this ac-count shall be credited and Account 123.22,Investments in Capital Term Certificates—Supplemental Financing, debited.

123.22 Investments in Capital TermCertificates—Supplemental Financing

This account shall include paid subscrip-tions in capital term certificates of CFC orother supplemental lenders.

123.23 Other Investments in AssociatedOrganizations

This account shall include investments incapital stock, securities, membership fees,and investment advances to associated orga-nizations other than provided for elsewhere.This account shall be maintained in such amanner as to show the investment in stockand securities of and advances to each asso-ciated organization.

Items

1. Investments in capital stock of associ-ated organizations.

2. Investments in securities issued by asso-ciated organizations.

3. Membership fees in associated organiza-tions, including NRECA, and Statewide asso-ciations of RUS-financed borrowers.

4. Investment advances to associated orga-nizations.

124 Other Investments

A. This account shall include the book costof investments in securities issued or as-sumed by nonassociated companies, invest-ment advances to such companies, and anyinvestments not accounted for elsewhere. In-clude also the offsetting entry to the record-ing of amortization of discount or premiumon interest bearing investments. (See Ac-count 419, Interest and Dividend Income.)

B. The records shall be maintained in suchmanner as to show the amount of each in-

vestment and the investment advances toeach person.


124.1 Other Investments—Federal EconomicDevelopment Loans

124.2 Other Investments—Non-Federal Eco-nomic Development Loans

NOTE A: Securities owned and pledged shallbe included in this account, but securitiesheld in special deposits or in special fundsshall be included in appropriate deposit orfund accounts. A complete record of securi-ties pledged shall be maintained.

NOTE B: Securities held as temporary cashinvestments shall not be included in this ac-count.

NOTE C: See Note D of Account 123.

124.1 Other Investments—Federal EconomicDevelopment Loans

This account shall include investment ad-vances of Federal funds received from aRural Economic Development Grant to non-associated organizations for authorized ruraleconomic development projects.

124.2 Other Investments—Non-FederalEconomic Development Loans

This account shall include investment ad-vances of non-Federal funds from the RuralEconomic Development Grant revolving fundto nonassociated organizations for author-ized rural economic development projects.

125 Sinking Funds

This account shall include the amount ofcash and book cost of investments held insinking funds. A separate account, with ap-propriate title, shall be kept for each sinkingfund. Transfers from this account to specialdeposit accounts, may be made as necessaryfor the purpose of paying matured sinkingfund obligations, or obligations called for re-demption but not presented, or the interestthereon.

126 Depreciation Fund

This account shall include the amount ofcash and the book cost of investments whichhave been segregated in a special fund forthe purpose of identifying such assets withthe accumulated provisions for depreciation.

128 Other Special Funds

This account shall include the amount ofcash and book cost of investments whichhave been segregated in special funds for in-surance, employee pensions, savings, relief,hospital, and other purposes not provided forelsewhere. A separate account, with appro-priate title, shall be kept for each fund.

NOTE: Amounts deposited with a trusteeunder the terms of an irrevocable trustagreement for pensions or other employee


752


benefits shall not be included in this ac-count.

Current and Accrued Assets

Current and accrued assets are cash, thoseassets which are readily convertible intocash or are held for current use in operationsor construction, current claims against oth-ers, payment of which is reasonably assured,and amounts accruing to the utility whichare subject to current settlement, exceptsuch items for which accounts other thanthose designated as current and accrued as-sets are provided. There shall not be includedin the category of accounts designated ascurrent and accrued assets any item, theamount or collectibility of which is not rea-sonably assured, unless an adequate provi-sion for possible loss has been made therefor.Items of current character but of doubtfulvalue may be written down, and for recordpurposes carried in these accounts at nomi-nal value.

131 Cash

A. This account shall include the amountof current cash funds except working funds.

B. Account 131 shall be subaccounted asfollows:

131.1 Cash—General131.2 Cash—Construction Fund—Trustee131.3 Cash—Installation Loan and Collec-

tion Fund131.4 Transfer of Cash131.12 Cash—General—Economic Develop-

ment Loan Funds131.13 Cash—General—Economic Develop-

ment Grant Funds131.14 Cash—General—Economic Develop-

ment Non-Federal Revolving Funds

131.1 Cash—General

This account shall include all cash of theorganization not provided for elsewhere. Sep-arate subaccounts may be maintained foreach bank account in which general cash ismaintained. Funds held by others for currentobligations shall be recorded in Account 134,Other Special Deposits.

131.2 Cash—Construction Fund—Trustee

This account shall include the cash re-ceived from the Rural Utilities Service, CFC,and any other source of supplemental financ-ing for financing the construction, purchase,and operation of electric facilities. RUS con-struction loan fund advances shall becharged to this account and credited to Ac-count 224.4, RUS Notes Executed—Construc-tion—Debit. CFC and other supplementallender construction loan fund advances shallbe charged to this account and credited toAccount 224.13, Supplemental FinancingNotes Executed—Debit.

131.3 Cash—Installation Loan andCollection Fund

A. This account shall include the cash ad-vanced on installation loans made subse-quent to September 13, 1957. Such advancesshall be debited to this account as receivedand credited to Account 224.10, RUS NotesExecuted—Installation—Debit. This accountshall also include interest and principal col-lections received on consumers’ loans fi-nanced from RUS loans made subsequent toSeptember 13, 1957.

B. Payments shall be made from this ac-count solely for financing consumers’ loansfor the purpose of wiring of consumers’premises, and the acquisition and installa-tion of electrical and plumbing appliancesand equipment by consumers. The cash inthis account is also used for the payment ofprincipal and interest on installation loansmade by RUS, subsequent to September 13,1957, in accordance with the terms of theloan agreement.

131.4 Transfer of Cash

This account shall be used in transferringfunds from one bank account to another.This account is charged when the check isdrawn for the transfer and entered in thecheck register, and credited when theamount transferred is entered in the cash re-ceipts book. This account is to be used as aclearing account and should not have abalance at the end of an accounting period.

131.12 Cash—General—EconomicDevelopment Funds

This account shall include the cash re-ceived from the Rural Utilities Service forRural Economic Development Loans. Eco-nomic development loan advances shall becharged to this account and credited to Ac-count 224.17, RUS Notes Executed—EconomicDevelopment—Debit.

131.13 Cash—General—EconomicDevelopment Grant Funds

This account shall include cash receivedfrom the Rural Utilities Service for RuralEconomic Development Grants. Economicdevelopment grant funds shall be charged tothis account and credited to Account 224.18,Other Long-Term Debt—Grant Funds; Ac-count 208, Donated Capital; or Account 421,Miscellaneous Nonoperating Income, as ap-propriate. This account shall be credited andeither Account 123.3, Investment in Associ-ated Organizations—Federal Economic De-velopment Loans, or Account 124.1, Other In-vestments—Federal Economic DevelopmentLoans, shall be debited, as appropriate, withthe amount of an economic development re-volving fund loan.


753


131.14 Cash—General—EconomicDevelopment Non-Federal Revolving Funds

This account shall include all non-Federalfunds comprising the economic developmentrevolving fund. It shall include all funds sup-plied by the borrower as well as all cash re-ceived from the repayment of loans madefrom the economic development revolvingfund. This account shall be credited and ei-ther Account 123.4, Investment in AssociatedOrganizations—Non-Federal Economic De-velopment Loans, or Account 124.2, Other In-vestments—Non-Federal Economic Develop-ment Loans, shall be debited, as appropriate,with the amount of an economic develop-ment revolving fund loan.

132 Interest Special Deposits

This account shall include special depositswith fiscal agents or others for the paymentof interest.

133 Dividend Special Deposits

This account shall include special depositswith fiscal agents or others for the paymentof dividends.

134 Other Special Deposits

This account shall include deposits withfiscal agents or others for special purposesother than the payment of interest and divi-dends. Such special deposits may includecash deposited with Federal, state, or munic-ipal authorities as a guaranty for the fulfill-ment of obligations; cash deposited withtrustees to be held until mortgaged propertysold, destroyed, or otherwise disposed of isreplaced; and cash realized from the sale ofthe accounting utility’s securities and depos-ited with trustees to be held until investedin property of the utility. Entries to this ac-count shall specify the purpose for which thedeposit is made.

NOTE: Assets available for general cor-porate purposes shall not be included in thisaccount. Further, deposits for more than oneyear, which are not offset by current liabil-ities, shall not be charged to this accountbut to Account 128, Other Special Funds.

135 Working Funds

This account shall include cash advancedto officers, agents, employees, and others aspetty cash or working funds.

136 Temporary Cash Investments

A. This account shall include the book costof investments, such as demand and timeloans, bankers’ acceptances, United StatesTreasury certificates, marketable securities,and other similar investments, acquired forthe purpose of temporarily investing cash.

B. This account shall be so maintained asto show separately temporary cash invest-ments in securities of associated companies

and of others. Records shall be kept of anypledged investments.

141 Notes Receivable

A. This account shall include the bookcost, not includible elsewhere, of all collect-ible obligations in the form of notes receiv-able and similar evidences (except interestcoupons) of money due on demand or withinone year from the date of issue, except, how-ever, notes receivable from associated com-panies. (See Account 136, Temporary CashInvestments, and Account 145, Notes Receiv-able from Associated Companies.)

NOTE: The face amount of notes receivablediscounted, sold, or transferred without re-leasing the utility from liability as endorserthereon, shall be credited to a separate sub-division of this account and appropriate dis-closure shall be made in the financial state-ments of any contingent liability arisingfrom such transactions.


141.1 Accumulated Provision forUncollectible Notes—Credit

141.1 Accumulated Provision forUncollectible Notes—Credit

This account shall be credited withamounts provided for losses on notes receiv-able which may become uncollectible, andalso with collections on notes previouslycharged hereto. Concurrent charges shall bemade to Account 904, Uncollectible Ac-counts.

142 Customer Accounts Receivable

A. This account shall include amounts duefrom customers for utility service and formerchandising, jobbing, and contract work.This account shall not include amounts duefrom associated companies.

B. This account shall be maintained so asto permit ready segregation of the amountsdue for merchandising, jobbing, and contractwork.


142.1 Customer Accounts Receivable—Elec-tric

142.2 Customer Accounts Receivable—Other

142.1 Customer Accounts Receivable—Electric

This account shall include amounts duefrom customers for utility service.

142.2 Customer Accounts Receivable—Other

This account shall include amounts duefrom customers for merchandising, jobbing,and contract work.


754


143 Other Accounts Receivable

A. This account shall include amounts duethe utility upon open accounts, other thanamounts due from associated companies andfrom customers for utility services and mer-chandising, jobbing and contract work.

B. This account shall be maintained so asto show separately amounts due on subscrip-tions to capital stock and from officers andemployees. The account shall not includeamounts advanced to officers or others asworking funds. (See Account 135, WorkingFunds.)

144 Accumulated Provision forUncollectible Accounts—Credit

A. This account shall include amounts pro-vided for losses on accounts receivable whichmay become uncollectible, and also with col-lections on accounts previously chargedhereto. Concurrent charges shall be made toAccount 904, Uncollectible Accounts, foramounts applicable to utility operations,and to corresponding accounts for other op-erations. Records shall be maintained so asto show the write-offs of accounts receivablefor each utility department.


144.1 Accumulated Provision forUncollectible Customer Accounts—Cred-it



144.4 Accumulated Provision for OtherUncollectible Accounts—Credit

144.1 Accumulated Provision forUncollectible Customer Accounts—Credit

This account shall be credited withamounts provided for losses on accounts re-ceivable which may become uncollectible,and also with collections on accounts pre-viously charged hereto. Concurrent chargesshall be made to Account 904, UncollectibleAccounts.


This account shall be credited withamounts provided for losses on merchan-dising, jobbing, and contract work whichmay become uncollectible, and also with col-lections on accounts previously chargedhereto. Concurrent charges shall be made toAccount 904, Uncollectible Accounts, foramounts applicable to utility operations,and to corresponding accounts for other op-erations.


This account shall be credited withamounts provided for losses on accounts re-ceivable from officers and employees whichmay become uncollectible and also with col-lections on accounts previously chargedhereto. Concurrent charges shall be made toAccount 904, Uncollectible Accounts.

144.4 Accumulated Provision for OtherUncollectible Accounts—Credit

This account shall be credited withamounts provided for losses on accounts re-ceivable which may become uncollectibleand for which the recording of this credit hasnot been provided for elsewhere. This ac-count shall also be credited with collectionson accounts previously charged hereto. Con-current charges shall be made to Account904, Uncollectible Accounts, for amounts ap-plicable to utility operations and to cor-responding accounts for other operations.

145 Notes Receivable from AssociatedCompanies

This account shall include notes uponwhich associated companies are liable, andwhich mature and are expected to be paid infull not later than one year from the date ofissue, together with any interest thereon,and debit balances subject to current settle-ment in open accounts with associated com-panies. Items which do not bear a specifieddue date but which have been carried formore than twelve months and items whichare not paid within twelve months from duedate shall be transferred to Account 123, In-vestment in Associated Companies.

NOTE: The face amount of notes receivablediscounted, sold or transferred without re-leasing the utility from liability as endorserthereon, shall be credited to a separate sub-division of this account and appropriate dis-closure shall be made in the financial state-ments of any contingent liability arisingfrom such transactions.

146 Accounts Receivable from AssociatedCompanies

This account shall include drafts uponwhich associated companies are liable, andwhich mature and are expected to be paid infull not later than one year from the date ofissue, together with any interest thereon,and debit balances subject to current settle-ment in open accounts with associated com-panies. Items which do not bear a specifieddue date but which have been carried formore than twelve months and items whichare not paid within twelve months from duedate shall be transferred to Account 123, In-vestment in Associated Companies.

NOTE: On the balance sheet, accounts re-ceivable from an associated company may be


755


offset against accounts payable to the samecompany.

151 Fuel Stock

This account shall include the book cost offuel on hand.

Items

1. Invoice price of fuel less any cash orother discounts.

2. Freight, switching, demurrage, andother transportation charges, not including,however, any charges for unloading from theshipping medium.

3. Excise taxes, purchasing agents’ com-missions, insurance, and other expenses di-rectly assignable to cost of fuel.

4. Operating, maintenance and deprecia-tion expenses, and ad valorem taxes on util-ity-owned transportation equipment used totransport fuel from the point of acquisitionto the unloading point.

5. Lease or rental costs of transportationequipment used to transport fuel from thepoint of acquisition to the unloading point.

152 Fuel Stock Expenses Undistributed

A. This account may include the cost oflabor and of supplies used and expenses in-curred in unloading fuel from the shippingmedium and in the handling thereof prior toits use, if such expenses are sufficiently sig-nificant in amount to warrant being treatedas a part of the cost of fuel inventory ratherthan being charged direct to expense as in-curred.

B. Amounts included herein shall becharged to expense as the fuel is used to theend that the balance herein shall not exceedthe expenses attributable to the inventory offuel on hand.

Items

Labor:1. Procuring and handling of fuel.2. All routine fuel analyses.3. Unloading from shipping facility and

placing in storage.4. Moving of fuel in storage and transfer-

ring from one station to another.5. Handling from storage or shipping facil-

ity to first bunker, hopper, bucket, tank, orholder of boiler house structure.

6. Operation of mechanical equipment suchas locomotives, trucks, cars, boats, barges,and cranes.

Supplies and Expenses:1. Tools, lubricants and other supplies.2. Operating supplies for mechanical equip-

ment.3. Transportation and other expenses in

moving fuel.4. Stores expenses applicable to fuel.

153 Residuals

This account shall include the book cost ofany residuals produced in the production ormanufacturing processes.

154 Plant Materials and Operating Supplies

A. This account shall include the cost ofmaterials purchased primarily for use in theutility business for construction, operationand maintenance purposes. It shall also in-clude the book cost of materials recovered inconnection with construction, maintenance,or the retirement of property, such materialsbeing credited to construction, maintenance,or accumulated depreciation provision, re-spectively, and included herein as follows:

1. Reusable materials consisting of largeindividual items shall be included in this ac-count at original cost, estimated if notknown. The cost of repairing such itemsshall be charged to the maintenance accountappropriate for the previous use.

2. Reusable materials consisting of rel-atively small items, the identity of which(from the date of original installation to thefinal abandonment or sale thereof) cannot beascertained without undue refinement in ac-counting, shall be included in this account atcurrent prices new for such items. The costof repairing such items shall be charged tothe appropriate expense account as indicatedby previous use.

3. Scrap and nonusable materials includedin this account shall be carried at the esti-mated net amount realizable therefrom. Thedifference between the amounts realized forscrap and nonusable materials sold and thenet amount at which the materials were car-ried in this account, as far as practicable,shall be adjusted to the accounts creditedwhen the materials were charged to this ac-count.

B. Materials and supplies issued shall becredited hereto and charged to the appro-priate construction, operating expense, orother account on the basis of a unit price de-termined by the use of cumulative average,first-in-first-out, or such other method of in-ventory accounting as conforms with accept-ed accounting standards consistently ap-plied.

Items

1. Invoice price of materials less cash orother discounts.

2. Freight, switching, or other transpor-tation charges when practicable to includeas part of the cost of particular materials towhich they relate.

3. Customs duties and excise taxes.4. Costs of inspection and special tests

prior to acceptance.5. Insurance and other directly assignable

charges.NOTE: Where expenses applicable to mate-

rials purchased cannot be directly assigned


756


to particular purchases, they shall becharged to Account 163, Stores Expense Un-distributed.

155 Merchandise

This account shall include the book cost ofmaterials and supplies and appliances andequipment held primarily for merchandising,jobbing, and contract work. The principlesprescribed in accounting for utility mate-rials and supplies shall be observed with re-spect to items carried in this account.

156 Other Materials and Supplies

This account shall include the book cost ofmaterials and supplies held primarily fornonutility purposes. The principles pre-scribed in accounting for utility materialsand supplies shall be observed with respectto items carried in this account.

157 Nuclear Materials Held for Sale

This account shall include the net salvagevalue of uranium, plutonium, and other nu-clear materials held by the company for saleor other disposition that are not to be reusedby the company in its electric utility oper-ations. This account shall be debited and Ac-count 120.5, Accumulated Provision for Am-ortization of Nuclear Fuel Assemblies, cred-ited for such net salvage value. Any dif-ference between the amount recorded in thisaccount and the actual amount realized fromthe sale of materials shall be debited or cred-ited, as appropriate, to Account 518, NuclearFuel Expense, at the time of such sale.

158.1 Allowance Inventory

A. This account shall include the cost ofallowances owned by the utility and notwithheld by the Environmental ProtectionAgency. See § 1767.15 (u) and Account 158.2,Allowances Withheld.

B. This account shall be credited and Ac-count 509, Allowances, shall be debited con-current with the monthly emission of sulfurdioxide.

C. Separate subdivisions of this accountshall be maintained so as to separately ac-count for those allowances usable in the cur-rent year and in each subsequent year. Theunderlying records of these subdivisionsshall be maintained in sufficient detail so asto identify each allowance included; the ori-gin of each allowance; and the acquisitioncost, if any, of the allowance.

158.2 Allowances Withheld

A. This account shall include the cost ofallowances owned by the utility but withheldby the Environmental Protection Agency.(See § 1767.15 (u).)

B. The inventory cost of the allowances re-leased by the Environmental ProtectionAgency for use by the utility shall be trans-

ferred to Account 158.1, Allowance Inven-tory.

C. The underlying records of this accountshall be maintained in sufficient detail so asto identify each allowance included; the ori-gin of each allowance; and the acquisitioncost, if any, of the allowances.

163 Stores Expense Undistributed

A. This account shall include the cost ofsupervision, labor, and expenses incurred inthe operation of general storerooms, includ-ing purchasing, storage, handling, and dis-tribution of materials and supplies.

B. This account shall be cleared by addingto the cost of materials and supplies issued,a suitable loading charge which will dis-tribute the expense equitably over storesissues. The balance in the account at theclose of the year shall not exceed the amountof stores expenses reasonably attributable tothe inventory of materials and supplies, ex-clusive of fuel, as any amount applicable tofuel costs should be included in Account 152,Fuel Stock Expenses Undistributed.

Items

Labor:

1. Inspecting and testing materials andsupplies when not assignable to specificitems.

2. Unloading from shipping facility andplacing in storage.

3. Supervision of purchasing and stores de-partment to extent assignable to materialshandled through stores.

4. Getting materials from stock and inreadiness to go out.

5. Inventorying stock received or stock onhand by stores employees but not includinginventories by general department employ-ees as part of internal or general audits.

6. Purchasing department activities inchecking material needs, investigatingsources of supply, analyzing prices, pre-paring and placing orders, and related activi-ties to extent applicable to materials han-dled through stores. (Optional: Purchasingdepartment expenses may be included in ad-ministrative and general expenses.)

7. Maintaining stores equipment.8. Cleaning and tidying storerooms and

stores offices.9. Keeping stock records, including the re-

cording and posting of material receipts andissues and maintaining inventory records ofstock.

10. Collecting and handling scrap materialsin stores.

Supplies and Expenses:

1. Adjustments of inventories of materialsand supplies but not including large dif-ferences which can readily be assigned to im-portant classes of materials and equitablydistributed among the accounts to which


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such classes of materials have been chargedsince the previous inventory.

2. Cash and other discounts not practicallyassignable to specific materials.

3. Freight and express charges when not as-signable to specific items.

4. Heat, light, and power for storeroomsand store offices.

5. Brooms, brushes, sweeping compoundsand other supplies used in cleaning andtidying storerooms and stores offices.

6. Injuries and damages.7. Insurance on materials and supplies and

on stores equipment.8. Losses due to breakage, leakage, evapo-

ration, fire or other causes, less credits foramounts received from insurance, transpor-tation companies, or others in compensationof such losses.

9. Postage, printing, stationery, and officesupplies.

10. Rent of storage space and facilities.11. Communication service.12. Excise and other similar taxes not as-

signable to specific materials.13. Transportation expense on inward

movement of stores and on transfer betweenstorerooms but not including charges on ma-terials recovered from retirements whichshall be accounted for as part of the cost ofremoval.

NOTE: A physical inventory of each class ofmaterials and supplies shall be made at leastevery two years.

165 Prepayments

A. This account shall include amounts rep-resenting prepayments of insurance, rents,taxes, interest, and miscellaneous items, andshall be kept or supported in such manner asto disclose the amount of each class of pre-payment.


165.1 Prepayments—Insurance165.2 Other Prepayments

171 Interest and Dividends Receivable

This account shall include the amount ofinterest on bonds, mortgages, notes, com-mercial paper, loans, open accounts, and de-posits, the payment of which is reasonablyassured, and the amount of dividends de-clared or guaranteed on stocks owned.

NOTE A: Interest which is not subject tocurrent settlement shall not be includedherein but in the account in which the asso-ciated principle is recorded.

NOTE B: Interest and dividends receivablefrom associated companies shall be includedin Account 146, Accounts Receivable fromAssociated Companies.

172 Rents Receivable

This account shall include rents receivableor accrued on property rented or leased bythe utility to others.

NOTE: Rents receivable from associatedcompanies shall be included in Account 146,Accounts Receivable from Associated Com-panies.

173 Accrued Utility Revenues

At the option of the utility, the estimatedamount accrued for service rendered, but notbilled at the end of any accounting period,may be included herein. If accruals are madefor unbilled revenues, accruals shall also bemade for unbilled expenses, such as the pur-chase of energy.

174 Miscellaneous Current and AccruedAssets

This account shall include the book cost ofall other current and accrued assets, appro-priately designated and supported so as toshow the nature of each asset included here-in.

Deferred Debits

181 Unamortized Debt Expense

This account shall include expenses relatedto the issuance or assumption of debt securi-ties. Amounts recorded in this account shallbe amortized over the life of each respectiveissue under a plan which will distribute theamount equitably over the life of the secu-rity. The amortization shall be on a monthlybasis, and the amounts thereof shall becharged to Account 428, Amortization ofDebt Discount and Expense. Anyunamortized amounts outstanding at thetime that the related debt is prematurely re-acquired shall be accounted for as indicatedin § 1767.15 (q).

182.1 Extraordinary Property Losses

A. When authorized or directed by RUS,this account shall include extraordinarylosses which could not reasonably have beenanticipated and which are not covered by in-surance or other provisions, such as unfore-seen damages to property.

B. Application to RUS for permission touse this account shall be accompanied by astatement giving a complete explanationwith respect to the items which it is pro-posed to include herein, the period overwhich, and the accounts to which it is pro-posed to write off the charges, and other per-tinent information.

182.2 Unrecovered Plant and RegulatoryStudy Costs

A. This account shall include: (1) non-recurring costs of studies and analyses man-dated by regulatory bodies related to plants


758


in service, transferred from Account 183, Pre-liminary Survey and Investigations Charges,and not resulting in construction; and (2)when authorized by RUS, significant unre-covered costs of plant facilities where con-struction has been cancelled or which havebeen prematurely retired.

B. This account shall be credited and Ac-count 407, Amortization of Property Losses,Unrecovered Plant and Regulatory StudyCosts, shall be debited over the period speci-fied by RUS.

C. Any additional costs incurred, relativeto the cancellation or premature retirement,may be included in this account and amor-tized over the remaining period of the origi-nal amortization period. Should any gains orrecoveries be realized relative to the can-celled or prematurely retired plant, suchamounts shall be used to reduce theunamortized amount of the costs recordedherein.

D. In the event that the recovery of costsincluded herein is disallowed in the rate pro-ceedings, the disallowed costs shall becharged to Account 426.5, Other Deductions,in the year of such disallowance.

182.3 Other Regulatory Assets

A. This account shall include the amountsof regulatory-created assets, not includablein other accounts, resulting from the rate-making actions of regulatory agencies. (Seethe definition of regulatory assets and liabil-ities.)

B. The amounts included in this accountare to be established by those charges whichwould have been included in net income de-terminations in the current period under thegeneral requirements of the Uniform Systemof Accounts but for it being probable thatsuch items will be included in a different pe-riod(s) for purposes of developing the ratesthat the utility is authorized to charge forits utility services. When specific identifica-tion of the particular source of a regulatoryasset cannot be made, such as in plant phase-ins, rate moderation plans, or ratelevelization plans, Account 407.4, RegulatoryCredits, shall be credited. The amounts re-corded in this account are generally to becharged, concurrently with the recovery ofthe amounts in rates, to the same accountthat would have been charged if included inincome when incurred, except all regulatoryassets established through the use of Ac-count 407.4 shall be charged to Account 407.3,Regulatory Debits, concurrent with the re-covery of the amounts in rates.

C. If rate recovery of all or part of anamount included in this account is dis-allowed, the disallowed amount shall becharged to Account 426.5, Other Deductions,or Account 435, Extraordinary Deductions, inthe year of the disallowance.

D. The records supporting the entries tothis account shall be kept so that the utility

can furnish full information as to the natureand amount of each regulatory asset in-cluded in this account, including justifica-tion for inclusion of such amounts in this ac-count.

183 Preliminary Survey and InvestigationCharges

A. This account shall be charged with allexpenditures for preliminary surveys, plans,and investigations made for the purpose ofdetermining the feasibility of utilityprojects under contemplation. If construc-tion results, this account shall be creditedand the appropriate utility plant accountcharged. If the work is abandoned, thecharge shall be made to Account 426.5, OtherDeductions, or to the appropriate operatingexpense account.

B. This account shall also include costs ofstudies and analyses mandated by regulatorybodies related to plant in service. If con-struction results from such studies, this ac-count shall be credited and the appropriateutility plant account charged with an equi-table portion of such study costs directly at-tributable to new construction. The portionof such study costs not attributable to newconstruction or the entire cost if construc-tion does not result shall be charged to Ac-count 182.2, Unrecovered Plant and Regu-latory Study Costs, or the appropriate oper-ating expense account. The costs of suchstudies relative to plant under constructionshall be included directly inAccount 107,Construction Work in Progress—Electric.

C. The records supporting the entries tothis account shall be so kept that the utilitycan furnish complete information as to thenature and the purpose of the survey, plans,or investigations, and the nature andamounts of the several charges.

NOTE: The amount of preliminary surveyand investigation charges transferred to util-ity plant shall not exceed the expenditureswhich may reasonably be determined to con-tribute directly and immediately and with-out duplication to utility plant.

184 Clearing Accounts

A. This caption shall include undistributedbalances in clearing accounts at the date ofthe balance sheet. Balances in clearing ac-count shall be substantially cleared not laterthan the end of the calendar year unlessitems held therein relate to a future period.

B. Account 184 shall be subaccounted asfollows:184.1 Transportation Expense—Clearing184.2 Clearing Accounts—Other

185 Temporary Facilities

This account shall include amounts shownby work orders for plant installed for tem-porary use in utility service for periods ofless than one year. Such work orders shall be


759


charged with the cost of temporary facilitiesand credited with payments received fromcustomers and net salvage realized on re-moval of the temporary facilities. Any netcredit or debit resulting shall be cleared toAccount 451, Miscellaneous Service Reve-nues.

186 Miscellaneous Deferred Debits

This account shall include all debits notelsewhere provided for, such as miscella-neous work in progress, and unusual or ex-traordinary expenses, not included in otheraccounts, which are in process of amortiza-tion and items the proper final disposition ofwhich is uncertain.

187 Deferred Losses from Disposition ofUtility Plant

This account shall include losses from thesale or other disposition of property pre-viously recorded in Account 105, ElectricPlant Held for Future Use, under the provi-sions of Paragraphs B, C, and D thereof,where such losses are significant and are tobe amortized over a period of 5 years, unlessotherwise authorized by RUS. The amortiza-tion of the amounts in this account shall bemade by debits to Account 411.7, Losses fromDisposition of Utility Plant. (See Account105, Electric Plant Held for Future Use.)

188 Research, Development, andDemonstration Expenditures

A. This account shall be charged with thecost of all expenditures coming within themeaning of Research, Development, andDemonstration (RD&D) of this USoA (See§ 1767.10 (a)(34)) except those expendituresproperly chargeable to Account 107, Con-struction Work in Progress—Electric.

B. Costs that are minor or of a general orrecurring nature shall be transferred fromthis account to the appropriate operating ex-pense function or if such costs are commonto the overall operations or cannot be fea-sibly allocated to the various operating ac-counts, such costs shall be recorded in Ac-count 930.2, Miscellaneous General Expenses.

C. In certain instances, a company mayincur large and significant research, develop-ment, and demonstration expenditures whichare nonrecurring and which would distortthe annual research, development, and dem-onstration charges for the period. In such acase, the portion of such amounts that causethe distortion may be amortized to the ap-propriate operating expense account over aperiod not to exceed 5 years unless otherwiseauthorized by RUS.

D. The entries in this account must be somaintained as to show separately eachproject along with complete detail of the na-ture and purpose of the research, develop-

ment, and demonstration project togetherwith the related costs.

189 Unamortized Loss on Reacquired Debt

This account shall include the losses onlong-term debt reacquired or redeemed. Theamounts in this account shall be amortizedin accordance with § 1767.15 (q).

190 Accumulated Deferred Income Taxes

A. This account shall be debited and Ac-count 411.1, Provision for Deferred IncomeTaxes—Credit, Utility Operating Income, orAccount 411.2, Provision for Deferred IncomeTaxes—Credit, Other Income and Deduc-tions, as appropriate, shall be credited withan amount equal to that by which incometaxes payable for the year are higher becauseof the inclusion of certain items in incomefor tax purposes, which items for general ac-counting purposes will not be fully reflectedin the utility’s determination of annual netincome until subsequent years.

B. This account shall be credited and Ac-count 410.1, Provision for Deferred IncomeTaxes, Utility Operating Income, or Account410.2, Provision for Deferred Income Taxes,Other Income and Deductions, as appro-priate, shall be debited with an amountequal to that by which income taxes payablefor the year are lower because of prior pay-ment of taxes as provided by Paragraph Aabove, because of difference in timing for taxpurposes of particular items of income or in-come deductions from that recognized by theutility for general accounting purposes. Suchcredit to this account and debit to Account410.1 or Account 410.2 shall, in general, rep-resent the effect on taxes payable in the cur-rent year of the smaller amount of book in-come recognized for tax purposes as com-pared to the amount recognized in the util-ity’s current accounts with respect to theitem or class of items for which deferred taxaccounting by the utility was authorized byRUS.

C. Vintage year records with respect to en-tries to this account, as described above, andthe account balance, shall be so maintainedas to show the factor of calculation with re-spect to each annual amount of the item orclass of items for which deferred tax ac-counting by the utility is utilized.

D. The utility is restricted in its use ofthis account to the purpose set forth above.It shall not make use of the balance in thisaccount or any portion thereof except as pro-vided in the text of this account, withoutprior approval of RUS. Any remaining de-ferred tax account balance with respect to anamount for any prior year’s tax deferral, theamortization of which or other recognitionin the utility’s income accounts has beencompleted, or other disposition made, shall


760


be debited to Account 410.1, Provision for De-ferred Income Taxes, Utility Operating In-come, or Account 410.2, Provision for De-ferred Income Taxes, Other Income and De-ductions, as appropriate, or otherwise dis-posed of as RUS may authorize or direct.(See § 1767.15 (t).)

[58 FR 59825, Nov. 10, 1993, as amended at 59FR 27436, May 27, 1994; 60 FR 55429, 55430,Nov. 1, 1995]

§ 1767.19 Liabilities and other credits.The liabilities and other credit ac-

counts identified in this section shallbe used by all RUS borrowers.

LIABILITIES AND OTHER CREDITS

Margins and Equities

200 Memberships200.1 Memberships Issued200.2 Memberships Subscribed But Unissued201 Patronage Capital201.1 Patronage Capital Credits201.2 Patronage Capital Assignable202 [Reserved]203 [Reserved]204 [Reserved]205 [Reserved]206 [Reserved]207 [Reserved]208 Donated Capital209 [Reserved]210 [Reserved]211 Consumers’ Contributions for Debt

Service212 [Reserved]213 [Reserved]214 [Reserved]215 Appropriated Margins215.1 Unrealized Gains and Losses—Debt

and Equity Securities216 [Reserved]216.1 Unappropriated Undistributed Sub-

sidiary Earnings217 Retired Capital Credits—Gain218 Capital Gains and Losses219 Other Margins and Equities219.1 Operating Margins219.2 Nonoperating Margins219.3 Other Margins219.4 Other Margins and Equities—Prior Pe-

riods

Long-Term Debt

221 Bonds222 Reacquired Bonds223 Advances from Associated Companies224 Other Long-Term Debt224.1 Long-Term Debt—RUS Construction

Loan Contract224.2 RUS Loan Contract—Construction—

Debit224.3 Long-Term Debt—RUS Construction

Notes Executed

224.4 RUS Notes Executed—Construction—Debit

224.5 Interest Accrued—Deferred—RUS Con-struction

224.6 Advance Payments Unapplied—RUSLong-Term Debt—Debit

224.7 Long-Term Debt—Installation LoanContract

224.8 RUS Loan Contract—Installation—Debit

224.9 Long-Term Debt—Installation NotesExecuted

224.10 RUS Notes Executed—Installation—Debit

224.11 Other Long-Term Debt—Subscrip-tions

224.12 Other Long-Term Debt—Supple-mental Financing

224.13 Supplemental Financing Notes Exe-cuted—Debit

224.14 Other Long-Term Debt—Miscella-neous

224.15 Notes Executed—Other—Debit224.16 Long-Term Debt—RUS Economic De-

velopment Notes Executed224.17 RUS Notes Executed—Economic De-

velopment—Debit225 Unamortized Premium on Long-Term

Debt226 Unamortized Discount on Long-Term

Debt—Debit

Other Noncurrent Liabilities

227 Obligations Under Capital Leases—Non-current

228.1 Accumulated Provision for PropertyInsurance

228.2 Accumulated Provision for Injuriesand Damages

228.3 Accumulated Provision for Pensionsand Benefits

228.4 Accumulated Miscellaneous OperatingProvisions

229 Accumulated Provision for Rate Re-funds

Current and Accrued Liabilities

231 Notes Payable232 Accounts Payable232.1 Accounts Payable—General232.2 Accounts Payable—RUS Construction232.3 Accounts Payable—Other233 Notes Payable to Associated Companies234 Accounts Payable to Associated Compa-

nies235 Customer Deposits236 Taxes Accrued236.1 Accrued Property Taxes236.2 Accrued U.S. Social Security Tax—Un-

employment236.3 Accrued U.S. Social Security Tax—

F.I.C.A.236.4 Accrued State Social Security Tax—

Unemployment236.5 Accrued State Sales Tax—Consumers236.6 Accrued Gross Revenue or Gross Re-

ceipts Tax


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236.7 Accrued Taxes—Other237 Interest Accrued238 Patronage Capital and Patronage Re-

funds Payable238.1 Patronage Capital Payable238.2 Patronage Refunds Payable239 Matured Long-Term Debt240 Matured Interest241 Tax Collections Payable242 Miscellaneous Current and Accrued Li-

abilities242.1 Accrued Rentals242.2 Accrued Payroll242.3 Accrued Employees’ Vacations and

Holidays242.4 Accrued Insurance242.5 Other Current and Accrued Liabilities243 Obligations Under Capital Leases—Cur-

rent

Deferred Credits

251 [Reserved]252 Customer Advances for Construction253 Other Deferred Credits253.1 Other Deferred Credits—Consumers’

Energy Prepayments254 Other Regulatory Liabilities255 Accumulated Deferred Investment Tax

Credits256 Deferred Gains from Disposition of Util-

ity Plant257 Unamortized Gain on Reacquired Debt281 Accumulated Deferred Income Taxes—

Accelerated Amortization Property282 Accumulated Deferred Income Taxes—

Other Property283 Accumulated Deferred Income Taxes—

Other

LIABILITIES AND OTHER CREDITS

Margins and Equities

200 Memberships

A. This account shall include the totalamount of memberships issued and sub-scribed.


200.1 Memberships Issued200.2 Memberships Subscribed But Unissued

200.1 Memberships Issued

A. This account shall include the facevalue of membership certificates out-standing. A detailed record shall be main-tained to show for each member, the name,address, date of payment, amount paid, andcertificate number.

B. If membership fees are applied againstenergy bills, this account shall be debited forthe full amount of the membership with theoffsetting credit to the appropriate accountsreceivable, and to accounts payable for any

refundable amounts. Any balances that can-not be refunded, due to inability to locatethe member or because of bylaw restrictions,shall be credited to Account 208, DonatedCapital. If determination of the ultimate dis-position of the fees cannot be made imme-diately, the amount involved should betransferred to Account 253, Other DeferredCredits, until the determination is made.

C. When a transfer fee is collected, thetransaction shall be recorded by debiting Ac-count 131.1, Cash—General, and crediting Ac-count 451, Miscellaneous Service Revenues,with the fee collected.

200.2 Memberships Subscribed But Unissued

This account shall include the face value ofmemberships subscribed for but not issued.When certificates are issued, the amount ofthe memberships shall be transferred to Ac-count 200.1, Memberships Issued.

201 Patronage Capital

A. This account shall include the totalamount of patronage capital assignable andassigned.


201.1 Patronage Capital Credits201.2 Patronage Capital Assignable

201.1 Patronage Capital Credits

A. This account shall include the amountsof patronage capital which have been as-signed to individual patrons. A subsidiaryrecord, ‘‘patronage capital ledger,’’ shall bemaintained, containing an account for eachpatron who has furnished capital under acapital credits plan.

B. When the return of patrons’ capital toindividual patrons has been authorized bythe board of directors (or trustees), theamounts authorized shall be transferred toAccount 238.1, Patronage Capital Payable.(See also Account 217, Retired Capital Cred-its-Gain.)

201.2 Patronage Capital Assignable

A. This account shall include all amountstransferred from Account 219.1, OperatingMargins; Account 219.2, Nonoperating Mar-gins; Account 219.3, Other Margins; and Ac-count 219.4, Other Margins and Equities—Prior Periods, which are assignable to indi-vidual patrons’ capital accounts.

B. Entries to this account shall be made soas to clearly disclose the nature and sourceof each transaction. Amounts so assignedshall be transferred to Account 201.1, Patron-age Capital Credits.


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202 [Reserved]

203 [Reserved]

204 [Reserved]

205 [Reserved]

206 [Reserved]

207 [Reserved]

208 Donated Capital

This account shall include credits arisingfrom forfeiture of membership fees and fromdonations of capital not otherwise providedfor. Entries to this account shall be made soas to clearly disclose the nature and sourceof each transaction.

209 [Reserved]

210 [Reserved]

211 Consumers’ Contributions for DebtService

This account shall include the amountsbilled to consumers as ‘‘amortizationcharges’’ for the purpose of servicing long-term debt.

212 [Reserved]

213 [Reserved]

214 [Reserved]

215 Appropriated Margins

This account shall include all amounts ap-propriated as reserves from margins. The ac-count shall be so maintained as to show theamount of each separate reserve and the na-ture and amounts of the debits and creditsthereto.

215.1 Unrealized Gains and Losses—Debtand Equity Securities

This account shall include the unrealizedholding gains and losses for available-for-sale securities.

216 [Reserved]

216.1 Unappropriated UndistributedSubsidiary Earnings

This account shall include the balances, ei-ther debit or credit, of undistributed re-tained earnings of subsidiary companiessince their acquisition. When dividends arereceived from subsidiary companies relatingto amounts included in this account, this ac-count shall be debited and Account 219.2,Nonoperating Margins, credited.

217 Retired Capital Credits—Gain

A. This account shall include credits re-sulting from the retirement of patronagecapital through settlement of individual pa-

trons’ capital credits at less than 100 percentof the capital assigned to the patron. Theportion of patronage capital not returned tothe patrons, under such settlements, shall bedebited to Account 201.1, Patronage CapitalCredits, and credited to this account.

B. This account shall also include amountsrepresenting patronage capital authorized tobe retired to patrons who cannot be located.Returned checks issued for retirements ofpatronage capital, after an appropriate wait-ing period, shall be credited to this account,and a record maintained adequate to enablethe cooperative to make payment to the pa-tron if and when a claim has been estab-lished by the consumer.

218 Capital Gains and Losses

No entries shall be made to this accountwithout the prior approval of RUS unless itis to distribute past capital gains and lossesas capital credits or to eliminate accumu-lated capital losses in conformance with thebylaws of the cooperative.

219 Other Margins and Equities

A. This account shall include total amountof margins and equities from all sources.

B. Account 219 shall be subaccounted asfollows:219.1 Operating Margins219.2 Nonoperating Margins219.3 Other Margins219.4 Other Margins and Equities—Prior Pe-

riods

219.1 Operating Margins

This account shall be debited or creditedwith the balances arising from transactions,the details of which have been recorded inAccounts 400, 401, 402, 403, 404, 405, 406, 407,408, 412, 413, 414, 423, 424, 425, 426, 427, 428, and431. Accounts 400, 401, and 402 are control ac-counts and, at the option of the borrowermay or may not be used. If they are not used,the detailed revenue and expense accountsshall be closed directly to this account.

219.2 Nonoperating Margins

This account shall be debited or creditedwith the balances arising from transactions,the details of which have been recorded inAccounts 415, 416, 417, 417.1, 418, 419, 419.1, 421,421.1, 421.2, 422, 434, and 435.

219.3 Other Margins

No entries shall be made to this accountunless it is to distribute or eliminate priorbalances in conformance with the bylaws ofthe cooperative.

219.4 Other Margins and Equities—PriorPeriods

A. This account shall include significantnonrecurring transactions relating to prior


763


periods. To be significant, the transactionmust be of sufficient magnitude to justify re-distribution of patronage capital credits al-ready allocated for such prior periods.

B. All entries to this account must receiveRUS prior approval.

C. These transactions are limited to itemsto (1) correct an error in the financial state-ments of a prior year, and (2) make adjust-ments that result from realization of incometax benefits of preacquisition operating losscarryforwards. This account shall also in-clude the related income taxes (state andFederal) on items included herein.

D. Amounts in this account shall be trans-ferred at the end of the year to Account219.1, Operating Margins, or Account 219.2,Nonoperating Margins, as appropriate. Also,at the end of the year, these amounts shouldbe transferred from Account 219.1, or Ac-count 219.2 to Account 201.2, Patronage Cap-ital Assignable, when appropriate.

Long-Term Debt

221 Bonds

This account shall include, in a separatesubdivision for each class and series ofbonds, the face value of the actually issuedand unmatured bonds which have not beenretired or cancelled; also the face value ofsuch bonds issued by others, the payment ofwhich has been assumed by the utility.

222 Reacquired Bonds

A. This account shall include the facevalue of bonds actually issued or assumed bythe utility and reacquired by it and not re-tired or cancelled. The account for reac-quired debt shall not include securitieswhich are held by trustees in sinking orother funds.

B. When bonds are reacquired, the dif-ference between face value, adjusted forunamortized discount, expenses or premium,and the amount paid upon reacquisition,shall be included in Account 189,Unamortized Loss on Reacquired Debt, orAccount 257, Unamortized Gain on Reac-quired Debt, as appropriate. (See § 1767.15(q).)

223 Advances from Associated Companies

A. This account shall include the facevalue of notes payable to associated compa-nies and the amount of open book accountsrepresenting advances from associated com-panies. It does not include notes and open ac-counts representing indebtedness subject tocurrent settlement which are includible inAccount 233, Notes Payable to AssociatedCompanies, or Account 234, Accounts Pay-able to Associated Companies.

B. The records supporting the entries tothis account shall be so kept that the utility

can furnish complete information concerningeach note and open account.

224 Other Long-Term Debt

A. This account shall include, until matu-rity, all long-term debt not otherwise pro-vided for. This covers such items as receiv-ers’ certificates, real estate mortgages exe-cuted or assumed, assessments for public im-provements, notes and unsecured certificatesof indebtedness not owned by associatedcompanies, receipts outstanding for long-term debt, and other obligations maturingmore than one year from the date of issue orassumption.

B. Account 224 shall be subaccounted asfollows:224.1 Long-Term Debt—RUS Construction

Loan Contract224.2 RUS Loan Contract—Construction—

Debit224.3 Long-Term Debt—RUS Construction

Notes Executed224.4 RUS Notes Executed—Construction—

Debit224.5 Interest Accrued—Deferred—RUS Con-

struction224.6 Advance Payments Unapplied—RUS

Long-Term Debt—Debit224.7 Long-Term Debt—Installation Loan

Contract224.8 RUS Loan Contract—Installation—

Debit224.9 Long-Term Debt—Installation Notes

Executed224.10 RUS Notes Executed—Installation—

Debit224.11 Other Long-Term Debt—Subscrip-

tions224.12 Other Long-Term Debt—Supple-

mental Financing224.13 Supplemental Lender Notes Exe-

cuted—Debit224.14 Other Long-Term Debt—Miscella-

neous224.15 Notes Executed—Other—Debit224.16 Long-Term Debt—RUS Economic De-

velopment Notes Executed224.17 RUS Notes Executed—Economic De-

velopment—Debit

224.1 Long-Term Debt—RUS ConstructionLoan Contract

A. This account shall include the contrac-tual obligation to RUS on construction loanscovered by loan contract but not by executednotes.

B. This account is to be used at the optionof the borrower.

224.2 RUS Loan Contract—Construction—Debit

A. This account shall include the totalloans (for construction purposes) which arecovered by loan contract but not by executednotes.


764



224.3 Long-Term Debt—RUS ConstructionNotes Executed

This account shall include the contractualliability to RUS on construction notes exe-cuted. Records shall be maintained to showseparately for each class of obligation all de-tails as to the date of obligation, date of ma-turity, interest date and rate, and securitiesfor the obligation.

224.4 RUS Notes Executed—Construction—Debit

This account shall include the totalamount of the unadvanced RUS loans forconstruction purposes, which are covered byexecuted notes. When advances are receivedfrom the RUS for construction, this accountshall be credited and Account 131.2, Cash—Construction Fund—Trustee, debited withthe amount of cash advanced.

224.5 Interest Accrued—Deferred—RUSConstruction

This account shall include interest on RUSconstruction obligations deferred by theterms of mortgage notes or extension agree-ments.

224.6 Advance Payments Unapplied—RUSLong-Term Debt—Debit

A. This account shall include principalpayments on mortgage notes paid in advanceof the date due and not applied to a specificnote. Also, include in this account interestsavings which are accrued and added to theadvance payment unapplied.

B. At such time as these payments are ap-plied to a specific note or loan balances, thisaccount shall be credited and the long-termdebt account debited with the amount so ap-plied.

224.7 Long-Term Debt—Installation LoanContract

A. This account shall include the contrac-tual obligation to RUS on installation loanscovered by loan contract but not covered byexecuted notes.


224.8 RUS Loan Contract—Installation—Debit

A. This account shall include the totalloans for installation purposes which arecovered by loan contract but not by executednotes.


224.9 Long-Term Debt—Installation NotesExecuted

This account shall include the contractualliability to RUS on installation notes exe-cuted.

224.10 RUS Notes Executed—Installation—Debit

This account shall include the totalamount of unadvanced loans for installationpurposes, which are covered by executednote. When advances are received from RUS,this account shall be credited and Account131.3, Cash—Installation Loan and CollectionFund, debited with the amount of cash ad-vanced.

224.11 Other Long-Term Debt—Subscriptions

This account shall include the contractualobligation to purchase CFC Capital TermCertificates and any other similar obligationrelating to supplemental financing.

224.12 Other Long-Term Debt—Supplemental Financing

This account shall include the contractualliability to CFC or other supplemental lend-ers for that portion of funds borrowed whichmature in more than one year.

224.13 Supplemental Financing NotesExecuted—Debit

This account shall include the totalamount of the unadvanced loans for con-struction purposes, which are covered by ex-ecuted notes to CFC or other supplementallender. This account shall be debited withthe face amount of notes executed. When ad-vances are received from a supplementallender for construction, this account shall becredited and Account 131.2, Cash—Construc-tion Fund—Trustee, debited with theamount of cash advanced.

224.14 Other Long-Term Debt—Miscellaneous

This account shall include the amount ofother long-term debt not provided for else-where.

224.15 Notes Executed—Other—Debit

This account shall include the totalamount of the unadvanced loans for con-struction purposes, which are covered by ex-ecuted notes to others not included in theforegoing accounts. When advances are re-ceived from such supplemental lender, thisaccount shall be credited and Account 131.2,Cash—Construction Fund—Trustee, debitedwith the amount of cash so advanced.


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224.16 Long-Term Debt—RUS EconomicDevelopment Notes Executed

This account shall include the contractualliability to RUS on rural economic develop-ment notes executed. Records shall be main-tained to show separately for each class ofobligation all details as to the date of obliga-tion, date of maturity, interest date andrate, and securities for the obligation.

224.17 RUS Notes Executed—EconomicDevelopment—Debit

This account shall include the totalamount of the unadvanced RUS loans forrural economic development purposes, whichare covered by executed notes. When ad-vances are received from the RUS for ruraleconomic development projects, this accountshall be credited and Account 131.12, Cash—General—Economic Development Funds,debited with the amount of cash advanced.

225 Unamortized Premium on Long-TermDebt

A. This account shall include the excess ofthe cash value of consideration received overthe face value upon the issuance or assump-tion of long-term debt securities.

B. Amounts recorded in this account shallbe amortized over the life of each respectiveissue under a plan which will distribute theamount equitably over the life of the secu-rity. The amortization shall be on a monthlybasis, with the amounts thereof to be cred-ited to Account 429, Amortization of Pre-mium on Debt—Credit. (See § 1767.15 (q).)

226 Unamortized Discount on Long-TermDebt—Debit

A. This account shall include the excess ofthe face value of long-term debt securitiesover the cash value of consideration receivedtherefor, related to the issue or assumptionof all types and classes of debt.

B. Amounts recorded in this account shallbe amortized over the life of the respectiveissues under a plan which will distribute theamount equitably over the life of the securi-ties. The amortization shall be on a monthlybasis, wit the amounts thereof charged toAccount 428, Amortization of Debt Discountand Expense. (See § 1767.15 (q).)

Other Noncurrent Liabilities

227 Obligations Under Capital Leases—Noncurrent

This account shall include the portion notdue within one year, of the obligations re-corded for the amounts applicable to leasedproperty recorded as assets in Account 101.1,Property Under Capital Leases; Account120.6, Nuclear Fuel Under Capital Leases; orAccount 121, Nonutility Property.

SPECIAL INSTRUCTIONS

No amounts shall be credited to Accounts228.1 through 228.4 unless authorized by aregulatory authority or authorities to becollected in the utility’s rates.

228.1 Accumulated Provision for PropertyInsurance

A. This account shall include amounts re-served by the utility for losses through acci-dent, fire, flood, or other hazards to its ownproperty or property leased from others, notcovered by insurance. The amounts chargedto Account 924, Property Insurance, or otherappropriate accounts to cover such risksshall be credited to this account. A scheduleof risks covered shall be maintained, givinga description of the property involved, thecharacter of the risks covered and the ratesused.

B. Charges shall be made to this accountfor losses covered, not to exceed the accountbalance. Details of these charges shall bemaintained according to the year the cas-ualty occurred which gave rise to the loss.

228.2 Accumulated Provision for Injuriesand Damages

A. This account shall be credited withamounts charged to Account 925, Injuriesand Damages, or other appropriate accounts,to meet the probable liability, not coveredby insurance, for deaths or injuries to em-ployees and others and for damages to prop-erty neither owned nor held under lease bythe utility.

B. When liability for any injury or damageis admitted by the utility either voluntarilyor because of the decision of a court or otherlawful authority, such as a workmen’s com-pensation board, the admitted liability shallbe charged to this account and credited tothe appropriate current liability account.Details of these charges shall be maintainedaccording to the year the casualty occurredwhich gave rise to the loss.

NOTE: Recoveries or reimbursements forlosses charged to this account shall be cred-ited hereto; the cost of repairs to property ofothers, if provided for herein, shall becharged to this account.

228.3 Accumulated Provision for Pensionsand Benefits

A. This account shall include provisionsmade by the utility and amounts contributedby employees for pensions, accident anddeath benefits, savings, relief, hospital, andother provident purposes, where the fundsare included in the assets of the utility ei-ther in general or in segregated fund ac-counts.

B. Amounts paid by the utility for the pur-pose for which this liability is establishedshall be charged hereto.


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C. A separate account shall be kept foreach kind of provision included herein.

NOTE: If employee pension or benefit planfunds are not included among the assets ofthe utility but are held by outside trustees,payments into such funds, or accruals there-for, shall not be included in this account.

228.4 Accumulated Miscellaneous OperatingProvisions

A. This account shall include all operatingprovisions which are not provided for else-where.

B. This account shall be maintained insuch a manner as to show the amount ofeach separate provision and the nature andamounts of the debits and credits thereto.

NOTE: This account includes only provi-sions as may be created for operating pur-poses and does not include any reservationsof income, the credits for which should be re-corded in Account 215, Appropriated Mar-gins.

229 Accumulated Provision for RateRefunds

A. This account shall be credited withamounts charged to Account 449.1, Provisionfor Rate Refunds, to provide for estimatedrefunds where the utility is collectingamounts in rates subject to refund.

B. When a refund of any amount recordedin this account is ordered by a regulatoryauthority, such amount shall be chargedhereto and credited to Account 242, Miscella-neous Current and Accrued Liabilities.

C. Records supporting the entries to thisaccount shall be kept so as to identify eachamount recorded by the respective rate fil-ing docket number.

Current and Accrued Liabilities

Current and accrued liabilities are thoseobligations which have either matured orwhich become due within 1 year from thedate thereof; except however, bonds, receiv-ers’ certificates, and similar obligationswhich shall be classified as long-term debtuntil date of maturity; accrued taxes, suchas income taxes, which shall be classified asaccrued liabilities even though payable morethan one year from date; compensationawards, which shall be classified as currentliabilities regardless of date due; and minoramounts payable in installments which maybe classified as current liabilities. If a liabil-ity is due more than 1 year from the date ofissuance or assumption by the utility, itshall be credited to a long-term debt accountappropriate for the transaction; except how-ever, the current liabilities previously men-tioned.

231 Notes Payable

This account shall include the face value ofall notes, drafts, acceptances, or other simi-

lar evidences of indebtedness, payable on de-mand or within a time not exceeding 1 yearfrom the date of issue, to other than associ-ated companies.

232 Accounts Payable

A. This account shall include all amountspayable by the utility within 1 year, whichare not provided for in other accounts.


232.1 Accounts Payable—General232.2 Accounts Payable—RUS Construction232.3 Accounts Payable—Other

233 Notes Payable to Associated Companies

This account shall include amounts owingto associated companies on notes, drafts, ac-ceptances, or other similar evidences of in-debtedness payable on demand or not morethan 1 year from the date of issue or cre-ation.

NOTE: Notes which are includible in Ac-count 223, Advances from Associated Compa-nies, shall be excluded from this account.

234 Accounts Payable to AssociatedCompanies

This account shall include amounts owingto associated companies on open accountspayable on demand.

NOTE: Accounts which are includible in Ac-count 223, Advances from Associated Compa-nies, shall be excluded from this account.

235 Customer Deposits

This account shall include all amounts de-posited with the utility by its customers assecurity for the payment of bills.

236 Taxes Accrued

A. This account shall be credited with theamount of taxes accrued during the account-ing period, corresponding debits being madeto the appropriate accounts for tax charges.Such credits may be based upon estimates,but from time to time during the year as thefacts become known, the amount of the peri-odic credits shall be adjusted so as to in-clude, as nearly as can be determined in eachyear, the taxes applicable thereto. Anyamount representing a prepayment of taxesapplicable to the period subsequent to thedate of the balance sheet, shall be shownunder Account 165, Prepayments.

B. If accruals for taxes are found to be in-sufficient or excessive, correction thereforshall be made through current tax accruals.

C. Accruals for taxes shall be based uponthe net amounts payable after credit for anydiscounts, and shall not include any amountsfor interest on tax deficiencies or refunds.Interest received on refunds shall be creditedto Account 419, Interest and Dividend In-come, and interest paid on deficiencies shall


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be charged to Account 431, Other InterestExpense.

D. Account 236 shall be subaccounted asfollows:236.1 Accrued Property Taxes236.2 Accrued U.S. Social Security Tax—Un-

employment236.3 Accrued U.S. Social Security Tax—

F.I.C.A.236.4 Accrued State Social Security Tax—

Unemployment236.5 Accrued State Sales Tax—Consumers236.6 Accrued Gross Revenue or Gross Re-

ceipts Tax236.7 Accrued Taxes—Other

237 Interest Accrued

This account shall include the amount ofinterest accrued but not matured on all li-abilities of the utility not including, how-ever, interest which is added to the principalof the debt on which incurred. Supportingrecords shall be maintained so as to show theamount of interest accrued on each obliga-tion.

238 Patronage Capital and PatronageRefunds Payable

A. This account shall include the totalamount of patronage capital authorized to bereturned and paid to patrons.

B. Account 238 shall be subaccounted asfollows:238.1 Patronage Capital Payable238.2 Patronage Refunds Payable

238.1 Patronage Capital Payable

This account shall include the amount ofpatronage capital which has been authorizedto be returned to the patron.

238.2 Patronage Refunds Payable

This account shall include the amount ofpatronage refunds which have been author-ized to be paid to patrons.

239 Matured Long-Term Debt

This account shall include the amount oflong-term debt (including any obligation forpremiums) matured and unpaid, without spe-cific agreement for extension of the time ofpayment and bonds called for redemption butnot presented.

240 Matured Interest

This account shall include the amount ofmatured interest on long-term debt or otherobligations of the utility at the date of thebalance sheet unless such interest is addedto the principal of the debt on which in-curred.

241 Tax Collections Payable

This account shall include the amount oftaxes collected by the utility through pay-

roll deductions or otherwise, pending trans-mittal of such taxes to the proper taxing au-thority.

NOTE: Do not include liabilities for taxesassessed directly against the utility whichare accounted for as part of the utility’s owntax expense.

242 Miscellaneous Current and AccruedLiabilities

A. This account shall include the amountof all other current and accrued liabilitiesnot provided for elsewhere appropriately des-ignated and supported so as to show the na-ture of each liability.

B. Account 242 shall be subaccounted asfollows:242.1 Accrued Rentals242.2 Accrued Payroll242.3 Accrued Employees’ Vacations and

Holidays242.4 Accrued Insurance242.5 Other Current and Accrued Liabilities

242.1 Accrued Rentals

This account shall include unpaid joint usepole rentals and other rentals. The recordssupporting the entries to this account shallbe maintained so as to show for each class ofrental, the amount accrued, the basis for theaccrual, the accounts to which charged, andthe amount of rentals paid.

242.2 Accrued Payroll

This account shall include the accrued li-ability for salaries and wages at the end ofan accounting period for which the appro-priate expense or other accounts have beencharged. This account is to be used whethersalaries and wages are paid on a weekly,semimonthly, or monthly basis.

242.3 Accrued Employees’ Vacations andHolidays

This account shall include the liability foraccrued wages for employees’ vacation, holi-days, and sick leave.

242.4 Accrued Insurance

A. This account shall most commonly beused in case of workmen’s compensation andpublic liability insurance for recording theexcess amounts of earned premium over theadvance premiums. Earned premiums arecomputed each month by applying the insur-ance rates to the actual payrolls.

B. Until the amount of the advance pre-miums is exhausted, the earned premium iscredited to Account 165, Prepayments.Earned premiums in excess of the advancepremiums are credited to this account.

242.5 Other Current and Accrued Liabilities

This account shall include current and ac-crued liabilities not provided for elsewhere.


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243 Obligations Under Capital Leases—Current

This account shall include the portion, duewithin 1 year, of the obligations recorded forthe amounts applicable to leased propertyrecorded as assets in Account 101.1, PropertyUnder Capital Leases; Account 120.6, NuclearFuel Under Capital Leases; or Account 121,Nonutility Property.

Deferred Credits

251 [Reserved]

252 Customer Advances for Construction

This account shall include consumer ad-vances for construction which are to be re-funded either wholly or in part. When a cus-tomer is refunded the entire amount towhich he is entitled, according to the agree-ment or rule under which the advance wasmade, the balance, if any, remaining in thisaccount shall be credited to the respectiveplant accounts.

253 Other Deferred Credits

This account shall include advance billingsand receipts and other deferred credit items,not provided for elsewhere, includingamounts which cannot be entirely cleared ordisposed of until additional information hasbeen received.

253.1 Other Deferred Credits—Consumers’Energy Prepayments

This account shall include the amount ofadvance payments made by consumers inconnection with electric service.

254 Other Regulatory Liabilities

A. This account shall include the amountsof regulatory liabilities, not includible inother accounts, imposed on the utility bythe ratemaking actions of regulatory agen-cies.

B. The amounts included in this accountare to be established by those credits whichwould have been included in net income de-terminations in the current period under thegeneral requirements of the Uniform Systemof Accounts but for it being probable that:(1) such items will be included in a differentperiod(s) for purposes of developing the ratesthat the utility is authorized to charge forits utility services; or (2) refunds to cus-tomers, not provided for in other accounts,will be required. When specific identificationof the particular source of the regulatory li-ability cannot be made or when the liabilityarises from revenues collected pursuant totariffs on file at a regulatory agency, Ac-count 407.3, Regulatory Debits, shall be deb-ited. The amounts recorded in this accountgenerally are to be credited to the same ac-count that would have been credited if in-cluded in income when earned except: (1) all

regulatory liabilities established throughthe use of Account 407.3 shall be credited toAccount 407.4, Regulatory Credits; and (2) inthe case of refunds, a cash account or otherappropriate account should be credited whenthe obligation is satisfied.

C. If it is later determined that theamounts recorded in this account will not bereturned to customers through rates or re-funds, such amounts shall be credited to Ac-count 421, Miscellaneous Nonoperating In-come, or Account 434, Extraordinary Income,as appropriate, in the year such determina-tion is made.

D. The records supporting the entries tothis account shall be kept in such a mannerthat the utility can furnish full informationas to the nature and amount of each regu-latory liability included in this account, in-cluding justification for inclusion of suchamounts in this account.

255 Accumulated Deferred Investment TaxCredits

A. This account shall be credited with allinvestment tax credits deferred by compa-nies which have elected to follow deferral ac-counting, partial or full, rather than recog-nizing, in the income statement, the totalbenefits of the tax credit as realized. Aftersuch election, a company may not transferamounts from this account, except as au-thorized herein and in Account 411.4, Invest-ment Tax Credit Adjustments, Utility Oper-ations; Account 411.5, Investment Tax CreditAdjustments, Nonutility Operations; and Ac-count 420, Investment Tax Credits, or withapproval of RUS.

B. Where the company’s accounting pro-vides that investment tax credits are to bepassed on to customers, this account shall bedebited and Account 411.4 credited with aproportionate amount determined in rela-tion to the average useful life of electricutility property to which the tax credits re-late or such lesser period of time as allowedby a regulatory agency having rate jurisdic-tion. If, however, the deferral procedure pro-vides that investment tax credits are not tobe passed on to customers, the proportionaterestorations to income shall be credited toAccount 420.

C. Subdivisions of this account, by depart-ment, shall be maintained for deferred in-vestment tax credits that are related to non-electric utility or other operations. Contraentries affecting such account subdivisionsshall be appropriately recorded in Account413, Expenses of Electric Plant Leased toOthers; or Account 414, Other Utility Oper-ating Income. Use of deferral or nondeferralaccounting procedures adopted for nonelec-tric utility or other operations are to be fol-lowed on a consistent basis.

D. Separate records for electric and non-electric utility or other operations shall bemaintained identifying the properties giving


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rise to the investment tax credits for eachyear with the weighted-average service lifeof such properties and any unused balancesof such credits. Such records are not nec-essary unless the tax credits are deferred.

256 Deferred Gains from Disposition ofUtility Plant

This account shall include gains from thesale or other disposition of property pre-viously recorded in Account 105, ElectricPlant Held for Future Use, under the provi-sions of Paragraphs B, C, and D thereof,where such gains are significant and are tobe amortized over a period of 5 years, unlessotherwise authorized by RUS. The amortiza-tion of the amounts in this account shall bemade by credits to Account 411.6, Gains fromDisposition of Utility Plant. (See Account105, Electric Plant Held for Future Use.)

257 Unamortized Gain on Reacquired Debt

This account shall include the amounts ofdiscount realized upon reacquisition or re-demption of long-term debt. The amounts inthis account shall be amortized in accord-ance with § 1767.15 (q).


Accumulated Deferred Income Taxes

Before using the deferred tax accounts pro-vided below, refer to § 1767.15 (r), Comprehen-sive Interperiod Income Tax Allocation. Thetext of these accounts are designed primarilyto cover deferrals of Federal income taxes.However, they are also to be used when mak-ing deferrals of state and local income taxes.Utilities and licensees which, in addition toan electric utility department, have anotherutility department, gas or water and non-utility property, and which have deferredtaxes on income with respect thereto shallseparately classify such deferrals in the ac-counts provided below so as to allow readyidentification of items relating to each util-ity deductions.

281 Accumulated Deferred Income Taxes—Accelerated Amortization Property

A. This account shall include tax deferralsresulting from adoption of the principles ofcomprehensive interperiod tax allocation de-scribed in § 1767.15 (s) that relate to propertyfor which the utility has availed itself of theuse of accelerated (5-year) amortization of(1) certified defense facilities as permitted bySection 168 of the Internal Revenue Code,and (2) certified pollution control facilitiesas permitted by Section 169 of the InternalRevenue Code.

B. This account shall be credited and Ac-count 410.1, Provision for Deferred IncomeTaxes, Utility Operating Income, or Account410.2, Provision for Deferred Income Taxes,Other Income and Deductions, as appro-

priate, shall be debited with tax effects re-lated to property described in Paragraph Aabove where taxable income is lower thanpretax accounting income due to differencesbetween the periods in which revenue and ex-pense transactions affect taxable income andthe periods in which they enter into the de-termination of pretax accounting income.

C. This account shall be debited and Ac-count 411.1, Provision for Deferred IncomeTaxes—Credit, Utility Operating Income, orAccount 411.2, Provision for Deferred IncomeTaxes-Credit, Other Income and Deductions,as appropriate, shall be credited with taxesrelated to property described in Paragraph Aabove where taxable income is higher thanpretax accounting income due to differencesbetween the periods in which revenue and ex-pense transactions affect taxable income andthe periods in which they enter into the de-termination of pretax accounting income.

D. The utility is restricted in its use ofthis account to the purposes set forth above.It shall not transfer the balance in this ac-count or any portion thereof to retainedearnings or make any use thereof except asprovided in the text of this account withoutprior approval of RUS. Upon the dispositionby sale, exchange, transfer, abandonment, orpremature retirement of plant on whichthere is a related balance therein, this ac-count shall be charged with an amount equalto the related income tax expense, if any,arising from such disposition and Account411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, or Account411.2, Provision for Deferred Income Taxes—Credit, Other Income and Deductions, as ap-propriate, shall be credited. When the re-maining balance, after consideration of anyrelated income tax expense, is less than$25,000, this account shall be charged and Ac-count 411.1 or Account 411.2, as appropriate,credited with such balance. If after consider-ation of any related income tax expense,there is a remaining amount of $25,000 ormore, RUS shall authorize or direct howsuch amount shall be accounted for at thetime approval for the disposition of account-ing is granted. When plant is disposed of bytransfer to a wholly owned subsidiary, therelated balance in this account shall also betransferred. When the disposition relates toretirement of an item or items under a groupmethod of depreciation where there is no taxeffect in the year of retirement, no entriesare required in this account if it can be de-termined that the related balances would benecessary to be retained to offset futuregroup item tax deficiencies.

282 Accumulated Deferred Income Taxes—Other Property

A. This account shall include the tax defer-rals resulting from adoption of the principle


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of comprehensive interperiod income tax al-location described in § 1767.15 (r) which arerelated to all property other than acceler-ated amortization property.

B. This account shall be credited and Ac-count 410.1, Provision for Deferred IncomeTaxes, Utility Operating Income, or Account410.2, Provision for Deferred Income Taxes,Other Income and Deductions, as appro-priate, shall be debited with tax effects re-lated to property described in Paragraph Aabove where taxable income is lower thanpretax accounting income due to differencesbetween the periods in which revenue and ex-pense transactions affect taxable income andthe periods in which they enter into the de-termination of pretax accounting income.

C. This account shall be debited and Ac-count 411.1, Provision for Deferred IncomeTaxes—Credit, Utility Operating Income, orAccount 411.2, Provision for Deferred IncomeTaxes—Credit, Other Income and Deduc-tions, as appropriate, shall be credited withtax effects related to property described inParagraph A above where taxable income ishigher than pretax accounting income due todifferences between the periods in which rev-enue and expense transactions affect taxableincome and the periods in which they enterinto the determination of pretax accountingincome.

D. The utility is restricted in its use ofthis account to the purposes set forth above.It shall not transfer the balance in this ac-count or any portion thereof to retainedearnings or make any use thereof except asprovided in the text of this account withoutprior approval of RUS. Upon the dispositionby sale, exchange, transfer, abandonment, orpremature retirement of plant on whichthere is a related balance herein, this ac-count shall be charged with an amount equalto the related income tax expense, if any,arising from such disposition and Account411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, or Account411.2, Provision for Deferred Income Taxes—Credit, Other Income and Deductions, shallbe credited. When the remaining balanceafter consideration of any related tax ex-penses, is less than $25,000, this account shallbe charged and Account 411.1 or Account411.2, as appropriate, credited with suchbalance. If after consideration any relatedincome tax expense, there a remainingamount of $25,00 or more, RUS shall author-ize or direct how such amount shall be ac-counted for at the time approval for the dis-position of accounting is granted. Whenplant is disposed of by transfer to a whollyowned subsidiary, the related balance in thisaccount shall also be transferred. When thedisposition relates to retirement of an itemor items under a group method of deprecia-tion where there is no tax effect in the yearof retirement, no entries are required in thisaccount if it can be determined that the re-

lated balance would be necessary to be re-tained to offset future group item tax defi-ciencies.

283 Accumulated Deferred Income Taxes—Other

A. This account shall include all credit taxdeferrals resulting from the adoption of theprinciples of comprehensive interperiod in-come tax allocation described in § 1767.15 (r)other than those deferrals which are includ-ible in Account 281, Accumulated DeferredIncome Taxes—Accelerated AmortizationProperty, and Account 282, Accumulated De-ferred Income Taxes—Other Property.

B. This account shall be credited and Ac-count 410.1, Provision for Deferred IncomeTaxes, Utility Operating Income, or Account410.2, Provision for Deferred Income Taxes,Other Income and Deductions, as appro-priate, shall be debited with tax effects re-lated to items described in Paragraph Aabove where taxable income is lower thanpretax accounting income due to differencesbetween the periods in which revenue and ex-pense transactions affect taxable income andthe periods in which they enter into the de-termination of pretax accounting income.

C. This account shall be debited and Ac-count 411.1, Provision for Deferred IncomeTaxes—Credit, Utility Operating Income orAccount 411.2, Provision for Deferred IncomeTaxes—Credit, Other Income and Deduc-tions, as appropriate, shall be credited withtax effects related to items described inParagraph A above where taxable income ishigher than pretax accounting income due todifferences between the periods in which rev-enue and expense transactions affect taxableincome and the periods in which they enterinto the determination of pretax accountingincome.

D. Records with respect to entries to thisaccount, as described above, and the accountbalance, shall be so maintained as to showthe factors of calculation with respect toeach annual amount of the item or class ofitems.

E. The utility is restricted in its use of thisaccount to the purposes set forth above. Itshall not transfer the balance in the accountor any portion thereof to retained earningsor to any other account or make any usethereof except as provided in the text of thisaccount, without prior approval of RUS.Upon the disposition by sale, exchange,transfer, abandonment, or premature retire-ment of items on which there is a relatedbalance herein, this account shall be chargedwith an amount equal to the related incometax effect, if any, arising from such disposi-tion and Account 411.1, Provision For De-ferred Income Taxes—Credit, Utility Oper-ating Income, or Account 411.2, ProvisionFor Deferred Income Taxes-Credit, Other In-come and Deductions, as appropriate, shallbe credited. When the remaining balance,


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after consideration of any related tax ex-penses, is less than $25,000, this account shallbe charged and Account 411.1 or Account411.2, as appropriate, credited with suchbalance. If after consideration of any relatedincome tax expense, there is a remainingamount of $25,000 or more, RUS shall author-ize or direct how such amount shall be ac-counted for at the time approval for the dis-position of accounting is granted.

When plant is disposed of by transfer to awholly owned subsidiary, the related balancein this account shall also be transferred.When the disposition relates to retirement ofan item or items under a group method of de-preciation where there is no tax effect in theyear of retirement, no entries are required inthis account if it can be determined that therelated balance would be necessary to be re-tained to offset future group item tax defi-ciencies.

[58 FR 59825, Nov. 10, 1993, as amended at 59FR 27436, May 27, 1994; 60 FR 55430, Nov. 1,1995]

§ 1767.20 Plant accounts.The plant accounts identified in this

section shall be used by all RUS bor-rowers.

INTANGIBLE PLANT

301 Organization302 Franchises and Consents303 Miscellaneous Intangible Plant

PRODUCTION PLANT

Steam Production

310 Land and Land Rights311 Structures and Improvements312 Boiler Plant Equipment313 Engines and Engine Driven Generators314 Turbogenerator Units315 Accessory Electric Equipment316 Miscellaneous Power Plant Equipment

Nuclear Production

320 Land and Land Rights321 Structures and Improvements322 Reactor Plant Equipment323 Turbogenerator Units324 Accessory Electric Equipment325 Miscellaneous Power Plant Equipment

Hydraulic Production

330 Land and Land Rights331 Structures and Improvements332 Reservoirs, Dams and Waterways333 Water Wheels, Turbines and Generators334 Accessory Electric Equipment335 Miscellaneous Power Plant Equipment336 Roads, Railroads and Bridges

Other Production

340 Land and Land Rights

341 Structures and Improvements342 Fuel Holders, Producers and Accessories343 Prime Movers344 Generators345 Accessory Electric Equipment346 Miscellaneous Power Plant Equipment

TRANSMISSION PLANT

350 Land and Land Rights351 [Reserved]352 Structures and Improvements353 Station Equipment354 Tower and Fixtures355 Poles and Fixtures356 Overhead Conductors and Devices357 Underground Conduit358 Underground Conductors and Devices359 Roads and Trails

DISTRIBUTION PLANT

360 Land and Land Rights361 Structures and Improvements362 Station Equipment363 Storage Battery Equipment364 Poles, Towers and Fixtures365 Overhead Conductors and Devices366 Underground Conduit367 Underground Conductors and Devices368 Line Transformers369 Services370 Meters371 Installations on Customers’ Premises372 Leased Property on Customers’ Prem-

ises373 Street Lighting and Signal Systems

GENERAL PLANT

389 Land and Land Rights390 Structures and Improvements391 Office Furniture and Equipment392 Transportation Equipment393 Stores Equipment394 Tools, Shop and Garage Equipment395 Laboratory Equipment396 Power Operated Equipment397 Communication Equipment398 Miscellaneous Equipment399 Other Tangible Property

INTANGIBLE PLANT

301 Organization

This account shall include all fees paid toFederal or state governments for the privi-lege of incorporation and expenditures inci-dent to organizing the corporation, partner-ship, or other enterprise and putting it intoreadiness to do business.

Items

1. Cost of obtaining certificates author-izing an enterprise to engage in the public-utility business.

2. Fees and expenses for incorporation.3. Fees and expenses for mergers or con-

solidations.


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4. Office expenses incident to organizingthe utility.

5. Stock and minute books and corporateseal.

NOTE A: This account shall not include anydiscounts upon securities issued or assumed;nor shall it include any costs incident to ne-gotiating loans, selling bonds or other evi-dences of debt or expenses in connectionwith the authorization, issuance, or sale ofcapital stock.

NOTE B: Exclude from this account and in-clude in the appropriate expense account thecost of preparing and filing papers in connec-tion with the extension of the term of incor-poration unless the first organization costshave been written off. When charges aremade to this account for expenses incurredin mergers, consolidations, or reorganiza-tions, amounts previously included herein orin similar accounts in the books of the com-panies concerned shall be excluded from thisaccount.

302 Franchises and Consents

A. This account shall include amounts paidto the Federal Government, to a state or toa political subdivision thereof in consider-ation for franchises, consents, water powerlicenses, or certificates, running in per-petuity or for a specified term of more thanone year, together with necessary and rea-sonable expenses incident to procuring suchfranchises, consents, water power licenses, orcertificates of permission and approval, in-cluding expenses of organizing and mergingseparate corporations, where statutes re-quire, solely for the purpose of acquiringfranchises.

B. If a franchise, consent, water power li-cense, or certificate is acquired by assign-ment, the charge to this account in respectthereof shall not exceed the amount paidtherefor by the utility to the assignor, norshall it exceed the amount paid by the origi-nal grantee, plus the expense of acquisitionto such grantee. Any excess of the amountactually paid by the utility over the amountabove specified shall be charged to Account426.5, Other Deductions.

C. When any franchise has expired, thebook cost thereof shall be credited heretoand charged to Account 426.5, Other Deduc-tions, or to Account 111, Accumulated Provi-sion for Amortization of Electric UtilityPlant, as appropriate.

D. Records supporting this account shallbe kept so as to show separately the bookcost of each franchise or consent.

NOTE: Annual or other periodic paymentsunder franchises shall not be included hereinbut in the appropriate operating expense ac-count.

303 Miscellaneous Intangible Plant

A. This account shall include the cost ofpatent rights, licenses, privileges, and otherintangible property necessary or valuable inthe conduct of utility operations and notspecifically chargeable to any other account.

B. When any item included in this accountis retired or expires, the book cost thereofshall be credited hereto and charged to Ac-count 426.5, Other Deductions, or Account111, Accumulated Provision for Amortizationof Electric Utility Plant, as appropriate.

C. This account shall be maintained insuch a manner that the utility can furnishfull information with respect to the amountsincluded herein.

PRODUCTION PLANT

Steam Production


This account shall include the cost of landand land rights used in connection withsteam-power generation. (See § 1767.16 (g).)

311 Structures and Improvements

This account shall include the cost, inplace, of structures and improvements usedin connection with steam-power generation.(See § 1767.16 (h).)

NOTE: Include steam production roads andrailroads in this account.

312 Boiler Plant Equipment

This account shall include the cost in-stalled of furnaces, boilers, coal and ash han-dling and coal preparing equipment, steamand feed water piping, boiler apparatus, andaccessories used in the production of steam,mercury, or other vapor, to be used pri-marily for generating electricity.

Items

1. Ash handling equipment, including hop-pers, gates, cars, conveyors, hoists, sluicingequipment, including pumps and motors,sluicing water pipe and fittings, sluicingtrenches and accessories, except sluiceswhich are a part of a building.

2. Boiler feed system, including feed waterheaters, evaporator condensers, heater drainpumps, heater drainers, deaerators, and ventcondensers, boiler feed pumps, surge tanks,feed water regulators, feed water measuringequipment, and all associated drives.

3. Boiler plant cranes and hoists and asso-ciated drives.

4. Boilers and equipment, including boilersand baffles, economizers, superheaters, sootblowers, foundations and settings, waterwalls, arches, grates, insulation, blowdownsystem, drying out of new boilers, also asso-ciated motors or other power equipment.

5. Breeching and accessories, includingbreeching, dampers, soot spouts, hoppers and


773


gates, cinder eliminators, breeching insula-tion, soot blowers and associated motors.

6. Coal handling and storage equipment, in-cluding coal towers, coal lorries, coal cars,locomotives and tracks when devoted prin-cipally to the transportation of coal, hop-pers, downtakes, unloading and hoistingequipment, skip hoists and conveyors, weigh-ing equipment, magnetic separators, cableways, and housings and supports for coalhandling equipment.

7. Draft equipment, including airpreheaters and accessories, induced andforced draft fans, air ducts, combustion con-trol mechanisms, and associated motors orother power equipment.

8. Gas-burning equipment, including hold-ers, burner equipment and piping, and con-trol equipment.

9. Instruments and devices, including allmeasuring, indicating, and recording equip-ment for boiler plant service together withmountings and supports.

10. Lighting systems.11. Oil-burning equipment, including tanks,

heaters, pumps with drive, burner equipmentand piping, and control equipment.

12. Pulverized fuel equipment, includingpulverizers, accessory motors, primary airfans, cyclones and ducts, dryers, pulverizedfuel bins, pulverized fuel conveyors andequipment, burners, burner piping, primingequipment, air compressors, and motors.

13. Stacks, including foundations and sup-ports, stack steel and ladders, stack brick-work, stack concrete, stack lining, stackpainting (first), when set on separate founda-tions, independent of substructures or super-structures of building.

14. Station piping, including pipe, valves,fittings, separators, traps, desuperheaters,hangers, excavation, and covering for stationpiping system, including all steam, conden-sate, boiler feed and water supply piping, butnot condensing water, plumbing, buildingheating, oil, gas, air piping or piping specifi-cally provided for in Account 313.

15. Stoker or equivalent feeding equip-ment, including stokers and accessory mo-tors, clinker grinders, fans and motors.

16. Ventilating equipment.17. Water purification equipment, includ-

ing softeners and accessories, evaporatorsand accessories, heat exchanges, filters,tanks for filtered or softened water, pumps,and motors.

18. Water-supply systems, including pumps,motors, strainers, raw-water storage tanks,boiler wash pumps, intake and dischargepipes, and tunnels not a part of a building.

19. Wood fuel equipment, including hop-pers, fuel hogs and accessories, elevators andconveyors, bins and gates, spouts, measuringequipment and associated drives.

NOTE: When the system for supplying boil-er or condenser water is elaborate, and whenit includes a dam, reservoir, canal, pipe line,

cooling ponds, or where gas or oil is used asa fuel for producing steam and is suppliedthrough a pipe line system owned by theutility, the cost of such special facilitiesshall be charged to a subdivision of Account311, Structures and Improvements.

313 Engines and Engine Driven Generators

This account shall include the cost in-stalled of steam engines, reciprocating or ro-tary, and their associated auxiliaries; andengine-driven main generators, exceptturbogenerator units.

Items

1. Air cleaning and cooling apparatus, in-cluding blowers, drive equipment, air ducts,not a part of building, louvers, pumps, andhoods.

2. Belting, shafting, pulleys, and reductiongearing.

3. Circulating pumps, including connec-tions between condensers and intake and dis-charge tunnels.

4. Cooling system, including towers,pumps, tank, and piping.

5. Condensers, including condensate pumps,air and vacuum pumps, ejector unloadingvalves and vacuum breakers, expansion de-vices, and screens.

6. Cranes and hoists, including items whol-ly identified with items listed herein.

7. Engines, reciprocating or rotary.8. Fire-extinguishing systems.9. Foundations and settings, especially

constructed for and not expected to outlastthe apparatus for which provided.

10. Generators-Main, a.c. or d.c., includingfield rheostats and connections for self-ex-cited units, and excitation systems whenidentified with the generating unit.

11. Governors.12. Lighting systems.13. Lubricating systems, including gauges,

filters, tanks, pumps, piping, and motors.14. Mechanical meters, including gauges,

recording instruments, sampling and testingequipment.

15. Piping-main exhaust, including connec-tions between generator and condenser andbetween condenser and hotwell.

16. Piping-main stream, including connec-tions from main throttle valve to turbineinlet.

17. Platforms, railings, steps, and gratingsappurtenant to apparatus listed herein.

18. Pressure oil system, including accumu-lators, pumps, piping, and motors.

19. Throttle and inlet valve.20. Tunnels, intake and discharge, for con-

denser system, when not a part of a struc-ture.

21. Water screens and motors.


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314 Turbogenerator Units

This account shall include the cost in-stalled of main turbine-driven units and ac-cessory equipment used in generating elec-tricity by steam.

Items

1. Air leaning and cooling apparatus, in-cluding blowers, drive equipment, air ductsnot a part of building, louvers, pumps, andhoods.

2. Circulating pumps, including connec-tions between condensers and intake and dis-charge tunnels.

3. Condensers, including condensate pumps,air and vacuum pumps, ejectors, unloadingvalves and vacuum breakers, expansion de-vices, and screens.

4. Generator hydrogen, gas piping, and de-trainment equipment.

5. Cooling system, including towers,pumps, tanks, and piping.


7. Excitation system, when identified withmain generating units.

8. Fire-extinguishing systems.9. Foundations and settings, especially

constructed for and not expected to outlastthe apparatus for which provided.


filters, water separators, tanks, pumps, pip-ing, and motors.

13. Mechanical meters, including gauges,recording instruments, sampling and testingequipment.

14. Piping-main exhaust, including connec-tions between turbogenerator and condenserand between condenser and hotwell.

15. Piping-main steam, including connec-tions from main throttle valve to turbineinlet.


17. Pressure oil systems, including accumu-lators, pumps, and piping motors.

18. Steelwork, specially constructed for ap-paratus listed herein.


denser system, when not a part of structure,and water screens.

21. Turbogenerators-main, including tur-bine and generator, field rheostats and elec-tric connections for self-excited units.

22. Water screens and motors.23. Moisture separator for turbine steam.24. Turbine lubricating oil (initial charge).

315 Accessory Electric Equipment

This account shall include the cost in-stalled of auxiliary generating apparatus,conversion equipment, and equipment usedprimarily in connection with the control and

switching of electric energy produced bysteam power, and the protection of electriccircuits and equipment, except electric mo-tors used to drive equipment included inother accounts. Such motors shall be in-cluded in the account in which the equip-ment with which they are associated is in-cluded.

Items

1. Auxiliary generators, including boards,compartments, switching equipment, controlequipment, and connections to auxiliarypower bus.

2. Excitation system, including motor, tur-bine and dual-drive exciter sets and rheo-stats, storage batteries and charging equip-ment, circuit breakers, panels and acces-sories, knife switches and accessories, surgearresters, instrument shunts, conductors andconduit, special supports for conduit, gener-ator field and exciter switch panels, exciterbus tie panels, generator and exciter rheo-stats and special housing and protectivescreens.

3. Generator main connections, includingoil circuit breakers and accessories, dis-connecting switches and accessories, oper-ating mechanisms and interlocks, currenttransformers, potential transformers, protec-tive relays, isolated panels and equipment,conductors and conduit, special supports forgenerator main leads, grounding switch, andspecial housings and protective screens.

4. Station buses including main, auxiliary,transfer, synchronizing and fault groundbuses, including oil circuit breakers and ac-cessories, disconnecting switches and acces-sories, operating mechanisms and interlocks,reactors and accessories, voltage regulatorsand accessories, compensators, resistors,starting transformers, current transformers,potential transformers, protective relays,storage batteries and charging equipment,isolated panels and equipment, conductorsand conduit, special supports, specialhousings, concrete pads, general stationgrounding system, special fire-extinguishingsystem, and test equipment.

5. Station control system, including sta-tion switchboards with panel wiring, panelswith instruments and control equipmentonly, panels with switching equipmentmounted or mechanically connected, truck-type boards complete, cubicles, station su-pervisory control boards, generator and ex-citer signal stands, temperature recordingdevices, frequency-control equipment, mas-ter clocks, watt-hour meters andsynchronoscope in the turbine room, stationtotalizing wattmeter, boiler-room load indi-cator equipment, storage batteries, panelsand charging sets, instrument transformersfor supervisory metering, conductors andconduit, special supports for conduit, switch-boards, batteries, special housing for bat-teries, protective screens, and doors.


775


NOTE A: Do not include in this accounttransformers and other equipment used forchanging the voltage or frequency of elec-tricity for the purposes of transmission ordistribution.

NOTE B: When any item of equipment list-ed herein is used wholly to furnish power toequipment included in another account, itscost shall be included in such other account.

316 Miscellaneous Power Plant Equipment

This account shall include the cost in-stalled of miscellaneous equipment in andabout the steam generating plant devoted togeneral station use, and which is not prop-erly includible in any of the foregoingsteam-power production accounts.

Items

1. Compressed air and vacuum cleaningsystems, including tanks, compressors,exhausters, air filters, and piping.

2. Cranes and hoisting equipment, includ-ing cranes, cars, crane rails, monorails, andhoists with electric and mechanical connec-tions.

3. Fire-extinguishing equipment for gen-eral station use.

4. Foundations and settings specially con-structed for and not expected to outlast theapparatus for which provided.

5. Locomotive cranes not includible else-where.

6. Locomotives not includible elsewhere.7. Marine equipment, including boats and

barges.8. Miscellaneous belts, pulleys, and

countershafts.9. Miscellaneous equipment, including at-

mospheric and weather indicating devices,intrasite communication equipment, labora-tory equipment, signal systems, callophones,emergency whistles and sirens, fire alarms,insect-control equipment, and other similarequipment.

10. Railway cars not includible elsewhere.11. Refrigerating systems, including com-

pressors, pumps, and cooling coils.12. Station maintenance equipment, in-

cluding lathes, shapers, planers, drill presses,hydraulic presses, and grinders with motors,shafting, hangers, and pulleys.

13. Ventilating equipment, including itemswholly identified with apparatus listed here-in.

NOTE: When any item of equipment listedherein is wholly used in connection withequipment included in another account, itscost shall be included in such other account.

Nuclear Production


This account shall include the cost of landand land rights used in connection with nu-clear power generation. (See § 1767.16(g).)


This account shall include the cost, inplace, of structures and improvements usedand useful in connection with nuclear powergeneration. (See § 1767.16 (h).)

NOTE: Include vapor containers and nu-clear production roads and railroads in thisaccount.

322 Reactor Plant Equipment

This account shall include the installedcost of reactors, reactor fuel handling andstorage equipment, pressurizing equipment,coolant charging equipment, purificationand discharging equipment, radioactivewaste treatment and disposal equipment,boilers, steam and feed water piping, reactorand boiler apparatus and accessories andother reactor plant equipment used in theproduction of steam to be used primarily forgenerating electricity, including auxiliarysuperheat boilers and associated equipmentin systems which change temperatures orpressure of steam from the reactor system.

Items

1. Auxiliary superheat boilers and associ-ated fuel storage handling preparation andburning equipment. (See Account 312, BoilerPlant Equipment, for items, but excludewater supply, water flow lines, and steamlines, as well as other equipment not strictlywithin the superheat function.)

2. Boiler feed system, including feed waterheaters, evaporator condensers, heater drainpumps, heater drainers, deaerators, and ventcondensers, boiler feed pumps, surge tanks,feed water regulators, feed water measuringequipment, and all associated drivers.

3. Boilers and heat exchangers.4. Instruments and devices, including all

measuring, indicating, and recording equip-ment for reactor and boiler plant service to-gether with mountings and supports.

5. Lighting systems.6. Moderators, such as heavy water, and

graphite, initial charge.7. Reactor coolant; primary and secondary

systems, initial charge.8. Radioactive waste treatment and dis-

posal equipment, including tanks, ion ex-changers, incinerators, condensers, chim-neys, and diluting fans and pumps.

9. Foundations and settings, especiallyconstructed for and not expected to outlastthe apparatus for which provided.

10. Reactor including shielding, controlrods and mechanisms.

11. Reactor fuel handling equipment, in-cluding manipulating and extraction tools,underwater viewing equipment, seal cuttingand welding equipment, fuel transfer equip-ment, and fuel disassembly machinery.

12. Reactor fuel element failure detectionsystem.


776


13. Reactor emergency poison containerand injection system.

14. Reactor pressuring and pressure reliefequipment, including pressurizing tanks andimmersion heaters.

15. Reactor coolant or moderator circula-tion charging, purification, and dischargingequipment, including tanks, pumps, heat ex-changers, demineralizers, and storage.

16. Station piping, including pipes, valves,fittings, separators, traps, desuperheaters,hangers, excavation, and covering for stationpiping system, including all-reactor coolant,steam, condensate, boiler feed and water sup-ply piping, but not condensing water, plumb-ing, building heating, oil, gas, or air piping.

17. Ventilating equipment.18. Water purification equipment, includ-

ing softeners, demineralizers and acces-sories, evaporators and accessories, heat ex-changers, filters, tanks for filtered or soft-ened water, pumps, and motors.

19. Water supply systems, including pumps,motors, strainers, raw-water storage tanks,boiler wash pumps, intake and dischargepipes and tunnels not a part of a building.

20. Reactor plant cranes and hoists, and as-sociated drives.

NOTE: When the system for supplying boil-er or condenser water is elaborate, as whenit includes a dam, reservoir, canal, pipelines, or cooling ponds, the cost of such spe-cial facilities shall be charged to a subdivi-sion of Account 321, Structures and Improve-ments.

323 Turbogenerator Units

This account shall include the cost in-stalled of main turbine-driven units and ac-cessory equipment used in generating elec-tricity by steam.

Items

1. Air cleaning and cooling apparatus, in-cluding blowers, drive equipment, air ducts,not a part of building, louvers, pumps, andhoods.

2. Circulating pumps, including connec-tions between condensers, and intake anddischarge tunnels.

3. Condensers, including condensate pumps,air and vacuum pumps, ejectors, unloadingvalves and vacuum breakers, expansion de-vices, and screens.

4. Generator hydrogen gas piping systemand hydrogen detrainment equipment, andbulk hydrogen gas storage equipment.

5. Cooling system, including towers,pumps, tanks, and piping.


7. Excitation system, when identified withmain generating units.

8. Fire extinguishing systems.

9. Foundations and settings, especiallyconstructed for and not expected to outlastthe apparatus for which provided.


filters, water separators, tanks, pumps, pip-ing, and motors.

13. Mechanical meters, including gauges,recording instruments, sampling and testingequipment.

14. Piping-main steam, including connec-tions between turbogenerator and condenserand between condenser and hotwell.

15. Piping-main steam, including connec-tions from main throttle valve to turbineinlet.


17. Pressure oil systems, including accumu-lators, pumps, piping, and motors.



denser system, when not a part of structure,and water screens.

21. Turbogenerators-main, including tur-bine and generator, field rheostats and elec-tric connections for self-excited units.

22. Water screens and motors.23. Moisture separators for turbine steam.24. Turbine lubricating oil, initial charge.


This account shall include the cost in-stalled of auxiliary generating apparatus,conversion equipment, and equipment usedprimarily in connection with the control andswitching of electric energy produced by nu-clear power, and the protection of electriccircuits and equipment, except electric mo-tors used to drive equipment included inother accounts. Such motors shall be in-cluded in the account in which the equip-ment with which they are associated is in-cluded.

NOTE: Do not include in this account trans-formers and other equipment used for chang-ing the voltage or frequency of electric en-ergy for the purpose of transmission or dis-tribution.

Items


2. Excitation system, including motor, tur-bine and dual-drive exciter sets and rheo-stats, storage batteries, and charging equip-ment, circuit breakers, panels and acces-sories, knife switches and accessories, surgearresters, instrument shunts, conductors andconduit, special supports for conduit, gener-ator field and exciter switch panels, exciter


777


bus tie panels, generator and exciter rheo-stats and special housing and protectivescreens.

3. Generator main connections, includingoil circuit breakers and accessories, dis-connecting switches and accessories, oper-ating mechanisms and interlocks, currenttransformers, potential transformers, protec-tive relays, isolated panels and equipment,conductors and conduit, special supports forgenerator main leads, grounding switch, spe-cial housings and protective screens.

4. Station buses, including main, auxiliary,transfer, synchronizing and fault groundbuses, including oil circuit breakers and ac-cessories, operating mechanisms and inter-locks, reactors and accessories, voltage regu-lators and accessories, compensators, resis-tors, starting transformers, current trans-formers, potential transformers, protectiverelays, storage batteries and charging equip-ment, isolated panels and equipment, con-ductors and conduit, special supports, specialhousings, concrete pads, general stationgrounding system, fire-extinguishing system,and test equipment.

5. Station control system, including sta-tion switchboards with panel wiring, panelswith instruments and control equipmentonly, panels with switching equipmentmounted or mechanically connected, truck-type boards complete, cubicles, station su-pervisory control boards, generator and ex-citer signal stands, temperature recordingdevices, frequency-control equipment, mas-ter clocks, watt-hour meters andsynchronoscope in the turbine room, stationtotalizing wattmeter, boiler-room load indi-cator equipment, storage batteries, panelsand charging sets, instrument transformersfor supervisory metering, conductors andconduit, special supports for conduit, switch-boards, batteries, special housing for bat-teries, protective screens, and doors.

NOTE: When any item of equipment listedherein is used wholly to furnish power toequipment included in another account, itscost shall be included in such other account.


This account shall include the cost in-stalled of miscellaneous equipment in andabout the nuclear generating plant devotedto general station use, which is not properlyincludible in any of the foregoing nuclear-power production accounts.

Items



3. Fire-extinguishing equipment for gen-eral station and site use.



6. Locomotives not included elsewhere.7. Marine equipment, including boats and



mospheric and weather recording devices,intrasite communication equipment, labora-tory equipment, signal systems, callophones,emergency whistles and sirens, fire alarms,insect-control equipment, and other similarequipment.

10. Railway cars or special shipping con-tainers not includible elsewhere.

11. Refrigerating systems, including com-pressors, pumps, and cooling coils.

12. Station maintenance equipment, in-cluding lathes, shapers, planers, drill presses,hydraulic presses, and grinders with motors,shafting, hangers, and pulleys.


14. Station and area radiation monitoringequipment.

NOTE: When any item of equipment listedherein is wholly used in connection withequipment included in another account, itscost shall be included in such other account.

Hydraulic Production


This account shall include the cost of landand land rights used in connection with hy-draulic power generation. (See § 1767.16 (g).)It shall also include the cost of land and landrights used in connection with (1) the con-servation of fish and wildlife, and (2) recre-ation. Separate subaccounts shall be main-tained for each of the above.


This account shall include the cost, inplace, of structures and improvements usedin connection with hydraulic power genera-tion. (See § 1767.16 (h).) It shall also includethe cost, in place, of structures and improve-ments used in connection with (1) the con-servation of fish and wildlife, and (2) recre-ation. Separate subaccounts shall be main-tained for each of the above.

332 Reservoirs, Dams, and Waterways

This account shall include the cost in placeof facilities used for impounding, collecting,storage, diversion, regulation, and deliveryof water used primarily for generating elec-tricity. It shall also include the cost in place


778


of facilities used in connection with (1) theconservation of fish and wildlife, and (2)recreation. Separate subaccounts shall bemaintained for each of the above. (See§ 1767.16 (h)(3).)

Items

1. Bridges and culverts, when not a part ofroads or railroads.

2. Clearing and preparing land.3. Dams, including wasteways, spillways,

flash boards, spillway gates with operatingand control mechanisms, tunnels, gatehouses, and fish ladders.

4. Dikes and embankments.5. Electric system, including conductors,

control system, transformers, and lightingfixtures.

6. Excavation, including shoring, bracing,bridging, refill, and disposal of excess exca-vated material.


8. Intakes, including trash racks, rackcleaners, control gates and valves with oper-ating mechanisms, and intake house whennot a part of station structure.

9. Platforms, railings, steps, and gratingsappurtenant to structures listed herein.

10. Power line wholly identified with itemsincluded herein.

11. Retaining walls.12. Water conductors and accessories, in-

cluding canals, tunnels, flumes, penstocks,pipe conductors, forebays, tailraces, naviga-tion locks and operating mechanisms, water-hammer and surge tanks, and supportingtrestles and structures.

13. Water storage reservoirs, includingdams, flashboards, spillway gates and oper-ating mechanisms, inlet and outlet tunnels,regulating valves and valve towers, silt andmud sluicing tunnels with valve or gate tow-ers, and all other structures wholly identi-fied with any of the foregoing items.

333 Water Wheels, Turbines and Generators

This account shall include the cost in-stalled of water wheels and hydraulic tur-bines (from connection with penstock orflume to tailrace) and generators driventhereby devoted to the production of elec-tricity by water power or for the productionof power for industrial or other purposes, ifthe equipment used for such purposes is apart of the hydraulic power plant works.

Items

1. Exciter water wheels and turbines, in-cluding runners, gates, governors, pressureregulators, oil pumps, operating mecha-nisms, scroll cases, draft tubes, and draft-tube supports.

2. Fire-extinguishing equipment.

3. Foundations and settings, specially con-structed for and not expected to outlast theapparatus for which provided.

4. Generator cooling system, including aircooling and washing apparatus, air fans andaccessories, and air ducts.

5. Generators-main, a.c. or d.c., includingfield rheostats and connections for self-ex-cited units and excitation system when iden-tified with the generating unit.

6. Lighting systems.7. Lubricating systems, including gauges,

filters, tanks, pumps, and piping.8. Main penstock valves and appur-

tenances, including main valves, controlequipment, bypass valves and fittings, andother accessories.

9. Main turbines and water wheels, includ-ing runners, gates, governors, pressure regu-lators, oil pumps, operating mechanisms,scroll cases, draft tubes, and draft-tube sup-ports.

10. Mechanical meters and recording in-struments.

11. Miscellaneous water-wheel equipment,including gauges, thermometers, meters, andother instruments.


13. Scroll case filling and drain system, in-cluding gates, pipe, valves, and fittings.

14. Water-actuated pressure-regulator sys-tem, including tanks and housings, pipes,valves, fittings and insulators, piers and an-chorage, and excavation and backfill.


This account shall include the cost in-stalled of auxiliary generating apparatus,conversion equipment, and equipment usedprimarily in connection with the control andswitching of electric energy produced by hy-draulic power and the protection of electriccircuits and equipment, except electric mo-tors used to drive equipment included inother accounts, such motors being includedin the account in which the equipment withwhich they are associated is included.

Items


2. Excitation system, including motor, tur-bine, and dual-drive exciter sets and rheo-stats, storage batteries and charging equip-ment, circuit breakers, panels and acces-sories, knife switches and accessories, surgearresters, instrument shunts, conductors andconduit, special supports for conduit, gener-ator field and exciter switch panels, exciterbus tie panels, generator and exciter rheo-stats and special housings and protectivescreens.


779


3. Generator main connections, includingoil circuit breakers and accessories, dis-connecting switches and accessories, oper-ating mechanisms and interlocks, currenttransformers, potential transformers, protec-tive relays, isolated panels and equipment,conductors and conduit, special supports forgenerator main leads, grounding switch, andspecial housings and protective screens.

4. Station buses, including main, auxiliary,transfer, synchronizing, and fault groundbuses, including oil circuit breakers and ac-cessories, disconnecting switches and acces-sories, operating mechanisms and interlocks,reactors and accessories, voltage regulatorsand accessories, compensators, resistorsstarting transformers, current transformers,potential transformers, protective relays,storage batteries, and charging equipment,isolated panels and equipment, conductorsand conduit, special supports, special fire-ex-tinguishing system, and test equipment.

5. Station control system, including sta-tion switchboards with panel wiring, panelswith instruments and control equipmentonly, panels with switching equipmentmounted for mechanically connected, truck-type boards complete, cubicles, station su-pervisory control devices, frequency controlequipment, master clocks, watt-hour meter,station totalizing watt-meter, storage bat-teries, panels and charging sets, instrumenttransformers for supervisory metering, con-ductors and conduit, special supports forconduit, switchboards, batteries, specialhousings for batteries, protective screens,and doors.

NOTE A: Do not include in this accounttransformers and other equipment used forchanging the voltage or frequency of elec-tricity for the purpose of transmission ordistribution.

NOTE B: When any item of equipment list-ed herein is used wholly to furnish power toequipment, it shall be included in suchequipment account.


This account shall include the cost in-stalled of miscellaneous equipment in andabout the hydroelectric generating plantwhich is devoted to general station use andis not properly includible in other hydraulicproduction accounts. It shall also include thecost of equipment used in connection with (1)the conservation of fish and wildlife, and (2)recreation. Separate subaccounts shall bemaintained for each of the above.

Items


2. Cranes and hoisting equipment, includ-ing cranes, cars, crane rails, monorails, and

hoists with electric and mechanical connec-tions.




6. Locomotives not includible elsewhere.7. Marine equipment, including boats and



mospheric and weather indicating devices.Intrasite communication equipment, labora-tory equipment, insect control equipment,signal systems, callophones, emergencywhistles and sirens, fire alarms, and othersimilar equipment.

10. Railway cars, not includible elsewhere.11. Refrigerating system, including com-

pressors, pumps, and cooling coils.12. Station maintenance equipment, in-

cluding lathes, shapers, planers, drill presses,hydraulic presses, and grinders with motors,shafting, hangers, and pulleys.


NOTE: When any item of equipment, listedherein, is used wholly in connection withequipment included in another account, itscost shall be included in such other account.

336 Roads, Railroads, and Bridges

This account shall include the cost ofroads, railroads, trails, bridges, and trestlesused primarily as production facilities. Italso includes those roads necessary to con-nect the plant with highway transportationsystems, except when such roads are dedi-cated to public use and maintained by publicauthorities.

Items

1. Bridges, including foundations, piers,girders, trusses, and flooring.

2. Clearing land.3. Railroads, including grading, ballast,

ties, rails, culverts, and hoists.4. Roads, including grading, surfacing, and

culverts.5. Structures, constructed and maintained

in connection with items listed herein.6. Trails, including grading, surfacing, and

culverts.7. Trestles, including foundations, piers,

girders, trusses, and flooring.NOTE A: Roads intended primarily for con-

necting employees’ houses with the powerplant, and roads used primarily in connec-tion with fish and wildlife, and recreation ac-tivities, shall not be included herein but inAccount 331, Structures and Improvements.


780


NOTE B: The cost of temporary roads andbridges necessary during the period of con-struction but abandoned or dedicated to pub-lic use upon completion of the plant, shallnot be included herein but shall be chargedto the accounts appropriate for the construc-tion.

Other Production


This account shall include the cost of landand land rights used in connection withother power generation. (See § 1767.16 (g).)


This account shall include the cost in placeof structures and improvements used in con-nection with other power generation. (See§ 1767.16 (h).)

342 Fuel Holders, Producers, andAccessories

This account shall include the cost in-stalled of fuel handling and storage equip-ment used between the point of fuel deliveryto the station and the intake pipe throughwhich fuel is directly drawn to the engine,also the cost of gas producers and accessoriesdevoted to the production of gas for use inprime movers driving main electric genera-tors.

Items

1. Blower and fans.2. Boilers and pumps.3. Economizers.4. Exhauster outfits.5. Flues and piping.6. Pipe system.7. Producers.8. Regenerators.9. Scrubbers.10. Steam injectors.11. Tanks for storage of oil and gasoline.12. Vaporizers.

343 Prime Movers

This account shall include the cost in-stalled of Diesel or other prime movers de-voted to the generation of electric energy,together with their auxiliaries.

Items

1. Air-filtering system.2. Belting, shafting, pulleys, and reduction

gearing.3. Cooling system, including towers,

pumps, tanks, and piping.4. Cranes and hoists, including items whol-

ly identified with apparatus listed herein.5. Engines, Diesel, gasoline, gas, or other

internal combustion.6. Foundations and settings specially con-

structed for and not expected to outlast theapparatus for which provided.

7. Governors.8. Ignition system.9. Inlet valve.10. Lighting systems.11. Lubricating systems, including filters,

tanks, pumps, and piping.12. Mechanical meters, including gauges,

recording instruments, sampling, and testingequipment.

13. Mufflers.14. Piping.15. Starting systems, compressed air, or

other, including compressors and drives,tanks, piping, motors, boards and connec-tions, and storage tanks.


17. Waste heat boilers and antifluctuators.

344 Generators

This account shall include the cost in-stalled of Diesel or other power driven maingenerators.

Items

1. Cranes and hoists, including items whol-ly identified with such apparatus.

2. Fire-extinguishing equipment.3. Foundations and settings, specially con-

structed for and not expected to outlast theapparatus for which provided.

4. Generator cooling system, including aircooling and washing apparatus, air fans andaccessories, and air ducts.

5. Generators-main, a.c. or d.c., includingfield rheostats and connections for self-ex-cited units and excitation system when iden-tified with the generating unit.

6. Lighting systems.7. Lubricating system, including tanks, fil-

ters, strainers, pumps, piping, and coolers.8. Mechanical meters and recording instru-

ments.9. Platforms, railings, steps, and gratings

appurtenant to apparatus listed herein.NOTE: If prime movers and generators are

so integrated that it is not practical to clas-sify them separately, the entire unit may beincluded in Account 344, Generators.


This account shall include the cost in-stalled of auxiliary generating apparatus,conversion equipment, and equipment usedprimarily in connection with the control andswitching of electric energy produced inother power generating stations, and theprotection of electric circuits and equip-ment, except electric motors used to driveequipment included in other accounts. Suchmotors shall be included in the account inwhich the equipment with which it is associ-ated is included.


781


Items


2. Excitation system, including motor, tur-bine and dual-drive exciter sets and rheo-stats, storage batteries and charging equip-ment, circuit breakers, panels and acces-sories, knife switches and accessories, surgearresters, instrument shunts, conductors andconduit, special supports for conduit, gener-ator field and exciter switch panels, exciterbus tie panels, generator and exciter rheo-stats and special housings and protectivescreens.

3. Generator main connections, includingoil circuit breakers and accessories, dis-connecting switches and accessories, oper-ating mechanisms and interlocks, currenttransformers, potential transformers, protec-tive relays, isolated panels and equipment,conductors and conduit, special supports forgenerator main leads, grounding switch, andspecial housing and protective screens.

4. Station control system, including sta-tion switchboards with panel wiring, panelswith instruments and control equipmentonly, panels with switching equipmentmounted or mechanically connected, trunk-type boards complete, cubicles, station su-pervisory control boards, generator and ex-citer signal stands, temperature-recordingdevices, frequency control equipment, mas-ter clocks, watt-hour meter, station total-izing wattmeter, storage batteries, panelsand charging sets, instrument transformersfor supervisory metering, conductors andconduit, special supports for conduit, switch-boards, batteries, special housing for bat-teries, protective screens, and doors.

5. Station buses, including main, auxiliary,transfer, synchronizing and fault groundbuses, including oil circuit breakers and ac-cessories, disconnecting switches and acces-sories, operating mechanisms and interlocks,reactors and accessories, voltage regulatorsand accessories, compensators, resistors,starting transformers, current transformers,potential transformers, protective relays,storage batteries and charging equipment,isolated panels and equipment, conductorsand conduit, special supports, specialhousings, concrete pads, general stationground system, special fire-extinguishingsystem, and test equipment.

NOTE A: Do not include in this accounttransformers and other equipment used forchanging the voltage or frequency of electricenergy for the purpose of transmission ordistribution.

NOTE B: When any item of equipment list-ed herein is used wholly to furnish power toequipment included in another account, itscost shall be included in such other account.


This account shall include the cost in-stalled of miscellaneous equipment in andabout the other power generating plant, de-voted to general station use, and not prop-erly includible in any of the foregoing otherpower production accounts.

Items





5. Miscellaneous equipment, including at-mospheric and weather indicating devices,intrasite communication equipment, labora-tory equipment, signal systems, callophones,emergency whistles and sirens, fire alarms,and other similar equipment.

6. Miscellaneous belts, pulleys, andcountershafts.

7. Refrigerating systems including com-pressors, pumps, and cooling coils.

8. Station maintenance equipment, includ-ing lathes, shapers, planters, drill presses,hydraulic presses, and grinders with motors,shafting, hangers, or pulleys.


NOTE: When any item of equipment, listedherein is used wholly in connection withequipment included in another account, itscost shall be included in such other account.

TRANSMISSION PLANT


This account shall include the cost of landand land rights used in connection withtransmission operations. (See § 1767.16 (g).)

351 [Reserved]


This account shall include the cost, inplace, of structures and improvements usedin connection with transmission operations.(See § 1767.16 (h).)

353 Station Equipment

This account shall include the cost in-stalled of transforming, conversion, andswitching equipment used for the purpose ofchanging the characteristics of electricity inconnection with its transmission or for con-trolling transmission circuits.


782


Items

1. Bus compartments, concrete, brick, andsectional steel, including items permanentlyattached thereto.

2. Conduit, including concrete and ironduct runs not a part of a building.

3. Control equipment, including batteries,battery charging equipment, transformers,remote relay boards, and connections.

4. Conversion equipment, including trans-formers, indoor and outdoor, frequencychangers, motor generator sets, rectifiers,synchronous converters, motors, coolingequipment, and associated connections.

5. Fences.6. Fixed and synchronous condensers, in-

cluding transformers, switching equipment,blowers, motors and connections.


8. General station equipment, including aircompressors, motors, hoists, cranes, testequipment, and ventilating equipment.


10. Primary and secondary voltage connec-tions, including bus runs and supports,insulators, potheads, lightning arresters,cable and wire runs from and to outdoor con-nections or to manholes and the associatedregulators, reactors, resistors, surge arrest-ers, and accessory equipment.

11. Switchboards, including meters, relays,and control wiring.

12. Switching equipment, indoor and out-door, including oil circuit breakers and oper-ating mechanisms, truck switches, and dis-connect switches.

13. Tools and appliances.

354 Towers and Fixtures

This account shall include the cost in-stalled of towers and appurtenant fixturesused for supporting overhead transmissionconductors.

Items

1. Anchors, guys, and braces.2. Brackets.3. Crossarms, including braces.4. Excavation, backfill, and disposal of ex-

cess excavated material.5. Foundations.6. Guards.7. Insulator pins and suspension bolts.8. Ladder and steps.9. Railings.10. Towers.

355 Poles and Fixtures

This account shall include the cost in-stalled of transmission line poles, wood,steel, concrete, or other material, togetherwith appurtenant fixtures used for sup-porting overhead transmission conductors.

Items

1. Anchors, head arm and other guys, in-cluding guy guards, guy clamps, straininsulators, and pole plates.

2. Brackets.3. Crossarms and braces.4. Excavation and backfill, including dis-

posal of excess excavated material.5. Extension arms.6. Gaining, roofing, stenciling, and tagging.7. Insulator pins and suspension belts.8. Paving.9. Pole steps.10. Poles, wood, steel, concrete, or other

material.11. Racks complete with insulators.12. Reinforcing and stubbing.13. Settings.14. Shaving and painting.

356 Overhead Conductors and Devices

This account shall include the cost in-stalled of overhead conductors and devicesused for transmission purposes.

Items

1. Circuit breakers.2. Conductors, including insulated and bare

wires and cables.3. Ground wires and ground clamps.4. Insulators, including pin, suspension,

and other types.5. Lightning arresters.6. Switches.7. Other line devices.

357 Underground Conduit

This account shall include the cost in-stalled of underground conduit and tunnelsused for housing transmission cables orwires. (See § 1767.16 (n).)

Items

1. Conduit, concrete, brick or tile, includ-ing iron pipe, fiber pipe, Murray duct, andstandpipe on pole or tower.

2. Excavation, including shoring, bracing,bridging, backfill, and disposal of excess ex-cavated material.


4. Lighting systems.5. Manholes, concrete or brick, including

iron or steel, frames and covers, hatchways,gratings, ladders, cable racks and hangers,permanently attached to manholes.

6. Municipal inspection.7. Pavement disturbed, including cutting

and replacing pavement, pavement base andsidewalks.

8. Permits.9. Protection of street openings.10. Removal and relocation of subsurface

obstructions.


783


11. Sewer connections, including drains,traps, tide valves, and check valves.

12. Sumps, including pumps.13. Ventilating equipment.

358 Underground Conductors and Devices

This account shall include the cost in-stalled of underground conductors and de-vices used for transmission purposes.

Items

1. Armored conductors, buried, includinginsulators, insulating materials, splices, pot-heads, and trenching.

2. Armored conductors, submarine, includ-ing insulators, insulating materials, splicesin terminal chambers, and potheads.

3. Cables in standpipe, including potheadand connection from terminal chamber ofmanhole to insulators on pole.

4. Circuit breakers.5. Fireproofing, in connection with any

items listed herein.6. Hollow-core oil-filled cable, including

straight or stop joints, pressure tanks, auxil-iary air tanks, feeding tanks, terminals, pot-heads and connections, and ventilatingequipment.

7. Lead and fabric covered conductors, in-cluding insulators, compound filled, oilfilled, or vacuum splices, and potheads.

8. Lightning arresters.9. Municipal inspection.10. Permits.11. Protection of street openings.12. Racking of cables.13. Switches.14. Other line devices.

359 Roads and Trails

This account shall include the cost ofroads, trails, and bridges used primarily astransmission facilities.

Items

1. Bridges, including foundation piers, gird-ers, trusses, and flooring.

2. Clearing land.3. Roads, including grading, surfacing, and

culverts.4. Structures, constructed and maintained

in connection with items included herein.5. Trails, including grading, surfacing, and

culverts.NOTE: The cost of temporary roads, and

bridges necessary during the period of con-struction but abandoned or dedicated to pub-lic use upon completion of the plant, shall becharged to the accounts appropriate for theconstruction.

DISTRIBUTION PLANT


This account shall include the cost of landand land rights used in connection with dis-tribution operations. (See § 1767.16 (g).)

NOTE: Do not include the cost of permits toerect poles, or towers or to trim trees in thisaccount. (See Account 364, Poles, Towers andFixtures, and Account 365, Overhead Conduc-tors and Devices.)


This account shall include the cost, inplace, of structures and improvements usedin connection with distribution operations.(See § 1767.16 (h).)

362 Station Equipment

This account shall include the cost in-stalled of station equipment, includingtransformer banks, which are used for thepurpose of changing the characteristics ofelectricity in connection with its distribu-tion.

Items

1. Bus compartments, concrete, brick andsectional steel, including items permanentlyattached thereto.

2. Conduit, including concrete and ironduct runs not part of building.

3. Control equipment, including batteries,battery charging equipment, transformers,remote relay boards, and connections.

4. Conversion equipment, indoor and out-door, frequency changers, motor generatorsets, rectifiers, synchronous converters, mo-tors, cooling equipment, and associated con-nections.

5. Fences.6. Fixed and synchronous condensers, in-

cluding transformers, switching equipment,blowers, motors, and connections.


8. General station equipment, including aircompressors, motors, hoists, cranes, testequipment, and ventilating equipment.


10. Primary and secondary voltage connec-tions, including bus runs and supports,insulators, potheads, lightning arresters,cable and wire runs from and to outdoor con-nections or to manholes and the associatedregulators, reactors, resistors, surge arrest-ers, and accessory equipment.

11. Switchboards, including meters, relays,and control wiring.

12. Switching equipment, indoor and out-door, including oil circuit breakers and oper-ating mechanisms, truck switches, dis-connect switches.


784


NOTE: The cost of rectifiers, series trans-formers, and other special station equipmentdevoted exclusively to street lighting serviceshall not be included in this account, but inAccount 373, Street Lighting and Signal Sys-tems.

363 Storage Battery Equipmentis accountshall include the cost installed of storagebattery equipment used for the purpose ofsupplying electricity to meet emergency orpeak demands.

Items

1. Batteries, including elements, tanks,and tank insulators.

2. Battery room connections, includingcable or bus runs and connections.

3. Battery room flooring, when speciallylaid for supporting batteries.

4. Charging equipment, including motorgenerator sets and other charging equipmentand connections, and cable runs from gener-ator or station bus to battery room connec-tions.

5. Miscellaneous equipment, including in-struments, and water stills.

6. Switching equipment, including endcellswitches and connections, boards and panels,used exclusively for battery control, not partof general station switchboard.

7. Ventilating equipment, including fansand motors, louvers, and ducts not part ofbuilding.

NOTE: Storage batteries used for controland general station purposes shall not be in-cluded in this account but in the account ap-propriate for their use.

364 Poles, Towers and Fixtures

This account shall include the cost in-stalled of poles, towers, and appurtenant fix-tures used for supporting overhead distribu-tion conductors and service wires.

Items

1. Anchors, head arm, and other guys, in-cluding guy guards, guy clamps, straininsulators, and pole plates.

2. Brackets.3. Crossarms and braces.4. Excavation and backfill, including dis-

posal of excess excavated material.5. Extension arms.6. Foundations.7. Guards.8. Insulator pins and suspension bolts.9. Paving.10. Permits for construction.11. Pole steps and ladders.12. Poles, wood, steel, concrete, or other

material.13. Racks complete with insulators.14. Railings.15. Reinforcing and stubbing.16. Settings.

17. Shaving, painting, gaining, roofing,stenciling, and tagging.

18. Towers.19. Transformer racks and platforms.

365 Overhead Conductors and Devices

This account shall include the cost in-stalled of overhead conductors and devicesused for distribution purposes.

Items

1. Circuit breakers.2. Conductors, including insulated and bare

wires and cables.3. Ground wires and clamps.4. Insulators, including pin, suspension,

and other types, and tie wire or clamps.5. Lightning arresters.6. Railroad and highway crossing guards.7. Splices.8. Switches.9. Tree trimming, initial cost including the

cost of permits therefor.10. Other line devices.11. Oil circuit reclosers (OCR).12. Sectionalizers.13. Labor costs for installation of OCRs and

Sectionalizers, first only.NOTE: The cost of conductors used solely

for street lighting or signal systems shallnot be included in this account but in Ac-count 373, Street Lighting and Signal Sys-tems.

366 Underground Conduit

This account shall include the cost in-stalled of underground conduit and tunnelsused for housing distribution cables or wires.

Items

1. Conduit, concrete, brick and tile, includ-ing iron pipe, fiber pipe, Murray duct, andstandpipe on pole or tower.

2. Excavation, including shoring, bracing,bridging, backfill, and disposal of excess ex-cavated material.

3. Foundations and settings specially con-structed for and not expected to outlast theapparatus for which constructed.

4. Lighting systems.5. Manholes, concrete or brick, including

iron or steel frames and covers, hatchways,gratings, ladders, cable racks, and hangerspermanently attached to manholes.

6. Municipal inspection.7. Pavement disturbed, including cutting

and replacing pavement, pavement base, andsidewalks.

8. Permits.9. Protection of street openings.10. Removal and relocation of subsurface

obstructions.11. Sewer connections, including drains,

traps, tide valves, and check valves.12. Sumps, including pumps.13. Ventilating equipment.


785


NOTE: The cost of underground conduitused solely for street lighting or signal sys-tems shall be included in Account 373, StreetLighting and Signal Systems.

367 Underground Conductors and Devices

This account shall include the cost in-stalled of underground conductors and de-vices used for distribution purposes.

Items

1. Armored conductors, buried, includinginsulators, insulating materials, splices, pot-heads, and trenching.

2. Armored conductors, submarine, includ-ing insulators, insulating materials, splicesin terminal chamber, and potheads.

3. Cables in standpipe, including potheadand connection from terminal chamber ormanhole to insulators on pole.

4. Circuit breakers.5. Fireproofing, in connection with any

items listed herein.6. Hollow-core oil-filled cable, including

straight or stop joints, pressure tanks, auxil-iary air tanks, feeding tanks, terminals, pot-heads and connections.

7. Lead and fabric covered conductors, in-cluding insulators, compound-filled, oil-filled or vacuum splices, and potheads.

8. Lightning arresters.9. Municipal inspection.10. Permits.11. Protection of street openings.12. Racking of cables.13. Switches.14. Other line devices.NOTE: The cost of underground conductors

and devices used solely for street lighting orsignal systems shall be included in Account373, Street Lighting and Signal Systems.

368 Line Transformers

A. This account shall include the cost in-stalled of overhead and underground dis-tribution line transformers and pole-typeand underground voltage regulators ownedby the utility, for use in transforming elec-tricity to the voltage at which it is to beused by the customer, whether actually inservice or held in reserve.

B. When a transformer is permanently re-tired from service, the original installed costthereof shall be credited to this account.

C. The records covering line transformersshall be so kept that the utility can furnishthe number of transformers of various capac-ities in service and those in reserve, and thelocation and the use of each transfer.

Items

1. Installation, labor of (first installationonly).

2. Transformer cut-out boxes.3. Transformer lightning arresters.4. Transformers, line and network.

5. Capacitors.6. Network protectors.7. Voltage regulators.NOTE: The cost of removing and resetting

line transformers shall not be charged tothis account but to Account 583, OverheadLine Expenses, or Account 584, UndergroundLine Expenses, as appropriate. The cost ofline transformers used solely for street light-ing or signal systems shall be included in Ac-count 373, Street Lighting and Signal Sys-tems.

369 Services

This account shall include the cost in-stalled of overhead and underground conduc-tors leading from a point where wires leavethe last pole of the overhead system or thedistribution box or manhole, or the top ofthe pole of the distribution line, to the pointof connection with the customer’s outlet orwiring. Conduit used for underground serviceconductors shall be included herein.

Items

1. Brackets.2. Cables and wires.3. Conduit.4. Insulators.5. Municipal inspection.6. Overhead to underground, including con-

duit or standpipe and conductor from lastsplice on pole to connection with customer’swiring.

7. Pavement disturbed, including cuttingand replacing pavement, pavement base, andsidewalks.

8. Permits.9. Protection of street openings.10. Service switch.11. Suspension wire.

370 Meters

A. This account shall include the cost in-stalled of meters or devices and appur-tenances thereto, for use in measuring theelectricity delivered to its users, whether ac-tually in service or held in reserve.

B. When a meter is permanently retiredfrom service, the installed cost includedherein shall be credited to this account.

C. The records covering meters shall be sokept that the utility can furnish informationas to the number of meters of various capac-ities in service and in reserve as well as thelocation of each meter owned.

Items

1. Alternate current, watt-hour meters.2. Current limiting devices.3. Demand indicators.4. Demand meters.5. Direct current watt-hour meters.6. Graphic demand meters.7. Installation, labor of (first installation

only).


786


8. Instrument transformers.9. Maximum demand meters.10. Meter badges and their attachments.11. Meter boards and boxes.12. Meter fittings, connections, and shelves

(first set).13. Meter switches and cut-outs.14. Prepayment meters.15. Protective devices.16. Testing new meters.NOTE A: This account shall not include me-

ters for recording output of a generating sta-tion, or substation meters. It includes onlythose meters used to record energy deliveredto customers.

NOTE B: The cost of removing and resettingmeters shall be charged to Account 586,Meter Expenses.

371 Installations on Customers’ Premises

This account shall include the cost in-stalled of equipment on the customer’s sideof a meter when the utility incurs such costand when the utility retains title to and as-sumes full responsibility for maintenanceand replacement of such property. This ac-count shall not include leased equipment.(See Account 372, Leased Property on Cus-tomers’ Premises.)

Items

1. Cable vaults.2. Commercial lamp equipment.3. Foundations and settings specially pro-

vided for equipment included herein.4. Frequency changer sets.5. Motor generator sets.6. Motors.7. Switchboard panels, high or low tension.8. Wire and cable connections to incoming

cables.NOTE: Do not include in this account any

costs incurred in connection with merchan-dising, jobbing, or contract work activities.

372 Leased Property on Customers’Premises

This account shall include the cost of elec-tric motors, transformers, and other equip-ment on customers’ premises (including mu-nicipal corporations), leased or loaned tocustomers, but not including property heldfor sale.

NOTE A: The cost of setting and connectingsuch appliances or equipment on the prem-ises of customers and the cost of resetting orremoval shall not be charged to this accountbut to operating expenses, Account 587, Cus-tomer Installations Expenses.

NOTE B: Do not include in this account anycosts incurred in connection with merchan-dising, jobbing, or contract work activities.

373 Street Lighting and Signal Systems

This account shall include the cost in-stalled of equipment used wholly for public

street and highway lighting or traffic, firealarm, police, and other signal systems.

Items

1. Armored conductors, buried or sub-marine, including insulators, insulating ma-terials, splices, and trenching.

2. Automatic control equipment.3. Conductors, overhead or underground,

including lead or fabric covered, parkway ca-bles, including splices, and insulators.

4. Lamps, arc, incandescent, or othertypes, including glassware, suspension fix-tures, and brackets.

5. Municipal inspection.6. Ornamental lamp posts.7. Pavement disturbed, including cutting

and replacing pavement, pavement base, andsidewalks.

8. Permits.9. Posts and standards.10. Protection of street openings.11. Relays or time clocks.12. Series contactors.13. Switches.14. Transformers, pole or underground.

GENERAL PLANT


This account shall include the cost of landand land rights used for utility purposes, thecost of which is not properly includible inother land and land rights accounts. (See§ 1767.16 (g).)


This account shall include the cost, inplace, of structures and improvements usedfor utility purposes, the cost of which is notproperly includible in other structures andimprovements accounts. (See § 1767.16 (h).)

391 Office Furniture and Equipment

This account shall include the cost of of-fice furniture and equipment owned by theutility and devoted to utility service, andnot permanently attached to buildings, ex-cept the cost of such furniture and equip-ment which the utility elects to assign toother plant accounts on a functional basis.

Items

1. Bookcases and shelves.2. Desks, chairs, and desk equipment.3. Drafting-room equipment.4. Filing, storage, and other cabinets.5. Floor covering.6. Library and library equipment.7. Mechanical office equipment, such as ac-

counting machines, and typewriters.8. Safes.9. Tables.


787


392 Transportation Equipment

This account shall include the cost oftransportation vehicles used for utility pur-poses.

Items

1. Airplanes.2. Automobiles.3. Bicycles.4. Electrical vehicles.5. Motor trucks.6. Motorcycles.7. Repair cars or trucks.8. Tractors and trailers.9. Other transportation vehicles.

393 Stores Equipment

This account shall include the cost ofequipment used for the receiving, shipping,handling, and storage of materials and sup-plies.

Items

1. Chain falls.2. Counters.3. Cranes (portable).4. Elevating and stacking equipment (port-

able).5. Hoists.6. Lockers.7. Scales.8. Shelving.9. Storage bins.10. Trucks, hand and power driven.11. Wheelbarrows.

394 Tools, Shop and Garage Equipment

This account shall include the cost oftools, implements, and equipment used inconstruction, repair work, general shops andgarages and not specifically provided for orincludible in other accounts.

Items

1. Air compressors.2. Anvils.3. Automobile repair shop equipment.4. Battery charging equipment.5. Belts, shafts and countershafts.6. Boilers.7. Cable pulling equipment.8. Concrete mixers.9. Drill presses.10. Derricks.11. Electric equipment.12. Engines.13. Forges.14. Furnaces.15. Foundations and settings specially con-

structed for and not expected to outlast theequipment for which provided.

16. Gas producers.17. Gasoline pumps, oil pumps, and storage

tanks.18. Greasing tools and equipment.

19. Hoists.20. Ladders.21. Lathes.22. Machine tools.23. Motor-driven tools.24. Motors.25. Pipe threading and cutting tools.26. Pneumatic tools.27. Pumps.28. Riveters.29. Smithing equipment.30. Tool racks.31. Vises.32. Welding apparatus.33. Work benches.

395 Laboratory Equipment

This account shall include the cost in-stalled of laboratory equipment used for gen-eral laboratory purposes and not specificallyprovided for or includible in other depart-mental or functional plant accounts.

Items

1. Ammeters.2. Current batteries.3. Frequency changers.4. Galvanometers.5. Inductometers.6. Laboratory standard millivolt meters.7. Laboratory standard volt meters.8. Meter-testing equipment.9. Millivolt meters.10. Motor generator sets.11. Panels.12. Phantom loads.13. Portable graphic ammeters, voltmeters,

and wattmeters.14. Portable loading devices.15. Potential batteries.16. Potentiometers.17. Rotating standards.18. Standard cell, reactance, resistor, and

shunt.19. Switchboards.20. Synchronous timers.21. Testing panels.22. Testing resistors.23. Transformers.24. Voltmeters.25. Other testing, laboratory, or research

equipment not provided for elsewhere.

396 Power Operated Equipment

This account shall include the cost ofpower operated equipment used in construc-tion or repair work exclusive of equipmentincludible in other accounts. Include, also,the tools and accessories acquired for usewith such equipment and the vehicle onwhich such equipment is mounted.

Items

1. Air compressors, including driving unitand vehicle.

2. Back filling machines.


788


3. Boring machines.4. Bulldozers.5. Cranes and hoists.6. Diggers.7. Engines.8. Pile drivers.9. Pipe cleaning machines.10. Pipe coating or wrapping machines.11. Tractors-Crawler type.12. Trenchers.13. Other power operated equipment.NOTE: It is intended that this account in-

clude only such large units as are generallyself-propelled or mounted on movable equip-ment.

397 Communication Equipment

This account shall include the cost in-stalled of telephone, telegraph, and wirelessequipment for general use in connection withutility operations.

Items

1. Antennae.2. Booths.3. Cables.4. Distributing boards.5. Extension cords.6. Gongs.7. Hand sets, manual and dial.8. Insulators.9. Intercommunicating sets.10. Loading coils.11. Operators’ desks.12. Poles and fixtures used wholly for tele-

phone or telegraph wire.13. Radio transmitting and receiving sets.14. Remote control equipment and lines.15. Sending keys.16. Storage batteries.17. Switchboards.18. Telautograph circuit connections.19. Telegraph receiving sets.20. Telephone and telegraph circuits.21. Testing instruments.22. Towers.23. Underground conduit used wholly for

telephone or telegraph wires and cable wires.

398 Miscellaneous Equipment

This account shall include the cost ofequipment, and apparatus used in the utilityoperations, which is not includible in otheraccounts.

Items

1. Hospital and infirmary equipment.2. Kitchen equipment.3. Employees’ recreation equipment.4. Radios.5. Restaurant equipment.6. Soda fountains.7. Operators’ cottage furnishings.8. Other miscellaneous equipment.NOTE: Miscellaneous equipment of the na-

ture indicated above wherever practicable,

shall be included in the utility plant ac-counts on a functional basis.

399 Other Tangible Property

This account shall include the cost of tan-gible utility plant not provided for else-where.

§ 1767.21 Operating income.The operating income accounts iden-

tified in this section shall be used byall RUS borrowers.

UTILITY OPERATING INCOME

400 Operating Revenues401 Operation Expense402 Maintenance Expense403 Depreciation Expense403.1 Depreciation Expense—Steam Produc-

tion Plant403.2 Depreciation Expense—Nuclear Pro-

duction Plant403.3 Depreciation Expense—Hydraulic Pro-

duction Plant403.4 Depreciation Expense—Other Produc-

tion Plant403.5 Depreciation Expense—Transmission

Plant403.6 Depreciation Expense—Distribution

Plant403.7 Depreciation Expense—General Plant404 Amortization of Limited-Term Electric

Plant405 Amortization of Other Electric Plant406 Amortization of Electric Plant Acquisi-

tion Adjustments407 Amortization of Property Losses, Unre-

covered Plant and Regulatory StudyCosts

407.3 Regulatory Debits407.4 Regulatory Credits408 Taxes Other than Income Taxes408.1 Taxes—Property408.2 Taxes—U.S. Social Security—Unem-

ployment408.3 Taxes—U.S. Social Security—F.I.C.A.408.4 Taxes—State Social Security—Unem-

ployment408.5 Taxes—State Sales—Consumers408.6 Taxes—Gross Revenue or Gross Re-

ceipts Tax408.7 Taxes—Other409 [Reserved]409.1 Income Taxes, Utility Operating In-

come409.2 Income Taxes, Other Income and De-

ductions409.3 Income Taxes, Extraordinary Items410 [Reserved]410.1 Provision for Deferred Income Taxes,

Utility Operating Income410.2 Provision for Deferred Income Taxes,

Other Income and Deductions411 [Reserved]411.1 Provision for Deferred Income Taxes—

Credit, Utility Operating Income


789


411.2 Provision for Deferred Income Taxes—Credit, Other Income and Deductions

411.3 [Reserved]411.4 Investment Tax Credit Adjustments,

Utility Operations411.5 Investment Tax Credit Adjustments,

Nonutility Operations411.6 Gains from Disposition of Utility

Plant411.7 Losses from Disposition of Utility

Plant411.8 Gains from Disposition of Allowances411.9 Losses from Disposition of Allowances412 Revenues from Electric Plant Leased to

Others413 Expenses of Electric Plant Leased to

Others414 Other Utility Operating Income

UTILITY OPERATING INCOME

400 Operating Revenues

There shall be shown under this captionthe total amount included in the electric op-erating revenue accounts provided herein.

401 Operation Expense

There shall be shown under this captionthe total amount included in the electric op-eration expense accounts provided herein.(See note to § 1767.17 (c).)

402 Maintenance Expense

There shall be shown under this captionthe total amount included in the electricmaintenance expense accounts providedherein.

403 Depreciation Expense

A. This account shall include the amountof depreciation expense for all classes of de-preciable electric plant in service exceptsuch depreciation expense as is chargeable toclearing accounts or to Account 416, Costsand Expenses of Merchandising, Jobbing andContract Work.

B. The utility shall keep such records ofproperty and property retirements as will re-flect the service life of property which hasbeen retired and aid in estimating probableservice life by mortality, turnover, or otherappropriate methods; and also such recordsas will reflect the percentage of salvage andcosts of removal for property retired fromeach account, or subdivision thereof, for de-preciable electric plant.

NOTE A: Depreciation expense applicable toproperty included in Account 104, ElectricPlant Leased to Others, shall be charged toAccount 413, Expenses of Electric PlantLeased to Others.

NOTE B: Depreciation expenses applicableto transportation equipment, shop equip-ment, tools, work equipment, power operatedequipment, and other general equipmentmay be charged to clearing accounts as nec-

essary in order to obtain a proper distribu-tion of expenses between construction andoperation.

NOTE C: Depreciation expense applicable totransportation equipment used for transpor-tation of fuel from the point of acquisitionto the unloading point shall be charged toAccount 151, Fuel Stock.


403.1 Depreciation Expense—Steam Produc-tion Plant

403.2 Depreciation Expense—Nuclear Pro-duction Plant

403.3 Depreciation Expense—Hydraulic Pro-duction Plant

403.4 Depreciation Expense—Other Produc-tion Plant

403.5 Depreciation Expense—TransmissionPlant

403.6 Depreciation Expense—DistributionPlant

403.7 Depreciation Expense—General Plant

404 Amortization of Limited-Term ElectricPlant

This account shall include amortizationcharges applicable to amounts included inthe electric plant accounts for limited-termfranchises, licenses, patent rights, limited-term interests in land, and expenditures onleased property where the service life of theimprovements is terminable by action of thelease. The charges to this account shall besuch as to distribute the book cost of eachinvestment as evenly as may be over the pe-riod of its benefit to the utility. (See Ac-count 111, Accumulated Provision for Amor-tization of Electric Utility Plant.)

405 Amortization of Other Electric Plant

A. When authorized by RUS, this accountshall include charges for amortization of in-tangible or other electric utility plant whichdoes not have a definite or terminable lifeand which is not subject to charges for de-preciation expense.

B. This account shall be supported in suchdetail as to show the amortization applicableto each investment being amortized, to-gether with the book cost of the investmentand the period over which it is being writtenoff.

406 Amortization of Electric PlantAcquisition Adjustments

This account shall be debited or credited,as appropriate, with amounts includible inoperating expenses, pursuant to approval ororder of RUS, for the purpose of providingfor the extinguishment of the amount in Ac-count 114, Electric Plant Acquisition Adjust-ments.


790


407 Amortization of Property Losses, Unre-covered Plant and Recovery Study Costs

This account shall be charged withamounts credited to Account 182.1, Extraor-dinary Property Losses, when RUS has au-thorized the amount in the latter account tobe amortized by charges to electric oper-ations.

407.3 Regulatory Debits

This account shall be debited, when appro-priate, with the amounts credited to Ac-count 254, Other Regulatory Liabilities, torecord regulatory liabilities imposed on theutility by the ratemaking actions of regu-latory agencies. This account shall also bedebited, when appropriate, with the amountscredited to Account 182.3, Other RegulatoryAssets, concurrent with the recovery of suchamounts in rates.

407.4 Regulatory Credits

This account shall be credited, when appro-priate, with the amounts debited to Account182.3, Other Regulatory Assets, to establishregulatory assets. This account shall also becredited, when appropriate, with theamounts debited to Account 254, Other Regu-latory Liabilities, concurrent with the re-turn of such amounts to customers throughrates.

408 Taxes Other Than Income Taxes

A. This account shall include the amountsof ad valorem, gross revenue, or gross re-ceipts taxes, state unemployment insurance,franchise taxes, Federal excise taxes, socialsecurity taxes, and all other taxes assessedby Federal, state, county, municipal, orother local governmental authorities, exceptincome taxes.

B. These accounts shall be charged in eachaccounting period with the amounts of taxeswhich are applicable thereto, with concur-rent credits to Account 236, Taxes Accrued,or Account 165, Prepayments, as appropriate.When it is not possible to determine theexact amounts of taxes, the amounts shall beestimated and adjustments made in currentaccruals as the actual tax levies becomeknown.

C. The charges to these accounts shall bemade or supported so as to show the amountof each tax and the basis upon which eachcharge is made. In the case of a utility ren-dering more than one utility service, taxes ofthe kind includible in these accounts shall beassigned directly to the utility departmentthe operation of which gave rise to the tax,in so far as practicable. Where the tax is notattributable to a specific utility department,it shall be distributed among the utility de-partments or nonutility operations on an eq-uitable basis after appropriate study to de-termine such basis.

NOTE A: Special assessments for street andsimilar improvements shall be included inthe appropriate utility plant or nonutilityproperty account.

NOTE B: Taxes specifically applicable toconstruction and retirement activities shallbe included in the cost of construction or theretirement.

NOTE C: Gasoline and other sales taxesshall be charged as far as practicable to thesame account as the materials on which thetax is levied.

NOTE D: Social security and other forms ofpayroll taxes shall be charged to nonutilityoperations, the specific functional oper-ations, maintenance, and administrative ex-pense accounts, and to construction and re-tirement activities on a basis related to pay-roll either directly or by transfers from thisaccount.

NOTE E: Property taxes applicable to thevarious utility functions shall be charged tothe specific functional operations and ad-ministrative expense accounts either di-rectly or by transfers from this account.

NOTE F: Interest on tax refunds or defi-ciencies shall not be included in these ac-counts but in Account 419, Interest and Divi-dend Income, or Account 431, Other InterestExpense, as appropriate.

D. Account 408 shall be subaccounted asfollows:

408.1 Taxes—Property408.2 Taxes—U.S. Social Security—Unem-

ployment408.3 Taxes—U.S. Social Security—F.I.C.A.408.4 Taxes—State Social Security—Unem-

ployment408.5 Taxes—State Sales—Consumers408.6 Taxes—Gross Revenue or Gross Re-

ceipts Tax408.7 Taxes—Other

409 [Reserved]


Accounts 409.1, 409.2, and 409.3

A. These accounts shall include theamount of local, state, and Federal incometaxes on income properly accruable duringthe period covered by the income statementto meet the actual liability for such taxes.Concurrent credits for the tax accruals shallbe made to Account 236, Taxes Accrued, andas the exact amounts of taxes becomeknown, the current tax accruals shall be ad-justed by charges or credits to these ac-counts.

B. The accruals for income taxes shall beapportioned among utility departments andto Other Income and Deductions so that, asnearly as practicable, each tax shall be in-cluded in the expenses of the utility depart-ment or Other Income and Deductions, theincome from which gave rise to the tax. The


791


tax effects relating to interest charges shallbe allocated between utility and nonutilityoperations. The basis for this allocationshall be the ratio of net investment in util-ity plant to net investment in nonutilityplant.

NOTE A: Taxes assumed by the utility oninterest shall be charged to Account 431,Other Interest Expense.

NOTE B: Interest on tax refunds or defi-ciencies shall not be included in these ac-counts but in Account 419, Interest and Divi-dend Income, or Account 431, Other InterestExpense, as appropriate.

409.1 Income Taxes, Utility OperatingIncome

This account shall include the amount ofthose local, state, and Federal income taxeswhich relate to utility operating income.This account shall be maintained so as toallow ready identification of tax effects(both positive and negative) relating to Util-ity Operating Income (by department), Util-ity Plant Leased to Others, and Other UtilityOperating Income.

409.2 Income Taxes, Other Income andDeductions

This account shall include the amount ofthose local, state, and Federal income taxes(both positive and negative), which relate toOther Income and Deductions.

409.3 Income Taxes, Extraordinary Items

This account shall include the amount ofthose local, state, and Federal income taxes(both positive and negative), which relate toExtraordinary Items.

410 [Reserved]


Accounts 410.1, 410.2, 411.1, and 411.2

A. Accounts 410.1 and 410.2 shall be debited,and Accumulated Deferred Income Taxes,shall be credited, with amounts equal to anycurrent deferrals of taxes on income or anyallocations of deferred taxes originating inprior periods, as provided by the texts of Ac-counts 190, 281, 282, and 283. There shall notbe netted against entries required to be madeto these accounts any credit amounts appro-priately includible in Account 411.1 or Ac-count 411.2.

B. Accounts 411.1 or 411.2 shall be credited,and Accumulated Deferred Income Taxes,shall be debited, with amounts equal to anyallocations of deferred taxes originating inprior periods or any current deferrals oftaxes on income, as provided by the texts ofAccounts 190, 281, 282, and 283. There shallnot be netted against entries required to be

made to these accounts any debit amountsappropriately includible in Account 410.1 orAccount 410.2.

410.1 Provision for Deferred Income Taxes,Utility Operating Income

This account shall include the amounts ofthose deferrals of taxes and allocations of de-ferred taxes which relate to Utility Oper-ating Income (by department).

410.2 Provision for Deferred Income Taxes,Other Income and Deductions

This account shall include the amounts ofthose deferrals of taxes and allocations of de-ferred taxes which relate to Other Incomeand Deductions.

411 [Reserved]

411.1 Provision for Deferred Income Taxes—Credit, Utility Operating Income

This account shall include the amounts ofthose allocations of deferred taxes and defer-rals of taxes, credit, which relate to UtilityOperating Income (by department).

411.2 Provision for Deferred Income Taxes—Credit, Other Income and Deductions

This account shall include the amounts ofthose allocations of deferred taxes and defer-rals of taxes, credit, which relate to OtherIncome and Deductions.

411.3 [Reserved]


Accounts 411.4 and 411.5

A. Account 411.4 shall be debited with theamounts of investment tax credits related toelectric utility property that are credited toAccount 255, Accumulated Deferred Invest-ment Tax Credits, by companies which donot apply the entire amount of the benefitsof the investment credit as a reduction ofthe overall income tax expense in the year inwhich such credit is realized. (See Account255).

B. Account 411.4 shall be credited with theamounts debited to Account 255 for propor-tionate amounts of tax credit deferrals allo-cated over the average useful life of electricutility property to which the tax credits re-late or such lesser period of time as may beadopted and consistently followed by thecompany.

C. Account 411.5 shall be debited and cred-ited as directed in paragraphs A and B, forinvestment tax credits related to nonutilityproperty.


792


411.4 Investment Tax Credit Adjustments,Utility Operations

This account shall include the amount ofthose investment tax credit adjustments re-lated to property used in Utility Operations(by department).

411.5 Investment Tax Credit Adjustments,Nonutility Operations

This account shall include the amount ofthose investment tax credit adjustments re-lated to property used in Nonutility Oper-ations.

411.6 Gains from Disposition of UtilityPlant

This account shall include, as approved byRUS, amounts relating to gains from the dis-position of future use utility plant includingamounts which were previously recorded inand transferred from Account 105, ElectricPlant Held for Future Use, under the Provi-sions of Paragraphs B, C, and D thereof. In-come taxes relating to gains recorded in thisaccount shall be recorded in Account 409.1,Income Taxes, Utility Operating Income.

411.7 Losses from Disposition of UtilityPlant

This account shall include, as approved byRUS, amounts relating to losses from thedisposition of future use utility plant includ-ing amounts which were previously recordedin and transferred from Account 105, ElectricPlant Held for Future Use, under the provi-sions of Paragraphs B, C, and D thereof. In-come taxes relating to losses recorded in thisaccount shall be recorded in Account 409.1,Income Taxes, Utility Operating Income.

411.8 Gains from Disposition of Allowances

This account shall be credited with thegain on the sale, exchange, or other disposi-tion of allowances in accordance with§ 1767.15 (u)(8). Income taxes relating to gainsrecorded in this account shall be recorded inAccount 409.1, Income Taxes, Utility Oper-ating Income.

411.9 Losses from Disposition of Allowances

This account shall be debited with the losson the sale, exchange, or other disposition ofallowances in accordance with § 1767.15 (u)(8).Income taxes relating to losses recorded inthis account shall be recorded in Account409.1, Income Taxes, Utility Operating In-come.

412 Revenues from Electric Plant Leased toOthers

This account shall include revenues fromelectric property constituting a distinct op-erating unit or system leased by the utilityto others, and which property is properly in-

cludible in Account 104, Electric PlantLeased to Others.

NOTE: Related taxes shall be recorded inAccount 408, Taxes Other Than IncomeTaxes, or Account 409.1, Income Taxes, Util-ity Operating Income, as appropriate.

413 Expenses of Electric Plant Leased toOthers

A. This account shall include expensesfrom electric property constituting a dis-tinct operating unit or system leased by theutility to others, and which property is prop-erly includible in Account 104, Electric PlantLeased to Others.

B. The detail of expenses shall be kept orsupported so as to show separately the fol-lowing:

1. Operation.2. Maintenance.3. Depreciation.4. Amortization.NOTE: Related taxes shall be recorded in

Account 408, Taxes Other Than IncomeTaxes, or Account 409.1, Income Taxes, Util-ity Operating Income, as appropriate.

414 Other Utility Operating Income

A. This account shall include the revenuesreceived and expenses incurred in connectionwith the operations of utility plant, the bookcost of which is included in Account 118,Other Utility Plant.

B. The expenses shall include every ele-ment of cost incurred in such operations, in-cluding depreciation, rents, and insurance.

NOTE: Related taxes shall be recorded inAccount 408, Taxes Other Than IncomeTaxes, or Account 409.1, Income Taxes, Util-ity Operating Income, as appropriate.


§ 1767.22 Other income and deduc-tions.

The other income and deductions ac-counts identified in this section shallbe used by all RUS borrowers.

OTHER INCOME AND DEDUCTIONS

415 Revenues from Merchandising, Jobbing,and Contract Work

416 Costs and Expenses of Merchandising,Jobbing, and Contract Work

417 Revenues from Nonutility Operations417.1 Expenses of Nonutility Operations418 Nonoperating Rental Income418.1 Equity in Earnings of Subsidiary Com-

panies419 Interest and Dividend Income419.1 Allowance for Funds Used During Con-

struction420 Investment Tax Credits421 Miscellaneous Nonoperating Income421.1 Gain on Disposition of Property


793


421.2 Loss on Disposition of Property422 Nonoperating Taxes423 Generation and Transmission Coopera-

tive Capital Credits424 Other Capital Credits and Patronage

Capital Allocations425 Miscellaneous Amortization426 [Reserved]426.1 Donations426.2 Life Insurance426.3 Penalties426.4 Expenditures for Certain Civic, Polit-

ical, and Related Activities426.5 Other Deductions

OTHER INCOME AND DEDUCTIONS

415 Revenues from Merchandising, Jobbingand Contract Work

A. This account shall include all revenuesderived from the sale of merchandise andjobbing or contract work, including any prof-it or commission accruing to the utility onjobbing work performed by it as agent undercontracts whereby it does jobbing work foranother for a stipulated profit or commis-sion. Interest related income from install-ment sales shall be recorded in Account 419,Interest and Dividend Income.

B. Records in support of this account shallbe so kept as to permit ready summarizationof revenues by such major items as are fea-sible.

NOTE: The classification of revenues ofmerchandising, jobbing, and contract workas nonoperating, and thus included in thisaccount, is for accounting purposes. It doesnot preclude consideration of justification tothe contrary for ratemaking or other pur-poses.

Items

1. Revenues from sale of merchandise andfrom jobbing and contract work.

2. Discounts and allowances made in settle-ment of bills for merchandise and jobbingwork.

416 Costs and Expenses of Merchandising,Jobbing and Contract Work

A. This account shall include all expensesderived from the sale of merchandise andjobbing or contract work.

B. Records in support of this account shallbe so kept as to permit ready summarizationof costs and expenses by such major items asare feasible.

NOTE: The classification of costs and ex-penses of merchandising, jobbing, and con-tract work as nonoperating, and thus in-cluded in this account, is for accounting pur-poses. It does not preclude consideration ofjustification to the contrary for ratemakingor other purposes.

Items

Labor:

1. Canvassing and demonstrating appli-ances in homes and other places for the pur-pose of selling appliances.

2. Demonstrating and selling activities insales rooms.

3. Installing appliances on customer prem-ises where such work is done only for pur-chasers of appliances from the utility.

4. Installing wire, piping, or other propertywork, on a jobbing or contract basis.

5. Preparing advertising materials for ap-pliance sales purposes.

6. Receiving and handling customer ordersfor merchandise or for jobbing services.

7. Cleaning and tidying sales rooms.8. Maintaining display counters and other

equipment used in merchandising.9. Arranging merchandise in sales rooms

and decorating display windows.10. Reconditioning repossessed appliances.11. Bookkeeping and other clerical work in

connection with merchandise and jobbing ac-tivities.

12. Supervising merchandise and jobbingoperations.

13. Advertising in newspapers, periodicals,radio, and television.

14. Cost of merchandise sold and of mate-rials used in jobbing work.

15. Stores expenses on merchandise andjobbing stocks.

16. Fees and expenses of advertising andcommercial artists’ agencies.

17. Printing booklets, dodgers, and otheradvertising data.

18. Premiums given as inducement to buyappliances.

19. Light, heat, and power.20. Depreciation on equipment used pri-

marily for merchandise and jobbing oper-ations.

21. Rent of sales rooms or of equipment.22. Transportation expense in delivery and

pick-up of appliances by utility’s facilities orby others.

23. Stationery and office supplies and ex-penses.

24. Losses from uncollectible merchandiseand jobbing accounts.

417 Revenues from Nonutility Operations

This account shall include revenues appli-cable to operations which are nonutility incharacter but nevertheless constitute a dis-tinct operating activity of the enterprise asa whole, such as the operation of an ice de-partment where applicable statutes do notdefine such operation as a utility, or the op-eration of a servicing organization for fur-nishing supervision, management, engineer-ing, and similar services to others.

NOTE: Related taxes shall be recorded inAccount 408, Taxes Other Than Income


794


Taxes, or Account 409.2, Income Taxes, OtherIncome and Deductions, as appropriate.

417.1 Expenses of Nonutility Operations

A. This account shall include expenses ap-plicable to operations which are nonutilityin character but nevertheless constitute adistinct operating activity of the enterpriseas a whole, such as the operation of an icedepartment where applicable statutes do notdefine such operation as a utility, or the op-eration of a servicing organization for fur-nishing supervision, management, engineer-ing, and similar services to others.

B. The expenses shall include all elementsof costs incurred in such operations, and theaccounts shall be maintained so as to permitready summarization as follows:

1. Operation.2. Maintenance.3. Rents.4. Depreciation.5. Amortization.

NOTE: Related taxes shall be recorded inAccount 408, Taxes Other Than IncomeTaxes, or Account 409.2, Income Taxes, OtherIncome and Deductions, as appropriate.

418 Nonoperating Rental Income

A. This account shall include all rent reve-nues and related expenses of land, buildings,or other property included in Account 121,Nonutility Property, which is not used in op-erations covered by Account 417 or Account417.1.

B. The expenses shall include all elementsof costs incurred in the ownership and rentalof property and the accounts shall be main-tained so as to permit ready summarizationas follows:

1. Operation.2. Maintenance.3. Rents.4. Depreciation.5. Amortization.NOTE: Related taxes shall be recorded in

Account 408, Taxes Other Than IncomeTaxes, or Account 409.2, Income Taxes, OtherIncome and Deductions, as appropriate.

418.1 Equity in Earnings of SubsidiaryCompanies

This account shall include the utility’s eq-uity in the earnings or losses of subsidiarycompanies for the year.

419 Interest and Dividend Income

A. This account shall include interest reve-nues on securities, loans, notes, advances,special deposits, tax refunds, and all otherinterest-bearing assets, and dividends onstocks of other companies, whether the secu-rities on which the interest and dividendsare received are carried as investments or in-

cluded in sinking or other special fund ac-counts.

NOTE A: Related taxes shall be recorded inAccount 408, Taxes Other Than IncomeTaxes, or Account 409.2, Income Taxes, OtherIncome and Deductions, as appropriate.

NOTE B: Interest accrued, the payment ofwhich is not reasonably assured, dividendsreceivable which have not been declared orguaranteed, and interest or dividends uponreacquired securities issued or assumed bythe utility shall not be credited to this ac-count.

419.1 Allowance for Funds Used DuringConstruction

This account shall include concurrentcredits for allowance for funds other thanborrowed funds used for construction pur-poses during the period of construction,based upon a reasonable rate. (See § 1767.16(c)(17).)

420 Investment Tax Credits

This account shall be credited as followswith investment tax credit amounts notpassed on to customers:

1. By amounts equal to debits to Account411.4, Investment Tax Credit Adjustments,Utility Operations, and Account 411.5, In-vestment Tax Credit Adjustments, Non-utility Operations, for investment tax cred-its used in calculating income taxes for theyear when the company’s accounting pro-vides for non-deferral of all or a portion ofsuch credits.

2. By amounts equal to debits to Account255, Accumulated Deferred Investment TaxCredits, for proportionate amounts of taxcredit deferrals allocated over the averageuseful life of the property to which the taxcredits relate, or such lesser period of timeas may be adopted and consistently used bythe company.

421 Miscellaneous Nonoperating Income

This account shall include all revenue andexpense items, except taxes properly includ-ible in the income account, not provided forelsewhere. Related taxes shall be recorded inAccount 408, Taxes Other Than IncomeTaxes, or Account 409.2, Income Taxes, OtherIncome and Deductions, as appropriate.

Items

1. Profit on sale of timber. (See § 1767.16(g)(3).)

2. Profits from operations of others real-ized by the utility under contracts.

3. Gains on disposition of investments.Also, gains on reacquisition and resale or re-tirement of the utility’s debt securities whenthe gain is not amortized or used by a juris-dictional regulatory agency to reduce em-bedded debt cost in establishing rates. (See§ 1767.15 (q).)


795


421.1 Gain on Disposition of Property

This account shall be credited with thegain on the sale, conveyance, exchange, ortransfer of utility or other property to an-other. Amounts relating to gains on land andland rights held for future use recorded inAccount 105, Electric Plant Held for FutureUse, will be accounted for as prescribed inParagraphs B, C, and D thereof. (See § 1767.16(e)(6), (g)(5), and (j)(5).) Income taxes ongains recorded in this account shall be re-corded in Account 409.2, Income Taxes, OtherIncome and Deductions.

421.2 Loss on Disposition of Property

This account shall be charged with the losson the sale, conveyance, exchange, or trans-fer of utility or other property to another.Amounts relating to losses on land and landrights held for future use recorded in Ac-count 105, Electric Plant Held for FutureUse, will be accounted for as prescribed inParagraphs B, C, and D thereof. (See § 1767.16(e)(6), (g)(5), and (j)(5).) The reduction in in-come taxes relating to losses recorded in thisaccount shall be recorded in Account 409.2,Income Taxes, Other Income and Deductions.

422 Nonoperating Taxes

This account shall be charged with taxesrelating to nonoperating income.

423 Generation and TransmissionCooperative Capital Credits

This account shall be credited with the an-nual capital furnished the power supply co-operative through payment of power bills.The amount of capital furnished the powersupply cooperative should be recorded in theapplicable year even though, in most cases,the power supplier’s notice of the allocationwill not have been received until after theclose of the year to which it relates.

424 Other Capital Credits and PatronageCapital Allocations

This account shall be credited with thecapital furnished in connection with patron-age of cooperative or mutual-type service or-ganization such as CFC and other financingcooperatives, and insurance, oil product,telephone, and data processing cooperatives.This account should be credited in the yearin which the notice of the capital credit orpatronage capital allocation is received.

425 Miscellaneous Amortization

This account shall include amortizationcharges not includible in other accountswhich are properly deductible in determiningthe income of the utility before interestcharges. Charges includible herein, if signifi-cant in amount, must be in accordance withan orderly and systematic amortization pro-gram.

Items

1. Amortization of utility plant acquisitionadjustments, or of intangibles included inutility plant in service when not authorizedto be included in utility operating expensesby RUS.

2. Other miscellaneous amortizationcharges allowed to be included in this ac-count by RUS.

426 [Reserved]


Accounts 426.1, 426.2, 426.3, 426.4, and 426.5

These accounts shall include miscellaneousexpense items which are nonoperating in na-ture but which are properly deductible beforedetermining total income before interestcharges.

NOTE: The classification of expenses asnonoperating and their inclusion in these ac-counts is for accounting purposes. It doesnot preclude RUS consideration of proof tothe contrary for ratemaking or other pur-poses.

426.1 Donations

This account shall include all payments ordonations for charitable, social, or commu-nity welfare purposes.

426.2 Life Insurance

This account shall include all payments forlife insurance of officers and employeeswhere the company is the beneficiary (netpremiums less the increase in the cash sur-render value of policies.)

426.3 Penalties

This account shall include payments bythe company for penalties or fines for viola-tion of any regulatory statutes by the com-pany or its officials.

426.4 Expenditures for Certain Civic,Political, and Related Activities

This account shall include expenditures forthe purpose of influencing public opinionwith respect to the election or appointmentof public officials, referenda, legislation, orordinances (either with respect to the pos-sible adoption of new referenda, legislationor ordinances or repeal or modification of ex-isting referenda, legislation or ordinances)or approval, modification, or revocation offranchises; or for the purpose of influencingthe decisions of public officials, but shall notinclude such expenditures which are directlyrelated to appearances before regulatory orother governmental bodies in connectionwith the reporting utility’s existing or pro-posed operations.


796


426.5 Other Deductions

This account shall include other miscella-neous expenses which are nonoperating innature, but which are properly deductible be-fore determining total income before inter-est charges.

Items

1. Loss relating to investments in securi-ties written-off or written-down.

2. Loss on sale of investments.3. Loss on reacquisition, resale, or retire-

ment of the utility’s debt securities, whenthe loss is not amortized and used by a juris-dictional regulatory agency to increase em-bedded debt cost in establishing rates. (See§ 1767.15 (q).)

4. Preliminary survey and investigation ex-penses related to abandoned projects, whennot written-off to the appropriate operatingexpense account.

5. Costs of preliminary abandonment costsrecorded in Account 182.1, ExtraordinaryProperty Losses, and Account 182.2, Unre-covered Plant and Regulatory Study Costs,not allowed to be amortized to Account 407,Amortization of Property Losses, Unre-covered Plant and Regulatory Study Costs.

§ 1767.23 Interest charges.The interest charges accounts identi-

fied in this section shall be used by allRUS borrowers.

INTEREST CHARGES

427 Interest on Long-Term Debt427.3 Interest Charged to Construction—

Credit428 Amortization of Debt Discount and Ex-

pense428.1 Amortization of Loss on Reacquired

Debt429 Amortization of Premium on Debt—

Credit429.1 Amortization of Gain on Reacquired

Debt—Credit430 Interest on Debt to Associated Compa-

nies431 Other Interest Expense432 Allowance for Borrowed Funds Used

During Construction—Credit

INTEREST CHARGES

427 Interest on Long-Term Debt

A. This account shall include the amountof interest on outstanding long-term debtissued or assumed by the utility, the liabil-ity for which included in Account 221, Bonds,or Account 224, Other Long-Term Debt.

B. This account shall be so kept or sup-ported as to show the interest accruals oneach class and series of long-term debt.

NOTE: This account shall not include inter-est on nominally issued or nominally out-

standing long-term debt, including securitiesassumed.

427.3 Interest Charged to Construction—Credit

This account shall include concurrentcredits for interest charged to constructionbased upon the net cost for the period of con-struction of borrowed funds used for con-struction purposes.

428 Amortization of Debt Discount andExpense

A. This account shall include the amortiza-tion of unamortized debt discount and ex-pense on outstanding long-term debt.Amounts charged to this account shall becredited concurrently to Account 181,Unamortized Debt Expense, and Account 226,Unamortized Discount on Long-Term Debt—Debit.

B. This account shall be so kept or sup-ported as to show the debt discount and ex-pense on each class and series of long-termdebt.

428.1 Amortization of Loss on ReacquiredDebt

A. This account shall include the amortiza-tion of the losses on reacquisition of debt.Amounts charged to this account shall becredited concurrently to Account 189,Unamortized Loss on Reacquired Debt.

B. This account shall be maintained so asto allow ready identification of the loss am-ortized applicable to each class and series oflong-term debt reacquired. (See § 1767.15 (q).)

429 Amortization of Premium on Debt—Credit

A. This account shall include the amortiza-tion of unamortized net premium on out-standing long-term debt. Amounts creditedto this account shall be charged concur-rently to Account 225, Unamortized Pre-mium on Long-Term Debt.

B. This account shall be so kept or sup-ported as to show the premium on each classand series of long-term debt.

429.1 Amortization of Gain on ReacquiredDebt—Credit

A. This account shall include the amortiza-tion of the gains realized from reacquisitionof debt. Amounts credited to this accountshall be charged concurrently to Account257, Unamortized Gain on Reacquired Debt.

B. This account shall be maintained so asto allow ready identification of the amor-tized gains applicable to each class and se-ries of long-term debt reacquired. (See§ 1767.15 (q).)


797


430 Interest on Debt to AssociatedCompanies

A. This account shall include the interestaccrued on amounts included in Account 223,Advances from Associated Companies, andon all other obligations to associated compa-nies.

B. The records supporting the entries tothis account shall be so kept as to show towhom the interest is to be paid, the periodcovered by the accrual, the rate of interest,and the principal amount of the advances orother obligations on which the interest is ac-crued.

431 Other Interest Expense

This account shall include all interestcharges not provided for elsewhere.

Items

1. Interest on notes payable on demand ormaturing one year or less from date and onopen accounts, except notes and accountswith associated companies.

2. Interest on customers’ deposits.3. Interest on claims and judgments, tax

assessments, and assessments for public im-provements past due.

4. Income and other taxes levied uponbondholders of the utility and assumed by it.

432 Allowance for Borrowed Funds UsedDuring Construction—Credit

This account shall include concurrentcredits for allowance for borrowed funds usedduring construction, not to exceed amountscomputed in accordance with the formulaprescribed in § 1767.16 (c)(17).

§ 1767.24 Extraordinary items.

The extraordinary items accountsidentified in this section shall be usedby all RUS borrowers.

EXTRAORDINARY ITEMS

434 Extraordinary Income435 Extraordinary Deductions435.1 Cumulative Effect on Prior Years of a

Change in Accounting Principle

EXTRAORDINARY ITEMS

434 Extraordinary Income

This account shall be credited with non-typical, noncustomary, infrequently recur-ring gains which would significantly distortthe current year’s income computed beforeextraordinary items, if reported other thanas extraordinary items. Income tax relatingto the amounts recorded in this accountshall be recorded in Account 409.3, IncomeTaxes, Extraordinary Items. (See § 1767.15(g).)

435 Extraordinary Deductions

This account shall be debited with nontyp-ical, noncustomary, infrequently recurringlosses which would significantly distort thecurrent year’s income computed before ex-traordinary items, if reported other than asextraordinary items. Income tax relating tothe amounts recorded in this account shallbe recorded in Account 409.3, Income Taxes,Extraordinary Items. (See § 1767.15 (f).)

435.1 Cumulative Effect on Prior Years of aChange in Accounting Principle

This account shall include the cumulativeeffect on margins of prior periods as a resultof a change in accounting principle from onethat is no longer generally accepted to onethat is generally accepted.

§ 1767.25 Retained earnings.The retained earnings accounts iden-


RETAINED EARNINGS

433 [Reserved]436 [Reserved]437 [Reserved]438 [Reserved]439 [Reserved]

RETAINED EARNINGS

433 [Reserved]

436 [Reserved]

437 [Reserved]

438 [Reserved]

439 [Reserved]

§ 1767.26 Operating revenue.The operating revenue accounts iden-


OPERATING REVENUE

Sales of Electricity

440 Residential Sales440.1 Residential Sales—Excluding Seasonal440.2 Residential Sales—Seasonal441 Irrigation Sales442 Commercial and Industrial Sales442.1 Commercial and Industrial Sales—1000

kVA or Less442.2 Commercial and Industrial Sales—

Over 1000 kVA444 Public Street and Highway Lighting445 Other Sales to Public Authorities446 Sales to Railroads and Railways447 Sales for Resale447.1 Sales for Resale—RUS Borrowers447.2 Sales for Resale—Other


798


448 Interdepartmental Sales449.1 Provision for Rate Refunds

Other Operating Revenues

450 Forfeited Discounts451 Miscellaneous Service Revenues453 Sales of Water and Water Power454 Rent from Electric Property455 Interdepartmental Rents456 Other Electric Revenues

OPERATING REVENUE

Sales of Electricity

440 Residential Sales

A. This account shall include the net bill-ing for electricity supplied for residential ordomestic purposes.

NOTE: When electricity supplied through asingle meter is used for both residential andcommercial purposes, the total revenue shallbe included in this account, or Account 442,Commercial and Industrial Sales, accordingto the rate schedule that is applied. If thesame rate schedules apply to residential andcommercial and industrial service, classi-fication shall be made according to principaluse.

B. Account 440 shall be subaccounted asfollows:440.1 Residential Sales—Excluding Seasonal440.2 Residential Sales—Seasonal

440.1 Residential Sales—Excluding Seasonal

A. This account shall include the net bill-ing for electricity supplied for residentialand domestic purposes.

B. This account shall also include net bil-lings for single phase service to schools,churches, lodges, and other public buildings.

C. Records shall be maintained so that thequantity of electricity sold and the revenuereceived under each rate schedule shall bereadily available.

NOTE: Net billings for multiphase serviceto schools, churches, lodges, and other publicbuildings shall be included in the appro-priate subaccount of Account 442, Commer-cial and Industrial Sales.

440.2 Residential Sales—Seasonal

This account shall include the net billingsfor electricity supplied for residential anddomestic purposes to seasonal consumers.

441 Irrigation Sales

This account shall include the net billingsfor electricity supplied for irrigation pump-ing. It need not be used unless such serviceis provided under a special irrigation rate.

442 Commercial and Industrial Sales

A. This account shall include the net bill-ing for electricity supplied to customers forcommercial and industrial purposes.

NOTE A: If the utility classifies large com-mercial and industrial customers and relatedrevenues on a lesser basis than 1000 kilo-watts of demand, or segregates industrialcustomers and related revenues according toa recognized definition of an industrial cus-tomer, such classifications are acceptable inlieu of those otherwise required by the textof this account on the basis of 1000 kilowattsof demand.

NOTE B: When electricity supplied througha single meter is used for both commercialand residential purposes, the total revenueshall be included in this account, or Account440, Residential Sales, according to the rateschedule that is applied. If the same rateschedules apply to residential and commer-cial and industrial service, classificationshall be made according to principal use.

B. Account 442 shall be subaccounted asfollows:442.1 Commercial and Industrial Sales—1000

kVA or Less442.2 Commercial and Industrial Sales—

Over 1000 kVA

442.1 Commercial and Industrial Sales—1000kVA or Less

A. This account shall include the net bill-ing for electricity supplied to consumers forcommercial and industrial purposes requir-ing transformer capacity of 1000 kVA or less.

B. Records shall be maintained so that thequantity of electricity sold and the revenuereceived under each rate schedule shall bereadily available.

NOTE: When electricity supplied through asingle meter is used for both commercial andresidential purposes, the total revenue shallbe included in this account or in Account440, Residential Sales, based upon primaryuse.

442.2 Commercial and Industrial Sales—Over 1000 kVA

A. This account shall include the net bill-ing for electricity supplied to consumers forcommercial and industrial purposes requir-ing transformer capacity in excess of 1000kVA.

B. Records shall be maintained so that thequantity of electricity sold and the revenuereceived under each rate schedule shall bereadily available.

444 Public Street and Highway Lighting

A. This account shall include the net bill-ing for electricity supplied and services ren-dered for the purposes of lighting streets,highways, parks, and other public places orfor traffic or signal system service, for mu-nicipalities or other divisions or agencies ofstate of Federal Governments.

B. Records shall be maintained so that thequantity of electricity sold and the revenuereceived from each customer shall be readily


799


available. In addition, the records shall bemaintained so as to show the revenues from(1) contracts which include both electricityand services, and (2) contracts which includesales of electricity only.

445 Other Sales to Public Authorities

A. This account shall include the net bill-ing for electricity supplied to municipalitiesor divisions or agencies of Federal or stategovernments, under special contracts oragreements or service classifications appli-cable only to public authorities, except suchrevenues as are includible in Account 444 andAccount 447.

B. Records shall be maintained so as toshow the quantity of electricity sold and therevenues received from each customer.

446 Sales to Railroads and Railways

A. This account shall include the net bill-ing for electricity supplied to railroads andinterurban and street railways, for generalrailroad use, including the propulsion of carsor locomotives, where such electricity issupplied under separate and distinct rateschedules.

B. Records shall be maintained so that thequantity of electricity sold and the revenuereceived from each customer shall be readilyavailable.

NOTE: Revenues from incidental use ofelectricity furnished under a contract forpropulsion of cars or locomotives shall be in-cluded herein.

447 Sales for Resale

A. This account shall include the net bill-ing for electricity supplied to other electricutilities or to public authorities for resalepurposes.

NOTE: Revenues from electricity suppliedto other utilities for use by them and not fordistribution, shall be included in Account442, Commercial and Industrial Sales, unlesssupplied under the same contracts as and notreadily separable from revenues includible inthis account.


447.1 Sales for Resale—RUS Borrowers447.2 Sales for Resale—Other

447.1 Sales for Resale—RUS Borrowers

A. This account shall include the net bill-ing for electricity supplied to RUS borrowersfor resale.

B. Records shall be maintained so as toshow the quantity of electricity sold and therevenue received from each customer.

NOTE: Revenues from electricity suppliedto other utilities for use by them and not fordistribution, shall be included in Account442, Commercial and Industrial Sales, unlesssupplied under the same contract as and not

readily separable from revenues includible inthis account.

447.2 Sales for Resale—Other

A. This account shall include the net bill-ing for electricity supplied for resale to utili-ties not financed by RUS.

B. Records shall be maintained so as toshow the quantity of electricity sold and therevenue received from each customer.

NOTE: Revenues from electricity suppliedto other utilities for use by them and not fordistribution, shall be included in Account442, Commercial and Industrial Sales, unlesssupplied under the same contract as and notreadily separable from revenues includible inthis account.

448 Interdepartmental Sales

A. This account shall include amountscharged by the electric department at tariffor other specified rates for electricity sup-plied by it to other utility departments.

B. Records shall be maintained so that thequantity of electricity supplied each otherdepartment and the charges therefor shall bereadily available.

449.1 Provision for Rate Refunds

A. This account shall be charged with pro-visions for the estimated pretax effects onnet income of the portions of amounts beingcollected subject to refund which are esti-mated to be required to be refunded. Suchprovisions shall be credited to Account 229,Accumulated Provision for Rate Refunds.

B. This account shall also be charged withamounts refunded when such amounts hadnot been previously accrued.

C. Income tax effects relating to theamounts recorded in this account shall be re-corded in Account 410.1, Provision for De-ferred Income Taxes, Utility Operating In-come, or Account 411.1, Provision for De-ferred Income Taxes—Credit, Utility Oper-ating Income, as appropriate.

Other Operating Revenues

450 Forfeited Discounts

This account shall include the amount ofdiscounts forfeited or additional charges im-posed because of the failure of customers topay their electric bills on or before a speci-fied date.

451 Miscellaneous Service Revenues

This account shall include revenues for allmiscellaneous services and charges billed tocustomers which are not specifically pro-vided for in other accounts.

Items

1. Fees for changing, connecting, or dis-connecting service.


800


2. Profit on maintenance of appliances,wiring, piping, or other installations on cus-tomers’ premises.

3. Net credit or debit (cost less net salvageand less payment from customers) on closingof work orders for plant installed for tem-porary service of less than one year. (See Ac-count 185, Temporary Facilities.)

4. Recovery of expenses in connection withcurrent diversion cases (billing for the elec-tricity consumed shall be included in the ap-propriate electric revenue account).

453 Sales of Water and Water Power

A. This account shall include revenues de-rived from the sale of water for irrigation,domestic, industrial, or other uses or for thedevelopment by others of water power or forheadwater benefits; also, revenues derivedfrom furnishing water power for mechanicalpurposes when the investment in the prop-erty used in supplying such water or waterpower is carried as electric plant in service.

B. The records for this account shall bekept in such manner as to permit an analysisof the rates charged and the purposes forwhich the water was used.

454 Rent from Electric Property

A. This account shall include rents re-ceived for the use by others of land, build-ings, and other property devoted to electricoperations by the utility.

B. When property owned by the utility isoperated jointly with others under a definitearrangement for apportioning the actual ex-penses among the parties to the arrange-ment, any amount received by the utility forinterest or return or in reimbursement oftaxes or depreciation on the property shallbe credited to this account.

NOTE: Do not include in this account rentsfrom property constituting an operating unitor system. (See Account 412, Revenues fromElectric Plant Leased to Others.)

455 Interdepartmental Rents

This account shall include rents creditedto the electric department on account ofrental charges made against other depart-ments (gas, water, etc.) of the utility. In thecase of property operated under a definite ar-rangement to allocate the costs among thedepartments using the property, any reim-bursement to the electric department for in-terest or return and depreciation and taxesshall be credited to this account.

456 Other Electric Revenues

This account shall include revenues de-rived from electric operations not includiblein any of the foregoing accounts. It shallalso include, in a separate subaccount, reve-nues received from operation of fish andwildlife and recreation facilities whether op-erated by the company or by contract con-

cessionaires, such as revenues from leases orrentals of land for cottages, homes, or camp-sites.

Items

1. Commission on sale or distribution ofelectricity of others when sold under ratesfiled by such others.

2. Compensation for minor or incidentalservices provided for others such as customerbilling, and engineering.

3. Profit or loss on the sale of material andsupplies not ordinarily purchased for resaleand not handled through merchandising andjobbing accounts.

4. Sale of steam, but not including salesmade by a steamheating department ortransfers of steam under joint facility oper-ations.

5. Revenues from transmission of elec-tricity of others over transmission facilitiesof the utility.

6. Include in a separate subaccount, reve-nues in payment for rights and/or benefitsreceived from others which are realizedthrough research, development, and dem-onstration ventures. In the event theamounts received are so large as to distortrevenues for the year in which received (5percent of net income before application ofthe benefit), the amounts shall be credited toAccount 253, Other Deferred Credits, and am-ortized by credits to this account over a pe-riod not to exceed 5 years.

§ 1767.27 Operation and maintenanceexpenses.

The operation and maintenance ex-pense accounts identified in this sec-tion shall be used by all RUS bor-rowers.

OPERATION AND MAINTENANCE EXPENSEACCOUNTS

POWER PRODUCTION EXPENSES

Steam Power Generation

(Operation)

500 Operation Supervision and Engineering501 Fuel502 Steam Expenses503 Steam from Other Sources504 Steam Transferred—Credit505 Electric Expenses506 Miscellaneous Steam Power Expenses507 Rents509 Allowances

(Maintenance)

510 Maintenance Supervision and Engineer-ing

511 Maintenance of Structures512 Maintenance of Boiler Plant513 Maintenance of Electric Plant


801


514 Maintenance of Miscellaneous SteamPlant

Nuclear Power Generation

(Operation)

517 Operation Supervision and Engineering518 Nuclear Fuel Expense519 Coolants and Water520 Steam Expenses521 Steam from Other Sources522 Steam Transferred—Credit523 Electric Expenses524 Miscellaneous Nuclear Power Expenses525 Rents

(Maintenance)


529 Maintenance of Structures530 Maintenance of Reactor Plant Equip-

ment531 Maintenance of Electric Plant532 Maintenance of Miscellaneous Nuclear

Plant

Hydraulic Power Generation

(Operation)

535 Operation Supervision and Engineering536 Water for Power537 Hydraulic Expenses538 Electric Expenses539 Miscellaneous Hydraulic Power Genera-

tion Expenses540 Rents

(Maintenance)


542 Maintenance of Structures543 Maintenance of Reservoirs, Dams, and

Waterways544 Maintenance of Electric Plant545 Maintenance of Miscellaneous Hydrau-

lic Plant

Other Power Generation

(Operation)

546 Operation Supervision and Engineering547 Fuel548 Generation Expenses549 Miscellaneous Other Power Generation

Expenses550 Rents

(Maintenance)


552 Maintenance of Structures553 Maintenance of Generating and Electric

Equipment

554 Maintenance of Miscellaneous OtherPower Generation Plant

OTHER POWER SUPPLY EXPENSES

555 Purchased Power556 System Control and Load Dispatching557 Other Expenses

TRANSMISSION EXPENSES

(Operation)

560 Operation Supervision and Engineering561 Load Dispatching562 Station Expenses563 Overhead Line Expenses564 Underground Line Expenses565 Transmission of Electricity by Others566 Miscellaneous Transmission Expenses567 Rents

(Maintenance)


569 Maintenance of Structures570 Maintenance of Station Equipment571 Maintenance of Overhead Lines572 Maintenance of Underground Lines573 Maintenance of Miscellaneous Trans-

mission Plant

DISTRIBUTION EXPENSES

(Operation)

580 Operation Supervision and Engineering581 Load Dispatching582 Station Expenses583 Overhead Line Expenses584 Underground Line Expenses585 Street Lighting and Signal System Ex-

penses586 Meter Expenses587 Customer Installations Expenses588 Miscellaneous Distribution Expenses589 Rents

(Maintenance)


591 Maintenance of Structures592 Maintenance of Station Equipment593 Maintenance of Overhead Lines594 Maintenance of Underground Lines595 Maintenance of Line Transformers596 Maintenance of Street Lighting and Sig-

nal Systems597 Maintenance of Meters598 Maintenance of Miscellaneous Distribu-

tion Plant


802


OPERATION AND MAINTENANCE EXPENSEACCOUNTS

POWER PRODUCTION EXPENSES

Steam Power Generation

(Operation)

500 Operation Supervision and Engineering

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of the oper-ation of steam power generating stations.Direct supervision of specific activities, suchas fuel handling, boiler-room operations, andgenerator operations shall be charged to theappropriate account. (See § 1767.17(a).)

501 Fuel

A. This account shall include the cost offuel used in the production of steam for thegeneration of electricity, including expensesin unloading fuel from the shipping mediaand handling thereof up to the point wherethe fuel enters the first boiler plant bunker,hopper, bucket, tank, or holder of the boiler-house structure. Records shall be maintainedto show the quantity, B.t.u. content and costof each type of fuel used.

B. The cost of fuel shall be charged ini-tially to Account 151, Fuel Stock, andcleared to this account on the basis of thefuel used. Fuel handling expenses may becharged to this account as incurred orcharged initially to Account 152, Fuel StockExpenses Undistributed. In the latter event,they shall be cleared to this account on thebasis of the fuel used. Respective amounts offuel stock and fuel stock expenses shall bereadily available.

Items

Labor:

1. Supervising, purchasing, and handling offuel.

2. All routine fuel analyses.3. Unloading from shipping facility and

placing in storage.4. Moving of fuel in storage and transfer-

ring fuel from one station to another.5. Handling from storage or shipping facil-

ity to first bunker, hopper, bucket, tank, orholder of boiler-house structure.

6. Operation of mechanical equipment,such as locomotives, trucks, cars, boats,barges, and cranes.Taxes:

1. Federal and state unemployment.2. F.I.C.A.3. Property.Employee Pensions and Benefits: The portion

of employee pensions and benefits specifi-cally identifiable with employees’ labor

costs charged herein or, in the absence ofspecific employee identification, the portionof employee pensions and benefits, allocatedon the more equitable basis of either directlabor dollars or direct labor hours, applica-ble to the labor items detailed above, includ-ing:

1. Accruals for or payments to pensionfunds or to insurance companies for pensionpurposes.

2. Group and life insurance premiums(credit dividends received).

3. Payments for medical and hospital serv-ices and expenses of employees when not theresult of occupational injuries.

4. Payments for accident, sickness, hos-pital, and death benefits or insurance.

5. Payments to employees incapacitatedfor service or on leave of absence beyond pe-riods normally allowed when not the resultof occupational injuries or in excess of statu-tory awards.

6. Expenses in connection with educationaland recreational activities for the benefit ofemployees.

Insurance:

1. Premiums payable to insurance compa-nies for fire, storm, burglary, boiler explo-sion, lightning, fidelity, riot, and similar in-surance.

2. Amounts credited to Account 228.1, Ac-cumulated Provision for Property Insurance,for similar protection.

3. Special costs incurred in procuring in-surance.

4. Insurance inspection service.5. Insurance counsel, brokerage fees, and

expenses.6. Premiums payable to insurance compa-

nies for protection against claims from inju-ries and damages by employees or others,such as public liability, property damages,casualty, employee liability, etc., andamounts credited to Account 228.2, Accumu-lated Provision for Injuries and Damage, forsimilar protection.

7. Losses not covered by insurance or re-serve accruals on account of injuries ordeaths to employees or others and damagesto the property of others.

8. Fees and expenses of claim investigators.9. Payment of awards to claimants for

court costs and attorneys’ services.10. Medical and hospital service and ex-

penses for employees as the result of occupa-tional injuries or resulting from claims ofothers.

11. Compensation payments under work-men’s compensation laws.

12. Compensation paid while incapacitatedas the result of occupational injuries. (SeeAccount 924, Note A.)

13. Cost of safety, accident prevention, andsimilar educational activities.

Materials and Expenses:


803


1. Operating, maintenance, and deprecia-tion expenses and ad valorem taxes on util-ity-owned transportation equipment used totransport fuel from the point of acquisitionto the unloading point.

2. Lease or rental costs of transportationequipment used to transport fuel from thepoint of acquisition to the unloading point.

3. Cost of fuel including freight, switching,demurrage, and other transportationcharges.

4. Excise taxes, insurance, purchasing com-missions, and similar items.

5. Stores expenses to extent applicable tofuel.

6. Transportation and other expenses inmoving fuel in storage.

7. Tools, lubricants, and other supplies.8. Operating supplies for mechanical equip-

ment.9. Residual disposal expenses less any pro-

ceeds from sale of residuals.

NOTE: Abnormal fuel handling expenses oc-casioned by emergency conditions shall becharged to expense as incurred.

502 Steam Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in pro-duction of steam for electric generation.This includes all expenses of handling andpreparing fuel beginning at the point wherethe fuel enters the first boiler plant bunker,hopper, tank, or holder of the boiler-housestructure.

Items

Labor:1. Supervising steam production.2. Operating fuel conveying, storage,

weighing, and processing equipment withinboiler plant.

3. Operating boiler and boiler auxiliaryequipment.

4. Operating boiler feed water purificationand treatment equipment.

5. Operating ash-collecting and disposalequipment located inside the plant.

6. Operating boiler plant electrical equip-ment.

7. Keeping boiler plant log and records andpreparing reports on boiler plant operations.

8. Testing boiler water.9. Testing, checking, and adjusting meters,

gauges, and other instruments and equip-ment in boiler plant.

10. Cleaning boiler plant equipment whennot incidental to maintenance work.

11. Repacking glands and replacing gaugeglasses where the work involved is of aminor nature and is performed by regular op-erating crews. Where the work is of a majorcharacter, such as that performed on high-

pressure boilers, the item should be consid-ered as maintenance.Taxes:


of employee pensions and benefits specifi-cally identifiable with employees’ laborcosts charged herein or, in the absence ofspecific employee identification, the portionof employee pensions and benefits, allocatedon the more equitable basis of either directlabor dollars or direct labor hours, applica-ble to the labor items detailed above, includ-ing:






6. Expenses in connection with educationaland recreational activities for the benefit ofemployees.Insurance:












804






1. Chemicals and boiler inspection fees.2. Lubricants.3. Boiler feed water purchased and pumping

supplies.

503 Steam from Other Sources

This account shall include the cost ofsteam purchased or transferred from anotherdepartment of the utility or from othersunder a joint facility operating arrangementfor use in prime movers devoted to the pro-duction of electricity.

NOTE: The records shall be so kept as toshow separately for each company fromwhich stem is purchased, the point of deliv-ery, the quantity, the price, and the totalcharge. When steam is transferred from an-other department or from others under ajoint operating arrangement, the utilityshall be prepared to show full details of thecost of producing such steam, the basis ofthe charge to electric generation, and the ex-tent and manner of use by each departmentor party involved.

504 Steam Transferred—Credit

A. This account shall include credits forexpenses of producing steam which arecharged to others or to other utility depart-ments under a joint operating arrangement.Include also credits for steam expenseschargeable to other electric accounts outsideof the steam generation group. Full detailsof the basis of determination of the cost ofsteam transferred shall be maintained.

B. If the charges to others or to other de-partments of the utility include an amountfor depreciation, taxes, and return on thejoint steam facilities, such portion of thecharge shall be credited, in the case of oth-ers, to Account 454, Rent from Electric Prop-erty, and in the case of other departments ofthe utility, to Account 455, Interdepart-mental Rents.

505 Electric Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,and materials used, and expenses incurred inoperating prime movers, generators, andtheir auxiliary apparatus, switch gear, andother electric equipment to the points whereelectricity leaves for conversion for trans-mission or distribution.

Items

Labor:1. Supervising electric production.2. Operating turbines, engines, generators,

and exciters.3. Operating condensers, circulating water

systems, and other auxiliary apparatus.4. Operating generator cooling system.5. Operating lubrication and oil control

system, including oil purification.6. Operating switchboards, switch gear and

electric control, and protective equipment.7. Keeping electric plant log and records

and preparing reports on electric plant oper-ations.

8. Testing, checking, and adjusting meters,gauges, and other instruments, relays, con-trols, and other equipment in the electricplant.

9. Cleaning electric plant equipment whennot incidental to maintenance work.

10. Repacking glands and replacing gaugeglasses.Taxes:

1. Federal and state unemployment.2. F.I.C.A.3. Taxes.Employee Pensions and Benefits: The portion












805













1. Lubricants and control system oils.2. Generator cooling gases.3. Circulating water purification supplies.4. Cooling water purchased.5. Motor and generator brushes.

506 Miscellaneous Steam Power Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and materials used and expensesincurred which are not specifically providedfor or not readily assignable to other steamgeneration operation expense accounts.

Items

Labor:

1. General clerical and stenographic work.2. Guarding and patrolling plant and yard.3. Building service.4. Care of grounds including snow removal,

and grass cutting.5. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.2. F.I.C.A.Employee Pensions and Benefits: The portion

of employee pensions and benefits specifi-cally identifiable with employees’ laborcosts charged herein or, in the absence ofspecific employee identification, the portionof employee pensions and benefits, allocatedon the more equitable basis of either directlabor dollars or direct labor hours, applica-

ble to the labor items detailed above, includ-ing:







Insurance:

1. Premiums payable to insurance compa-nies for protection against claims from inju-ries and damages by employees or others,such as public liability, property damages,casualty, employee liability, etc., andamounts credited to Account 228.2, Accumu-lated Provision for Injuries and Damage, forsimilar protection.









1. General operating supplies, such astools, gaskets, packing waste, gauge glasses,hose, indicating lamps, record and reportforms.

2. First-aid supplies and safety equipment.3. Employees’ service facilities expenses.4. Building service supplies.5. Communication service.6. Miscellaneous office supplies and ex-

penses, printing, and stationery.7. Transportation expenses.8. Meals, traveling, and incidental ex-

penses.9. Research, development, and demonstra-

tion expenses.


806


507 Rents

This account shall include all rents ofproperty of others used, occupied or operatedin connection with steam power generation.(See § 1767.17 (c).)

509 Allowances

This account shall include the cost of al-lowances expensed concurrent with themonthly emission of sulfur dioxide. (See§ 1767.15 (u).)

(Maintenance)

510 Maintenance Supervision andEngineering

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of mainte-nance of steam generation facilities. Directfield supervision of specific jobs shall becharged to the appropriate maintenance ac-count. (See § 1767.17(a).)

511 Maintenance of Structures

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and materials used and expensesincurred in the maintenance of steam struc-tures, the book cost of which is includible inAccount 311, Structures and Improvements.(See § 1767.17(b).)

512 Maintenance of Boiler Plant

A. This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and materials used and expensesincurred in the maintenance of steam plant,the book cost of which is includible in Ac-count 312, Boiler Plant Equipment. (See§ 1767.17(b).)

B. For the purpose of making charges here-to and to Account 513, Maintenance of Elec-tric Plant, the point at which steam plant isdistinguished from electric plant is definedas follows:

1. Inlet flange of throttle valve on primemover.

2. Flange of all steam extraction lines onprime mover.

3. Hotwell pump outlet on condensatelines.

4. Inlet flange of all turbine-room auxil-iaries.

5. Connection to line side of motor starterfor all boiler-plant equipment.

513 Maintenance of Electric Plant

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries and

damages, and materials used and expensesincurred in the maintenance of electricplant, the book cost of which is includible inAccount 313, Engines and Engine-DrivenGenerators; Account 314, TurbogeneratorUnits; and Account 315, Accessory ElectricEquipment. (See § 1767.17(b) and Paragraph Bof Account 512.)

514 Maintenance of Miscellaneous SteamPlant

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and materials used and expensesincurred in maintenance of miscellaneoussteam generation plant, the book cost ofwhich is includible in Account 316, Miscella-neous Power Plant Equipment. (See§ 1767.17(b).)

Nuclear Power Generation

(Operation)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of the oper-ation of nuclear power generating stations.Direct supervision of specific activities, suchas fuel handling, reactor operations, and gen-erator operations shall be charged to the ap-propriate account. (See § 1767.17(a).)

518 Nuclear Fuel Expense

A. This account shall be debited and Ac-count 120.5, Accumulated Provision for Am-ortization of Nuclear Fuel Assemblies, cred-ited for the amortization of the net cost ofnuclear fuel assemblies used in the produc-tion of energy. The net cost of nuclear fuelassemblies subject to amortization shall bethe cost of nuclear fuel assemblies plus orless the expected net salvage of uranium,plutonium, and other byproducts and un-burned fuel. The utility shall adopt the nec-essary procedures to assure that charges tothis account are distributed according to thethermal energy produced in such periods.

B. This account shall also include the costsinvolved when fuel is leased.

C. This account shall also include the costof other fuels, used for ancillary steam fa-cilities, including superheat.

D. This account shall be debited or cred-ited as appropriate for significant changes inthe amounts estimated as the net salvagevalue of uranium, plutonium, and other by-products contained in Account 157, NuclearMaterials Held for Sale, and the amount re-alized upon the final disposition of the mate-rials. Significant declines in the estimatedrealizable value of items carried in Account157 may be recognized at the time of market


807


price declines by charging this account andcrediting Account 157. When the decliningchange occurs while the fuel is recorded inAccount 120.3, Nuclear Fuel Assemblies inReactor, the effect shall be amortized overthe remaining life of the fuel.

519 Coolants and Water

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,and materials used and expenses incurred forheat transfer materials and water used forsteam and cooling purposes.

Items

Labor:

1. Operation of water supply facilities.2. Handling of coolants and heat transfer

materials.

Taxes:

1. Federal and state unemployment.2. F.I.C.A.3. Taxes.Employee Pensions and Benefits: The portion








Insurance:




4. Insurance inspection service.

5. Insurance counsel, brokerage fees, andexpenses.








13. Cost of safety, accident prevention, andsimilar educational activities.Materials and Expenses:

1. Chemicals.2. Additions to or refining of fluids used in

reactor systems.3. Lubricants.4. Pumping supplies and expenses.5. Miscellaneous supplies and expenses.6. Purchased water.

NOTE: Do not include in this account waterfor general station use or the initial chargefor coolants, heat transfer, or moderatorfluids, chemicals, or other supplies capital-ized.

520 Steam Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,and materials used and expenses incurred inproduction of steam through nuclear proc-esses, and similar expenses for operation ofany auxiliary superheat facilities.

Items

Labor: 1. Supervising steam production.2. Fuel handling including removal, inser-

tion, disassembly, and preparation for cool-ing operations and shipment.

3. Testing instruments and gauges.4. Health, safety, monitoring, and decon-

tamination activities.5. Waste disposal.6. Operating steam boilers and auxiliary

steam, superheat facilities.Taxes:


808










Insurance:















1. Chemical supplies.2. Charts and logs.3. Health, safety, monitoring, and decon-

tamination supplies.4. Boiler inspection fees.5. Lubricants.

521 Steam from Other Sources

This account shall include the cost ofsteam purchased or transferred from anotherdepartment of the utility or from othersunder a joint facility operating arrangementfor use in prime movers devoted to the pro-duction of electricity.

NOTE: The records shall be so kept as toshow separately for each company fromwhich steam is purchased, the point of deliv-ery, the quantity, the price, and the totalcharge. When steam is transferred from an-other operating department, the utility shallbe prepared to show full details of the cost ofproducing such steam, the basis of thecharges to electric generation, and the ex-tent and manner of use by each departmentinvolved.

522 Steam Transferred—Credit

A. This account shall include credits forexpenses of producing steam which arecharged to others or to other utility depart-ments under a joint operating arrangement.Include also credits for steam expenseschargeable to other electric accounts outsideof the steam generation group. Full detailsof the basis of determination of the cost ofsteam transferred shall be maintained.

B. If the charges to others or to other de-partments of the utility include an amountfor depreciation, taxes, and return on thejoint steam facilities, such portion of thecharge shall be credited in the case of others,to Account 454, Rent from Electric Property,and in the case of other departments of theutility, to Account 455, InterdepartmentalRents.


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in op-erating turbogenerators, steam turbines andtheir auxiliary apparatus, switch gear, andother electric equipment to the points whereelectricity leaves for conversion for trans-mission or distribution.


809


Items

Labor:1. Supervising electric production.2. Operating turbines, engines, generators,

and exciters.3. Operating condensers, circulating water

systems, and other auxiliary apparatus.4. Operating generator cooling system.5. Operating lubrication and oil control

system, including oil purification.6. Operating switchboards, switch gear, and

electric control and protective equipment.7. Keeping plant log and records and pre-

paring reports on electric plant operations.8. Testing, checking and adjusting meters,

gauges, and other instruments, relays, con-trols, and other equipment in the electricplant.

9. Cleaning electric plant equipment whennot incidental to maintenance.

10. Repacking glands and replacing gaugeglasses.Taxes:























1. Lubricants and control system oils.2. Generator cooling gases.3. Log sheets and charts.4. Motor and generator brushes.

524 Miscellaneous Nuclear Power Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred which are not specifically providedfor or are not readily assignable to other nu-clear generation operation accounts.

Items

Labor:

1. General clerical and stenographic work.2. Plant security.3. Building service.4. Care of grounds, including snow removal,

and grass cutting5. Miscellaneous labor.

Taxes:




810
















1. General operating supplies, such astools, gaskets, hose, indicating lamps,records and reports forms.

2. First-aid supplies and safety equipment.3. Employees’ service facilities expenses.4. Building service supplies.5. Communication service.6. Miscellaneous office supplies and ex-

penses, printing and stationery.7. Transportation expenses.8. Meals, traveling, and incidental ex-


tion expenses.

525 Rents

This account shall include all rents ofproperty of others used, occupied, or oper-ated in connection with nuclear generation.(See § 1767.17 (c).)

(Maintenance)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of mainte-nance of nuclear generation facilities. Directfield supervision of specific jobs shall becharged to the appropriate maintenance ac-count. (See § 1767.17(a).)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in the maintenance of structures, thebook cost of which is includible in Account321, Structures and Improvements. (See§ 1767.17(b).)

530 Maintenance of Reactor PlantEquipment

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in the maintenance of reactor plant,the book cost of which is includible in Ac-count 322, Reactor Plant Equipment. (See§ 1767.17(b).)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in the maintenance of electric plant,the book cost of which is includible in Ac-count 323, Turbogenerator Units, and Ac-count 324, Accessory Electric Equipment.(See § 1767.17(b).)

532 Maintenance of Miscellaneous NuclearPlant

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of miscellaneous nu-clear generating plant, the book cost ofwhich is includible in Account 325, Miscella-neous Power Plant Equipment. (See§ 1767.17(b).)

Hydraulic Power Generation

(Operation)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries and


811


damages, and expenses incurred in the gen-eral supervision and direction of the oper-ation of hydraulic power generating stations.Direct supervision of specific activities, suchas hydraulic operation, and generator oper-ation shall be charged to the appropriate ac-count. (See § 1767.17(a).)

536 Water for Power

This account shall include the cost ofwater used for hydraulic power generation.

Items

1. Cost of water purchased from others, in-cluding water tolls paid reservoir companies.

2. Periodic payments for licenses or per-mits from any governmental agency forwater rights, or payments based on the useof the water.

3. Periodic payments for riparian rights.4. Periodic payments for headwater bene-

fits or for detriments to others.5. Cloud seeding.

537 Hydraulic Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in op-erating hydraulic works including reservoirs,dams, and waterways, and in activities di-rectly relating to the hydroelectric develop-ment outside the generating station. It shallalso include the cost of labor, materialsused, and other expenses incurred in connec-tion with the operation of (1) fish and wild-life, and (2) recreation facilities. Separatesubaccounts shall be maintained for each ofthe above.

Items

Labor:

1. Supervising hydraulic operation.2. Removing debris and ice from trash

racks, reservoirs, and waterways.3. Patrolling reservoirs and waterways.4. Operating intakes, spillways, sluiceways,

and outlet works.5. Operating bubbler, heater, or other deic-

ing systems.6. Ice and log jam work.7. Operating navigation facilities.8. Operations relating to conservation of

game, fish, and forests.9. Insect control activities.

Taxes:


of employee pensions and benefits specifi-cally identifiable with employees’ laborcosts charged herein or, in the absence ofspecific employee identification, the portion

of employee pensions and benefits, allocatedon the more equitable basis of either directlabor dollars or direct labor hours, applica-ble to the labor items detailed above, includ-ing:







Insurance:















1. Insect control materials.


812


2. Lubricants, packing, and other suppliesused in the operation of hydraulic equip-ment.

3. Transportation expense.


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in op-erating prime movers, generators, and theirauxiliary apparatus, switchgear, and otherelectric equipment, to the point where elec-tricity leaves for conversion for transmissionor distribution.

Items

Labor:

1. Supervising electric production.2. Operating prime movers, generators, and

auxiliary equipment.3. Operating generator cooling system.4. Operating lubrication and oil control

systems, including oil purification.5. Operating switchboards, switchgear, and

electric control and protection equipment.6. Keeping plant log and records and pre-

paring reports on plant operations.7. Testing, checking and adjusting meters,

gauges, and other instruments, relays, con-trols, and other equipment in the plant.

8. Cleaning plant equipment when not inci-dental to maintenance work.

9. Repacking glands.

Taxes:






















1. Lubricants and control system oils.2. Motor and generator brushes.

539 Miscellaneous Hydraulic PowerGeneration Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred which are not specifically providedfor or are not readily assignable to other hy-draulic generation operation expense ac-counts.

Items

Labor:

1. General clerical and stenographic work.2. Guarding and patrolling plant and yard.3. Building service.4. Care of grounds including snow removal,

and grass cutting.5. Snow removal from roads and bridges.


813


6. Miscellaneous labor.Taxes:









Insurance:










1. General operating supplies, such astools, gaskets, packing, waste, hose, indi-cating lamps, record and report forms.

2. First-aid supplies and safety equipment.3. Employees’ service facilities expenses.

4. Building service supplies.5. Communication service.6. Office supplies, printing and stationery.7. Transportation expenses.8. Fuel.9. Meals, traveling, and incidental ex-


tion expenses.

540 Rents

This account shall include all rents ofproperty of others used, occupied, or oper-ated in connection with hydraulic power gen-eration, including amounts payable to theUnited States for the occupancy of publiclands and reservations for reservoirs, dams,flumes, forebays, penstocks, and powerhouses but not including transmission right-of-way. (See § 1767.17 (c).)

(Maintenance)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of the mainte-nance of hydraulic power generating sta-tions. Direct field supervision of specific jobsshall be charged to the appropriate mainte-nance account. (See § 1767.17(a).)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of hydraulic struc-tures, the book cost of which is includible inAccount 331, Structures and Improvements.(See § 1767.17 (b).) However, the cost of labor,materials used, and expenses incurred in themaintenance of fish and wildlife and recre-ation facilities, the book cost of which is in-cludible in Account 331, Structures and Im-provements, shall be charged to Account 545,Maintenance of Miscellaneous HydraulicPlant.

543 Maintenance of Reservoirs, Dams, andWaterways

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of plant includible inAccount 332, Reservoirs, Dams, and Water-ways. (See § 1767.17(b).) However, the cost oflabor, materials used, and expenses incurredin the maintenance of fish and wildlife andrecreation facilities, the book cost of whichis includible in Account 332, Reservoirs,Dams, and Waterways, shall be charged to


814


Account 545, Maintenance of MiscellaneousHydraulic Plant.


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of plant includible inAccount 333, Water Wheels, Turbines andGenerators, and Account 334, Accessory Elec-tric Equipment, (See § 1767.17(b).)

545 Maintenance of MiscellaneousHydraulic Plant

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of plant, the bookcost of which is includible in Account 335,Miscellaneous Power Plant Equipment, andAccount 336, Roads Railroads and Bridges.(See § 1767.17(b).) It shall also include thecost of labor, materials used, and other ex-penses incurred in the maintenance of (1)fish and wildlife, and (2) recreation facilities.Separate subaccounts shall be maintainedfor each of the above.

Other Power Generation

(Operation)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of the oper-ation of other power generating stations. Di-rect supervision of specific activities, suchas fuel handling and engine and generatoroperation shall be charged to the appropriateaccount. (See § 1767.17(a).)

547 Fuel

This account shall include the cost deliv-ered at the station (See Account 151, FuelStock) of all fuel, such as gas, oil, kerosene,and gasoline used in other power generation.

548 Generation Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in op-erating prime movers, generators, and elec-tric equipment in other power generatingstations, to the point where electricityleaves for conversion for transmission or dis-tribution.

Items

Labor:

1. Supervising other power generation op-eration.

2. Operating prime movers, generators, andauxiliary apparatus and switching and otherelectric equipment.

3. Keeping plant log and records and pre-paring reports on plant operations.

4. Testing, checking, cleaning, oiling, andadjusting equipment.Taxes:

















815








1. Dynamo, motor, and generator brushes.2. Lubricants and control system oils.3. Water for cooling engines and genera-

tors.

549 Miscellaneous Other Power GenerationExpenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in the operation of other power gener-ating stations which are not specifically pro-vided for or are not readily assignable toother generation expense accounts.

Items

Labor:

1. General clerical and stenographic work.2. Guarding and patrolling plant and yard.3. Building service.4. Care of grounds, including snow removal,

and grass cutting.5. Miscellaneous labor.

Taxes:







5. Payments to employees incapacitatedfor service or on leave of absence beyond pe-riods normally allowed when not the result

of occupational injuries or in excess of statu-tory awards.


Insurance:










1. Building service supplies.2. First-aid supplies and safety equipment.3. Communication service.4. Employees’ service facilities expenses.5. Office supplies, printing and stationery.6. Transportation expense.7. Meals, traveling, and incidental ex-

penses.8. Fuel for heating.9. Water for fire protection or general use.10. Miscellaneous supplies, such as hand

tools, drills, saw blades, and files.11. Research, development, and demonstra-

tion expenses.

550 Rents

This account shall include all rents ofproperty of others used, occupied, or oper-ated in connection with other power genera-tion. (See § 1767.17 (c).)

(Maintenance)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of the mainte-nance of other power generating stations. Di-rect field supervision of specific jobs shall be


816


charged to the appropriate maintenance ac-count. (See § 1767.17(a).)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of facilities used andexpenses incurred in maintenance of facili-ties used in other power generation, the bookcost of which is includible in Account 341,Structures and Improvements, and Account342, Fuel Holders, Producers and Accessories.(See § 1767.17(b).)

553 Maintenance of Generating and ElectricEquipment

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of plant, the bookcost of which is includible in Account 343,Prime Movers; Account 344, Generators; andAccount 345, Accessory Electric Equipment.(See § 1767.17(b).)

554 Maintenance of Miscellaneous OtherPower Generation Plant

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of other power gen-eration plant, the book cost of which is in-cludible in Account 346, Miscellaneous PowerPlant Equipment. (See § 1767.17(b).)

OTHER POWER SUPPLY EXPENSES

555 Purchased Power

A. This account shall include the cost atpoint of receipt by the utility of electricitypurchased for resale. It shall also include,net settlements for exchange of electricityor power, such as economy energy, off-peakenergy for on-peak energy, and spinning re-serve capacity. In addition, the account shallinclude the net settlements for transactionsunder pooling or interconnection agreementswherein there is a balancing of debits andcredits for energy, or capacity. Distinct pur-chases and sales shall not be recorded as ex-changes and net amounts only recordedmerely because debit and credit amounts arecombined in the voucher settlement.

B. The records supporting this accountshall show, by months, the demands and de-mand charges, kilowatt-hours and pricesthereof under each purchase contract andthe charges and credits under each exchangeor power pooling contract.

556 System Control and Load Dispatching

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,and expenses incurred in load dispatching ac-tivities for system control. Utilities havingan interconnected electric system or oper-ating under a central authority which con-trols the production and dispatching of elec-tricity may apportion these costs to this ac-count and Account 561, Load Dispatching,and Account 581, Load Dispatching.

Items

Labor:

1. Allocating loads to plants and inter-connections with others.

2. Directing switching.3. Arranging and controlling clearances for

construction, maintenance, test, and emer-gency purposes.

4. Controlling system voltages.5. Recording loadings, and water condi-

tions.6. Preparing operating reports and data for

billing and budget purposes.7. Obtaining reports on the weather and

special events.

Taxes:









Insurance:


817















Expenses:

1. Communication service provided for sys-tem control purposes.

2. System record and report forms.3. Meals, traveling, and incidental ex-

penses.4. Obtaining weather and special events re-

ports.

557 Other Expenses

A. This account shall be charged with anyproduction expenses including expenses in-curred directly in connection with the pur-chase of electricity, which are not specifi-cally provided for in other production ex-pense accounts. Charges to this accountshall be supported so that a description ofeach type of charge will be readily available.

B. Recoveries from insurance companies,under use and occupancy provisions of poli-cies, of amounts in reimbursement of exces-sive or added productions costs for which theinsurance company is liable under the termsof the policy shall be credited to this ac-count.

TRANSMISSION EXPENSES

(Operation)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of the oper-ation of the transmission system as a whole.Direct supervision of specific activities, suchas station operation and line operation shallbe charged to the appropriate account. (See§ 1767.17(a).)

561 Load Dispatching

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in loaddispatching operations pertaining to thetransmission of electricity.

Items

Labor:

1. Direct switching.2. Arranging and controlling clearances for


3. Controlling system voltages.4. Obtaining reports on the weather and

special events.5. Preparing operating reports and data for

billing and budget purposes.

Taxes:









818



Insurance:














Expenses:



penses.4. Obtaining weather and special events re-

ports.

562 Station Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in op-erating transmission substations and switch-ing stations. If transmission station equip-ment is located in or adjacent to a gener-ating station, the expenses applicable totransmission station operations shall never-theless be charged to this account.

Items

Labor:

1. Supervising station operation.2. Adjusting station equipment where such

adjustment primarily affects performance,such as regulating the flow of cooling water,adjusting current in fields of a machine orchanging voltage of regulators, changing sta-tion transformer taps.

3. Inspecting, testing, and calibrating sta-tion equipment for the purpose of checkingits performance.

4. Keeping station log and records and pre-paring records on station operation.

5. Operating switching and other stationequipment.

6. Standing watch, guarding, and patrol-ling station and station yard.

7. Sweeping, mopping, and tidying station.8. Care of grounds, including snow removal,

and grass cutting.

Taxes:









Insurance:






819











1. Building service expenses.2. Operating supplies, such as lubricants,

commutator brushes, water, and rubbergoods.

3. Station meter and instrument supplies,such as ink and charts.

4. Station record and report forms.5. Tool expense.6. Transportation expenses.7. Meals, traveling, and incidental ex-

penses.

563 Overhead Line Expenses

564 Underground Line Expenses

A. These accounts shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in theoperation of transmission lines.

B. If the expenses are not substantial forboth overhead and underground lines, theseaccounts may be combined.

Items

Labor:

1. Supervising line operation.2. Inspecting and testing lightning arrest-

ers, circuit breakers, switches, and grounds.3. Load tests of circuits.4. Routine line patrolling.5. Routine voltage surveys made to deter-

mine the condition or efficiency of trans-mission system.

6. Transferring loads, switching and recon-necting circuits and equipment for operating

purposes. (Switching for construction ormaintenance purposes is not includible inthis account.)

7. Routine inspection and cleaning of man-holes, conduit, network, and transformervaults.

8. Electrolysis surveys.9. Inspecting and adjusting line-testing

equipment, such as voltmeters, ammeters,and wattmeters.

10. Regulation and addition of oil or gas inhigh-voltage cable systems.

Taxes:









Insurance:








820









1. Transportation expenses.2. Meals, traveling, and incidental ex-

penses.3. Tool expenses.4. Operating supplies, such as instrument

charts, and rubber goods.

565 Transmission of Electricity by Others

This account shall include amounts pay-able to others for the transmission of theutility’s electricity over transmission facili-ties owned by others.

566 Miscellaneous Transmission Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamage, materials used, and expenses in-curred in transmission map and record work,transmission office expenses, and othertransmission expenses not provided for else-where.

Items

Labor:1. General records of physical characteris-

tics of lines and stations, such as capacities.2. Ground resistance records.3. Janitor work at transmission office

buildings, including care of grounds, snow re-moval, and grass cutting.

4. Joint pole maps and records.5. Line load and voltage records.6. Preparing maps and prints.7. General clerical and stenographic work.8. Miscellaneous labor.

Taxes:


of employee pensions and benefits specifi-cally identifiable with employees’ laborcosts charged herein or, in the absence ofspecific employee identification, the portionof employee pensions and benefits, allocatedon the more equitable basis of either direct

labor dollars or direct labor hours, applica-ble to the labor items detailed above, includ-ing:















1. Communication service.2. Building service supplies.3. Map and record supplies.4. Transmission office supplies and ex-

penses, printing and stationery.5. First-aid supplies.6. Research, development, and demonstra-

tion expenses.

567 Rents

This account shall include rents of prop-erty of others used, occupied, or operated inconnection with the transmission system, in-cluding payments to the United States andothers for use of public or private lands andreservations for transmission line rights-of-way. (See § 1767.17 (c).)


821


(Maintenance)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of mainte-nance of the transmission system. Directfield supervision of specific jobs shall becharged to the appropriate maintenance ac-count. (See § 1767.17(a).)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in the maintenance of structures, thebook cost of which is includible in Account352, Structures and Improvements. (See§ 1767.17(b).)

570 Maintenance of Station Equipment

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of station equipment,the book cost of which is includible in Ac-count 353, Station Equipment. (See§ 1767.17(b).)

571 Maintenance of Overhead Lines

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of transmission plant,the book cost of which is includible in Ac-counts 354, Towers and Fixtures; 355, Polesand Fixtures; 356, Overhead Conductors andDevices; and 359, Roads and Trails. (See§ 1767.17(b).)

Items

1. Work of the following character onpoles, towers, and fixtures:

a. Installing or removing additionalclamps or strain insulators on guys in place.

b. Moving line or guy pole in relocation ofthe same pole or section of line.

c. Painting poles, towers, crossarms, orpole extensions.

d. Readjusting and changing position ofguys or braces.

e. Realigning and straightening poles,crossarms braces, and other pole fixtures.

f. Reconditioning reclaimed pole fixtures.g. Relocating crossarms, racks, brackets,

and other fixtures on poles.h. Repairing or realigning pins, racks, or

brackets.i. Repairing pole supported platform.j. Repairs by others to jointly owned poles.

k. Shaving, cutting rot, or testing poles orcrossarms in use or salvaged for reuse.

l. Stubbing poles already in service.m. Supporting fixtures and conductors and

transferring them to new poles during polereplacements.

n. Maintenance of pole signs, stencils, andtags.

2. Work of the following character on over-head conductors and devices:

a. Overhauling and repairing line cutouts,line switches, and line breakers.

b. Cleaning insulators and bushings.c. Refusing cutouts.d. Repairing line oil circuit breakers and

associated relays and control wiring.e. Repairing grounds.f. Resagging, retyping, or rearranging posi-

tion or spacing of conductors.g. Standing by phones, going to calls, cut-

ting faulty lines clear, or similar activitiesat times of emergencies.

h. Sampling, testing, changing, purifying,and replenishing insulating oil.

i. Repairing line testing equipment.j. Transferring loads, switching and recon-

necting circuits and equipment for mainte-nance purposes.

k. Trimming trees and clearing brush.l. Chemical treatment of right of way areas

when occurring subsequent to constructionof line.

3. Work of the following character on roadsand trails:

a. Repairing roadways and bridges.b. Trimming trees and brush to maintain

previous roadway clearance.c. Snow removal from roads and trails.d. Maintenance work on publicly owned

roads and trails when done by utility at itsexpense.Taxes:







5. Payments to employees incapacitatedfor service or on leave of absence beyond pe-riods normally allowed when not the result


822


of occupational injuries or in excess of statu-tory awards.


Insurance:1. Premiums payable to insurance compa-




court costs and attorneys’ services.5. Medical and hospital services and ex-





572 Maintenance of Underground Lines

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of transmission plant,the book cost of which is includible in Ac-counts 357, Underground Conduit, and Ac-count 358, Underground Conductors and De-vices. (See § 1767.17(b).)

Items

1. Work of the following character on un-derground conduit:

a. Cleaning ducts, manholes, and sewerconnections.

b. Minor alterations of handholes, man-holes, or vaults.

c. Refastening, repairing, or moving racks,ladders, hangers in manholes, or vaults.

d. Plugging and shelving or repluggingducts.

e. Repairs to sewers and drains, walls andfloors, rings and covers.

2. Work of the following character on un-derground conductors and devices:

a. Repairing oil circuit breakers, switches,cutouts, and control wiring.

b. Repairing grounds.c. Retraining and reconnecting cables in

manholes, including transfer of cables fromone duct to another.

d. Repairing conductors and splices.

e. Repairing or moving junction boxes andpotheads.

f. Refireproofing of cables and repairingsupports.

g. Repairing electrolysis preventive de-vices for cables.

h. Repairing cable bonding systems.i. Sampling, testing, changing, purifying,

and replenishing insulating oil.j. Transferring loads, switching and recon-

necting circuits, and equipment for mainte-nance purposes.

k. Repairing line testing equipment.l. Repairs to oil or gas equipment in high-

voltage cable system and replacement of oilor gas.

Taxes:









Insurance:




court costs and attorneys’ services.


823


5. Medical and hospital service and ex-penses for employees as the result of occupa-tional injuries or resulting from claims ofothers.




573 Maintenance of MiscellaneousTransmission Plant

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of owned or leasedplant which is assignable to transmission op-erations and is not provided for elsewhere.(See § 1767.17(b).)

DISTRIBUTION EXPENSES

(Operation)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of the oper-ation of the distribution system. Direct su-pervision of specific activities, such as sta-tion operation, line operation, and meter de-partment operation shall be charged to theappropriate account. (See § 1767.17(a).)

581 Load Dispatching

This account (the keeping of which is op-tional with the utility) shall include the costof labor, employee pensions and benefits, so-cial security and other payroll taxes, inju-ries and damages, property insurance, prop-erty taxes, materials used, and expenses in-curred in load dispatching operations per-taining to the distribution of electricity.

Items

Labor: 1. Direct switching.2. Arranging and controlling clearances for


3. Controlling system voltages.4. Preparing operating reports.5. Obtaining reports on the weather and

special events.Taxes:


of employee pensions and benefits specifi-cally identifiable with employees’ labor

costs charged herein or, in the absence ofspecific employee identification, the portionof employee pensions and benefits, allocatedon the more equitable basis of either directlabor dollars or direct labor hours, applica-ble to the labor items detailed above, includ-ing:







Insurance:














Expenses:


824




penses.

582 Station Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in theoperation of distribution substations.

Items

Labor:

1. Supervising station operation.2. Adjusting station equipment where such

adjustment primarily affects performance,such as regulating the flow of cooling water,adjusting current in fields of a machine,changing voltage of regulators, or changingstation transformer taps.

3. Keeping station log and records and pre-paring reports on station operation.

4. Inspecting, testing, and calibrating sta-tion equipment for the purpose of checkingits performance.

5. Operating switching and other stationequipment.

6. Standing watch, guarding, and patrol-ling station and station yard.

7. Sweeping, mopping, and tidying station.8. Care of grounds, including snow removal,

and grass cutting.

Taxes:









Insurance:















1. Building service expenses.2. Operating, supplies, such as lubricants,

commutator brushes, water, and rubbergoods.

3. Station meter and instrument supplies,such as ink and charts.

4. Station record and report forms.5. Tool expense.6. Transportation expense.7. Meals, traveling, and incidental ex-

penses.

NOTE: If the utility owns storage batteryequipment used for supplying electricity tocustomers in periods of emergency, the costof operating labor and of supplies, such asacid, gloves, hydrometers, thermometers,soda, automatic cell fillers, and acid proofshoes shall be included in this account. Ifsignificant in amount, a separate subdivisionshall be maintained for such expenses.


825


583 Overhead Line Expenses

584 Underground Line Expenses

These accounts shall include, respectively,the cost of labor, employee pensions and ben-efits, social security and other payroll taxes,injuries and damages, property insurance,property taxes, materials used, and expensesincurred in the operation of overhead andunderground distribution lines.

Items

Labor:1. Supervising line operation.2. Changing line transformer taps.3. Inspecting and testing lightning arrest-

ers, line circuit breakers, switches, andgrounds.

4. Inspecting and testing line transformersfor the purpose of determining load, tem-perature, or operation performance.

5. Patrolling lines.6. Load tests and voltage surveys of feed-

ers, circuits, and line transformers.7. Removing line transformers and voltage

regulators with or without replacement.8. Installing line transformers or voltage

regulators with or without change in capac-ity provided that the cost of first installa-tion of these items is included in Account368, Line Transformers.

9. Voltage surveys, either routine or uponrequest of customers, including voltage testsat customer’s main switch.

10. Transferring loads, switching and re-connecting circuits and equipment for oper-ation purpose.

11. Electrolysis surveys.12. Inspecting and adjusting line testing

equipment.Taxes:

1. Federal and State unemployment.2. F.I.C.A,3. Property.Employee Pensions and Benefits: The portion






5. Payments to employees incapacitatedfor service or on leave of absence beyond pe-

riods normally allowed when not the resultof occupational injuries or in excess of statu-tory awards.









8. Fees and expenses of claim investiga-tors.

9. Payment of awards to claimants forcourt costs and attorneys’ services.





1. Tool expense.2. Transportation expense.3. Meals, traveling, and incidental ex-

penses.4. Operating supplies, such as instrument

charts, and rubber goods.

585 Street Lighting and Signal SystemExpenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in: (1)The operation of street lighting and signalsystem plant which is owned or leased by theutility; and (2) the operation and mainte-nance of such plant owned by customerswhere such work is done regularly as a part


826


of the street lighting and signal system serv-ice.

Items

Labor:

1. Supervising street lighting and signalsystems operation.

2. Replacing lamps and incidental cleaningof glassware and fixtures in connectiontherewith.

3. Routine patrolling for lamp outages, ex-traneous nuisances, or encroachments.

4. Testing lines and equipment includingvoltage and current measurement.

5. Winding and inspection of time switchand other controls.Taxes:









Insurance:






nies for protection against claims from inju-ries and damages by employees or others,such as public liability, property damages,

casualty, employee liability, etc., andamounts credited to Account 228.2, Accumu-lated Provision for Injuries and Damage, forsimilar protection.









1. Street lamp renewals.2. Transportation and tool expense.3. Meals, traveling, and incidental ex-

penses.

586 Meter Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in theoperation of customer meters and associatedequipment.

Items

Labor:

1. Supervising meter operation.2. Clerical work on meter history and asso-

ciated equipment record cards, test cards,and reports.

3. Disconnecting and reconnecting, remov-ing and reinstalling, sealing and unsealingmeters and other metering equipment inconnection with initiating or terminatingservices including the cost of obtainingmeter readings, if incidental to such oper-ation.

4. Consolidating meter installations due toelimination of separate meters for differentrates of service.

5. Changing or relocating meters, instru-ment transformers, time switches, and othermetering equipment.

6. Resetting time controls, checking oper-ation of demand meters and other meteringequipment, when done as an independent op-eration.

7. Inspecting and adjusting meter testingequipment.

8. Inspecting and testing meters, instru-ment transformers, time switches, and othermetering equipment on premises or in shops


827


excluding inspecting and testing incidentalto maintenance.Taxes:






















Materials and Expenses

1. Meter seals and miscellaneous metersupplies.

2. Transportation expenses.3. Meals, traveling, and incidental ex-

penses.4. Tool expenses.

NOTE: The cost of the first setting and test-ing of a meter is chargeable to utility plant,Account 370, Meters.

587 Customer Installations Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred inwork on customer installations in inspectingpremises and in rendering services to cus-tomers of the nature of those indicated bythe list of items hereunder.

Items

Labor:

1. Supervising customer installationswork.

2. Inspecting premises, including the checkof wiring for code compliance.

3. Investigating, locating, and clearinggrounds on customers’ wiring.

4. Investigating service complaints, includ-ing load tests of motors and lighting andpower circuits on customers’ premises; fieldinvestigations of complaints on bills or ofvoltage.

5. Installing, removing, renewing, andchanging lamps and fuses.

6. Radio, television, and similar inter-ference work including erection of newaerials on customers’ premises and patrol-ling of lines, testing of lightning arresters,inspection of pole hardware, and examina-tion on or off premises of customers’ appli-ances, wiring, or equipment to locate causeof interference.

7. Installing, connecting, reinstalling, orremoving leased property on customers’premises.

8. Testing, adjusting, and repairing cus-tomers’ fixtures and appliances in the shopor on premises.

9. Cost of changing customers’ equipmentdue to changes in service characteristics.

10. Investigation of current diversion in-cluding setting and removal of check metersand securing special readings thereon; spe-cial calls by employees in connection with


828


discovery and settlement of current diver-sion; changes in customer wiring; and anyother labor cost identifiable as caused bycurrent diversion.Taxes:


















penses for employees as the result of occupa-

tional injuries or resulting from claims ofothers.





1. Lamp and fuse renewals.2. Materials used in servicing customers’

fixtures, appliances, and equipment.3. Power, light, heat, telephone, and other

expenses of the appliance repair department.4. Tool expense.5. Transportation expense, including pick-

up and delivery charges.6. Meals, traveling, and incidental ex-

penses.7. Rewards paid for discovery of current di-

version.

NOTE A: Amounts billed customers for anywork, the cost of which is charged to this ac-count, shall be credited to this account. Anyexcess over costs resulting therefrom, shallbe transferred to Account 451, MiscellaneousService Revenues.

NOTE B: Do not include in this account ex-penses incurred in connection with merchan-dising, jobbing, and contract work.

588 Miscellaneous Distribution Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in distribution system operation notprovided for elsewhere.

Items

Labor:

1. General records of physical characteris-tics of lines and substations, such as capac-ities.

2. Ground resistance records.3. Joint pole maps and records.4. Distribution system voltage and load

records.5. Preparing maps and prints.6. Service interruption and trouble records.7. General clerical and stenographic work

except that chargeable to Account 586, MeterExpenses.

Taxes:


of employee pensions and benefits specifi-cally identifiable with employees’ laborcosts charged herein or, in the absence ofspecific employee identification, the portionof employee pensions and benefits, allocatedon the more equitable basis of either direct


829


labor dollars or direct labor hours, applica-ble to the labor items detailed above, includ-ing:







Insurance:

1. Premiums payable to insurance compa-nies for protection against claims from inju-ries and damages by employees or otherssuch as public liability, property damages,casualty, employee liability, etc., andamounts credited to Account 228.2, Accumu-lated Provision for Injuries and Damage, forsimilar protection.








Expenses:

1. Operating records covering poles, trans-formers, manholes, cables, and other dis-tribution facilities. Exclude meter recordschargeable to Account 586, Meter Expenses,and station records chargeable to Account582, Station Expenses, and stores recordschargeable to Account 163, Stores ExpenseUndistributed.

2. Janitor work at distribution office build-ings including snow removal and grass cut-ting.

3. Communication service.4. Building service expenses.5. Miscellaneous office supplies and ex-

penses, printing and stationery, maps andrecords, and first-aid supplies.

6. Research, development, and demonstra-tion expenses.

589 Rents

This account shall include rents of prop-erty of others used, occupied, or operated inconnection with the distribution system, in-cluding payments to the United States andothers for the use and occupancy of publiclands and reservations for distribution linerights of way. (See § 1767.17 (c).)

(Maintenance)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral supervision and direction of mainte-nance of the distribution system. Direct fieldsupervision of specific jobs shall be chargedto the appropriate maintenance account.(See § 1767.17(a).)


This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of structures, thebook cost of which is includible in Account361, Structures and Improvements. (See§ 1767.17(b).)

592 Maintenance of Station Equipment

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of plant, the bookcost of which is includible in Account 362,Station Equipment, and Account 363, Stor-age Battery Equipment. (See § 1767.17(b).)

593 Maintenance of Overhead Lines

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in the maintenance of overhead dis-tribution line facilities, the book cost ofwhich is includible in Account 364, Poles,Towers and Fixtures; Account 365, OverheadConductors and Devices; and Account 369,Services. (See § 1767.17(b).)

Items

1. Work of the following character onpoles, towers, and fixtures:

a. Installing additional clamps or remov-ing clamps or strain insulators on guys inplace.

b. Moving line or guy pole in relocation ofpole or section of line.


830


c. Painting poles, towers, crossarms, orpole extensions.

d. Readjusting and changing position ofguys or braces.

e. Realigning and straightening poles,crossarms, braces, pins, racks, brackets, andother pole fixtures.

f. Reconditioning reclaimed pole fixtures.g. Relocating crossarms, racks, brackets,

and other fixtures on poles.h. Repairing pole supported platform.i. Repairs by others to jointly owned poles.j. Shaving, cutting rot, or treating poles or

crossarms in use or salvaged for reuse.k. Stubbing poles already in service.l. Supporting conductors, transformers,

and other fixtures and transferring them tonew poles during pole replacements.

m. Maintaining pole signs, stencils, andtags.

2. Work of the following character on over-head conductors and devices:

a. Overhauling and repairing line cutouts,line switches, line breakers, and capacitorinstallations.

b. Cleaning insulators and bushings.c. Refusing line cutouts.d. Repairing line oil circuit breakers and

associated relays and control wiring.e. Repairing grounds.f. Resagging, retying, or rearranging posi-

tion or spacing of conductors.g. Standing by phones, going to calls, cut-

ting faulty lines clear, or similar activitiesat times of emergency.

h. Sampling, testing, changing, purifying,and replenishing insulating oil.

i. Transferring loads, switching, and recon-necting circuits and equipment for mainte-nance purposes.

j. Repairing line testing equipment.k. Trimming trees and clearing brush.l. Chemical treatment of right-of-way area

when occurring subsequent to constructionof line.

3. Work of the following character on over-head services:

a. Moving position of service either on poleor on customers’ premises.

b. Pulling slack in service wire.c. Retying service wire.d. Refastening or tightening service brack-

et.

Taxes:









Insurance:









594 Maintenance of Underground Lines

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in the maintenance of undergrounddistribution line facilities, the book cost ofwhich is includible in Account 366, Under-ground Conduit; Account 367, UndergroundConductors and Devices; and Account 369,Services. (See § 1767.17(b).)

Items

1. Work of the following character on un-derground conduit:

a. Cleaning ducts, manholes, and sewerconnections.

b. Moving or changing position of conduitor pipe.


831


c. Minor alterations of handholes, man-holes, or vaults.

d. Refastening, repairing, or moving racks,ladders, or hangers in manholes or vaults.

e. Plugging and shelving ducts.f. Repairs to sewers, drains, walls, and

floors, rings, and covers.2. Work of the following character on un-

derground conductors and devices:a. Repairing circuit breakers, switches,

cutouts, network protectors, and associatedrelays and control wiring.

b. Repairing grounds.c. Retraining and reconnecting cables in

manholes including transfer of cables fromone duct to another.

d. Repairing conductors and splices.e. Repairing or moving junction boxes and

potheads.f. Refireproofing cables and repairing sup-

ports.g. Repairing electrolysis preventive de-

vices for cables.h. Repairing cable bonding systems.i. Sampling, testing, changing, purifying,

and replenishing insulating oil.j. Transferring loads, switching and recon-

necting circuits and equipment for mainte-nance purposes.

k. Repairing line testing equipment.l. Repairing oil or gas equipment in high

voltage cable systems and replacement of oilor gas.

3. Work of the following character on un-derground services:

a. Cleaning ducts.b. Repairing any underground service

plant.

Taxes:









Insurance:









595 Maintenance of Line Transformers

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of distribution linetransformers, the book cost of which is in-cludible in Account 368, Line Transformers.(See § 1767.17(b).)

596 Maintenance of Street Lighting andSignal Systems

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of plant, the bookcost of which is includible in Account 373,Street Lighting and Signal Systems. (See§ 1767.17(b).)

597 Maintenance of Meters

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in the maintenance of meters andmeter testing equipment, the book cost ofwhich is includible in Account 370, Meters,and Account 395, Laboratory Equipment, re-spectively. (See § 1767.17(b).)


832


598 Maintenance of MiscellaneousDistribution Plant

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in maintenance of plant, the bookcost of which is includible in Accounts 371,Installations on Customers’ Premises, andAccount 372, Leased Property on Customers’Premises, and any other plant the mainte-nance of which is assignable to the distribu-tion function and is not provided for else-where. (See § 1767.17(b).)

Items

1. Work of similar nature to that listed inother distribution maintenance accounts.

2. Maintenance of office furniture andequipment used by distribution system de-partment.Taxes:


















§ 1767.28 Customer accounts expenses.The customer accounts expense ac-

counts identified in this section shallbe used by all RUS borrowers.

CUSTOMER ACCOUNTS EXPENSES

(Operation)

901 Supervision902 Meter Reading Expenses903 Customer Records and Collection Ex-

penses904 Uncollectible Accounts905 Miscellaneous Customer Accounts Ex-

penses

CUSTOMER ACCOUNTS EXPENSES

(Operation)

901 Supervision

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral direction and supervision of customeraccounting and collecting activities. Directsupervision of a specific activity shall becharged to Account 902, Meter Reading Ex-penses, or Account 903, Customer Recordsand Collection Expenses, as appropriate. (See§ 1767.17(a).)

902 Meter Reading Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in reading customer meters, and de-termining consumption when performed byemployees engaged in reading meters.

Items

Labor:1. Addressing forms for obtaining meter

readings by mail.2. Changing and collecting meter charts

used for billing purposes.


833


3. Inspecting time clocks and checkingseals when performed by meter readers andthe work represents a minor activity inci-dental to regular meter reading routine.

4. Reading meters, including demand me-ters, and obtaining load information for bill-ing purposes. Exclude and charge to Account586, Meter Expenses, or to Account 903, Cus-tomer Records and Collection Expenses, asapplicable, the cost of obtaining meter read-ings, first and final, if incidental to the oper-ation of removing or resetting, sealing orlocking, and disconnecting or reconnectingmeters.

5. Computing consumption from meterreader’s book or from reports by mail whendone by employees engaged in reading me-ters.

6. Collecting from prepayment meterswhen incidental to meter reading.

7. Maintaining record of customers’ keys.8. Computing estimated or average con-

sumption when performed by employees en-gaged in reading meters.Taxes:










2. Losses not covered by insurance or re-serve accruals on account of injuries or

deaths to employees or others and damagesto the property of others.







1. Badges, lamps, and uniforms.2. Demand charts, meter books and binders

and forms for recording readings, but not thecost of preparation.

3. Postage and supplies used in obtainingmeter readings by mail.

4. Transportation, meals, and incidentalexpenses.

903 Customer Records and CollectionExpenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in work on customer applications,contracts, orders, credit investigations, bill-ing and accounting, collections and com-plaints.

Items

Labor:1. Receiving, preparing, recording, and

handling routine orders for service, dis-connections, transfers or meter tests initi-ated by the customer, excluding the cost ofcarrying out such orders, which is charge-able to the account appropriate for the workcalled for by such orders.

2. Investigations of customers’ credit andkeeping of records pertaining thereto, in-cluding records of uncollectible accountswritten off.

3. Receiving, refunding, or applying cus-tomer deposits and maintaining customerdeposit, line extension, and other miscella-neous records.

4. Checking consumption shown by meterreaders’ reports where incidental to prepara-tion of billing date.

5. Preparing address plates and addressingbills and delinquent notices.

6. Preparing billing data.7. Operating billing and bookkeeping ma-

chines.8. Verifying billing records with contracts

or rate schedules.9. Preparing bills for delivery and mailing

or delivering bills.


834


10. Collecting revenues, including collec-tion from prepayment meters, unless inci-dental to meter-reading operations.

11. Balancing collections, preparing collec-tions for deposit, and preparing cash reports.

12. Posting collections and other credits orcharges to customer accounts and extendingunpaid balances.

13. Balancing customer accounts and con-trols.

14. Preparing, mailing, or delivering delin-quent notices and preparing reports of delin-quent accounts.

15. Final meter reading of delinquent ac-counts when done by collectors incidental toregular activities.

16. Disconnecting and reconnecting servicebecause of nonpayment bills.

17. Receiving, recording, and handling ofinquiries, complaints, and requests for inves-tigations from customers, including prepara-tion of necessary orders, but excluding thecost of carrying out such orders, which ischargeable to the account appropriate forthe work called for by such orders.

18. Statistical and tabulating work on cus-tomer accounts and revenues, but not includ-ing special analyses for sales department,rate department, or other general purposes,unless incidental to regular customer ac-counting routines.

19. Preparing and periodically rewritingmeter reading sheets.

20. Determining consumption and com-puting estimated or average consumptionwhen performed by employees other thanthose engaged in reading meters.

Taxes:









Insurance:1. Premiums payable to insurance compa-










1. Address plates and supplies.2. Cash overages and shortages.3. Commissions or fees to others for col-

lecting.4. Payments to credit organizations for in-

vestigations and reports.5. Postage.6. Transportation expenses, including

transportation of customer bills and meterbooks under centralized billing procedures.

7. Transportation, meals expenses, and in-cidental expenses.

8. Bank charges, exchange, and other feesfor cashing and depositing customers’checks.

9. Forms for recording orders for services,or removals.

10. Rent of mechanical equipment.

NOTE: The cost of work on meter historyand meter location records in chargeable toAccount 586, Meter Expenses.

904 Uncollectible Accounts

This amount shall be charged withamounts sufficient to provide for losses fromuncollectible utility revenues. Concurrentcredits shall be made to Account 144, Accu-mulated Provision for Uncollectible Ac-counts—Credit. Losses from uncollectible ac-counts shall be charged to Account 144.


835


905 Miscellaneous Customer AccountsExpenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred notprovided for in other accounts.

Items

Labor:

1. General clerical and stenographic work.2. Miscellaneous labor.

Taxes:


of employee pensions and benefits specifi-cally identifiable with employees’ laborcosts charged herein, or, in the absence ofspecific employee identification, the portionof employee pensions and benefits, allocatedon the more equitable basis of either directlabor dollars or direct labor hours, applica-ble to the labor items detailed above, includ-ing:







Insurance:






nies for protection against claims from inju-ries and damages by employees or others,such as public liability, property damages,casualty, employee liability, etc., andamounts credited to Account 228.2, Accumu-

lated Provision for Injuries and Damage, forsimilar protection.








1. Communication service.2. Miscellaneous office supplies and ex-

penses and stationery and printing otherthan those specifically provided for in Ac-count 902 and Account 903.

[58 FR 59825, Nov. 10, 1993, as amended at 62FR 42311, Aug. 6, 1997; 62 FR 43201, Aug. 12,1997]

§ 1767.29 Customer service and infor-mational expenses.

The customer service and informa-tional expense accounts identified inthis section shall be used by all RUSborrowers.

CUSTOMER SERVICE AND INFORMATIONALEXPENSES

(Operation)

907 Supervision908 Customer Assistance Expenses909 Informational and Instructional Adver-

tising Expenses910 Miscellaneous Customer Service and In-

formational Expenses

CUSTOMER SERVICE AND INFORMATIONALEXPENSES

(Operation)

907 Supervision

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral direction and supervision of customerservice activities, the object of which is toencourage safe, efficient, and economical useof the utility’s service. Direct supervision ofa specific activity within customer serviceand informational expense classificationshall be charged to the account wherein the


836


costs of such activity are included. (See§ 1767.17(a).)

908 Customer Assistance Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in providing instructions or assist-ance to customers, the object of which is toencourage safe, efficient, and economical useof the utility’s service.

Items

Labor:

1. Direct supervision of department.2. Processing customer inquiries relating

to the proper use of electric equipment, thereplacement of such equipment, and infor-mation related to such equipment.

3. Advice directed to customers as to howthey may achieve the most efficient andsafest use of electric equipment.

4. Demonstrations, exhibits, lectures, andother programs designed to instruct cus-tomers in the safe, economical, or efficientuse of electric service, and/or oriented to-ward conservation of energy.

5. Engineering and technical advice to cus-tomers, the object of which is to promotesafe, efficient, and economical use of theutility’s service.

Taxes:









Insurance:









1. Supplies and expenses pertaining to dem-onstrations, exhibits, lectures, and otherprograms.

2. Loss in value on equipment and appli-ances used for customer assistance pro-grams.

3. Office supplies and expenses.4. Transportation, meals, and incidental

expenses.

NOTE: Do not include in this account ex-penses that are provided for elsewhere, suchas Accounts 416, Costs and Expenses of Mer-chandising, Jobbing, and Contract Work; 587,Customer Installations Expenses; and 912,Demonstrating and Selling Expenses.

909 Informational and InstructionalAdvertising Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in activities which primarily conveyinformation as to what the utility urges orsuggests customers should do in utilizingelectric service to protect health and safety,to encourage environmental protection, toutilize their electric equipment safely andeconomically, or to conserve electric energy.

Items

Labor:

1. Direct supervision of information activi-ties.

2. Preparing informational materials fornewspapers, periodicals, and billboards andpreparing and conducting informational mo-tion pictures, radio and television programs.


837


3. Preparing informational booklets andbulletins used in direct mailings.

4. Preparing informational window andother displays.

5. Employing agencies, selecting media,and conducting negotiations in connectionwith the placement and subject matter of in-formation programs.Taxes:

















Materials and Expenses:1. Use of newspapers, periodicals, bill-

boards, and radio for informational purposes.2. Postage on direct mailings to customers

exclusive of postage related to billings.3. Printing of informational booklets,

dodgers, and bulletins.4. Supplies and expenses in preparing infor-

mational materials by the utility.5. Office supplies and expenses.

NOTE A: Exclude from this account andcharge to Account 930.2, Miscellaneous Gen-eral Expenses, the cost of publication ofstockholder reports, dividend notices, bondredemption notices, financial statements,and other notices of a general corporatecharacter. Also exclude all expenses of a pro-motional, institutional, goodwill, or polit-ical nature, which are includible in such ac-counts as 913, Advertising Expenses; 930.1,General Advertising Expenses; and 426.4, Ex-penditures for Certain Civic, Political andRelated Activities.

NOTE B: Entries relating to informationaladvertising included in this account shallcontain or refer to supporting documentswhich identify the specific advertising mes-sage. If references are used, copies of the ad-vertising message shall be readily available.

910 Miscellaneous Customer Service andInformational Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in con-nection with customer service and informa-tional activities which are not includible inother customer information expense ac-counts.

Items

Labor:1. General clerical and stenographic work

not assigned to specific customer service andinformational programs.

2. Miscellaneous labor.Taxes:





838




















1. Communication service.2. Printing, postage, and office supplies ex-

penses.


§ 1767.30 Sales expenses.The sales expense accounts identified

in this section shall be used by all RUSborrowers.

SALES EXPENSES

(Operation)

911 Supervision912 Demonstrating and Selling Expenses913 Advertising Expenses916 Miscellaneous Sales Expenses

SALES EXPENSES

(Operation)

911 Supervision

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, and expenses incurred in the gen-eral direction and supervision of sales activi-ties, except merchandising. Direct super-vision of a specific activity, such as dem-onstrating, selling, or advertising shall becharged to the account wherein the costs ofsuch activity are included. (See § 1767.17(a).)

912 Demonstrating and Selling Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in promotional, demonstrating, andselling activities, except by merchandising,the object of which is to promote or retainthe use of utility services by present andprospective customers.

Items

Labor:1. Demonstrating uses of utility services.2. Conducting cooking schools, preparing

recipes, and related home service activities.3. Exhibitions, displays, lectures, and other

programs designed to promote use of utilityservices.

4. Experimental and development work inconnection with new and improved appli-ances and equipment, prior to general publicacceptance.

5. Solicitation of new customers or of addi-tional business from old customers, includ-ing commissions paid employees.

6. Engineering and technical advice topresent or prospective customers in connec-tion with promoting or retaining the use ofutility services.

7. Special customer canvasses when theirprimary purpose is the retention of businessor the promotion of new business.Taxes:


of employee pensions and benefits specifi-cally identifiable with employees’ laborcosts charged herein or, in the absence ofspecific employee identification, the portionof employee pensions and benefits, allocated


839


on the more equitable basis of either directlabor dollars or direct labor hours, applica-ble to the labor items detailed above, includ-ing:















1. Supplies and expenses pertaining to dem-onstration, experimental, and developmentactivities.

2. Booth and temporary space rental.3. Loss in value on equipment and appli-

ances used for demonstration purposes.4. Transportation, meals, and incidental

expenses.

913 Advertising Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in advertising designed to promote orretain the use of utility service, except ad-

vertising the sale of merchandise by the util-ity.

Items

Labor:

1. Direct supervision of department.2. Preparing advertising material for news-

papers, periodicals, and billboards, and pre-paring and conducting motion pictures,radio, and television programs.

3. Preparing booklets and bulletins used indirect mail advertising.

4. Preparing window and other displays.5. Clerical and stenographic work.6. Investigating advertising agencies and

media and conducting negotiations in con-nection with the placement and subject mat-ter of sales advertising.Taxes:









Insurance:




court costs and attorneys’ services.


840






1. Advertising in newspapers, periodicals,billboards, and radio for sales promotion pur-poses, but not including institutional orgoodwill advertising includible in Account930.1, General Advertising Expenses.

2. Materials and services given as prizes orotherwise in connection with civic lightingcontests, canning, or cooking contests, andbazaars in order to publicize and promote theuse of utility services.

3. Fees and expenses of advertising agen-cies and commercial artists.

4. Novelties for general distribution.5. Postage on direct mail advertising.6. Premiums distributed generally, such as

recipe books when not offered as inducementto purchase appliances.

7. Printing booklets, dodgers, and bul-letins.

8. Supplies and expenses in preparing ad-vertising material.

9. Office supplies and expenses.

NOTE A: The cost of advertisements whichset forth the value or advantages of utilityservice without reference to specific appli-ances, or, if reference is made to appliances,invites the reader to purchase appliancesfrom his dealer or refer to appliances notcarried for sale by the utility, shall be con-sidered sales promotion advertising andcharged to this account. However, advertise-ments which are limited to specific makes ofappliances sold by the utility and price andterms, thereof, without referring to thevalue or advantages of utility service, shallbe considered as merchandise advertisingand the cost shall be charged to Costs andExpenses of Merchandising, Jobbing andContract Work, Account 416.

NOTE B: Advertisements which substan-tially mention or refer to the value or advan-tages of utility service, together with spe-cific reference to makes of appliance sold bythe utility and the price, and terms, thereof,and designed for the joint purpose of increas-ing the use of utility service and the sales ofappliances, shall be considered as a combina-tion advertisement and the costs shall bedistributed between this account and Ac-count 416 on the basis of space, time, orother proportional factors.

NOTE C: Exclude from this account andcharge to Account 930.2, Miscellaneous Gen-eral Expenses, the cost of publication of

stockholder reports, dividend notices, bondredemption notices, financial statements,and other notices of a general corporatecharacter. Also exclude all institutional orgoodwill advertising. (See Account 930.1,General Advertising Expenses.)

916 Miscellaneous Sales Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,materials used, and expenses incurred in con-nection with sales activities, except mer-chandising, which are not includible in othersales expense accounts.

Items

Labor:

1. General clerical and stenographic worknot assigned to specific functions.

2. Special analysis of customer accountsand other statistical work for sales purposesnot a part of the regular customer account-ing and billing routine.

3. Miscellaneous labor.

Taxes:









Insurance:



841














1. Communication service.2. Printing, postage, office supplies, and ex-

penses applicable to sales activities, exceptthose chargeable to Account 913, AdvertisingExpenses.


§ 1767.31 Administrative and generalexpenses.

The administrative and general ex-pense accounts identified in this sec-tion shall be used by all RUS bor-rowers.

ADMINISTRATIVE AND GENERAL

(Operation)

920 Administrative and General Salaries921 Office Supplies and Expenses922 Administrative Expenses Transferred—

Credit923 Outside Services Employed924 Property Insurance925 Injuries and Damages926 Employee Pensions and Benefits927 Franchise Requirements928 Regulatory Commission Expenses929 Duplicate Charges—Credit930.1 General Advertising Expenses

930.2 Miscellaneous General Expenses931 Rents

(Maintenance)

935 Maintenance of General Plant

ADMINISTRATIVE AND GENERAL

(Operation)

920 Administrative and General Salaries

A. This account shall include the com-pensation (salaries, bonuses, employee pen-sions and benefits, social security and otherpayroll taxes, injuries and damages, andother consideration for services, but not in-cluding directors’ fees) of officers, execu-tives, and other employees of the utilityproperly chargeable to utility operations andnot chargeable directly to a particular oper-ating function.

B. This account may be subdivided in ac-cordance with a classification appropriate tothe departmental or other functional organi-zation of the utility.

921 Office Supplies and Expenses

A. This account shall include office sup-plies and expenses incurred in connectionwith the general administration of the util-ity’s operations which are assignable to spe-cific administrative or general departmentsand are not specifically provided for in otheraccounts. This includes the expenses of thevarious administrative and general depart-ments, the salaries and wages of which areincludible in Account 920.

B. This account may be subdivided in ac-cordance with a classification appropriate tothe departmental or other functional organi-zation of the utility.

NOTE: Office expenses which are clearly ap-plicable to any category of operating ex-penses other than the administrative andgeneral category shall be included in the ap-propriate account in such category. Further,general expenses which apply to the utilityas a whole rather than to a particular ad-ministrative function, shall be included inAccount 930.2, Miscellaneous General Ex-penses.

Items

1. Automobile service, including chargesthrough clearing account.

2. Bank messenger and service charges.3. Books, periodicals, bulletins, and sub-

scriptions to newspapers, newsletters, andtax services.

4. Building service expenses for customeraccounts, sales, and administrative and gen-eral purposes.

5. Communication service expenses.6. Cost of individual items of office equip-

ment used by general departments which areof small value or short life.


842


7. Membership fees and dues in trade, tech-nical, and professional associations paid by autility for employees. (Company member-ships are includible in Account 930.2.)

8. Office supplies and expenses.9. Payment of court costs, witness fees, and

other expenses of legal department.10. Postage, printing, and stationery.11. Meals, traveling, and incidental ex-

penses.

922 Administrative Expenses Transferred—Credit

This account shall be credited with admin-istrative expenses recorded in Account 920and Account 921 which are transferred toconstruction costs or to nonutility accounts.(See § 1767.16 (d).)

923 Outside Services Employed

A. This account shall include the fees andexpenses of professional consultants and oth-ers for general services which are not appli-cable to a particular operating function orother accounts. It shall include also the payand expenses of persons engaged for a specialor temporary administrative or general pur-pose in circumstances where the person soengaged is not considered as an employee ofthe utility.

B. This account shall be so maintained asto permit ready summarization according tothe nature of service and the person fur-nishing the same.

Items

1. Fees, pay, and expenses of accountantsand auditors, actuaries, appraisers, attor-neys, engineering consultants, managementconsultants, negotiators, public relationscounsel, and tax consultants.

2. Supervision fees and expenses paid undercontracts for general management services.

NOTE: Do not include inspection and bro-kerage fees and commissions chargeable toother accounts or fees and expenses in con-nection with security issues which are in-cludible in the expenses of issuing securities.

924 Property Insurance

A. This account shall include the cost ofinsurance or reserve accruals to protect theutility against losses and damages to ownedor leased property used in its utility oper-ations. It shall also include the cost of labor,employee pensions and benefits, social secu-rity and other payroll taxes, injuries anddamages, and the related supplies and ex-penses incurred in property insurance activi-ties.

B. Recoveries from insurance companies orothers for property damages shall be creditedto the account charged with the cost of thedamage. If the damaged property has beenretired, the credit shall be to the appropriate

account for accumulated provision for depre-ciation.

C. Records shall be kept so as to show theamount of coverage for each class of insur-ance carried, the property covered, and theapplicable premiums. Any dividends distrib-uted by mutual insurance companies shall becredited to the accounts to which the insur-ance premiums were charged.

Items





expenses.NOTE A: The cost of insurance or reserve

accruals capitalized, shall be charged to con-struction and retirement either directly orby transfers to construction and retirementwork orders from this account.

NOTE B: The cost of insurance or reserveaccruals for the following classes of propertyshall be charged as indicated:

1. Materials, supplies, and stores equip-ment to Account 163, Stores Expense Undis-tributed, or appropriate materials account.

2. Transportation and other general equip-ment to appropriate clearing accounts thatmay be maintained.

3. Electric plant leased to others to Ac-count 413, Expenses of Electric Plant Leasedto Others.

4. Nonutility property to the appropriatenonutility income account.

5. Merchandise and jobbing property to Ac-count 416, Costs and Expenses of Merchan-dising, Jobbing and Contract Work.

NOTE C: The cost of labor, employee pen-sions and benefits, social security and otherpayroll taxes, and the related supplies andexpenses of administrative and general em-ployees who are only incidentally engaged inproperty insurance work may be included inAccount 920 and Account 921, as appropriate.

NOTE D: The cost of insurance or reserveaccruals applicable to the various utilityfunctions shall be charged to the specificfunctional operations and the appropropriatemiscellaneous administrative expense ac-counts either directly or by transfers fromthis account.

925 Injuries and Damages

A. This account shall include the cost ofinsurance or reserve accruals to protect theutility against injuries and damages claimsof employees or others, losses of such char-acter not covered by insurance, and expenses


843


incurred in settlement of injuries and dam-ages claims. It shall also include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, related supplies, and expenses in-curred in injuries and damages activities.

B. Reimbursements from insurance compa-nies or others for expenses charged hereto onaccount of injuries, damages, and insurancedividends or refunds shall be credited to thisaccount.

Items







7. Compensation paid while incapacitatedas the result of occupational injuries. (SeeNote A.)


NOTE A: Payments to or in behalf of em-ployees for accident or death benefits, hos-pital expenses, medical expenses, or for sala-ries while incapacitated for service or onleave of absence beyond periods normally al-lowed, when not the result of occupationalinjuries, shall be charged to Account 926,Employee Pensions and Benefits. (See alsoNote B of Account 926.)

NOTE B: The cost of injuries and damagesor reserve accruals capitalized shall becharged to construction and retirement ac-tivities either directly or by transfers fromthis account to the applicable constructionand retirement work orders.

NOTE C: The cost of insurance or reserveaccruals applicable to the various utilityfunctions shall be charged to the specificfunctional operations and the appropropriatemiscellaneous administrative expense ac-counts either directly or by transfers fromthis account.

NOTE D: Exclude herefrom the time and ex-penses of employees (except those engaged ininjuries and damages activities) spent in at-tendance at safety and accident preventioneducational meetings, if occurring duringthe regular work period.

NOTE E: The cost of labor, employee pen-sions and benefits, social security and otherpayroll taxes, and the related supplies andexpenses of administrative and general em-ployees who are only incidentally engaged ininjuries and damages activities, may be in-cluded in Account 920 and Account 921, as ap-propriate.

926 Employee Pensions and Benefits

A. This account shall include pensions paidto or on behalf of retired employees or accru-als to provide for pensions or payments forthe purchase of annuities for this purpose,when the utility has definitely, by contract,committed itself to a pension plan underwhich the pension funds are irrevocably de-voted to pension purposes and payments foremployee accident, sickness, hospital, anddeath benefits, or insurance therefor. In-clude, also, expenses incurred in medical,educational, or recreational activities forthe benefit of employees and administrativeexpenses in connection with employee pen-sions and benefits.

B. The utility shall maintain a completerecord of accruals or payments for pensionsand be prepared to furnish full informationto RUS of the plan under which it has cre-ated or proposes to create a pension fund anda copy of the declaration of trust or resolu-tion under which the pension plan is estab-lished.

C. There shall be credited to this account,the portion of pensions and benefits expenseswhich is applicable to nonutility operations,the specific functional operations, mainte-nance, and administrative expense accounts,and to construction and retirement activi-ties unless such amounts are distributed di-rectly to the accounts involved and are notincluded herein in the first instance.

D. Records in support of this account shallbe so kept that the total pensions expense,the total benefits expense, the administra-tive expenses included herein, and theamounts of pensions and benefits expensestransferred to the operations, maintenance,administrative, construction or retirementaccounts will be readily available.

Items

1. Payment of pensions to retirees on anonaccrual basis.






844




NOTE A: The cost of labor, employee pen-sions and benefits, social security and otherpayroll taxes, injuries and damages, and therelated supplies and expenses of administra-tive and general employees who are only in-cidentally engaged in employee pension andbenefit activities may be included in Ac-count 920 and Account 921, as appropriate.

NOTE B: Salaries paid to employees duringperiods of nonoccupational sickness may becharged to the appropriate labor accountrather than to employee benefits.

927 Franchise Requirements

A. This account shall include payments tomunicipal or other governmental authoritiesand the cost of materials, supplies, and serv-ices furnished such authorities without reim-bursement in compliance with franchise, or-dinance, or similar requirements; provided,however, that the utility may charge to thisaccount at regular tariff rates, instead ofcost, utility service furnished withoutcharge under provisions of franchises.

B. When no direct outlay is involved, con-current credit for such charges shall be madeto Account 929, Duplicate Charges—Credit.

C. The account shall be maintained so asto readily reflect the amounts of cash out-lays, utility service supplied without charge,and other items furnished without charge.

NOTE A: Franchise taxes shall not becharged to this account, but to Account408.1, Taxes Other Than Income Taxes, Util-ity Operating Income.

NOTE B: Any amount paid as initial consid-eration for a franchise running for more thanone year shall be charged to Account 302,Franchises and Consents.

928 Regulatory Commission Expenses

A. This account shall include all expense(except pay of regular employees only inci-dentally engaged in such work) properly in-cludible in utility operating expenses, in-curred by the utility in connection with for-mal cases before regulatory commissions orother regulatory bodies or cases in whichsuch a body is a party, including paymentsmade to a regulatory commission for fees as-sessed against the utility for pay and ex-penses of such commission, its officers,agents, and employees, and also includingpayments made to the United States for theadministration of the Federal Power Act.

B. Amounts of regulatory commission ex-penses which, by approval or direction ofRUS, are to be spread over future periods

shall be charged to Account 182.3, Other Reg-ulatory Assets, and amortized by charges tothis account.

C. The utility shall be prepared to showthe cost of each formal case.

Items

1. Salaries, fees, retainers, and expenses ofcounsel, solicitors, attorneys, accountants,engineers, clerks, attendants, witnesses, andothers engaged in the prosecution of ordefence against petitions or complaints pre-sented to regulatory bodies or in the valu-ation of property owned or used by the util-ity in connection with such cases.

2. Office supplies and expenses, paymentsto public service or other regulatory com-missions, stationery and printing, travelingexpenses, and other expenses incurred di-rectly in connection with formal cases beforeregulatory commissions.

NOTE A: Exclude from this account and in-clude in other appropriate operating expenseaccounts, expenses incurred in the improve-ment of service, additional inspection, orrendering reports which are made necessaryby the rules and regulations, or orders, ofregulatory bodies.

NOTE B:Do not include in this accountamounts includible in Account 302, Fran-chises and Consents; Account 181,Unamortized Debt Expense; or Account 214,Capital Stock Expense.

929 Duplicate Charges—Credit

This account shall include concurrentcredits for charges which may be made to op-erating expenses or to other accounts for theuse of utility service from its own supply. In-clude, also, offsetting credits for any othercharges made to operating expenses forwhich there is no direct money outlay.

930.1 General Advertising Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, materials used, and expenses in-curred in advertising and related activities,the cost of which by their content and pur-pose are not provided for elsewhere.

Items

Labor:

1. Supervision.2. Preparing advertising material for news-

papers, periodicals, and billboards and pre-paring or conducting motion pictures, radio,and television programs.

3. Preparing booklets and bulletins used indirect mail advertising.

4. Preparing window and other displays.5. Clerical and stenographic work.6. Investigating and employing advertising

agencies, selecting media, and conducting


845


negotiations in connection with the place-ment and subject matter of advertising.

Taxes:


















1. Advertising in newspapers, periodicals,billboards, and radios.

2. Advertising matter such as posters, bul-letins, booklets, and related items.

3. Fees and expenses of advertising agen-cies and commercial artists.

4. Postage and direct mail advertising.5. Printing of booklets, dodgers, and bul-

letins.6. Supplies and expenses in preparing ad-

vertising materials.7. Office supplies and expenses.NOTE A: Properly includible in this ac-

count is the cost of advertising activities ona local or national basis of a goodwill or in-stitutional nature, which is primarily de-signed to improve the image of the utility orthe industry, including advertisementswhich inform the public concerning mattersaffecting the company’s operations, such as,the cost of providing service, the company’sefforts to improve the quality of service, andthe company’s efforts to improve and protectthe environment. Entries relating to adver-tising included in this account shall containor refer to supporting documents which iden-tify the specific advertising message. If ref-erences are used, copies of the advertisingmessage shall be readily available.

NOTE B: Exclude from this account and in-clude in Account 426.4, Expenditures for Cer-tain Civic, Political and Related Activities,expenses for advertising activities, which aredesigned to solicit public support or the sup-port of public officials in matters of a polit-ical nature.

930.2 Miscellaneous General Expenses

This account shall include the cost oflabor, employee pensions and benefits, socialsecurity and other payroll taxes, injuries anddamages, property insurance, property taxes,and expenses incurred in connection with thegeneral management of the utility not pro-vided for elsewhere.

Items

Labor:1. Miscellaneous labor not elsewhere pro-

vided for.Taxes:






846

7 CFR Ch. XVII (1–1–99 Edition)§§ 1767.32–1767.40

















13. Cost of safety, accident prevention, andsimilar educational activities.Expenses:

1. Industry association dues for companymemberships.

2. Contributions for conventions and meet-ings of the industry.

3. Research, development, and demonstra-tion expenses not charged to other operationand maintenance expense accounts on afunctional basis.

4. Communication service not chargeableto other accounts.

5. Trustee, registrar, and transfer agentfees and expenses.

6. Stockholders meeting expenses.

7. Dividend and other financial notices.8. Printing and mailing dividend checks.9. Directors’ fees and expenses.10. Publishing and distributing annual re-

ports to stockholders.11. Public notices of financial, operating,

and other data required by regulatory stat-utes, not including, however, notices re-quired in connection with security issues oracquisitions of property.

931 Rents

This account shall include rents properlyincludible in utility operating expenses forthe property of others used, occupied, or op-erated in connection with the customer ac-counts, customer service and informational,sales, general, and administrative functionsof the utility. (See § 1767.17 (c).)

(Maintenance)

935 Maintenance of General Plant

A. This account shall include the cost as-signable to customer accounts, sales, admin-istrative, and general functions of labor, em-ployee pensions and benefits, social securityand other payroll taxes, injuries and dam-ages, materials used, and expenses incurredin the maintenance of property, the bookcost of which is includible in Account 390,Structures and Improvements; Account 391,Office Furniture and Equipment; Account397, Communication Equipment; and Ac-count 398, Miscellaneous Equipment. (See§ 1767.17(b).)

B. Maintenance expenses on office fur-niture and equipment used elsewhere than ingeneral, commercial, and sales offices shallbe charged to the following accounts:

1. Steam Power Generation, Account 514.2. Nuclear Power Generation, Account 532.3. Hydraulic Power Generation, Account

545.4. Other Power Generation, Account 554.5. Transmission, Account 573.6. Distribution, Account 598.7. Merchandise and Jobbing, Account 416.8. Garages, Shops, etc., Appropriate clear-

ing account, if used.NOTE: Maintenance of plant included in

other general equipment accounts shall beincluded herein unless charged to clearingaccounts or to the particular functionalmaintenance expense account indicated bythe use of the equipment.


§§ 1767.32–1767.40 [Reserved]

§ 1767.41 Accounting methods and pro-cedures required of all RUS bor-rowers.

All RUS borrowers shall maintainand keep their books of accounts and


847


all other books and records which sup-port the entries in such books of ac-counts in accordance with the account-ing principles prescribed in this sec-tion. Interpretations Nos. 133, 134, 137,403, 404, 602, 606, 618, 627, 628, and 629adopt and implement the provisions ofstandards issued by the Financial Ac-counting Standards Board (FASB).Each interpretation includes a synopsisof the requirements of the standard aswell as specific accounting require-ments and interpretations required byRUS. The synopsis provides general in-formation to assist borrowers in deter-mining whether the standard applies toan individual cooperative’s operations.The synopsis is not intended to changethe requirements of the FASB stand-ards unless it is set forth in the sectionentitled RUS Accounting Require-ments in each interpretation. If a par-ticular borrower believes a conflict ex-ists between the FASB standard and anRUS interpretation, the borrower shallcontact the Director, PASD, to seekresolution of the issue.

Numerical Index

Num-ber Title

101 Work Order Procedures102 Line Conversion103 Sacrificial Anodes and the Replace-

ment of a Neutral104 Terminal Facilities105 Pole Top Disconnect Switch106 Steel Pole Reinforcers107 Mobile Substations108 Security Lights109 Joint Use110 First Clearing and Grading of Land

and Rights of Way111 Engineering Contracts for System

Planning112 Determination of Availability of

Service113 Temporary Facilities (Services)114 Construction Work-in-Progress

Damaged or Destroyed by Storm115 Liquidated Damages116 Nonrefundable Payments for Con-

struction117 Refunds of Overpayments for Mate-

rials and Equipment118 Load Control Equipment119 Special Equipment120 Meter Sockets and Meters121 Minimum—Maximum Voltmeters122 Retrofitting Demand Meters123 Transformer Conversions

Numerical Index—Continued

Num-ber Title

124 Transclosures125 Retirement Units126 Establishment of Continuing Prop-

erty Records127 Continuing Property Records for

Buildings128 Sale of Property129 Gain or Loss on the Sale of an Office

Building130 Salvage and Obsolete Material131 Plant Acquisition Adjustments132 General Plant133 Plant Abandonments and Disallow-

ances of Plant Cost134 Utility Plant Phase-in Plans135 Accounting for Removal or Reloca-

tion of Electric Facilities Result-ing from the Action of Others

136 Storm Damage137 Impairment of Long-Lived Assets.138 Automatic Meter Reading Systems-

Turtles.139 Global Positioning Systems.140 Radio-Based Automatic Meter Read-

ing Systems.201 Supplemental Financing301 Forfeited Customers’ Deposits401 Computer Software Costs402 Legal Expenses403 Leases404 Consolidated Financial Statements501 Patronage Capital Assignments502 Patronage Capital Retirements503 Operating and Nonoperating Mar-

gins504 Patronage Capital from G&T Co-

operatives505 Patronage Capital Furnished by

Other Cooperative Service Organi-zations

506 Forfeited Membership Fees601 Employee Benefits602 Compensated Absences603 Employee Retirement and Group In-

surance604 Deferred Compensation605 Life Insurance Premium on Life of a

Borrower Employee606 Pension Costs607 Unproductive Time608 Training Costs, Attendance at Meet-

ings, etc.609 Maintenance and Operations610 Financial Forecast611 Advertising Expense612 Special Power Cost Study613 Mapping Costs614 Member Relations Costs615 Statewide Fees616 Power Supply/Distribution Coopera-

tive Borrowings


848


Numerical Index—Continued

Num-ber Title

617 Rate Discount Allowed by thePower Cooperative to DistributionCooperative Owning ConnectingTransmission Lines

618 Theft Losses not Covered by Insur-ance

619 Self Billing620 Purchase Rebates621 Integrity Fund622 In-Substance Defeasance623 Satellite or Cable Television Serv-

ices624 Pollution Control Bonds625 Prepayment of Debt626 Rural Economic Development Loan

and Grant Program627 Postretirement Benefits628 Postemployment Benefits629 Investments in Debt and Equity Se-

curities630 Split Dollar Life Insurance.631 Special Early Retirement Plan.

Subject Matter Index

Num-ber

A

Abandonments—Plant ....................... 133Acquisition Adjustments—Plant ...... 131Advertising Expenses ........................ 611Assignments—Patronage Capital ...... 501Attendance at Meetings .................... 608Automatic Meter Reading Systems—

Radio-Based ................................... 140Automatic Meter Reading Systems—

Turtles ........................................... 138Availability of Service—Determina-

tion of ............................................ 112B

Benefits—Employee .......................... 601Bonds—Pollution Control ................. 624Borrowing—Power Supply Coopera-

tive/Distribution Cooperative ........ 616Buildings—Continuing Property

Records .......................................... 127Buildings, Office—Gain or Loss on

Sale of ............................................ 129C

Cable Television Services ................. 623Capital Credits—Assignment ............ 501Capital Credits—G&T Cooperative .... 504Capital Credits—Other Service Co-

operatives ....................................... 505Capital Credits—Retirement ............. 502Compensated Absences ...................... 602Computer Software Costs .................. 401Consolidated Financial Statements .. 404

Subject Matter Index—Continued

Num-ber

Construction Work in Progress Dam-aged or Destroyed by Storm .......... 114

Continuing Property Records—Build-ings ................................................ 127

Continuing Property Records—Es-tablishment of ................................ 126

Contributions—Nonrefundable .......... 116Conversion—Line .............................. 102Conversion—Transformer ................. 123Customers’ Deposits—Forfeited ........ 301

D

Damaged or Destroyed ConstructionWork in Progress ............................ 114

Damages—Liquidated ....................... 115Debt—Prepayment of ........................ 625Debt Securities—Investments in ....... 629Deferred Compensation ..................... 604Demand Meters—Retrofitting ........... 122Determination of Availability of

Service ........................................... 113Disallowances of Plant Costs ............ 133Disconnect Switch—Pole Top ........... 105Discounts Allowed by Power Cooper-

ative to Distribution CooperativeOwning Transmission Lines ........... 617

Distribution Cooperative/Power Sup-ply Cooperative Borrowing ............ 616

E

Early Retirement Plan ..................... 631.Economic Development Loan and

Grant Program ............................... 626Employee Benefits ............................ 601Equity Securities—Investments in ... 629

F

Fees—Statewide ................................ 615Financial Forecast ............................ 610Financial Statements—Consolidated 404Financing—Supplemental ................. 201First Clearing and Grading of Land

and Rights of Way .......................... 110Forfeited Customer Deposits ............ 301Forfeited Membership Fees ............... 506

G

Gain or Loss on Sale of Office Build-ing .................................................. 129

General Plant .................................... 132Generation and Transmission (G&T)

Capital Credits ............................... 504Global Positioning Systems .............. 139

I

Impairment of Long-Lived Assets ..... 137In-substance Defeasance ................... 622Insurance—Employee Retirement

and Group ....................................... 603Insurance—Premium on Life of a

Borrower Employee ........................ 605Insurance—Split Dollar .................... 630Integrity Fund .................................. 621Investments in Debt and Equity Se-

curities ........................................... 629


849



Num-ber

J

Joint Use ........................................... 109L

Land—First Clearing and Grading .... 110Leases ............................................... 403Legal Expenses .................................. 402Life Insurance Premiums on Life of a

Borrower Employee ........................ 605Life Insurance—Split Dollar ............. 630Line Conversion ................................ 102Line Relocations ............................... 135Liquidated Damages ......................... 115Load Control Equipment ................... 118Long-Lived Assets-Impairment ......... 137

M

Maintenance and Operations ............. 609Mapping Costs ................................... 613Margins—Operating and Nonop-

erating ........................................... 503Material—Salvage and Obsolete ....... 130Materials and Supplies—Refund for

Overpayments ................................ 117Member Relation Costs ..................... 614Membership Fees—Forfeited ............. 506Meter Reading Systems—Radio-

Based .............................................. 140Meter Reading Systems—Turtles ...... 138Meter Sockets and Meters ................ 120Minimum—Maximum Voltmeters ..... 121Mobile Substations ........................... 107

N

Neutral—Replacement of .................. 103Nonoperating Margins ...................... 503Nonrefundable Payments for Con-

struction ........................................ 116O

Obsolete Material .............................. 130Operating and Nonoperating Margins 503Operations Costs ............................... 609

P

Patronage Capital Assignments ........ 501Patronage Capital Furnished by

Other Cooperative Service Organi-zations ............................................ 505

Patronage Capital from G&T Co-operatives ....................................... 504

Patronage Capital Retirements ........ 502Payments for Construction—Non-

refundable ...................................... 116Pension Costs .................................... 606Phase-in Plans .................................. 134Plant Abandonments ......................... 133Plant Acquisition Adjustments ........ 131Plant Costs—Disallowances .............. 133Plant—General .................................. 132Pole Reinforcers—Steel .................... 106Pole Top Disconnect Switch ............. 105Pollution Control Bonds ................... 624Postemployment Benefits ................. 628


Num-ber

Postretirement Benefits ................... 627Power Cost Study .............................. 612Power Supply/Distribution Coopera-

tive Borrowing ............................... 616Prepayment of Debt .......................... 625Property—Sale of .............................. 128Purchase Rebates .............................. 620

R

Radio-Based Automatic Meter Read-ing Systems .................................... 140

Rate Discount Allowed by Power Co-operative to a Distribution Cooper-ative Owning Transmission Lines .. 617

Rebates—Purchase ............................ 620Refunds for Overpayments for Mate-

rials and Supplies ........................... 117Reimbursement for Line Relocations 135Relocations of Lines ......................... 135Replacement of a Neutral ................. 103Retirement Units .............................. 125Retirements—Patronage Capital ...... 502Retrofitting Demand Meters ............. 122Rights of Way—First Clearing and

Grading .......................................... 110Rural Economic Development Loan

and Grant Program ........................ 626S

Sacrificial Anodes and the Replace-ment of a Neutral ........................... 103

Sale of an Office Building ................. 129Sale of Property ................................ 128Salvage and Obsolete Material ......... 130Satellite Television Services ............ 623Securities—Investments in Debt and

Equity ............................................ 136Security Lights ................................. 108Self Billing ........................................ 619Software Costs .................................. 401Special Early Retirement Plan ......... 631Special Equipment ............................ 119Special Power Cost Study ................. 612Split Dollar Life Insurance ............... 630Statewide Fees .................................. 615Steel Pole Reinforcers ...................... 106Storm Damage .................................. 136Substation—Mobile ........................... 107Supplemental Financing ................... 201System Planning—Engineering Con-

tracts ............................................. 111T

Temporary Facilities (Services) ....... 113Terminal Facilities ........................... 104Theft Losses not Covered by Insur-

ance ................................................ 618Training Costs, Attendance at Meet-

ings, etc. ......................................... 608Transclosures .................................... 124Transformer Conversions .................. 123Turtles—Automatic Meter Reading

Systems .......................................... 138


850



Num-ber

U

Unproductive Time ........................... 607V

Voltmeters—Minimum/Maximum ..... 121W

Work Order Procedures ..................... 101

101 Work Order Procedures

When a minor item of property is re-moved from service and not replaced, aretirement work order is not requiredexcept in the case of a conductor. Thecost of the minor item shall remain inthe appropriate plant account until theretirement unit, of which it is a part, isretired. However, as conductor is re-corded in feet and is not part of anyspecific retirement unit, conductorshall be retired even though theamount taken down and not replaced isless than a retirement unit (two spans).

When minor items of plant are re-moved and not replaced, materialsalvaged shall be recorded on a mate-rial salvage ticket. Items of materialrecorded on this ticket shall be chargedto the materials and supplies accountand credited in the miscellaneous col-umns of the Materials Register to theAccumulated Provision for Deprecia-tion. In this example, it is assumedthat the cost of removal is nil. If, how-ever, costs are incurred during the re-moval of minor items of plant, thesecosts shall reduce the credit to the Ac-cumulated Provision for Depreciation.

When a staking sheet supporting asingle work order reflects a combina-tion of new construction and replace-ments, or system improvements, thepredominant cost shall be the gov-erning factor in determining theamount of cost RUS will finance. To il-lustrate, assume that a service is to berun to a new home near the end of anexisting line. On inspection, the polefrom which the service is to be run isfound to be in very poor physical condi-tion and must be replaced. In addition,a single span of wire and a service arepresently connected to this pole whichserve no purpose. The home originallyserved has been demolished and the ex-

isting span, pole, and service were re-tired. In other words, what started outto be simply the installation of a newservice now includes the retirement ofa span of wire, a pole, and a service;the replacement of a pole; and the run-ning of a new service. Assuming the re-placement of the pole is the costliestpart of this project, the constructionand retirement activity shall be classi-fied as an ordinary replacement eventhough the work includes new con-struction and retirements without re-placement.

102 Line Conversion

If it is necessary to move a conductorfrom one location to another on a poleassembly during the conversion of aline from one phase to another phase,the cost of moving the conductor iscapitalizable as a system improvement.

103 Sacrificial Anodes and theReplacement of a Neutral

Many utilities conduct studies to de-termine whether sacrificial anodes areneeded to protect underground cableagainst corrosion. The following proce-dures shall be followed to account forsacrificial anodes and the replacementof a neutral:

1. If the study results in the installa-tion of sacrificial anodes, the cost ofthe study shall be capitalized to Ac-count 367, Underground Conductors andDevices. If the study does not result inthe installation of anodes, the costshall be charged to Account 594, Main-tenance of Underground Lines.

2. Costs incurred in the first installa-tion are capitalizable even though an-odes are considered minor items ofproperty. However, only the first costsof installation shall be capitalized. Allsubsequent replacements of anodesshall be expensed.

3. Sacrificial anodes do not con-stitute a record unit; therefore, thecost of anodes shall be added to thecost of the underground cable unit.

4. Because a neutral is part of an un-derground cable record unit, and is not,in and of itself, a record unit, the costto replace a corroded neutral shall becharged to Account 594, Maintenance ofUnderground Lines.


851


104 Terminal Facilities

Borrowers are sometimes required toconstruct terminal facilities in thetransmission line of another utility inorder to receive power from theirpower supplier. The document executedbetween the borrower and the utility isnormally referred to as a ‘‘LicenseAgreement’’. The license agreementmay stipulate that certain items of theterminal facilities are to be transferredto, and become the property of, theother utility upon completion of theconstruction. The accounting for thistype of transaction shall be as follows:

1. All construction costs incurredshall be charged to a work order. Uponcompletion of the construction and ac-cumulation of all costs, the cost of thefacilities that become the property ofanother utility shall be transferredfrom construction work-in-progress toAccount 303, Miscellaneous IntangiblePlant. The cost of the plant for whichthe borrower retains title shall becharged to the appropriate plant ac-counts.

2. The cost of the facilities recordedin Account 303 shall be amortized toAccount 405, Amortization of OtherElectric Plant, over the contract termor the estimated useful service life ofthe plant, whichever is shorter. If therelated contract or contracts for thispower supply are terminated, theunamortized balance shall be expensed,in the current period, in Account 557.

105 Pole Top Disconnect Switch

The installation of pole top servicedisconnect switches, where title is re-tained by the utility, shall be capital-ized in Account 371, Installations onCustomers’ Premises. If a switch cabi-net is purchased with a current trans-former included as an integral part ofthe cabinet, the entire cost of theswitch shall be charged to Account 371.If the current transformer is installedoutside of the switch cabinet, thetransformer, meter, and meter base, to-gether with the first installation costs,shall be capitalized, upon purchase, inAccount 370, Meters.

Payments received from the cus-tomer toward construction costs shallbe credited to Account 371, Installa-tions on Customers’ Premises. Such

payments, together with any amountnot financed by RUS, shall be enteredin column 9 of the RUS Form 219, In-ventory of Work Orders. The associatedmaintenance costs shall be charged toAccount 587, Customer InstallationsExpenses, or to Account 597, Mainte-nance of Meters, as appropriate.

When pole top disconnect switchesare installed and title is held by thecustomer, the cost of the materialshall be charged to Account 456, OtherElectric Revenues and the receiptsfrom the sale of line material shall becredited to Account 456. The portion ofthe receipts for resale material as wellas that for installation shall be cred-ited to Account 415, Revenues fromMerchandising, Jobbing, and ContractWork. The cost of resale material soldand the cost of installation shall becharged to Account 416, Costs and Ex-penses of Merchandising, Jobbing andContract Work.

Future maintenance costs incurredby the cooperative that are not billedto the customer shall be charged to Ac-count 587, Customer Installations Ex-penses.

106 Steel Pole Reinforcers

The cost associated with the pur-chase and installation of steel polereinforcers shall be charged to Account593, Maintenance of Overhead Lines.

107 Mobile Substations

Mobile substations shall be ac-counted for in a manner similar to thatfor a spare and are, therefore, includedas part of transmission or distributionstation equipment, depending upon theuse of the mobile substation. The mo-bile substation, together with the trail-er on which it is permanently mounted,shall be capitalized upon purchase. Ageneral purpose truck or tractor usedto relocate a mobile substation andtrailer shall be classified as transpor-tation equipment.

The composite depreciation rate usedfor transmission plant or distributionplant, as appropriate, shall be appliedto the mobile substation.

108 Security Lights

Where a pole supports both a sec-ondary wire and a security light, the


852


cost of the pole shall be charged to Ac-count 364, Poles, Towers, and Fixtures,even though the plant investment insecurity lights is recorded in Account371, Installations on Customers’ Prem-ises.

109 Joint Use

There are many cases in which anelectric utility and a communicationsutility enter into an agreement thatprovides for joint use of poles. Underthe terms of these agreements, eitherutility may occupy the poles of theother upon payment of a stipulated an-nual rental. If such joint occupancy ne-cessitates the use of a higher thanstandard pole, the new pole shall beprovided at the expense of the utilityhaving the need for the higher pole.

When an electric utility replaces, atits own expense, a standard pole be-longing to the communications utilitywith a higher pole, the cost of the high-er pole, less net salvage (if any) of thepole replaced, shall be charged to theaccount in which the pole rental is in-cluded.

Contributions made to an electricutility by a communications utility forthe costs incurred in stubbing joint useelectric poles shall be credited to Ac-count 593, Maintenance of OverheadLines. The cost of pole stubbing onelectric plant distribution facilitiesshall be charged to Account 593.

An investment in outside plant thatis held in joint ownership shall be re-corded in the appropriate plant ac-counts at its cost to the utility. Forcontinuing property record purposes,jointly owned property units shall bepriced at their cost to the utility andshall be appropriately segregated inthe CPRs to indicate joint ownership.

110 First Clearing and Grading ofLand and Rights of Way

Utility accounting practice requiresthe costs associated with the firstclearing and grading of land and rightsof way and any resulting damage there-to, to be included in the accounts forstructures and improvements or equip-ment to which such costs relate. Sincethe first clearing, as well as clearingwhich is ‘‘directly occasioned by thebuilding of a structure,’’ is done, notfor the purpose of enhancing the value

of the land or the rights of way, but forthe purpose of constructing plant,these costs are more directly related tothe construction of plant than to thepurchase of land or rights of way. Theaccounts shall be charged as follows:

1. For overhead transmission polelines, Account 356, Overhead Conduc-tors and Devices;

2. For overhead distribution lines,Account 365, Overhead Conductors andDevices; and

3. For underground distribution lines,Account 366, Underground Conduit, fora conduit installation; or Account 367,Underground Conductors and Devices,for a direct burial installation.

111 Engineering Contracts for SystemPlanning

Engineering costs for long-range sys-tem plans shall be charged to Account183, Preliminary Survey and Investiga-tion Charges, as incurred. The cost ofengineering services incurred in pre-paring a long-range system plan rep-resents a legitimate component of thetotal cost of construction of all systemimprovements detailed in the plan. Theamount of engineering costs to be asso-ciated with any specific system im-provement is the annual costs incurredup to the time of the allocation (notpreviously allocated), plus that portionof the initial cost which relates to theparticular construction in question. Ifany major system improvement in-cluded in the engineering plan is notconstructed, or if the study is super-seded by another complete study, thecost of that portion of the originalstudy not resulting in constructionshall be charged to Account 182.2, Un-recovered Plant and Regulatory StudyCosts, if the costs are to be recoveredthrough future rates. Costs recorded inAccount 182.2 shall be amortized to Ac-count 407, Amortization of PropertyLosses, Unrecovered Plant and Regu-latory Study Costs, as the costs are re-covered through the rates. Any costsincluded in Account 182.2 that are dis-allowed for rate-making purposes shallbe charged to Account 426.5, Other De-ductions.

The allocation of engineering serv-ices to the various construction


853


projects requires the exercise of judg-ment. In some cases, system improve-ments are continuous over a period ofmonths or years, thus permitting theengineering cost to be spread monthlyas overhead in relation to the directcosts incurred in construction. (If asubstantial amount of retirement workis performed in connection with systemimprovements, a proportionate share ofthe engineering cost shall be allocatedon the basis of direct retirement labor.)If the system improvements detailed inthe plan are not performed in a contin-uous manner, the engineering costshall be allocated on the basis of theestimated costs of the various largersystem improvement projects which re-sult from the long-range plan.

If construction is performed by con-tract, the engineering cost applicablethereto shall be transferred from Ac-count 183 to Account 107, ConstructionWork-in-Progress—Electric, and there-by spread to the appropriate plant ac-counts on the basis of contract costs.

In the case of system improvementconstruction performed on the basis ofwork orders, engineering costs shall betransferred to Account 107, Construc-tion Work-in-Progress—Electric, andincluded in total work order costs aseither overhead or special services. Ifengineering services are not readilyidentifiable with individual work or-ders, they shall be capitalized as over-head. If engineering costs for eachwork order are readily separable fromthe engineering costs for all otherwork orders, they shall be capitalizedas special services.

In summarizing system improvementwork orders on the RUS Form 219, In-ventory of Work Orders, the amount ofengineering costs previously approvedfor advance on the long range plan, ifany, shall be deducted to determine thebalance of loan funds subject to ad-vance by RUS.

112 Determination of Availability ofService

Costs relating to the determinationof availability of service, rates, andsimilar items for individual applicantsshall be charged to Account 912, Dem-onstrating and Selling Expenses. If it isexpected that construction will result,the costs incurred to provide service,

including staking, shall be charged toAccount 107, Construction Work-in-Progress—Electric. If constructiondoes not result, Account 107 shall becredited and Account 426.5, Other De-ductions, shall be charged.

113 Temporary Facilities (Services)

Plant installed for temporary use, aperiod of less than 1.ar, shall be re-corded in Account 185, Temporary Fa-cilities, net of any payments receivedfrom customers. Upon retirement, thisnet cost plus cost of removal, less anysalvage value, shall be cleared to Ac-count 451, Miscellaneous Service Reve-nues.

When a temporary service is installedat the site of a building under con-struction, the location of the perma-nent service entrance and the load andits characteristics are usually known.The temporary service is of the propercapacity and is so located or has suffi-cient slack, that it can be relocated toserve the new building as a permanentservice. Under these conditions, theservice shall be charged to Account 369,Services, when first installed. The costof moving and attaching the service tothe permanent service entrance shallbe charged to Account 593, Mainte-nance of Overhead Lines or Account594, Maintenance of UndergroundLines, as appropriate.

114 Construction Work-in-ProgressDamaged or Destroyed by Storm

When installed plant, not yet com-pleted or completed but not yet placedin service, has been damaged or de-stroyed by storm, the cost of the repairand restoration shall be added to thecost of construction and capitalized ifthe plant was constructed under forceaccount or work order construction,and the utility paid for the cost of therepairs. If the plant was constructedunder contract, the contractor is re-quired to deliver the plant in new con-dition. Therefore, any repairs requiredprior to the completion of constructionand acceptance by the utility, are ordi-narily borne by the contractor.

115 Liquidated Damages

Liquidated damages are amountspaid by or assessed against contractors


854


for the completion of constructionafter an agreed upon date. Liquidateddamages shall be credited to Account107, Construction Work-in-Progress—Electric. Since these damages accrueduring the construction period, theybecome one of the components of con-struction cost. Even though a portionof these damages may compensate theutility for costs which are not ‘‘identi-fiable,’’ no portion of the damages shallbe credited to revenue or expense.

When a contractor has been paid infull from loan funds or from funds to bereimbursed by loan funds without a de-duction for liquidated damages, theamount of liquidated damages receivedshall be deposited in the ConstructionFund. This amount shall be reflectedby a decrease in column 5, ‘‘Total Ex-penditures to Date,’’ of the RUS Form595, Financial Requirement and Ex-penditure Statement, and as an in-crease in column 6, ‘‘Cash Balance.’’ Ifliquidated damages are obtained bywithholding an equivalent amountfrom the contractor’s payment, the netresult will be the same.

116 Nonrefundable Payments forConstruction

Nonrefundable payments (contribu-tions) from customers and developersfor underground construction shallfirst be credited to Account 107.2, Con-struction Work-in-Progress—Force Ac-count. When the constructed plant isunitized and distributed to the indi-vidual plant accounts, the contribu-tions shall be credited to those plantaccounts which gave rise to the con-tribution.

When a customer or developer fur-nishes a trench or other service in con-nection with buried plant, the coopera-tive shall debit Account 107.2 with theactual or estimated cost of the serviceperformed, and account for the creditas set forth above.

117 Refunds of Overpayments forMaterials and Equipment

Refunds of overpayments for mate-rials and equipment previously pur-chased are occasionally received as theresult of legal action brought againstelectrical suppliers for price fixing inviolation of antitrust laws. Such re-funds shall be accounted for as follows:

1. The refund shall first be applied toany litigation costs that were incurred.

2. Refunds for special equipmentitems shall be accounted for, in detail,on the Summary of Special EquipmentCosts and credited against the appro-priate plant accounts.

3. Other material or equipment itemsthat were installed through work or-ders or a materials furnished contractshall be adjusted on an amended workorder. The amended work order shallinclude full details of the refund.

4. Continuing property records shallbe adjusted to reflect the above trans-actions.

5. Amounts approved for advance onthe RUS Form 595, Financial Require-ment and Expenditure Statement, andon the loan budget records, shall be ad-justed. For special equipment items,the adjustment shall be requested in aletter to RUS. For materials installedby work order or contract, the adjust-ments shall be made through creditsshown on the RUS Form 219, Inventoryof Work Orders.

6. Refunds for material currently instock shall be credited to Account 154,Plant Materials and Operating Sup-plies.

7. If the material was used in mainte-nance activities or operations, the re-fund shall be credited to the appro-priate maintenance or operations ex-pense account.

8. Refunds for materials or equip-ment financed from loan funds shall bedeposited in the Construction Fund—Trustee Account or remitted to RUS asa special payment on a note. Other re-funds shall be deposited in the generalfunds.

118 Load Control Equipment

The primary purpose of a Load Man-agement System is to optimize loaddispatch and to reduce or minimizesystem peaks in order to reduce pur-chases of power or to delay or elimi-nate the need for construction of newplant. A Load Management Systemmay be used on integrated systems, oron generation, transmission, or dis-tribution systems separately. The te-lemetry equipment used for data acqui-sition and interpretation may be in-cluded at various points on a system,such as generation, transmission, or


855


distribution substation, switchyards oron consumers’ premises.

An effective load control programshould be coordinated with the G&Tand requires full participation of allmember distribution systems. The G&Tmonitors the power load of the totalmember distribution system to predictthe time of the system’s peak load. Anoptimal load control strategy is devel-oped by the G&T and is passed on fromthe G&T computer system to the loadcontrol computer systems of the mem-ber distribution cooperatives.

The equipment at the member dis-tribution system level is the type actu-ally being used by an integrated powersystem to operate a load control pro-gram. The equipment used may varyfrom one integrated power system toanother. The selection of equipmentused is determined by the informationneeds of the integrated power system,and the method selected to operate theload control system.

Some equipment performs onlySCADA-type functions. This equipmentis included with the equipment thatperforms only load control functionsbecause SCADA-type equipment is anintegral part of a load control program.An effective load control strategy re-quires current information on loads sothat member distribution systems candetermine the actual loads to be shedand the duration of the load control.

The function and location of the loadcontrol equipment are the primary fac-tors in determining the account inwhich the equipment shall be recorded.The following example depicts a com-mon load control system and the asso-ciated accounting. Equipment typemay vary, thereby necessitating theuse of accounts not prescribed below.In all instances, however, the functionand location of the equipment shalldictate the appropriate account classi-fication.

G&T Borrower

1. Coordinating System Equipment

Coordinating System Equipment isthe data acquisition, processing andcontrol hardware and software used tocoordinate the load control efforts ofthe member distribution system. Gen-erally, this equipment is dedicated to

load control use and is not shared withother electric utility activities.

The purpose of the G&T load controlcomputer system is to reduce or mini-mize the peak power requirements ofthe entire member distribution system.This involves load dispatching to con-trol transmission circuits and break-ers. The computer system for load con-trol shall, therefore, be recorded in Ac-count 353, Station Equipment, with theassociated operating expenses recordedin Account 561, Load Dispatching, andmaintenance expenses recorded in Ac-count 570, Maintenance of StationEquipment.

2. Coordinating System CommunicationsLink

The G&T load control computer sys-tem is usually linked to the load con-trol computer system for each memberdistribution system by a radio or tele-phone link that is dedicated to thatpurpose and is not shared with othercommunication activities. Under suchcircumstances, communications equip-ment shall be classified in Account 353,Station Equipment. If the communica-tions equipment is shared with generaluse or voice communications equip-ment, however, the equipment shall beclassified in Account 397, Communica-tion Equipment.

3. DepreciationLoad control equipment shall be re-

corded in separate subaccounts of theprimary plant accounts detailed aboveand shall be depreciated based upon theowner’s estimate of the equipment’suseful service life.

Distribution Borrower

1. Member System EquipmentMember system equipment is the

data acquisition, processing and con-trol hardware and software used as asubset to the overall load control ef-forts by the integrated power system.

The member system computer foreach distribution member system ac-cepts the control strategy from theG&T coordinating system and developsthe tables that determine the controlloads that are to be shed and the dura-tion of the load control. The membersystem computer for each distributionsystem monitors the usage at each ofits delivery points. This usage data is


856


then transmitted to the G&T coordi-nating system for use in developingload projects and evaluating controlstrategies for the integrated power sys-tem. The member system computer isgenerally dedicated to load control useand is not shared with other electricutility operations.

The member computer system shallbe recorded in Account 362, StationEquipment. The associated operatingexpenses shall be recorded in Account581, Load Dispatching, and mainte-nance expenses shall be recorded in Ac-count 592, Maintenance of StationEquipment.

2. Substation Remote ControllersSubstation Remote Controllers are

located at the distribution substation.They accept control signals from themember system computer and couplethe signal to the portion of the dis-tribution system to which it is con-nected. Substation Remote Controllersalso serve as a receiver of inbound sig-nals from transponders located in thedistribution system. They also senddata back to the member system com-puter.

Substation Remote Controllers shallbe recorded in Account 362, StationEquipment. The associated operatingexpenses shall be recorded in Account582, Station Expenses, and mainte-nance expenses shall be recorded in Ac-count 592, Maintenance of StationEquipment.

3. Substation Injection UnitsSubstation Injection Units are used

only in power line based systems andare located in distribution substations.A major function of the Substation In-jection Unit is to receive load controlsignals from the member system com-puter and inject them into the powerline based system to be transmitted tothe Load Control Receivers. SubstationInjection Units can also perform con-trol and SCADA functions similar tothose performed by Substation RemoteControllers.

Substation Injection Units shall berecorded in Account 362, Station Equip-ment. The associated operating ex-penses shall be recorded in Account 582,Station Expenses, and maintenance ex-penses shall be recorded in Account 592,Maintenance of Station Equipment.

4. Remote Terminal Units

Remote Terminal Units perform elec-tric utility SCADA functions in a dis-tribution substation or delivery point.These functions include monitoringequipment for abnormal operating con-ditions, monitoring analog quantitiessuch as conductor voltage or sub-station load, and controlling of certainequipment within the substation.

Remote Terminal Units shall be re-corded in Account 362, Station Equip-ment. The associated operating ex-penses shall be recorded in Account 582,Station Expenses, and maintenance ex-penses shall be recorded in Account 592,Maintenance of Station Equipment.

5. Line Device Transponder

A Line Device Transponder directlycontrols a piece of distribution appa-ratus, such as a voltage regulator or apower factor correction capacitor, lo-cated on a distribution feeder and notaccessible to a Remote Terminal Unit.The Line Device Transponder actuatesthe control functions and reports backto the member system computer uponcompletion of the requested action.This transponder is located at the siteof the distribution apparatus beingcontrolled.

Line Device Transponders shall be re-corded in Account 368, Line Trans-formers. The associated operating ex-pense shall be recorded in Account 583,Overhead Line Expenses, or Account584, Underground Line Expenses, as ap-propriate, and maintenance expensesshall be recorded in Account 595, Main-tenance of Line Transformers.

6. Communications Verification Tran-sponders

Communication Verification Tran-sponders are used to respond to inquir-ies from Substation Remote Control-lers. In power line based systems, thesetransponders are used to verify the per-formance of the communications sys-tem. They are also used during adversesystem operations to isolate sections ofthe distribution system that are expe-riencing an outage.

Communication Verification Tran-sponders shall be recorded in Account362, Station Equipment. The associatedoperating expenses shall be recorded inAccount 582, Station Expenses, and


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maintenance expenses shall be re-corded in Account 592, Maintenance ofStation Equipment.

7. Load Control ReceiversThe Load Control Receiver, also

known as a load control switch, is lo-cated at the site of the consumer’sload. These receivers directly controlthe electric supply to an end-use appli-ance, such as an electric water heater,central air conditioning compressor, orirrigation pump. The amount of timethat an appliance will be turned off bythe load control receiver is preset.When the member system computer de-termines that load shedding is nec-essary, it sends a signal to the commu-nication link which then sends signalsdirectly to the Load Control Receivers.In a power line based system, the sig-nal from the communications link issent by radio or telephone line to theSubstation Injection Units, which thensignals the Load Control Receivers toshut down the appliances for thepresent time. In nonpower line basedsystems, the signal from the commu-nications link is sent by radio directlyto the Load Control Receivers.

Load Control Receivers are locatedon the consumer’s side of the meter.When the member distribution systemretains title to the Load Control Re-ceivers and assumes full responsibilityfor maintenance and replacement ofthe equipment, it shall be classified inAccount 371, Installations on Cus-tomer’s Premises. Load Control Re-ceivers that are donated or given toconsumers shall be charged to Account908, Customer Assistance Expenses.

Operating and maintenance expensesapplicable to Load Control Receiversrecorded in Account 371 shall becharged to Account 587, Customer In-stallations Expenses, and Account 598,Maintenance of Miscellaneous Dis-tribution Plant, respectively. Expensesapplicable to Load Control Receiversdonated or given to consumers shall berecorded in Account 908, Customer As-sistance Expenses.

Load Control Receivers may bemoved on a continual basis from onecustomer location to another and are,therefore, considered to be specialequipment items. When ownership ismaintained by the member distributioncooperative, Load Control Receivers

shall be accounted for in accordancewith the special equipment proceduresoutlined in Accounting InterpretationNo. 119 of this section.

8. Communication Links

The communication link in the mem-ber distribution systems between theMember System Computer, the Sub-station Remote Controllers or Sub-station Injection Units, Remote Ter-minal Units, Line Device Tran-sponders, Communication VerificationTransponders, and Load Control Re-ceivers is usually accomplished byradio, telephone line, or power linebased system. The communicationlinks are normally dedicated to theSCADA and load control functionsbeing served. Under such cir-cumstances, communications equip-ment shall be recorded in Account 362,Station Equipment. If, however, thecommunication equipment used isshared with general use or voice com-munications equipment, the equipmentshall be charged to Account 397, Com-munication Equipment.

9. Depreciation

Load control equipment shall be re-corded in separate subaccounts of theprimary plant accounts detailed aboveand shall be depreciated based upon themanufacturer’s estimate of the equip-ment’s useful service life.

119 Special Equipment

Special Equipment items are classi-fied as such because they are contin-ually being moved from one location toanother due to load changes and main-tenance practices. The USoA providesaccounting that differs from that usedfor other types of materials. The cost,new, of special equipment items shallbe capitalized at the time of purchase;it shall not be charged to Account 154as is the case with other materials. Thefirst installation cost, as well as all in-cidental costs necessary to prepare theequipment for use, shall be capitalizedwith the material upon purchase. Allsubsequent costs of removing, reset-ting, changing, renewing oil, and re-pairing constitute operations andmaintenance expenses. The capitalizedcost of special equipment items, in-cluding the first installation, shall be


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removed from the electric plant ac-counts only when the items are aban-doned or retired from the system.

Meters, line-type transformers, oilcircuit reclosers, sectionalizers, cur-rent and potential transformers, metersockets, and other metering equipmentlisted in Account 370, Meters, as well aspole-type and underground voltage reg-ulators in Account 368, Line Trans-formers, are considered to be specialequipment items. Similarly, load con-trol receivers (load control switches)recorded in Account 371, Installationson Customers’ Premises, are consideredto be items of special equipment. (SeeInterpretation No. 118.) Transformers,voltage regulators, metering equip-ment, and current and potential trans-formers for substations are not.

Special equipment items which areclassified as nonusable shall be seg-regated in the warehouse and retiredfrom service. The Summary of SpecialEquipment Costs shall be retitled Sum-mary of Special Equipment Costs Re-tired and used for this purpose. A jour-nal entry reflecting this informationshall be prepared and posted to thebooks. Since loan funds for specialequipment, including first installationcosts, are approved for advance by RUSupon receipt of the borrower’s writtenestimate of funds required, and not onthe basis of an Inventory of Work Or-ders, it is improper to take a credit forany salvage involved in the retirementof special equipment on the Inventoryof Work Orders.

120 Meter Sockets and Meters

When a utility furnishes meter sock-ets, ownership by the utility of themeter socket or base, as well as themeter itself, is established by virtue ofthem being furnished without cost tothe consumer by the cooperative. Whileno agreement as to ownership betweenthe cooperative and the property ownerexists, cooperative ownership is im-plied by long standing practice and tra-dition in the electric utility industry.

121 Minimum—Maximum Voltmeters

A minimum—maximum voltmeter isused to record the minimum and max-imum voltages at a specific line loca-tion over a period of time. It is nor-mally installed on a pole in connection

with a 11⁄2 kVA transformer, a meterbase and connecting wires, and othersmall items of materials. Meter basesare ordinarily set for these voltmetersthroughout the system, and a lessernumber of voltmeters are rotatedamong them periodically to obtainvoltage readings. An average systemmay have one voltmeter to two instal-lations, with a maximum of 20 or 25voltmeters for the whole system.

Minimum—maximum voltmetersshall be recorded, through work orders,in Account 370, Meters, when installed.The cost of the transformers shall re-main in Account 368, Line Trans-formers, with the cost of the meterbases remaining in Account 370, Me-ters. The miscellaneous material usedin installing the transformer and themeter base shall be charged to Account370, Meters.

Maintenance expense shall becharged to either Account 595, Mainte-nance of Line Transformers, or Ac-count 597, Maintenance of Meters, asappropriate. Costs associated withreading the voltmeters shall be chargedto Account 583, Overhead Line Ex-penses, and the cost of relocating orchanging the complete installation orany part thereof, other than retire-ment of the meter base, shall becharged to Account 583, Overhead LineExpenses, or Account 586, Meter Ex-penses.

122 Retrofitting Demand Meters

A demand meter measures theamount of electricity used over a pe-riod of time in kilowatt-hours (kWh)and indicates the maximum kilowatts(kW) required at any one time bymeans of a pointer.

Electronic or solid state demand me-ters have a direct readout which readskilowatt demand to two decimalplaces. The use of a direct readout de-mand meter may result in increasedrevenues as pointer readings tend toregister lower than actual usages.

The process of retrofitting a demandmeter replaces the pointer with a di-rect readout. The cost of such a re-placement is usually expensed as aminor item of property; however, sincethe use of a direct readout results in asubstantial betterment, the excess costof the replacement over the estimated


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cost, at current prices, of replacing thepointer without the betterment is cap-italized.

123 Transformer Conversions

The conversion of an overhead trans-former to an underground transformerconstitutes a betterment and shall,therefore, be capitalized.

124 Transclosures

Transclosures are enclosures or cabi-nets in which line transformers aremounted. The cost of transclosuresthat are purchased separately from thetransformer shall be charged to Ac-count 154, Plant Materials and Oper-ating Supplies, when received, and cap-italized, upon installation, to Account368, Line Transformers, as a separateunit of property. If the case and thetransformer are inseparable, the unit isconsidered a transformer and shall becapitalized upon purchase.

125 Retirement Units

Services

A retirement unit shall consist of acomplete service rather than the indi-vidual wires comprising that service. Ifeach separate wire of a service weretreated as a retirement unit, the re-tirement unit would represent a com-paratively small cost. Such a smallunit of property would substantiallyincrease the number of retirementwork orders. The complete serviceshall, therefore, be considered a retire-ment unit.

Minor Items

When minor items of property areadded separately from complete retire-ment units, the costs of these itemsshall be included in work orders, andby unitizing all costs of completed con-struction for a month, these minoritems shall be spread to the retirementunits of which they normally form apart. For example, to convert a two-phase line to a three-phase line re-quires the addition of a conductor, aninsulator and a pole-top pin. A pole-toppin is typically capitalized as a compo-nent of the cost of the pole to which itis attached. Assuming this is the onlywork order for the month, the cost of

this pin shall be charged to the con-ductor, so that its cost is included inthe total cost of the project. In actualpractice, however, this does not happenas it is normal to have a number ofwork orders for a given month, whichinclude the setting of poles. In allo-cating the cost of all constructionprojects for the month, part of the costof pole-top pins shall be allocated topoles even though the work orders onwhich they were capitalized did not in-clude poles.

The retirement and replacement ofisolated single retirement units cannotbe charged to maintenance; a retire-ment and construction work ordershall be used.

126 Establishment of ContinuingProperty Records

The costs of installing a system ofcontinuing property records shall becharged to Account 930.2, Miscella-neous General Expenses, and may in-clude:

1. Labor and expenses incurred in de-veloping an inventory of property;

2. Labor and material costs incurredin connection with developing polerecords including map preparation andpole cards; and

3. Labor and material costs (ledgersheets, etc.) incurred in connectionwith the installation of the record sys-tem.

127 Continuing Property Records forBuildings

When establishing continuing prop-erty records for a building where thereis no detailed breakdown of contractcosts, it is necessary to estimate thecost of the each component part. Itshould be noted that the establishmentof continuing property records is notrequired for buildings; however, ifCPRs are not maintained, all repairsincluding the replacement of majorcomponent parts shall be expensed inthe period incurred.

128 Sale of Property

All proceeds deposited in the Con-struction Fund account from the saleof property, regardless of materiality,shall be reflected on the RUS Form 595,


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Financial Requirement and Expendi-ture Statement. Proceeds from the saleof property shall be reported on theForm 595, by budget purpose, as a re-duction in total expenditures to date,column 5; and an increase in the cashbalance, column 6.

Proceeds from the sale of propertyshall not be used to maintain an ‘‘Em-ployee Fund.’’ A utility may, pursuantto board policy, use general funds foremployee welfare equivalent in amountto proceeds received from the sale ofscrap property. If general funds, in anamount equivalent to proceeds re-ceived from the sale of scrap property,are used for employee welfare, Account926, Employee Pensions and Benefits,shall be charged.

129 Gain or Loss on the Sale of anOffice Building

A gain on the sale of an office build-ing shall be recorded in Account 421.1,Gain on the Disposition of Property,with a loss recorded in Account 421.2,Loss on the Disposition of Property. Ifthe gain or loss will materially distortcurrent year’s net margins, such gainor loss is reportable as an extraor-dinary item in Account 434, Extraor-dinary Income, or Account 435, Ex-traordinary Deductions.

130 Salvage and Obsolete Material

The value of material salvaged fromthe retirement of units of property re-duces the loss on the retirement andshall be so applied. The value assignedto salvage shall be credited to Account108.8, Retirement Work-in-Progress,which results in reducing net chargesto the provision for depreciation whenthe work order is completed andcleared.

If salvage is sold, any difference be-tween the realized value and the esti-mated value of the salvaged materialshall be charged or credited to the ap-propriate provision for depreciation.

Salvage resulting from maintenancewhere no retirement units are involvedshall be debited to the materials andsupplies account, and credited to theappropriate maintenance account.

Occasionally a utility will have a lossdue to obsolescence of materials onhand. If the loss is due to obsolescenceof new material, the loss shall be

charged to Account 426.5, Other Deduc-tions. If the loss is due to obsolescenceof used material, the loss shall becharged to the appropriate subaccountof Account 108, Accumulated Provisionfor Depreciation.

131 Plant Acquisition Adjustments

Plant acquisition adjustments shallbe amortized to the operating expenseaccounts. These adjustments are re-corded in Account 114, Electric PlantAcquisition Adjustments, and amor-tized to Account 406, Amortization ofElectric Plant Acquisition Adjust-ments, or Account 425, MiscellaneousAmortization, as required by the regu-latory commission having jurisdiction.Accounts 406 and 425 shall be closed tooperating margins.

132 General Plant

When the unit method of deprecia-tion is used for general plant items,gains and losses on sales, trades or dis-posals of equipment shall be recordedas such. If the composite method of de-preciation is used, gains or losses onthe disposal of general plant itemsshall be recorded in the appropriate de-preciation reserve account.

A truck which is used only for trans-porting power operated equipmentmounted thereon shall be charged, to-gether with the installed equipment, toAccount 396, Power Operated Equip-ment. If the same type of truck is usedfor transporting materials and sup-plies, tools and work equipment, per-sonnel, or other items, the cost of thetruck shall be charged to Account 392,Transportation Equipment.

Depreciation and other expenses re-lating to power operated equipmentshall be accumulated in a subaccountof Account 184, Clearing Accounts, anddistributed monthly on an equitablebasis to the accounts properly charge-able.

Depreciation expense on vehicles andother work equipment, furniture andoffice equipment, and other such plantused in the construction of utilityplant, is a proper component of con-struction cost. To avoid a duplicate ad-vance of funds, however, the amount ofdepreciation on such items that haspreviously been financed from loan


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funds shall be deducted from Inven-tories of Work Orders submitted toRUS. This amount shall be specificallyidentified, and shown either monthlyor annually as a single item in column9 on the RUS Form 219, Inventory ofWork Orders.

133 Plant Abandonments andDisallowances of Plant Costs

In December 1986, the Financial Ac-counting Standards Board issuedStatement of Financial AccountingStandards No. 90, Regulated Enter-prises—Accounting for Abandonments(Statement No. 90) and Disallowancesof Plant Costs. This section provides anoverview of the requirements outlinedin Statement No. 90 together with thespecific accounts that shall be used torecord a plant abandonment or a dis-allowance of plant costs.

Plant Abandonments

When an abandonment becomes prob-able, the cost of the abandoned assetshall be removed from ConstructionWork-in-Progress or Plant-in-Service,as applicable. Before making thistransfer, however, a determinationmust be made as to whether recoveryof the allowed cost is likely to be pro-vided with a full return on the invest-ment during the period from the timethe abandonment becomes probable, tothe time when recovery is completed,or with a partial or no return on the in-vestment. This determination shall bemade based upon the facts and cir-cumstances of the specific abandon-ment, and past practices and currentpolicies of regulatory jurisdiction.

If a full return on the investment islikely to be provided, any disallowanceof all or part of the cost of abandonedplant that is both probable and reason-ably estimated shall be recognized as aloss in the current year with the car-rying basis of the asset reduced by anequal amount. The remaining cost ofabandoned plant shall be recorded as aseparate new asset.

If partial or no return on the invest-ment is likely to be provided, any dis-allowance of abandoned plant coststhat is both probable and reasonablyestimated shall be recognized as a loss.The present value of the future reve-nues expected to be provided to recover

the allowable cost of the abandonedplant and return on the investment, ifany, shall be reported as a separatenew asset. The discount rate used tocompute the present value shall be theborrower’s incremental borrowing rate,which is the rate that the borrowerwould have to pay to borrow an equiva-lent amount for a period equal to theexpected recovery period. In deter-mining the value of expected futurerevenues, the borrower shall considerthe probable time period before the re-covery is expected to begin and theprobable time period over which recov-ery is expected to be provided.

The amount of the new asset shall beadjusted from time to time, as nec-essary, if new information indicatesthat the estimates used to record thenew asset have changed. The carryingvalue of the new asset, however, shallnot be adjusted for changes in the in-cremental borrowing rate. The amountof any adjustments shall be recorded asa gain or loss.

During the period between the dateon which a new asset is recognized andthe date on which recovery begins, thecarrying amount shall be increased byaccruing a carrying charge. The rateused to accrue the carrying chargeshall be:

1. If a full return on the investmentis likely, a rate equal to the allowedoverall cost of capital in the jurisdic-tion in which recovery is expected tobe provided shall be used.

2. If partial or no return is likely, theasset shall be amortized in a mannerthat will produce a constant return onthe unamortized investment in the newasset equal to the rate at which the ex-pected revenues were discounted.

Due to the nonprofit environment inwhich electric cooperatives operate,full recovery of interest expense onplant related long-term debt equates tofull recovery of the rate of return foran investor-owned utility. Therefore, ifa cooperative is permitted full recov-ery of the interest expense incurred onthe long-term debt borrowed to financeconstruction of an abandoned plant, nodiscounting of the asset is required noris accrual of the carrying charge per-mitted.

If, at the time the provisions ofStatement No. 90 are first applied, the


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borrower elects to restate the financialstatements, the financial statementsfor all periods presented shall be re-stated and the financial statementsshall disclose the nature of the restate-ment and its effect on margins beforeextraordinary items, net margins, andpatronage capital at the beginning ofthe earliest period presented. If theborrower elects not to restate the fi-nancial statements, the effect of apply-ing Statement No. 90 shall be reportedas a change in accounting principle andthe financial statements shall disclosethe nature of the change and the effectof applying Statement No. 90 on mar-gins before extraordinary items andnet margins.

The specific accounts that shall beused to record transactions involvingplant abandonments are as follows:

1. In the year of the abandonment,the unrecoverable portion of the cost ofabandoned plant included in construc-tion work-in-progress shall be recog-nized as a loss by a charge to Account426.5, Other Deductions, and a credit toAccount 107, Construction Work-in-Progress.

2. The balance of the cost remainingin the construction work-in-progressaccount shall be credited to Account107 and charged to Account 182.2, Unre-covered Plant and Regulatory StudyCosts.

3. The difference between the chargeto Account 182.2 and the present valueof expected future revenues for recov-ery of the new asset, shall be recordedas a credit to Account 182.2 and a debitto Account 426.5. The credit to Account182.2 shall be segregated from theamount charged to Account 182.2 bythe use of a separate subaccount.Statement No. 90 does not require thissegregation; however, it is necessaryunder the USoA to provide for the ap-propriate segregation of operating andnonoperating income.

4. During the waiting period for re-covery of the new asset to begin, car-rying charges shall be accrued by adebit toAccount 182.2 with a concur-rent credit to Account 421, Miscella-neous Nonoperating Income. Debits toAccount 182.2 shall be treated as reduc-tions to the credit subaccount of Ac-count 182.2.

5. The borrower shall amortize theamount debited to Account 182.2 bycharges to operating income, con-sistent with the way the amortizedamounts are recovered through rates.These charges to income shall be re-corded in Account 407, Amortization ofProperty Losses, Unrecovered Plantand Regulatory Study Costs.

6. As the recoverable amount re-corded in Account 182.2 is recoveredthrough rates, the borrower shall ac-crue income by charges to Account182.2 and credits to Account 421, Mis-cellaneous Nonoperating Income. Ac-cruals shall be computed by applyingthe same rate used to derive thepresent value of the asset establishedin Account 182.2, to the unamortizedbalance in that account. Accruedamounts charged to Account 182.2 shallbe treated as reductions to the creditsubaccount withinAccount 182.2.

Prior to implementing the account-ing prescribed above, the borrowershall submit the details of each plantabandonment to RUS for approval.

Disallowances of Costs of RecentlyCompleted Plant

When it becomes probable that a por-tion of the cost of recently completedplant will be disallowed for rate mak-ing purposes and a reasonable estimateof the amount of the disallowance canbe made, the estimated amount of theprobable disallowance shall be de-ducted from the reported cost of theplant and recognized as a loss. If a por-tion of the costs is explicitly, but indi-rectly disallowed, the equivalentamount of the cost shall be deductedfrom the reported cost of the plant andrecognized as a loss.The specific ac-counts that shall be used to recordtransactions involving the disallow-ance of plant costs are as follows:

1. Estimated disallowed plant costswhich the borrower records as a creditto Account 101, Electric Plant-in-Serv-ice, shall be charged to Account 426.5,Other Deductions.

2. If the loss qualifies as an extraor-dinary item under the criteria set forthin General Instruction No. 7 of theUSoA, the borrower shall record theloss in Account 435, Extraordinary De-ductions. To be considered extraor-dinary, an item shall be more than five


863


percent of income computed before ex-traordinary items. If a borrower be-lieves that a loss of less than five per-cent should be treated as an extraor-dinary item; the borrower shall, withcommission approval, record the loss inAccount 435 and report the loss as anextraordinary item. If the borrower isnot subject to state commission juris-diction, RUS approval is required.

134 Utility Plant Phase-in Plans

In August 1987, the Financial Ac-counting Standards Board issuedStatement of Financial AccountingStandards No. 92, Regulated Enter-prises—Accounting for Phase-in Plans(Statement No. 92). This section pro-vides an overview of the requirementsoutlined in Statement No. 92.

The term phase-in plan is used torefer to any method of recognition ofallowable costs in rates that meets allof the following criteria:

1. The method was adopted by theregulator in connection with a major,newly completed plant of the regulatedenterprise or one of its suppliers or amajor plant scheduled for completionin the near future.

2. The method defers the rates in-tended to recover allowable costs be-yond the period in which those allow-able costs would be charged to expenseunder generally accepted accountingprinciples applicable to enterprises ingeneral.

3. The method defers the rates in-tended to recover allowable costs be-yond the period in which those rateswould have been ordered under therate-making methods routinely usedprior to 1982 by that regulator for simi-lar allowable costs of that regulatedenterprise.

If a phase-in plan is ordered by a reg-ulator in connection with a plant onwhich no substantial physical con-struction had been performed beforeJanuary 1, 1988, none of the allowablecosts that are deferred for future recov-ery by the regulator under the plan forrate-making purposes, shall be capital-ized for general-purpose financial re-porting purposes (financial reporting).

If a phase-in plan is ordered by a reg-ulator in connection with a plant com-pleted before January 1, 1988, or a plant

on which substantial physical con-struction had been performed beforeJanuary 1, 1988, the criteria specifiedbelow shall be applied to that plan. Ifthe phase-in plan meets all of those cri-teria, all allowable costs that are de-ferred for future recovery by the regu-lator under the plan shall be capital-ized for financial reporting purposes asa separate asset (a deferred charge). Ifany one of those criteria is not met,none of the allowable costs that are de-ferred for future recovery by the regu-lator under the plan shall be capital-ized for financial reporting. The cri-teria for determining whether capital-ization is appropriate are:

1. The allowable costs in question aredeferred pursuant to a formal plan thathas been agreed to by the regulator;

2. The plan specifies the timing of re-covery of all allowable costs that willbe deferred under the plan;

3. All allowable costs deferred underthe plan are scheduled for recoverywithin 10 years of the date when thedeferral began; and

4. The percentage increase in ratesscheduled under the plan for each fu-ture year is no greater than the per-centage increase in rates scheduledunder the plan for each immediatelypreceding year. That is, the scheduledpercentage increase in year two is nogreater than the percentage increasegranted in year one, the scheduled per-centage increase in year three is nogreater than the percentage increase inyear two, etc.

By definition, a phase-in plan ap-proved prior to 1982 that contains pro-visions contrary to those detailedabove is not subject to the provisionsof Statement No. 92. This exemption,however, only relates to a specific util-ity and a specific regulator. For exam-ple, a utility cannot use a phase-inplan approved by its regulator for a dif-ferent utility as justification for itsphase-in plan exceeding the 10-yearlimit imposed by Statement No. 92.

A phase-in plan is a method of ratemaking intended to moderate a suddenincrease in rates while providing theregulated enterprise with recovery ofits investment and a return on that in-vestment during the recovery period. Adisallowance is a rate-making actionthat prevents the regulated enterprise


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from recovering either some amount ofits investment or some amount of re-turn on its investment. Statement No.90 specifies the accounting for dis-allowances of plant costs (see item 133of this regulation). If a method of ratemaking that meets the criteria for aphase-in plan includes an indirect dis-allowance of plant costs, that disallow-ance shall be accounted for in accord-ance with Statement No. 90. Cumu-lative amounts capitalized underphase-in plans shall be reported as aseparate asset in the balance sheet.The net amount capitalized in each pe-riod or the net amount of previouslycapitalized allowable costs recoveredduring each period shall be reported asa separate item of other income or ex-pense in the income statement. Allow-able costs capitalized shall not be re-ported as reductions of other expenses.

The terms of any phase-in plan in ef-fect during the year or ordered for fu-ture years shall be disclosed in the fi-nancial statements. Statement No. 92does not permit capitalization for fi-nancial reporting of allowable costs de-ferred for future recovery by the regu-lator pursuant to a phase-in plan thatdoes not meet the criteria or a phase-in plan related to plant on which sub-stantial physical construction was notcompleted before January 1, 1988. Nev-ertheless, the financial statementsshall include disclosures of the netamount deferred at the balance sheetdate for rate-making purposes, and thenet change in deferrals for rate-makingpurposes during the year for thoseplans.

If the provisions of Statement No. 92are applied retroactively, the financialstatements of all periods presentedshall be restated. In addition, the re-stated financial statements shall, inthe year that Statement No. 92 is firstapplied, disclose the nature of any re-statement and its effect on margins be-fore extraordinary items, net margins,and on patronage capital at the begin-ning of the earliest period presented. Ifthe financial statements for prior yearsare not restated, the effects of applyingStatement No. 92 to existing phase-inplans shall be reported as a change inaccounting principle and the financialstatements shall disclose the effect ofadopting Statement No. 92 on margins

before extraordinary items and netmargins.

The application of Statement No. 92to an existing phase-in plan shall be de-layed if both of the following condi-tions are met:

1. The enterprise has filed a rate ap-plication to have the plan amended tomeet the criteria of Statement No. 92or intends to do so as soon as prac-ticable; and

2. It is reasonably possible that theregulator will change the terms of thephase-in plan so that it will meet thecriteria of Statement No. 92.

If the above conditions are met, theprovisions of Statement No. 92 shall beapplied to the existing phase-in plan onthe earlier of the date when one of theconditions ceases to be met or the datewhen the final rate order is received,amending or refusing to amend thephase-in plan. However, if the enter-prise delays filing its application forthe amendment or the regulator doesnot process the application in the nor-mal period of time, the application ofStatement No. 92 shall not be furtherdelayed.

In applying the criteria of StatementNo. 92 to a plan that was in existenceprior to the first fiscal year beginningafter December 15, 1987, and that wasrevised to meet that criteria, the 10-year criterion and the requirementconcerning the percentage increaseshall be measured from the date of theamendment rather than from the dateof the first scheduled deferrals underthe original plan. All phase-in plansmust receive RUS approval prior to im-plementation.

135 Accounting for Removal or Relo-cation of Electric Facilities Result-ing from the Action of Others

Under arrangements with anotherparty, a borrower agrees, or is obliged,to remove, relocate, rearrange, or oth-erwise make changes in utility prop-erty, other than for the purpose of ren-dering utility service to the otherparty, for which the utility is reim-bursed for all or a portion of the costsincurred.


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Plant Accounting

The relocation of the line shall be ac-counted for as follows:

1. If all of the assemblies in the lineare retired or completely removed andlater reinstalled or if the line is con-structed in a new location before theold line is removed, construction andretirement work orders shall be pre-pared except for the costs relating tospecial equipment items (transformers,oil circuit reclosers, etc.) which shallbe charged to operations expense.

2. If a line is moved in its entirety toa new location except for isolated re-tirement units (such as at the end ofthe line) or poles not suitable for reset-ting, the cost of moving the portion ofline that is moved intact shall becharged to maintenance expense whilethe cost related to the change in iso-lated retirement units or the replace-ment of poles not suitable for resettingshall be accounted for through use ofconstruction and retirement work or-ders.

3. If a line is moved intact withoutany change in assemblies, the costshall be charged to maintenance ex-pense.

Reimbursement

If the borrower receives reimburse-ment for the costs related to the relo-cation of the line, the reimbursementshall be accounted for by crediting op-eration and maintenance expenses tothe extent of actual expenses occa-sioned by the plant changes and cred-iting the remainder to the accumulatedprovision for depreciation, unless con-tractual terms definitely characterizeresidual or specific amounts as applica-ble to the cost of replacement. In thelatter event, appropriate credits shallbe entered in the plant accounts.

Reimbursement received from a tele-phone company for adding a pole or re-placing a present pole with a tallerpole under joint use contracts fallswithin this latter category. In this in-stance, appropriate credits are chargedagainst the plant accounts.

Financing

The total reimbursement, less anyportion for operations and mainte-nance costs, shall be entered in the

‘‘Contributions in Aid of Construction’’section at the bottom of the Construc-tion Work Order. When the Inventoryof Work Orders (RUS Form 219) is pre-pared, enter only enough of the con-tribution in column 9 to reduce to zerothe amount in column 10, ‘‘Loan FundsSubject to Advance by RUS.’’ Thisentry is made although none of the re-imbursement received is recorded inthe accounting records as a contribu-tion in aid of construction.

136 Storm Damage

As a result of recent hurricane, flood,and ice storm damage, the Rural Utili-ties Service (RUS) has received severalinquiries concerning the proper ac-counting for storm damage costs andthe associated funds received from theFederal Emergency Management Ad-ministration (FEMA).

Storm damage costs should be ac-counted for under the work order pro-cedure. Units of property destroyed orotherwise removed from service mustbe reflected on retirement work ordersand units of property installed must beshown on construction work orders. Toensure that the accounting for con-struction and retirement costs is as ac-curate as possible, an effort should bemade to accurately accumulate mate-rial, labor, and overhead costs. Evenwhen extreme care has been exercised,however, it may still be necessary touse estimates to develop the appro-priate cost figures.

When a storm occurs, a utility typi-cally incurs a large retirement loss, allor a part of which should be charged tothe accumulated provision for depre-ciation. Storm damage costs over andabove construction and retirementcosts represent maintenance expense.Maintenance costs include the costs ofresagging lines, straightening poles,and replacing minor items of property.When extensive damage has occurred,the need to restore the property to anoperating condition without delay usu-ally results in excessive costs being in-curred. Standard property unit costsmay be used as a guide in determiningthe amount to be capitalized. It shouldbe noted, however, that when standardproperty unit costs are used, all excesscosts are charged to maintenance ex-pense.


866


Because of the storm’s destruction,property is retired prematurely and asa result, extraordinary retirementlosses occur. When such extraordinarylosses occur, they should be recorded inthe year in which the losses are in-curred. If the recording of such losseswill materially distort the incomestatement, such losses may be chargedto Account 435, Extraordinary Deduc-tions. These costs may be deferred andamortized to future periods only if theprovisions of Statement of FinancialAccounting Standards No. 71, Account-ing for the Effects of Certain Types ofRegulation (Statement No. 71), are ap-plied. Under the provisions of State-ment No. 71, a utility may defer cer-tain costs, provided such costs are in-cluded in the utility’s rate base and re-covered through future rates. If anRUS borrower elects to apply the pro-visions of Statement No. 71, RUS ap-proval is required. To obtain RUS ap-proval, a borrower must submit:

a. A detailed description of the planincluding the nature of the expenseitem, the amount of the deferral, thespecific time period for rate recovery,and justifying support for the time pe-riod selected;

b. The accounting journal entriesbeing used by the cooperative to recordthe expense deferral and amortizationof the deferred costs;

c. A copy of the state Commissionorder authorizing recovery of the de-ferred costs through future rates, or inthe absence of commission jurisdiction,

a resolution from the cooperative’sboard of directors authorizing such re-covery; and

d. A statement from the borrower’scertified public accountant (CPA) orCPA firm indicating that the deferraland amortization of these costs is inaccordance with generally accepted ac-counting principles.

To assist in the restoration of thedamaged facilities, the Federal govern-ment often provides assistance throughFEMA. Under current FEMA proce-dures, FEMA provides funds for therestoration of facilities based upon thecost estimates submitted by the entityrequesting assistance. If the FEMAgrant is for less than 100 percent of thecost estimates, FEMA does not specifywhich costs are to be reimbursed. Whenthe funds are received, therefore, theyshould be accounted for by creditingconstruction, retirement, maintenanceexpense, and administrative expense indirect proportion to the total costs in-curred. For example, if total stormdamage costs are $1,000,000 with $450,000incurred for maintenance, $300,000 forretirement, $200,000 for construction,and $50,000 for administrative costs,the FEMA reimbursement should beaccounted for by applying 45 percent ofthe funds received as a credit to main-tenance expense, 30 percent as a creditto retirement costs, 20 percent as acredit to construction, and 5 percent asa credit to administrative and generalcosts.

ACCOUNTING JOURNAL ENTRIES

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. $1,015.17Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $1,015.17

To transfer the removal costs recorded in Column 11 of Retirement Work Order #4401X to Ac-count 108.8X.

Dr. 107.4, Construction Work in Progress—Storm Damage .............. $4,141.55Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $4,141.55

To remove material salvaged in the llllllllll rebuild from Account 107.4. Theoriginal entry debited Account 154, Plant Materials and Operating Supplies, and creditedAccount 107.4. (See Column 12 of Retirement Work Order #4401X.)

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. $312,230.41Cr. 364, Poles Towers and Fixtures ............................................. .................. $133,377.55Cr. 365, Overhead Conductors and Devices ................................. .................. 59,683.08Cr. 368, Lines Transformers ........................................................ .................. 19,704.60Cr. 369, Services .......................................................................... .................. 97,651.23Cr. 373, Street Lighting and Signal Systems .............................. .................. 1,813.95

To remove the original cost of property destroyed and retired from the classified plant ac-counts. This retirement is recorded, in detail, on Retirement Work Order #4401X. It is un-derstood that this retirement covers all distribution property retired or destroyed in thellllllllll area exclusive of substations and special equipment items (meters,meter sockets, current and potential transformers, transformers, voltage regulators, oilcircuit reclosers (OCR), and sectionalizers).


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ACCOUNTING JOURNAL ENTRIES—ContinuedDr. 108.6, Accumulated Provision for Depreciation of Distribution

Plant ............................................................................................. $309,104.03Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $309,104.03

To record the net loss due to the retirement of distribution lines in the llllllllllarea. (See Retirement Work Order #4401X.)

Dr. 364, Poles, Towers and Fixtures ................................................. $99,075.40Dr. 365, Overhead Conductors and Devices ....................................... 104,142.22Dr. 368, Line Transformers ............................................................... 25,036.07Dr. 369, Services ............................................................................... 28,865.08Dr. 373, Street Lighting and Signal Systems ................................... 2,101.60

Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $259,220.37To record, in the proper classified plant accounts, Construction Work Order #4401 covering

the llllllllll rebuild.This entry includes:

Material Issued .......................................................................... $150,336.49Less: Materials Returned ........................................................... 15,631.39

Net Material Used ...................................................................... 134,705.10Labor and overhead estimated by using standard record unit

costs ........................................................................................ 124,515.27

Total ....................................................................................... 259,220.37

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. 2,384.00Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $2,384.00

To transfer the removal costs associated with the retirement of old transmission lines($1,966) and substations ($418) to Account 107.4. This cost is shown in Column 11 of Retire-ment Work Order #4400X).

Dr. 107.4, Construction Work in Progress—Storm Damage .............. $1,939.74Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $1,939.74

To remove material salvaged from transmission lines ($1,545.74) and substations ($394.00)from Account 107.4. The original entry debited Account 154 and credited Account 107.4.(See Column 12 of Retirement Work Order #4400X.)

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. $162,172.06Cr. 355, Poles and Fixtures ......................................................... .................. $47,738.45Cr. 356, Overhead Conductors & Devices ..................................... .................. 80,304.11Cr. 362, Station Equipment ........................................................ .................. 34,129.50

To remove the original cost of transmission lines and substations destroyed and retiredfrom the classified plant accounts. (See Retirement Work Order #4400X.) (New substationswere built and separately accounted for on Work Order #4406.)

Dr. 108.5, Accumulated Provision for Depreciation of TransmissionPlant ............................................................................................. $128,462.82

Dr. 108.6, Accumulated Provision for Depreciation of DistributionPlant ............................................................................................. 34,153.50

Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $162,616.32To record the net loss due to the retirement of transmission lines ($128,462.82) and sub-

stations ($34,153.50). (See Retirement Work Order #4400X):

Sub-stations

Trans-missionplant

Original Cost .................................................................................... $34,129.50 $128,042.56Add: Cost of Removal ....................................................................... 418.00 1,966.00

34,547.50 130,008.56Less: Material Salvaged ................................................................... 394.00 1,545.74

Total ....................................................................................... 34,153.50 128,462.82

Dr. 355, Poles and Fixtures ............................................................... $161,784.05Dr. 356, Overhead Conductors and Devices ....................................... 124,704.77

Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $286,488.82To record, in the proper classified plant accounts, the costs of a 69 kV transmission line

(llllllllll) as detailed in Work Order #4400. This work order includes construc-tion costs as follows:


868


Material Used (Net) .......................................................................... $171,665.62Labor and overhead estimated by using standard record unit

costs ........................................................................................ 114,823.20

Total ....................................................................................... 286,488.82

Dr. 107.4, Construction Work in Progress—Storm Damage .............. $329.40Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $329.40

To correct the journal entry for cash received from the sale of scrapped meters and trans-formers. The original entry credited Account 107.4 at the time of receipt.

Transformers .............................................................................. $318.00Meters ........................................................................................ 11.40

Net Materials Used ..................................................................... 329.40

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. .................. $137,671.22Cr. 365, Overhead Conductors and Devices ................................. .................. $4,557.00Cr. 368, Line Transformers ......................................................... .................. 112,815.22Cr. 370, Meters ............................................................................ .................. 20,299.00

To remove the cost of meters, transformers, and OCRs lost or destroyed from the primaryplant accounts. (See Retirement Work Order #4402X.)

737 Transformers ........................................................................ $112,815.2231 OCRs ....................................................................................... 4,557.001,532 Meters ................................................................................ 20,299.00

Total ....................................................................................... 137,671.22

Dr. 108.6, Accumulated Provision for Depreciation of DistributionPlant ............................................................................................. $137,341.82

Cr. 108.8X, Retirement Work in Progress ................................... .................. $137,341.82To record the net loss due to the retirement of meters, transformers, and OCRs. (See Retire-

ment Work Order #4402X.)Original Cost .............................................................................. $137,671.22Salvaged Realized ...................................................................... 329.40

Total ....................................................................................... 137,341.82

Dr. 186, Miscellaneous Deferred Debits ............................................ $1,319.85Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $1,319.85

To record the engineering costs associated with future construction work in thellllllllll area.

Dr. 593, Maintenance of Overhead Lines ........................................... $607.24Dr. 595, Maintenance of Line Transformers ..................................... 19,365.86Dr. 597, Maintenance of Meters ........................................................ 6,595.56

Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $26,568.66To charge the costs of repairing damaged meters, transformers, voltage regulators, and

OCRs to the appropriate expense accounts. Repair costs were originally charged to Ac-count 107.4.

593 595 597

Meters ......................................................................... .................. .................. $6,595.56Transformers .............................................................. .................. $18,869.95 ..................Voltage Regulators ..................................................... .................. 495.91 ..................Oil Circuit Reclosers .................................................. $607.24 .................. ..................

Total .................................................................. 607.24 19,365.86 6,595.56

Dr. 920, Administrative and General Salaries ................................................. $32,000.00Dr. 921, Office Supplies and Expenses ........................................................... 4,421.69

Cr. 107.4, Construction Work in Progress—Storm Damage .................... ........................ $36,421.69To charge the administrative costs incurred to obtain the FEMA grant to the appropriate expense accounts.

Administrative costs were originally charged to Account 107.4.Salaries ..................................................................................................... $32,000.00Office Supplies .......................................................................................... 4,421.69

Total ...................................................................................................... $36,421.69


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Dr. 571, Maintenance of Overhead Lines ........................................................ $3,675.60Dr. 593, Maintenance of Overhead Lines ........................................................ 33,080.40

Cr. 107.4, Construction Work in Progress Storm Damage ...................... ........................ $36,756.00To allocate expenses remaining in Account 107.4 to distribution and transmission maintenance expense. It

was estimated that only 10 percent is applicable to transmission.Dr. 426.5, Other Deductions ............................................................................ $275,000.00Dr. 435, Extraordinary DeductionsDr. 182.1, Extraordinary Property Losses

Cr. 108.5, Accumulated Provision for Depreciation of TransmissionPlant ...................................................................................................... ........................ $35,000.00

Cr. 108.6, Accumulated Provision for Depreciation of Distribution Plant ........................ 240,000.00To restore the accumulated provisions for depreciation to their appropriate levels based upon a study of plant

currently in service.NOTE: Account 426.5, Other Deductions, should be used to record the retirement loss as a

current period expense. Account 435, Extraordinary Deductions, may be used when the losswill materially distort the income statement. Account 182.1, Extraordinary Property Losses,should be used when such costs are being deferred under the provisions of Statement No. 71.Costs recorded in this account should be amortized to Account 407, Amortization of PropertyLosses, as the costs are recovered through rates.

Dr. 131.1, Cash—General ................................................................... $1,000,000.00Cr. 253, Other Deferred Credits ................................................... .................. $1,000,000.00

To record the receipt of funds from the Federal Emergency Management Administration(FEMA).

Dr. 253, Other Deferred Credits ......................................................... $1,000,000.00Cr. 108.5, Accumulated Provision for Depreciation of Trans-

mission Plant .......................................................................... .................. $74,205.00Cr. 108.6, Accumulated Provision for Depreciation of Distribu-

tion Plant ................................................................................ .................. 191,575.00Cr. 186, Miscellaneous Deferred Debits ....................................... .................. 872.00Cr. 355, Poles and Fixtures ......................................................... .................. 129,056.00Cr. 356, Overhead Conductors and Devices ................................. .................. 99,408.00Cr. 364, Poles, Towers and Fixtures ............................................ .................. 78,916.00Cr. 365, Overhead Conductors and Devices ................................. .................. 82,840.00Cr. 368, Line Transformers ......................................................... .................. 20,056.00Cr. 369, Services .......................................................................... .................. 23,108.00Cr. 373, Street Lighting and Signal Systems .............................. .................. 1,744.00Cr. 426.5, Other Deductions ......................................................... .................. 219,220.00Cr. 571, Maintenance of Overhead Lines ..................................... .................. 2,900.00Cr. 593, Maintenance of Overhead Lines ..................................... .................. 26,600.00Cr. 595, Maintenance of Line Transformers ................................ .................. 15,300.00Cr. 597, Maintenance of Meters ................................................... .................. 5,200.00Cr. 920, Administrative and General Salaries ............................. .................. 25,491.00Cr. 921, Office Supplies and Expenses ......................................... .................. 3,509.00

To allocate FEMA funds to the proper accounts..

Summary of CostsMaintenance:

Account 571, Maintenance of Overhead Lines .................................................. $3,675.60Account 593, Maintenance of Overhead Lines .................................................. 33,687.24Account 595, Maintenance of Line Transformers ............................................ 19,365.86Account 597, Maintenance of Meters ............................................................... 6,595.56

Total Maintenance Costs .............................................................................. 63,324.26

Retirement Loss:Account 108.5, Accumulated Provision for Depreciation of Transmission

Plant ............................................................................................................. 93,462.82Account 108.6, Accumulated Provision for Depreciation of Distribution

Plant ............................................................................................................. 240,599.35Account 426.5, Other Deductions ..................................................................... 275,000.00

Total Retirement Loss ................................................................................. 609,062.17

Construction:Account 186, Miscellaneous Deferred Debits ................................................... 1,319.85Account 355, Poles and Fixtures ...................................................................... 161,784.05Account 356, Overhead Conductors and Devices .............................................. 124,704.77


870


Account 364, Poles, Towers and Fixtures ........................................................ 99,075.40Account 365, Overhead Conductor and Devices ................................................ 104,142.22Account 368, Line Transformers ...................................................................... 25,036.07Account 369, Services ...................................................................................... 28,865.08Account 373, Street Lighting and Signal Systems .......................................... 2,101.60

Total Construction Cost ............................................................................... 547,029.04

Administrative:Account 920, Administrative and General Salaries ......................................... $32,000.00Account 921, Office Supplies and Expenses ...................................................... 4,421.69

Total Administrative Cost ........................................................................... 36,421.69

Maintenance .................................................................................................... 63,324.26Retirement Loss .............................................................................................. 609,062.17Construction .................................................................................................... 547,029.04Administrative ................................................................................................ 36,421.69

Total Costs ................................................................................................... 1,255,837.16

Distribution of FEMA FundsMaintenance: 63,324.26÷1,255,837.16=.0504=5.0%Retirement: 609,062.17÷1,255,837.16=.4850=48.5%Construction: 547,029.04÷1,255,837.16=.4356 = 43.6%Administrative: 36,421.69÷1,255,837.16=.0290=2.9%Maintenance: $1,000,000.00×5.0%= ........................................................................... $50,000.00Retirement: $1,000,000.00×48.5%= ............................................................................ 485,000.00Construction: $1,000,000.00×43.6%= ......................................................................... 436,000.00Administrative: $1,000,000.00×2.9%= ....................................................................... 29,000.00

Total ............................................................................................................. 1,000,000.00

Distribution of FEMA Funds—MaintenanceAccount 571: 3,675.60÷63,324.26=.0580=5.8%Account 593: 33,687.24÷63,324.26=.5320=53.2%Account 595: 19,365.86÷63,324.26=.3058=30.6%Account 597: 6,595.56÷63,324.26=.1041=10.4%Account 571: $50,000.00×5.8%= ................................................................................. $2,900.00Account 593: $50,000.00×53.2%= ................................................................................ 26,600.00Account 595: $50,000.00×30.6%= ................................................................................ 15,300.00Account 597: $50,000.00×10.4%= ................................................................................ 5,200.00

Total ............................................................................................................. 50,000.00

Distribution of FEMA Funds—Retirement LossAccount 108.5: 93,462.82÷609,062.17=.1535=15.3%Account 108.6: 240,599.35÷609,062.17=.3950=39.5%Account 426.5: 275,000.00÷609,062.17=.4515=45.2%Account 108.5: $485,000.00×15.3%= ............................................................................ $74,205.00Account 108.6: $485,000.00×39.5%= ............................................................................ 191,575.00Account 426.5: $485,000.00×45.2%= ............................................................................ 219,220.00

Total ............................................................................................................. 485,000.00

Distribution of FEMA Funds—ConstructionAccount 186: 1,319.85÷547,029.04=.0024=.2%Account 355: 161,784.05÷547,029.04=.2958=29.6%Account 356: 124,704.77÷547,029.04=.2280=22.8%Account 364: 99,075.40÷547,029.04=.1811=18.1%Account 365: 104,142.22÷547,029.04=.1904=19.0%Account 368: 25,036.07÷547,029.04=.0457=4.6%Account 369: 28,865.08÷547,029.04=.0528=5.3%Account 373: 2,101.67÷547,029.04=.0038=.4%Account 186: $436,000.00×.2%= ................................................................................. $872.00Account 355: $436,000.00×29.6%= .............................................................................. 129,056.00Account 356: $436,000.00×22.8%= .............................................................................. 99,408.00Account 364: $436,000.00×18.1%= .............................................................................. 78,916.00


871


Account 365: $436,000.00×19.0%= .............................................................................. 82,840.00Account 368: $436,000.00×4.6%= ................................................................................ 20,056.00Account 369: $436,000.00×5.3%= ................................................................................ 23,108.00Account 373: $436,000.00×.4%= ................................................................................. 1,744.00

Total ............................................................................................................. 436,000.00

Distribution of FEMA Funds—AdministrativeAccount 920: 32,000.00÷36,421.69=.8786=87.9%Account 921: 4,421.69÷36,421.69=.1213=12.1%Account 920: $29,000.00×87.9%= ................................................................................ $25,491.00Account 921: $29,000.00×12.1%= ................................................................................ 3,509.00

Total ............................................................................................................. 29,000.00

137 Impairment of Long-Lived Assets

Statement of Financial AccountingStandards No. 121, Accounting for theImpairment of Long-Lived Assets andfor Long-Lived Assets to be Disposed of(Statement No. 121), requires reportingentities to review all long-lived assetsand certain identifiable intangiblesthat are to be held, used, or disposed ofby that entity for impairment when-ever events and changes in cir-cumstances indicate that the carryingamount of the asset may not be recov-erable. If the sum of the expected fu-ture cash flows (undiscounted andwithout interest charges) is less thanthe carrying value of the asset, the en-tity must recognize an impairmentloss. The impairment loss is measuredas the amount by which the carryingamount of the asset exceeds the fairvalue of the asset. The impairment lossis reported as a component of incomefrom continuing operations before in-come taxes for entities presenting anincome statement and in the statementof activities of not-for-profit organiza-tions. Statement No. 121 does not applyto assets included in the scope ofStatement of Financial AccountingStandards No. 90, Regulated Enter-prises—Accounting for Abandonmentsand Disallowances of Plant Costs.

Assets To Be Held or Used

Entities are required to review long-lived assets and certain identifiable in-tangibles whenever events or changesin circumstances indicate that the car-rying value of the asset may not be re-coverable. For example:

1. A significant decrease in the mar-ket value of an asset;

2. A significant change in the extentor manner in which an asset is used;

3. A significant physical change in anasset;

4. A significant adverse change inlegal factors or in the business climatethat could affect the value of an asset;

5. An adverse action or assessment bya regulator;

6. An accumulation of costs signifi-cantly in excess of the amount origi-nally expected to acquire or constructan asset; and

7. A current period operating or cashflow loss combined with a history ofoperating or cash flow losses or a pro-jection or forecast that demonstratescontinued losses associated with anasset used for the purpose of producingrevenue.

The impairment of the asset is meas-ured by estimating the future cashflows expected to result from the use ofthe asset and its disposition. Assets aregrouped at the lowest level for whichthere are identifiable cash flows thatare largely independent of the cashflows of other groups of assets. Futurecash flows are those cash inflows thatare expected to be generated by theasset less the cash outflows expected tobe necessary to maintain those inflows.If the future cash flows (undiscountedand without interest charges) are lessthan the carrying value of the asset, animpairment loss must be recognized. Ifthe expected future cash flows aregreater than the carrying value of theasset, no impairment loss exists.

The impairment loss is the amountby which the carrying amount (acquisi-tion cost less accumulated deprecia-tion) of the asset exceeds the fair valueof the asset. The fair value of the asset


872


is the amount for which the asset couldbe bought or sold in an arms-lengthtransaction between willing parties. Aquoted market price is the best evi-dence of fair value. If this informationis not available, the fair value shouldbe based upon the best informationavailable. Consideration should begiven to the price of similar assets andvaluation techniques such as thepresent value of the expected futurecash flows discounted at a rate rep-resentative of the risk involved, op-tion-pricing models, matrix pricing,option-adjusted spread models, andfundamental analysis. All available in-formation should be considered whenusing the above pricing techniques.

If an impairment is recognized, thecarrying value of the asset is reducedto the lower of its fair value or its car-rying value and, if depreciable, depre-ciated over the remaining useful life.Previously recognized impairmentlosses cannot be restored. If the assetwas acquired in a business combinationand there is goodwill resulting fromthe transaction, the goodwill is in-cluded in the asset grouping and re-duced or eliminated before any adjust-ment is made to the carrying value ofthe asset.

The following financial statementdisclosures are required in the periodin which the impairment is recognized:

1. A description of the impaired as-sets and the facts and circumstancessurrounding the impairment;

2. The amount of the impairment andhow fair value was determined;

3. The caption in the income state-ment or the statement of activities inwhich the impairment loss is aggre-gated if that loss has not been pre-sented as a separate caption or re-ported parenthetically on the face ofthe statement; and

4. If applicable, the business seg-ment(s) affected.

Assets To Be Disposed

Statement No. 121 also applies to alllong-lived assets and certain identifi-able intangibles for which manage-ment, having the authority to approvethe action, has committed to a plan ofdisposal except those assets covered byAPB No. 30, Reporting the Results ofOperations—Reporting the Effects of

Disposal of a Segment of a Business,and Extraordinary, Unusual and Infre-quently Occurring Events and Trans-actions. An asset to be disposed of iscarried at the lower of its carryingamount (acquisition cost less accumu-lated depreciation) or its fair value lesscost to sell.

The fair value of the asset to be dis-posed of is computed in the same man-ner as that for an asset to be held orused by the entity. Selling costs in-clude the incremental direct cost totransact the sale—broker commissions,legal fees, title transfer, and otherclosing costs that must be incurred be-fore legal title can be transferred.Costs such as insurance, security serv-ice, and utilities are generally excludedunless these costs are part of a con-tractual agreement that obligates theentity to incur such costs in the future.If the asset’s fair value is based uponcurrent market price or the currentselling price for a similar asset, thefair value is considered a currentamount and is not discounted. If, how-ever, the fair value is based upon dis-counted expected future cash flows andif the sale is to occur beyond one year,the cost to sell must also be dis-counted. Assets covered by this state-ment are not depreciated (amortized)while being held for disposal.

Subsequent revisions in estimates offair value less cost to sell are reportedas adjustments to the carrying amountof the asset to be disposed of as long asthe carrying amount of the asset doesnot exceed the original carryingamount.

The following financial statementdisclosures are required in the periodin which the impairment is recognized:

1. A description of the assets to bedisposed of including the facts and cir-cumstances leading to the expecteddisposal, the expected disposal date,and the carrying amount of those as-sets;

2. If applicable, the business seg-ment(s) in which the assets to be dis-posed of are held;

3. The amount, if any, of the impair-ment loss resulting from the adoptionof this statement;

4. The gain or loss, if any, resultingfrom subsequent revisions in the esti-mates of fair value less cost to sell;


873


5. The caption in the income state-ment or statement of activities inwhich the gains or losses are aggre-gated if those gains or losses have notbeen presented as a separate caption orreported parenthetically on the face ofthe statement; and

6. The results of operations for assetsto be disposed of to the extent thatthose results are included in the enti-ty’s results of operations for the periodand can be identified.

Accounting Requirements

All borrowers must adopt the ac-counting prescribed by Statement No.121.

Effective Date and Implementation

Statement No. 121 is effective for fi-nancial statements for fiscal years be-ginning after December 15, 1995. Im-pairment losses resulting from the ap-plication of this statement to assetsthat are held or used by the entitymust be reported in the period in whichthe recognition criteria are first ap-plied and met. Impairment losses at-tributable to assets to be disposed ofmust be reported as the cumulative ef-fect of a change in accounting principleas prescribed in Accounting PrinciplesBoard Opinion No. 20, AccountingChanges.

Accounting Journal Entries—Implementation Date

If a borrower has impaired assetsthat are held or used at the implemen-tation date, the following entry shouldbe recorded:

Dr. 426.5, Other DeductionsCr. 300 Series of Accounts, Plant Ac-

countsTo record the adoption of Statement

No. 121 for the impairment of assetsthat are held or used.

If a borrower has impaired assets tobe disposed of at the implementationdate, the following entry should be re-corded:

Dr. 435.1, Cumulative Effect on PriorYears of a Change in AccountingPrinciple

Cr. 300 Series—Plant Accounts

To record the adoption of StatementNo. 121 for assets that are to be dis-posed.

Accounting Journal Entries—Subsequentto Implementation Date

If an asset that is either held, used orto be disposed of becomes impaired, thefollowing entry should be recorded:

Dr. 426.5, Other DeductionsCr. 300 Series—Plant AccountsTo record the impairment of a plant

asset.

If a borrower makes a subsequent re-vision in the estimate of the fair valueless the cost to sell of an asset to bedisposed of, the following entry shouldbe recorded:

Dr. 300 Series—Plant AccountsCr. 421, Miscellaneous Nonoperating In-

comeTo revise the fair value of an asset to

be disposed.

138 Automatic Meter ReadingSystems—Turtles

Automatic meter reading systemswere developed from technology calledpower line carrier communication sys-tems. One such system, developed byHunt Technologies, Inc., is called by itsbrand name, the Turtle system. In ad-dition to its function as an automatedreading device, the Turtle can provideoutage detection, power failure counts,and other potential applications. Thecurrent Turtle system does not havethe capability for applications such ascollection of load survey or intervaldata. A Turtle system consists of:

1. A meter reader mounted (retro-fitted) inside the meter;

2. A receiver located in each sub-station; and

3. Monitoring and programmingequipment (software and personal com-puter) usually located in the head-quarters building.

The system transmits continuous in-formation one way from the meter to areceiver located in the substation. Thereceiver constantly monitors everyTurtle meter served by the substation.The substation receiver can be sized tomonitor up to 3,000 Turtle meter read-ers at the same time. The data is then


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transmitted to the headquarters moni-toring equipment via telephone line oran equivalent communication system.

The technical literature and other in-formation provided by the manufac-turer indicates that this system canonly be used for remote meter reading,outage detection, power failure counts,and phase identification. At this time,there is no indication that the systemsupports other functions such as homesecurity. Therefore, the accountingprescribed for the Turtle meter readingdevices and support equipment relatesonly to electric utility operations.


The function of the equipment is theprimary factor in determining the ac-count in which the equipment shall berecorded. The components of the Turtleautomatic meter reading system shallbe recorded in Account 370, Meters. Thecost of the meter reader encoding de-vice and retrofitting the meter withthe meter reader unit shall be capital-ized to the cost of the existing meter.Any associated operating expensesshall be charged to Account 586, MeterExpenses, with maintenance expensescharged to Account 597, Maintenance ofMeters.

Separate continuing property recordsshall be established for the meters, ei-ther fitted or retrofitted with the de-vice; the receiver; the personal com-puter; and the system software. Themeters, receivers, and personal com-puter shall be depreciated over themanufacturer’s estimated useful serv-ice life. The system software shall bedepreciated over the estimated usefulservice life of the program not to ex-ceed 5 years.

139 Global Positioning Systems

The Global Positioning System(GPS) is a worldwide radio-navigationsystem formed from a network of 24satellites and their ground stations.Utilities are using this advanced tech-nology geographic data collection sys-tem to update and modernize their sys-tem maps. GPS uses a system of sat-ellites orbiting the earth to establishplant locations with pinpoint accuracy.By triangulating from three satellitesand using radio signals to measure dis-tances and locate items, system-wide

maps can be created of the utility’sservice area. A field inventory is thentaken of the utility’s plant and plottedonto the map. The GPS consists of basestation equipment, remote stationequipment, the GPS program, and map-ping conversion software.

All equipment associated with GPS isdedicated to the mapping effort. Thebase station is installed at a fixed loca-tion and ties satellite measurementsinto a solid local reference. The remotestation is a portable receiver that istaken into the field to determine loca-tions and is moved from site to site.The GPS program is the applicationsoftware that operates the stationequipment and is used by layout tech-nicians to gather information of exist-ing and new facilities in the field. Theconversion software is used for con-verting the GPS and inventory infor-mation gathered in the field into aform usable by the mapping program.


The function and location of theequipment are the primary factors indetermining the account in which theequipment shall be recorded. The com-ponents of the GPS shall be accountedfor as follows:

1. Remote and Base Station Equipment.The cost of the equipment, both remoteand fixed, shall be capitalized in a sub-account of Account 391, Office Fur-niture and Equipment.

2. GPS Program and Conversion Soft-ware for Mapping. The cost of GPS pro-gram and conversion software shall becapitalized in a subaccount of Account391, Office Furniture and Equipment.

3. GPS/GIS Field Inventory of System.The cost of performing a GPS/GIS sur-vey and field inventory of the existingsystem, by either a consultant or theutility’s own forces, shall be charged toAccount 588, Miscellaneous Distribu-tion Expenses.

140 Radio-Based Automatic MeterReading Systems

Radio-based automatic meter readingtechnology allows meters equippedwith a low-power radio device called anERT (Encoder, Receiver, Transmitter)to be read from a remote location. TheERT device can either be retrofitted to


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an existing meter or purchased in-stalled in a new meter. The ERT device‘‘encodes’’ energy consumption andtransmits this information to a radiotransceiver equipped handheld com-puter. The data collected and stored inthe handheld computer is thenuploaded to a billing computer usingspecialized software for that purpose.


The function of the equipment is theprimary factor in determining the ac-count in which the equipment shall berecorded. The components of the radio-based automatic meter reading systemshall be recorded in Account 370, Me-ters. The cost of the meter reader en-coding device and retrofitting themeter with the meter reader unit shallbe capitalized to the cost of the exist-ing meter. Any associated operatingexpenses shall be charged to Account586, Meter Expenses, with maintenanceexpenses charged to Account 597, Main-tenance of Meters.

Separate continuing property recordsshall be established for the meters, ei-ther fitted or retrofitted with the de-vice; the handheld computer; and theupload software. The meters andhandheld computer shall be depre-ciated over the manufacturer’s esti-mated useful service life. The uploadsoftware shall be depreciated over theestimated useful service life of the pro-gram not to exceed 5 years.

201 Supplemental Financing

Many borrowers secure additional fi-nancing from sources other than RUS.CFC was established to provide asource of supplemental financing. Al-though the accounting provided in thissection refers to CFC, it is applicableto other sources of supplemental fi-nancing as well.

1. Membership FeesWhen a membership fee is paid to

CFC, the payment shall be recorded asa debit to Account 123.23, Other Invest-ments in Associated Organizations.

2. SubscriptionsThe subscription agreement to pur-

chase Capital Term Certificates (CTCs)is a binding obligation to pay an initialsubscription in equal annual paymentsover the first three years and an addi-

tional annual subscription payable inthe fourth through fifteenth years.

The annual subscriptions to CFC forthe fourth through fifteenth years is2.0 percent of total operating revenuesafter deducting the cost of power.Using the best data available, each bor-rower shall estimate the amount ofCTCs that are required to be pur-chased. Estimates are not expected tobe precise and adjustments shall bemade when future projections indicatea change is needed. When the agree-ment to purchase CTCs is made, anentry shall be recorded debiting Ac-count 123.21, Subscriptions to CapitalTerm Certificates—Supplemental Fi-nancing, and crediting Account 224.11,Other Long-Term Debit—Subscrip-tions. When the CTCs are actually pur-chased, the following entries shall berecorded:Dr. 224.11, Other Long-Term Debt—

SubscriptionsCr. 131.1, Cash—General

Dr. 123.22, Investments in Capital TermCertificates—Supplemental Financ-ing

Cr. 123.21, Subscriptions to CapitalTerm Certificates—SupplementalFinancing

3. Interest ReceiptsInterest accrues monthly to the hold-

er of CTCs at a rate in accordance withthe terms of the CFC Invitation toSubscribe. The accrual of interest andthe receipt of interest proceeds shall berecorded as follows:Dr. 171, Interest and Dividends Receiv-

ableCr. 419, Interest and Dividend Income

To record the monthly accrual of inter-est.

Dr. 131.1, Cash—GeneralCr. 171, Interest and Dividends Re-

ceivableTo record the receipt of interest pro-

ceeds from the investment in CTCs.NOTE: Any amounts received in excess of

the previous accruals shall be credited to Ac-count 419.

Interest penalties may be charged byCFC for late payments on any subscrip-tion from the date that the paymentwas due to the date that the paymentwas actually received. Such chargesshall be expensed to Account 431, OtherInterest Expense.

4. Notes


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If a note is due more than one yearafter the date of the note, the appro-priate subaccount of Account 224,Other Long-Term Debt, shall be cred-ited. If the note is due less than oneyear from the date of the note, Ac-count 231, Notes Payable, shall be cred-ited.

When a loan from CFC has been con-summated and a note is executed, Ac-count 224.13, Supplemental FinancingNotes Executed—Debit, shall be deb-ited; and Account 224.12, Other Long-Term Debt—Supplemental Financing,credited. When a loan from anothersource has been consummated, Account224.15, Notes Executed—Other—Debit,shall be debited; and Account 224.14,Other Long-Term Debt—Miscellaneous,credited.

5. Loan ProceedsCash proceeds from unsecured short-

term loans shall be deposited into theGeneral Fund Account. Cash proceedsfrom all secured loans shall be depos-ited into the Construction Fund Trust-ee Account.

From two to seven percent, depend-ing upon the class of borrower and itsdebt-equity ratio, of each CFC loan isapplied to the purchase of CapitalTerm Certificates. At the time of a bor-rower’s first requisition under the CFCloan, the following entry shall be re-corded:Dr. 131.2, Cash—Construction Fund—

TrusteeDr. 123.22, Investments in Capital Term

Certificates—Supplemental Financ-ing

Cr. 224.13, Supplemental FinancingNotes Executed—Debit

To record the requisition of funds fromCFC.

6. Capital CreditsAs a result of borrowing from CFC or

other lenders organized on a coopera-tive basis, a borrower may receive cap-ital credit allocations. These alloca-tions are usually based upon the bor-rower’s participation in the lendingprogram with participation measuredby the amount of interest expense andconversion costs incurred.

To account for patronage capital al-locations from cooperative lenders, thefollowing journal entries shall be re-corded:

Dr. 123.1, Patronage Capital from Asso-ciated Cooperatives

Cr. 424, Other Capital Credits and Pa-tronage Capital Allocations

To record the allocation of capitalcredits from a cooperative lender.

NOTE: If any portion of the interest ex-pense was capitalized as a component of con-struction cost, a similar portion of the cap-ital credit allocation shall be credited toconstruction rather than to Account 424. Theportion credited to construction shall be de-termined by applying the percentage of in-terest expense charged to construction forthat particular lender to the interest ex-pense incurred for that lender.Dr. 131.1, Cash—General

Cr. 123.1, Patronage Capital from As-sociated Cooperatives

To record the cash receipt of patronagecapital credits from cooperativelenders.

301 Forfeited Customers’ Deposits

Customers may be required to makedeposits to guarantee payment ofamounts billed for electric service.When a customer discontinues service,the customer’s deposit shall first be ap-plied to unpaid energy bills, with thebalance remitted by check to the cus-tomer. If the check is returned, it shallbe voided and the original entry thatwas made when the check was issuedshall be reversed.

Unclaimed balances of customer de-posits shall remain in Account 235,Customer Deposits, until the legal li-ability of the cooperative to make sucha refund has elapsed. When there is nofurther legal liability to refund the de-posit and if it does not escheat to thestate, it shall be transferred to Ac-count 144, Accumulated Provision forUncollectible Customer Accounts—Credit, retaining full information of allparticulars.

401 Computer Software Costs

Computer software consists of pro-grams and routines (sets of computerinstructions) which direct the oper-ation of the computer. Software mayrefer to generalized routines useful incomputer operations or to programs forspecific applications such as payroll.

The distinction between generalizedsoftware and application software isimportant. Generalized software pro-vides operating support for individual


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applications. This would include pro-grams for such tasks as making print-outs of machine-readable records, sort-ing records, organizing and maintain-ing files, translating programs writtenin a symbolic language into machine-language instructions, and schedulingjobs through the computer. These pro-grams are generally furnished by themanufacturer.

Application software consists of a setof instructions for performing a par-ticular data processing task. Applica-tion programs are generally written bythe user installation, but are fre-quently obtained as prewritten pack-ages from software vendors. Applica-tion software includes programs suchas payroll, billing, general ledger, aswell as engineering or managerial ap-plications.

Costs incurred with the purchase ordevelopment of computer softwareshall be accounted for as follows:

1. Capitalize in a subaccount of Ac-count 391, Office Furniture and Equip-ment, all costs for generalized soft-ware. Depreciate the cost over theservice life (or remaining life) of themain hardware (i.e., containing centralprocessor). If the purchase invoice doesnot break out or assign a cost to the‘‘generalized software,’’ it is appro-priate to include the full amount inhardware costs. Capitalize in a sepa-rate subaccount of Account 391, allcosts for applications software deter-mined to have a service life of over oneyear. Depreciate the cost over the esti-mated useful service life of the pro-gram. This depreciation period shallnot exceed five (5) years. RUS realizes,however, that there may be cir-cumstances that justify a useful lifelonger than 5 years. When this is thecase and it is management’s intent toutilize these programs over an ex-tended period, written justificationshall be submitted to RUS for ap-proval.

2. Expense in Account 921, Office Sup-plies and Expenses, in the period in-curred, all costs associated with themaintenance, updating, and conversionof files or revision of all software, andall costs for software with a useful lifeof less than 1 year. Also expense in Ac-count 921, the unamortized cost of allsoftware determined, during the year,

to be no longer used by or useful to thecooperative. Such costs that are clear-ly applicable to any category of oper-ating expenses other than the adminis-trative and general category, however,shall be included in the appropriate ac-count in such category. In accordancewith the USoA, no portion of suchcosts shall be capitalized to construc-tion or retirement activities.

In determining the total cost of pur-chased or internally developed soft-ware, the following items shall be in-cluded:

a. Costs incurred for feasibility stud-ies if they result in the purchase or de-velopment of software;

b. All costs related to the actual pur-chase or development of the software.These costs must be specifically identi-fiable with the software and properlysupported by time cards, invoices, orother documents; and

c. All costs incurred in ‘‘testing anddebugging’’ the software.

Computer software costs are properlychargeable to Account 107, Construc-tion Work in Progress, provided thatthe following criteria are met:

1. The computer program is specifi-cally dedicated to performing a con-struction related activity, and

2. The cost of the software isitemized separate and apart from otherhardware and software costs.

The cost of software programs meet-ing the above requirements and havingan estimated useful service life in ex-cess of 1 year shall be recorded in Ac-count 186, Miscellaneous Deferred Deb-its, and amortized to Account 107, Con-struction Work in Progress, over theestimated service life of the programnot to exceed 5 years.

All costs related to training per-sonnel in the use of software shall beexpensed as incurred.

The accounting in this section is notintended to apply to immaterialamounts. When it is deemed that thecosts of the recordkeeping necessary toamortize these costs outweigh the ben-efits to the members, software costsshall be expensed in the year incurred.

For computer costs relating to loadcontrol equipment, refer to Item 118 ofthis section.


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402 Legal Expenses

Utilities may incur legal expenseswhich pertain to construction activi-ties, loan activities, or general serv-ices. The proper accounting treatmentfor legal expenses is as follows:

1. Legal fees incurred in connectionwith a construction project, includingthe court costs directly related there-to, which can be identified and sup-ported as such, shall be capitalized inAccount 107, Construction Work-in-Progress, as a cost of construction.

2. Legal fees specifically identifiedand properly supported as resultingfrom activities designed to obtain long-term debt, shall be deferred in Account181, Unamortized Debt Expense.

3. Legal fees for all other services andfees which cannot be properly identi-fied will require expensing to eitherAccount 417.1, Expenses of NonutilityOperations, or Account 923, OutsideServices Employed, as appropriate.

To properly support the capitaliza-tion or deferral of legal fees, the attor-ney shall provide an itemization ofservices performed and the cor-responding costs. Only those costs spe-cifically identified by the attorney asbeing related to construction or loanactivities shall be capitalized or de-ferred as described above.

403 Leases

Lease transactions shall be ac-counted for as either a capital lease oran operating lease depending uponwhether or not the lease meets the cri-teria for classification as a capitallease. The definitions for capital andoperating leases and the criteria usedto determine which method shall beused are as follows:

Definitions

1. Capital Lease: A lease that trans-fers substantially all of the benefitsand risks inherent in the ownership ofthe property to the lessee, who ac-counts for the lease as an acquisitionof an asset and the incurrence of a li-ability.

2. Operating Lease: An operating leaseis a simple rental agreement whichdoes not meet the criteria for a capitallease. Under the terms of an operating

lease, the lessee records the rental pay-ments due over the term of the lease asrent expense.

Criteria

A lease agreement shall be classifiedas a capital lease if one or more of thefollowing criteria is met:

1. Ownership of the property is trans-ferred to the lessee by the end of thelease term;

2. The lease contains a bargain pur-chase option;

3. The lease term is equal to 75 per-cent or more of the estimated usefullife of the leased property; or

4. The present value of the lease pay-ments at the inception of the leaseequals or exceeds 90 percent of the fairmarket value of the leased property.

A lease agreement qualifying as acapital lease shall be recorded in eitherAccount 101.1, Property Under CapitalLeases;Account 120.6, Nuclear FuelUnder Capital Leases; or Account 121,Nonutility Property, as appropriate, atthe present value (at the beginning ofthe lease term) of the minimum leasepayments. If, however, this amount ex-ceeds the fair value of the leased prop-erty at the inception of the lease, theasset shall be recorded at its fair mar-ket value. An offsetting credit shall berecorded in Account 227, ObligationsUnder Capital Leases—Noncurrent,with the current portion recorded inAccount 243, Obligations Under CapitalLeases—Current. Assets recorded inAccount 101.1 shall be classified sepa-rately according to the detailed ac-counts (301–399) provided for electricplant in service.

Monthly payments made under thelease obligation shall be charged torent expense, fuel expense, or construc-tion work-in-progress as they becomepayable. Similarly, the leased assetand the associated obligation shall bereduced by the current amount due.

The following journal entries shall beused by the lessee to record capitallease transactions:Dr. 101.1, Property Under Capital

LeasesCr. 243, Obligations Under Capital

Leases—CurrentCr. 227, Obligations Under Capital

Leases—Noncurrent


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To record the capital lease agreement.Dr. 550, Rents

Cr. 232, Accounts PayableDr. 243, Obligations Under Capital

Leases—CurrentCr. 101.1, Property Under Capital

LeasesTo record the monthly rental payment

due.Dr. 232, Accounts Payable

Cr. 131.1, Cash—GeneralTo record the monthly lease payment.

Operating leases which are simplerental agreements do not require therecording of an asset or a liability. Theentries that are required to record anoperating lease by the lessee are as fol-lows:

Dr. 550, RentsCr. 232, Accounts Payable

To record the monthly rental paymentdue.

Dr. 232, Accounts PayableCr. 131.1, Cash—General

To record the monthly lease payment.

For purposes of illustration, the jour-nal entries presented in this interpre-tation debit Account 550, Rents. How-ever, Account 507, Rents (steam powergeneration); Account 525, Rents (nu-clear power generation); Account 540,Rents (hydraulic power generation);Account 550, Rents (other power pro-duction); Account 567, Rents (trans-mission expense); Account 589, Rents(distribution expense); and Account931, Rents (general and administra-tive), should be charged, as appro-priate, depending upon the function ofthe equipment being leased.

404 Consolidated FinancialStatements

In October 1987, the Financial Ac-counting Standards Board issuedStatement of Financial AccountingStandards No. 94, Consolidation of AllMajority-Owned Subsidiaries (State-ment No. 94). For purposes of reportingto RUS, Statement No. 94 shall be ap-plied as follows:

1. An RUS borrower that is a sub-sidiary of another entity shall prepareand submit to RUS separate financialstatements even though this financialinformation is presented in the par-ent’s consolidated statements.

2. In those cases in which an RUSborrower has a majority-ownership in asubsidiary, the borrower must prepareconsolidated financial statements inaccordance with the requirements ofStatement No. 94. These consolidatedstatements must also include supple-mentary schedules presenting aBalance Sheet and Income Statementfor each majority-owned subsidiary in-cluded in the consolidated statements.

Although Statement No. 94 requiresthe consolidation of majority-ownedsubsidiaries, RUS Forms 7 and 12 mustbe prepared on an unconsolidated basis.

501 Patronage Capital Assignments

Accounting for patronage capital andmargins may vary depending upon theindividual cooperative’s bylaws. Thecomments contained in this section re-late to the application of the standardbylaw provisions.

The entries required, at year’s end,to record patronage capital trans-actions where there is no major mer-chandising program are as follows:Dr. 219.1, Operating MarginsDr. 219.2, Nonoperating margins

Cr. 201.2, Patronage Capital Assign-able

To record the amount of patronagecapital assignable.

Dr. 201.2, Patronage Capital AssignableCr. 201.1, Patronage Capital Credits

To record the allocation of patronagecapital to the patrons’ accounts.

The procedure for determining theamount of patronage capital assignableto the individual patron on a total dol-lar basis is as follows:

1. Determine the total amount to beassigned for the year (Account 201.2).

2. Determine patronage from electricservice, the total of consumers’ billings(Accounts 440–447).

3. Determine the percentage factor tobe used in calculating patronage cap-ital to be credited to each consumeraccount. Divide ‘‘1’’ by ‘‘2’’.

4. Determine the amount of capitalto be credited to each consumer. Mul-tiply the individual consumer’s billingsfor the year by the percentage factorobtained in ‘‘3’’ above.

The procedure for determining theamount of patronage capital assignableto the individual patron on a dollar


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basis, less the cost of power, is as fol-lows:

1. Determine the total amount to beassigned for the year.

2. Determine the total amount of rev-enue received from each classificationof customers.

3. Determine the total cost of powerfor each classification of customers.(For example, use cost per kWh sold).

4. For each classification of cus-tomers subtract the amount obtainedin ‘‘3’’ from the amount obtained in‘‘2,’’ to obtain the total amount re-ceived, less cost of power, by classifica-tion of customers.

5. Add the amounts obtained in ‘‘4’’to obtain the total amount of revenue,less cost of power.

6. Divide the total amount received,less cost of power for each classifica-tion of customers (amounts obtained in‘‘4’’), by the total amount received, lesscost of power for all customers(amount obtained in ‘‘5’’) to obtain theprorata percentage for each classifica-tion of customers.

7. Multiply the total amount to be al-located (amount obtained in ‘‘1’’) bythe prorata percentage for each classi-fication of customers (obtained in ‘‘6’’)to obtain the amount to be assignedeach classification of customers.

8. Divide the amount to be assignedeach classification of customers(amount obtained in ‘‘7’’) by the totalamount received from the classifica-tion of customers (amount obtain in‘‘2’’) to obtain the percentage factor foreach classification of customers.

9. Determine the total amount re-ceived from each individual customer.

10. Multiply the total amount re-ceived from each individual customer(amount obtained in ‘‘9’’) by the per-centage factor for his classification(amount obtained in ‘‘8’’) to obtain theamount of capital to be assigned eachindividual customer.

After calculating the patronage cap-ital to be credited to each customer,there is usually a small balance re-maining. This small balance shall re-main in Account 201.2, Patronage Cap-ital Assignable, and shall be added tothe amount to be assigned in the fol-lowing year.

Proper records shall be maintained tosupport all capital credit transactions.

As a minimum, these records shallshow, for each patron, the amount ofcapital credited for each year as wellas the amount and date retired for eachyear.

The process of transferring capitalcredits from the Patronage Capital As-signable accounts to the Patrons’ Cap-ital Credits Assigned accounts or tothe Patrons’ Capital Credits accountsand the making of entries to individualpatron’s records constitutes an assign-ment of capital credits. This holds truefor recordkeeping purposes as well asfrom a legal point of view. This assign-ment shall be followed by formal noti-fication to patrons within a reasonableperiod of time.

In the event that a distribution coop-erative incurs a net loss, that loss shallnot be allocated to its members (pa-trons). The loss shall be accumulatedand offset by future nonoperating mar-gins.

502 Patronage Capital Retirements

As the board of directors has the re-sponsibility for determining whetherthe financial condition of the coopera-tive will permit retirement of capitalcredits and whether the proposed re-tirement complies with mortgage andbylaw provisions, the authorization forthe retirement shall be set forth in theboard minutes. The entries to recordthe general retirement of capital cred-its shall be as follows:

Dr. 201.1, Patronage Capital CreditsCr. 238.1, Patronage Capital Payable

To record the board of directors’ au-thorization to make payments ofcapital credits.

Dr. 238.1, Patronage Capital PayableCr. 131.1, Cash—General.

To record actual cash payments of cap-ital credits.

NOTE: To provide better control over thepayment of patronage capital credits, a spe-cial checking account should be establishedin an amount equal to the authorized generalretirement. Special prenumbered checksshall be used for each general retirement ofpatronage capital.

To strengthen internal control and tofacilitate the settlement of estates, theboard should adopt a policy specifying


881


exactly how payments of capital cred-its shall be made to the estates of de-ceased patrons. Payments made to es-tates shall be recorded as follows:Dr. 201.1, Patronage Capital Credits

Cr. 131.1, Cash—GeneralTo record the payment of capital cred-

its when an estate is settled by re-funding 100 cents on the dollar.

Dr. 201.1, Patronage Capital CreditsCr. 131.1, Cash—GeneralCr. 217, Retired Capital Credits—Gain

To record the payment of capital cred-its when an estate is settled for lessthan the full amount of capitalcredited to the deceased customer’saccount.

Dr. 217, Retired Capital Credits—GainCr. 201.2, Patronage Capital Assign-

ableTo record the reallocation to current

patrons of the amount of the dis-count, if provided for in the bylaws.

If a capital credit check is returneddue to an inability to locate the pa-tron, it shall be held pending a recheckof available records to ascertain thecorrect address of the patron. If it isdetermined that the patron cannot belocated, the check shall be cancelledand the amount of the check debited toAccount 131.1, Cash—General, and cred-ited to Account 217, Retired CapitalCredits—Gain. If the state, however,has unclaimed property laws to whichthe amount is subject, the amountshall be credited to Account 253, OtherDeferred Credits, until final dispositionhas been made. A notation shall bemade in the records of the former pa-tron to facilitate payment if his or herwhereabouts is subsequently deter-mined.

If the records show that a number offormer patrons have moved and left noforwarding address, it is not necessaryto prepare a capital credit retirementcheck for these patrons when a generalretirement of capital credits is made.When setting funds aside to make ageneral retirement, however, appro-priate amounts shall be included tocover payments due these patrons. Thecooperative shall then make a reason-able effort to locate these patronsthrough publication of their names inthe newsletter or local newspaper. Ifthe patrons are not located, theamounts set aside and the credits to

their accounts shall be handled in amanner similar to those for whom pay-ment checks are returned.

Under the standard bylaw provisionsrecommended by RUS, it is not properto use capital credits that were as-signed to former patrons to liquidatetheir delinquent bills. When the stand-ard bylaws are in effect and collectionefforts have failed, the balance of anuncollectible bill, after application ofcustomers deposits and membershipfees, shall be charged against the accu-mulated provision for uncollectible ac-counts. If the patron has capital cred-its assigned to him or her, these re-main untouched except for a notationto indicate the amount of the unpaidbill. When a general retirement of cap-ital credits is made at some futuredate, amounts which would otherwisebe due the patron may be applied tosatisfy the unpaid bill with the balancerefunded to him or her.

503 Operating and NonoperatingMargins

Occasionally questions arise con-cerning the accounting for the balancesin Accounts 218, Capital Gains andLosses; 219.3, Other Margins; 219.4,Other Margins and Equities-Prior Peri-ods; 434, Extraordinary Income; and435, Extraordinary Deductions. Thebalance in these accounts shall be ac-counted for as follows:

1. The balance in Account 219.4, OtherMargins and Equities—Prior Periods,shall be transferred, at year’s end, toAccount 219.1 or 219.2, as appropriate.Accounts 219.1 and 219.2 are then closedto Account 201.2, Patronage Capital As-signable, unless otherwise provided forin the bylaws.

2. The balances in Account 434, Ex-traordinary Income, and Account 435,Extraordinary Deductions, shall becleared to Account 219.2 at year’s end.

3. The balances in Account 219.3,Other Margins, and Account 218, Cap-ital Gains and Losses, shall remain inthese accounts unless they are allo-cated to patrons or used to absorb fu-ture losses as provided for in the by-laws of the cooperative.

When a cooperative is engaged in amajor merchandising activity, all costs


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properly chargeable to the merchan-dising activity shall be allocated assuch to offset the associated revenue.Nonoperating margins generated fromthis source shall be prorated annuallyon a patronage basis and credited tothose patrons accounts from whomsuch amounts were obtained. Merchan-dising activities of this nature may re-quire a bylaw provision allowing forthe allocation of margins generated bya major merchandising activity sepa-rate from other operating or nonop-erating margins.

If, at the time of the adoption of thebylaw provisions for the allocation ofnonoperating margins, there are prioryears’ losses resulting in debit balancesin Accounts 218, Capital Gains andLosses; 219.1, Operating Margins; 219.2,Nonoperating Margins; or 219.3, OtherMargins; the credit balances in Ac-counts 218, 219.2, or 219.3 resulting fromprior years’ operations shall be trans-ferred, to the extent necessary, to off-set such deficits. If the board deter-mines that amounts shall be allocatedto prior years’ patrons, the creditbalances remaining in these accountsshall be transferred to Account 201.2,Patronage Capital Assignable.

If there are current year’s losses re-sulting in debit balances in either Ac-count 219.1 or 219.2, credit balances inAccounts 219.2, 219.3, and 218 shall betransferred, to the extent necessary, tooffset such deficits. Remaining creditbalances allocable to patrons shall betransferred to Account 1.2.

504 Patronage Capital from G&TCooperatives

When a cooperative receives capitalcredits from a G&T cooperative, thetransaction shall be recorded by a debitto Account 123.1, Patronage Capitalfrom Associated Cooperatives, and acredit to Account 423, Generation andTransmission Cooperative CapitalCredits. This entry shall be madepriorto the closing of the cooperative’sbooks even though, in most cases, thenotice of the G&T allocation is not re-ceived until after the close of the yearto which it relates. If precise informa-tion cannot be obtained from the G&Twithin a reasonable time, capital cred-its shall be recorded on an estimatedbasis. The difference between the esti-

mated amount and the actual shall berecognized in the following year unlessthe difference is material.

A distribution cooperative shall notrecognize its proportionate share oflosses incurred by the G&T. G&T lossesshall be accumulated and offset as pro-vided for in the bylaws. Unlike dis-tribution cooperatives, a G&T has theoption to offset accumulated losseswith future operating and/or nonop-erating margins.

505 Patronage Capital Furnished byOther Cooperative Service Organiza-tions

Utilities may obtain long-term andshort-term loans, telephone or dataprocessing services, or may purchaseoil, gasoline, materials, insurance, andvarious items from cooperative or mu-tual enterprises. These enterprisesoften make patronage refunds or pro-vide evidence that an amount equal tosuch a refund has been credited to theutility as an investment of capital. Therefund may be in the form of cash inthe year following the purchase or itmay be deducted from the next invoice.The notice of patronage credited to theborrower’s account may indicate thatsuch capital may be retired at some fu-ture date upon certain conditions hav-ing been met. The following providesthe accounting journal entries forthese types of transactions:

1. Insurance policy refunds from mu-tual companies, in cash or as creditsagainst subsequent purchases, shall becredited to the appropriate expense ac-count. If sufficient information is notavailable to credit the refunds to theappropriate expense accounts, theyshall be credited to Account 165, Pre-payments, and reduce premiums for thecurrent year.

2. Patronage capital allocations fromcooperatives, other than mutual insur-ance companies, shall be credited, inthe year that the allocation notice isreceived, to Account 424, Other CapitalCredits and Patronage Allocations, orto construction work-in-progress, asappropriate. The allocation of patron-age capital credits between Account 424and construction work-in-progressshall be made on an equitable basis.For example, patronage capital alloca-tions received from a cooperative


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money lender are allocated betweenAccount 424 and construction work-in-progress based upon the ratio of inter-est charged to construction for thatparticular lender to total interest ex-pense incurred for that lender. Patron-age capital allocations received from amaterial supplier are allocated basedupon the ratio of materials charged toconstruction to total materials pur-chased.

3. The face amount of patronage cap-ital certificates received by the cooper-ative from the purchase of goods orservices from cooperative money lend-ers (CFC), oil dealers, material sup-pliers, pole treating plants, commu-nications services, and others shall becharged to either Account 123.1, Pa-tronage Capital from Associated Co-operatives, or Account 124, Other In-vestments, as appropriate. Account123.1 shall include investments in onlythose cooperatives, or enterprises, thatare directly related to the electric util-ity industry and controlled by the elec-tric cooperatives. These include state-wide cooperatives, power cooperatives,and NRECA. Other investments in oilcooperatives and insurance companiesshall be charged to Account 124.

506 Forfeited Membership Fees

The bylaws of each cooperative pre-scribe certain rules and regulationsconcerning membership in the coopera-tive. Among these are provisions forforfeiture of membership fees. Somebylaws provide for application of mem-bership fees against any unpaid ac-counts at the time of termination ofservice. Any remaining balance may berefunded to the member. Balances thatcannot be refunded to the member dueto an inability to locate the member ordue to bylaw restriction, shall be cred-ited to Account 208, Donated Capital,provided they do not escheat to thestate. If disposition of the fees cannotbe determined immediately, theamount involved shall be transferred toAccount 253, Other Deferred Credits,until the determination is made.

601 Employee Benefits

The costs of employees’ fringe bene-fits (hospitalization, retirement, holi-day, sick and vacation pay, etc.) shallbe accumulated in an appropriate

clearing account and allocated month-ly on the basis of payroll. Vacationcosts shall be accrued monthly by ap-propriate credits to an accrual ac-count. These monthly accruals shall beallocated on the basis of direct payrollcosts to construction, retirement, andthe applicable operations, mainte-nance, and administrative expense ac-counts.

Sick leave costs are not normally ac-crued unless the employee is entitledto be paid for accumulated sick leaveat the termination of employment.Salary payments and the associatedemployee pensions and benefits and so-cial security and other payroll taxesfor an employee who is actually sickshall be charged to the same accountor accounts to which his or her salaryis normally charged.

602 Compensated Absences

Statement of Financial AccountingStandards No. 43, Accounting for Com-pensated Absences (Statement No. 43),requires employers to accrue a liabilityas an employee earns the right to bepaid for future absences. Four criteriawere established for this accrual:

1. The employer’s obligation for pay-ment for future absences is attrib-utable to employees’ services alreadyperformed.

2. The obligation relates to employeerights which vest or accumulate. Vest-ed rights are considered those forwhich the employer is obligated tomake payment even if the employeeterminates. Rights which accumulateare those earned but unused rights tocompensated absences which may becarried forward to one or more periods,subsequent to the period in which theyare earned.

3. Payment of the compensation isprobable.

4. The amount can be reasonably es-timated.

A company’s liability shall be esti-mated based upon payments it expectsto make as a result of employees’ workalready performed. If a reasonable esti-mate cannot be made, the companyshall disclose that fact in the financialstatements.


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Statement No. 43 does not apply toseverance or termination pay, post-retirement benefits, deferred com-pensation, stock or stock options,group insurance, or other long-termfringe benefits.

The entries required to account forthe accrual of compensated absencesare as follows:


Cr. 242.3, Accrued Employees’ Vacationand Holidays

To record the liability for benefitsearned in prior years.

Dr. 107, Construction Work in ProgressDr. 108.8, Retirement Work in ProgressDr. Various Operations, Maintenance,

and Administrative Expense Ac-counts

Cr. 242.3, Accrued Employees Vacationand Holidays

To record the liability for benefitsearned in the current period.

603 Employee Retirement and GroupInsurance

Some borrowers have group insur-ance or retirement plans or both fortheir employees. As a general rule thecost of these programs is borne par-tially by the cooperative and partiallyby its employees. The cooperative maypay the full cost in advance and re-cover the employee’s share throughpayroll deductions. The accounting forthese transactions is as follows:

1. The cooperative’s advanced pay-ment of premiums on insurance and re-tirement agreements shall be chargedto Account 165, Prepayments, for theemployers portion, and Account 143,Other Accounts Receivable, for the em-ployee’s portion.

2. The cost of the employer’s portionof a retirement and group insuranceprogram shall be charged to construc-tion and retirement activities and theapplicable operations, maintenance,and administrative expense accountsbased upon a specific identificationwith employees’ labor costs chargedtherein or, in the absence of specificemployee identification, based upon di-rect labor dollars or direct labor hoursdepending upon which allocation tech-

nique provides the most equitable dis-tribution of costs.

604 Deferred Compensation

Many utilities participate in theNRECA Deferred Compensation Pro-gram. Based upon the provisions of theprogram, the following accounting en-tries shall be made:

Dr. 186.XX, Miscellaneous DeferredDebits—Deferred Compensation

Cr. 228.3, Accumulated Provision forPensions and Benefits

To increase the deferred compensationprovision by the amount of the an-nual deposit to NRECA’s DeferredCompensation Fund.

Dr. 128, Other Special Funds—DeferredCompensation

Cr. 131.1, Cash—GeneralTo record the annual deposit to

NRECA’s Deferred CompensationFund.

Dr. Construction Work in Progress, Re-tirement Work in Progress, or theVarious Operations, Maintenance,and Administrative Expense Ac-counts, as appropriate.

Cr. 186.XX, Miscellaneous DeferredDebits—Deferred Compensation

To record monthly accrual of deferredcompensation.

NOTE: If an employee joins the deferredcompensation program during the year, useentry #1 to record the additional deposit tothe NRECA Deferred Compensation Fundand increase the monthly accrual in entry #2to reflect this deposit.

NRECA provides borrowers that par-ticipate in the deferred compensationprogram with an annual account state-ment disclosing the activity for eachHomestead Fund investment includingthe number of shares owned, interestincome, dividend income, capital gains/losses, and the value of the sharesowned at statement date. Funds maybe invested in the Short-term BondFund, the Value Fund, the Short-termGovernment Securities Fund, and theDaily Income Fund. Depending uponthe Homestead Fund selected, investedfunds may earn interest and dividendincome and may experience unrealizedholding gains or losses. Based upon theinformation provided on the annual


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statement, the following journal en-tries shall be recorded to recognize theincrease or decrease in the fund assets:

Dr. 128, Other Special Funds—DeferredCompensation

Cr. 419, Interest and Dividend IncomeCr. 421, Miscellaneous Nonoperating In-

comeTo record an increase in the fund value

as of December 31, 19xx, resultingfrom interest and dividend incomeand from unrecognized holding gainson trading securities.

Dr. Various Operations, Maintenance,and Administrative Expense Ac-counts

Cr. 228.3, Accumulated Provision forPensions and Benefits

To record an increase in the liability tothe employee resulting from an in-crease in the investment account.

Dr. 426.5, Other DeductionsCr. 128, Other Special Funds—Deferred

CompensationTo record a decrease in fund value as of

December 31, 19xx, resulting from un-recognized holding losses on tradingsecurities.

Dr. 228.3, Accumulated Provision forPensions and Benefits

Cr. Various Operations, Maintenance,and Administrative Expense Ac-counts

To record a decrease in the liability tothe employee resulting from a de-crease in the investment account.

Payments made to participating em-ployees because of retirement or sepa-ration for other reasons shall be re-corded using the following entries:

Dr. 131.1, Cash—GeneralCr. 128, Other Special Funds—Deferred

CompensationTo record the receipt of funds from

NRECA.andDr. 228.3, Accumulated Provision for

Pensions and BenefitsCr. 131.1, Cash—GeneralTo record payment to employee for de-

ferred compensation.

If the borrower has elected to bearthe market risk of the funds whichguarantee that the amount of moneyan employee receives will not be lessthan the amount of salary deferred, the

following entry shall be recorded iftotal payment(s) from NRECA are lessthan the amount of salary deferred:


Cr. 131.1, Cash—GeneralTo record payment to employee for de-

ferred compensation. Payment wasmade because amount returned didnot equal salary deferred.

Appropriate disclosure of the termsof the program shall be made in thenotes to the financial statements.

605 Life Insurance Premium on Life ofa Borrower Employee

Some borrowers insure the life of themanager and/or key employees withthe borrower being named as the bene-ficiary. Such arrangements shall be ac-counted for as follows:

1. Charge Account 426.2, Life Insur-ance, for the net amount of the pre-mium paid each year on the insurancepolicy.

2. At the anniversary date of the pol-icy each year, charge Account 124,Other Investments, and credit Account426.2, Life Insurance, with the amountof the annual increase in the cash sur-render value of the policy; providedsuch increase is less than the net pre-mium paid for that year. If the annualincrease in the surrender value exceedsthe net premium paid for the sameyear, only that portion of the sur-render value increase equal to the netpremium paid shall be credited to Ac-count 426.2. The remainder is to becredited to Account 419, Interest andDividend Income.

3. Upon retirement of the insured em-ployee and surrender of the insurancepolicy, charge Account 131.1, Cash—General, and credit Account 124, OtherInvestments, for the amount receivedfrom the insurance company. If it is de-cided to grant to the retiring insuredemployee all, or any portion, of thecash received upon surrender of thepolicy, Account 926, Employee Pen-sions and Benefits, shall be chargedand Account 131.1 credited for theamount paid to the retiring employee.

4. If the insured employee dies withinhis term of service, charge Account131.1, Cash—General, for the face


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amount of the policy paid by the insur-ance company. Credit Account 124,Other Investments, for the cash sur-render value previously charged there-to, and credit the remainder to Ac-count 421, Miscellaneous NonoperatingIncome.

606 Pension Costs

With the issuance of Statement of Fi-nancial Accounting Standards No. 87,Employers’ Accounting for Pensions(Statement No. 87), there have beensignificant changes in the accountingand reporting requirements relating topension costs. This section will high-light the accounting and reporting re-quirements for the major types of pen-sion plans. It should be noted, however,that the definitions and accountingprocedures outlined in this section re-late to financial accounting and theymay differ from those used for tax ac-counting.

Defined Benefit Pension Plans

A defined benefit pension plan is aplan that defines an amount of pensionbenefit to be provided, usually as afunction of one or more factors such asage, years of service, or compensation.In a defined benefit plan, the employerpromises to provide, in addition to cur-rent wages, retirement income pay-ments in future years after the em-ployee retires or terminates service.Generally, the amount of benefit to bepaid depends upon a number of futureevents that are incorporated into theplan’s benefit formula, after includinghow long the employee and any sur-vivors live, how many years of servicethe employee renders, and the employ-ee’s compensation in the years imme-diately before retirement or termi-nation.

Under a defined benefit plan, the de-termination of pension costs, assets, li-abilities, and the disclosures in the fi-nancial statements require many cal-culations and assumptions to be made.This section provides a general over-view of the accounting and reportingrequirements associated with a definedbenefit pension plan. Consult State-ment No. 87 for guidance in making thenecessary calculations and assumption.

The accounting and reporting re-quirements related to a defined benefitpension plan are as follows:

1. The following components shall beincluded in the periodic recognition ofnet pension cost by an employer spon-soring a defined benefit pension plan:

a. The service cost component recog-nized in a period shall be determined asthe actuarial present value of benefitsattributed by the pension plan formulato employee service during that period.The measurement of the service costcomponent requires use of an attribu-tion method and assumptions.

b. The interest cost component rec-ognized in a period shall be determinedas the increase in the projected benefitobligation due to the passage of time.Measuring the projected benefit obliga-tion as a present value requires accrualof an interest cost at rates equal to theassumed discount rates.

c. For a funded plan, the actual re-turn on plan assets, if any, shall be de-termined based upon the fair value ofplan assets at the beginning and theend of the period, adjusted for con-tributions and benefit payments.

d. Plan amendments (including initi-ation of a plan) often include provi-sions that grant increased benefitsbased upon services rendered in priorperiod. Because plan amendments aregranted with the expectation that theemployer will realize economic benefitsin future period, Statement No. 87 doesnot require the cost of providing suchretroactive benefits (prior service cost)to be included in net periodic pensioncost entirely in the year of the amend-ment but provides for recognition dur-ing the future service periods of thoseemployees active at the date of theamendment who are expected to re-ceive benefits under the plan.

The cost of retroactive benefits (in-cluding benefits that are granted to re-tirees) is the increase in the projectedbenefit obligation at the date of theamendment. Except as noted below,prior service cost shall be amortized byassigning an equal amount to each fu-ture period of service of each employeeactive at the date of the amendmentswho is expected to receive benefitsunder the plan. If all or almost all ofthe plan’s participants are inactive,


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the cost of retroactive plan amend-ments affecting benefits of inactiveparticipants shall be amortized basedupon the remaining life expectancy ofthose participants rather than the re-maining service period.

To reduce the complexity and detailof the computations required, con-sistent use of an alternative amortiza-tion approach that more rapidly re-duces the unrecognized cost of retro-active amendments is acceptable. Forexample, a straight-line amortizationof the cost over the average remainingservice period of employees expected toreceive benefits under the plan is ac-ceptable. The alternative method usedshall be disclosed.

In some situations, a history of reg-ular plan amendments and other evi-dence may indicate that the periodduring which the employee expects torealize economic benefits from anamendment granting retroactive bene-fits is shorter than the entire remain-ing service period of the active employ-ees. Identification of such situationsrequires an assessment of the indi-vidual circumstances and the sub-stance of the particular plan situation.In those circumstances, the amortiza-tion of prior service cost shall be accel-erated to reflect the more rapid expira-tion of the employer’s economic bene-fits and to recognize the cost in the pe-riods benefited.

A plan amendment can reduce ratherthan increase the projected benefit ob-ligation. Such a reduction shall be usedto reduce an existing unrecognizedprior service cost, and the excess, ifany, shall be amortized on the samebasis as the cost of benefit increases.

e. Gains and losses are changes in theamount of either the projected benefitobligation or plan assets resulting fromexperience different from that assumedand changes in assumptions. Gains andlosses include amounts that have beenrealized. Because gains and losses mayreflect refinements in estimates as wellas real changes in economic values, andbecause some gains in one period maybe offset by losses in another or viceversa, the recognition of gains andlosses as components of net pensioncost of the period in which they arise isnot required.

The expected return on plan assetsshall be determined based upon the ex-pected long-term rate of return on planassets and the market-related value ofplan assets. The market-related valueof plan assets shall be either fair valueor a calculated value that recognizeschanges in fair value in a systematicand rational manner over not morethan 5 years. Different ways of calcu-lating market-related value may beused for different classes of assets butthe manner of determining market-re-lated value shall be applied consist-ently from year to year for each assetclass.

Asset gains and losses are the dif-ferences between the actual return onassets during a period and the expectedreturn on assets for that period. Assetsgains and losses include both changesreflected in the market-related valueof assets and changes not yet reflectedin the market-related value (that is,the difference between the fair value ofassets and the market-related value).Asset gains and losses not yet reflectedin market-related values are not re-quired to be amortized.

As a minimum, amortization of anunrecognized gain or loss (excludingasset gains and losses not yet reflectedin market-related value) shall be in-cluded as a component of net pensioncost for a year if, as of the beginning ofthe year, that unrecognized net gain orloss exceeds 10 percent of the greater ofthe projected benefit obligation or themarket-related value of plan assets. Ifamortization is required, the minimumamortization shall be that excess di-vided by the average remaining serviceperiod of active employees expected toreceive benefits under the plan. If all oralmost all of a plan’s participants areinactive, the average remaining life ex-pectancy of the inactive participantsshall be used instead of average re-maining service life.

Any systematic method of amortiza-tion of gains and losses may be used inlieu of the minimum specified in theprevious paragraph provided that theminimum is used in any period inwhich the minimum is greater (i.e., re-duces the net balance by more), themethod is applied consistently, themethod is applied similarly to both


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gains and losses, and the method is dis-closed.

The gain or loss component of netperiodic pension cost shall consist ofthe difference between the actual re-turn on plan assets and the expectedreturn on plan assets and amortizationof the unrecognized net gain or lossfrom previous periods.

2. A liability (unfunded accrued pen-sion cost) shall be recognized if the netperiodic pension cost recognized pursu-ant to Statement No. 87 exceedsamounts the employer has contributedto the plan. An asset (prepaid pensioncost) shall be recognized if the net peri-odic pension cost is less than theamounts the employer has contributedto the plan.

If the accumulated benefit obligationexceeds the fair value of plan assets,the employer shall recognize a liability(including unfunded accrued pensioncost) that is at least equal to the un-funded accumulated benefit obligation.Recognition of an additional minimumliability is required if an unfunded ac-cumulated benefit obligation existsand an asset has been recognized as aprepaid pension cost, the liability al-ready recognized as unfunded accruedpension cost is less than the unfundedaccumulated benefit obligation, or noaccrued or prepaid pension cost hasbeen recognized.

If an additional minimum liability isrecognized, an equal amount shall berecognized as an intangible asset, pro-vided that the asset does not exceedthe amount of unrecognized prior serv-ice cost. If an additional liability re-quired to be recognized exceeds unrec-ognized prior service cost, the excess(which represents a net loss not yetrecognized as a net periodic pensioncost) shall be reported as a separatecomponent (reduction) of equity.

When a new determination of theamount of additional liability is madeto prepare a balance sheet, the relatedintangible asset and separate compo-nent of equity shall be eliminated oradjusted, as necessary.

3. An employer sponsoring a definedbenefit pension plan shall disclose thefollowing information:

a. A description of the plan includingemployee groups covered, type of ben-efit formula, funding policy, types of

assets held and significant nonbenefitliabilities, if any, and the nature andeffect of significant matters affectingcomparability of information for allperiod presented.

b. The amount of net periodic pen-sion cost for the period showing sepa-rately the service cost component, theinterest cost component, the actual re-turn on assets for the period, and thenet total of other components.

c. A schedule reconciling the fundedstatus of the plan with amounts re-ported in the employer’s balance sheet,showing separately, the fair value ofplan assets, the projected benefit obli-gation identifying the accumulatedbenefit obligation and the vested ben-efit obligation, the amount of unrecog-nized prior service cost, the amount ofunrecognized net gain or loss includingasset gains and losses not yet reflectedin market-related value), the amountof any remaining unrecognized net ob-ligation or net asset existing at thedate of initial application of StatementNo. 87, the amount of any additional li-ability recognized, and the amount ofnet pension asset or liability recog-nized in the balance sheet (which is thenet result of combining the previoussix items).

d. The weighted-average assumed dis-count rate and rate of compensationincrease (if applicable) used to measurethe projected benefit obligation andthe weighted-average expected long-term rate of return on plan assets.

e. If applicable, the amount and typeof securities of the employer and re-lated parties included in plan assets,and the approximate amount of annualbenefits of employees and retirees cov-ered by annuity contracts issued by theemployer and related parties. Also, ifapplicable, the alternative amortiza-tion periods used.

f. An employer that sponsors two ormore separate defined benefit pensionplans shall determine net periodic pen-sion cost, liabilities, and assets by sep-arately applying the provisions ofStatement No. 87 to each plan. In par-ticular, unless an employer clearly hasa right to use the assets of one plan topay benefits of another, a liability re-quired to be recognized for one planshall not be reduced or eliminated be-cause another plan has assets in excess


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of its accumulated benefit obligationor because the employer has prepaidpension cost related to another plan.

The required disclosures may be ag-gregated for all of an employer’s sin-gle-employer defined benefit plans, orplans may be disaggregated into groupsso as to provide the most useful infor-mation. Plans with assets in excess ofthe accumulated benefit obligation,however, shall not be aggregated withplans that have accumulated benefitobligations that exceed plan assets.

Annuity Contracts

An annuity contract is a contract inwhich an insurance company uncondi-tionally undertakes a legal obligationto provide specified benefits to specificindividuals in return for a fixed consid-eration or premium. An annuity con-tract is irrevocable and involves thetransfer of significant risk from theemployer to the insurance company.Some annuity contracts (participatingannuity contracts) provide that thepurchaser (either the plan or the em-ployer) may participate in the experi-ence of the insurance company. Underthese contracts, the insurance com-pany ordinarily pays dividends to thepurchaser. If the substance of a partici-pating contract is such that the em-ployer remains subject to all or most ofthe risks and rewards associated withthe benefit obligation covered and theassets transferred to the insurancecompany, that contract is not an annu-ity contract for purposes of StatementNo. 87.

To the extent that benefits currentlyearned are covered by annuity con-tracts, the cost of these benefits shallbe the cost of purchasing the contracts,except as noted below. That is, if allbenefits attributed by the plan’s bene-fits formula to service in the currentperiod are covered by nonparticipatingannuity contracts, the cost of the con-tracts determines the service cost com-ponent of net pension cost for that pe-riod.

Benefits provided by the pension ben-efit formula beyond benefits providedby annuity contracts (for example, ben-efits related to future compensationlevels) shall be accounted for accordingto the provisions applicable to plansnot involving insurance contracts.

Benefits covered by annuity con-tracts shall be excluded from the pro-jected benefit obligation and the accu-mulated benefit obligation. Except asnoted below, annuity contracts shall beexcluded from plan assets.

Some annuity contracts provide thatthe purchaser (either the plan or theemployer) may participate in the expe-rience of the insurance company.Under these contracts, the insurancecompany ordinarily pays dividends tothe purchaser, the effect of which is toreduce the cost of the plan. The pur-chase price of a participating annuitycontract ordinarily is higher than theprice of an equivalent contract withoutparticipation rights. The cost of theparticipation right shall be recognized,at the date of purchase, as an asset. Insubsequent periods, the participationright shall be measured at its fairvalue if the contract is such that thefair value is reasonably estimable. Oth-erwise, the participation right shall bemeasured at its amortized cost (not inexcess of its net realizable value), andthe cost shall be amortized systemati-cally over the expected dividend periodunder the contract.

Other Contracts with InsuranceCompanies

Insurance contracts that are, in sub-stance, equivalent to the purchase ofannuities shall be accounted for assuch. Other contracts with insurancecompanies shall be accounted for as in-vestments and measured at fair value.For some contracts, the best availableevidence of fair value may be contractvalue. If a contract has a determinablecash surrender value or conversionvalue, that is presumed to be its fairvalue.

Defined Contribution Plans

A defined contribution pension planis a plan that provides pension benefitsin return for services rendered, pro-vides an individual account for eachparticipant, and has terms that specifyhow contributions to the individual’saccounts are to be determined ratherthan the amount of pension benefitsthe individual is to receive. Under a de-fined contribution plan, the pension


890


benefits a participant will receive de-pend only upon the amount contrib-uted to the participant’s account, thereturns earned on investments of thosecontributions, and forfeitures of otherparticipants’ benefits that may be allo-cated to the participant’s account.

To the extent that a plan’s definedcontributions to an individual’s ac-count are to be made for periods inwhich that individual renders services,the net pension cost for a period shallbe the contribution called for in thatperiod. If a plan calls for contributionsfor periods after an individual retiresor terminates, the estimated cost shallbe accrued during the employee’s serv-ice period.

An employer that sponsors one ormore defined contribution plans shalldisclose the following separately fromits defined benefit plan disclosures:

1. A description of the plan(s) includ-ing employee groups covered, the basisfor determining contributions, and thenature and effect of significant mattersaffecting comparability of informationfor all periods presented.

2. The amount of cost recognized dur-ing the period.

A pension plan having characteristicsof both a defined benefit plan and a de-fined contribution plan requires carefulanalysis. If the substance of the plan isto provide a defined benefit, as may bethe case with some ‘‘target benefit’’plans, the accounting and disclosurerequirements shall be determined inaccordance with the provisions applica-ble to a defined benefit plan.

Multiemployer Plans

A multiemployer plan is a pensionplan to which two or more unrelatedemployers contribute, usually pursuantto one or more collective-bargainingagreements. A characteristic of multi-employer plans is that assets contrib-uted by one participating employermay be used to provide benefits to em-ployees of other participating employ-ers since assets contributed by an em-ployer are not segregated in a separateaccount or restricted to provide bene-fits only to employees of that em-ployer.

An employer participating in a mul-tiemployer plan shall recognize as netpension cost, the required contribution

for the period and shall recognize as aliability, any contributions due and un-paid. The required contribution in-cludes both current costs and priorservice costs. If an employer elects tofund prior service cost in full at the in-ception of the plan, the total paymentbecomes the employer’s required con-tribution, and accordingly, its pensioncost for the period.

The following provisions are applica-ble to RUS borrowers participating in amultiemployer pension plan:

1. An electric utility participating ina multiemployer plan may defer cur-rent period pension expenses if the pro-visions of Statement of Financial Ac-counting Standards No. 71 (StatementNo. 71), Accounting for the Effects ofCertain Types of Regulation, are ap-plied.

Under the provisions of StatementNo. 71, pension costs may be deferredprovided such costs are recoveredthrough future rates.

2. An electric utility instituting anamendment to the NRECA Retirementand Security plan enters into a con-tractual agreement to pay the costs in-curred (prior service pension costs) forthe amendment. In such cases, theagreement is noncancelable and pay-able regardless of continued participa-tion in the plan.

Since the utility is unconditionallycommitted to making these paymentsand such payments are not contingentupon the utility’s continued participa-tion in the plan, the recognition ofthat liability is appropriate. The costsassociated with this liability shall beexpensed, in their entirety, when theliability is recognized.

The accounting journal entries re-quired to record the transactions asso-ciated with a multiemployer pensionplan are as follows:

Sample 1—Current Pension Expense

The journal entry required to recordthe normal costs associated with theNRECA Retirement and Security Pro-gram is as follows:Dr. Various Operations, Maintenance,


Dr. 107, Construction Work-in-ProgressDr. 108.8, Retirement Work-in-ProgressCr. 131.1, Cash—General


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To record the payment of pension coststo NRECA.NOTE: This entry shall not be recorded dur-

ing the moratorium.

Sample 2—Prior Service Pension Expense

The journal entries required torecord the prior service costs associ-ated with the NRECA Retirement andSecurity Program are as follows:

1. If the RUS borrower elects to paythe prior service pension costs in full,and there is no deferral of costs underthe provision of Statement No. 71, thefollowing entry shall be recorded:Dr. Various Operations, Maintenance,


Dr. 107, Construction Work-in-ProgressDr. 108.8, Retirement Work-in-ProgressCr. 131.1, Cash—GeneralTo record the payment of prior service

pension costs to NRECA.2. If the RUS borrower elects to fi-

nance prior service pension costs over aperiod of years and there is no deferralof costs under the provisions of State-ment No. 71, the following entries shallbe recorded:Dr. Various Operations, Maintenance,


Dr. 107, Construction Work-in-ProgressDr. 108.8, Retirement Work-in-ProgressCr. 224, Other Long-Term DebtTo record the liability to NRECA for

prior service pension costs.Dr. 224, Other Long-Term DebtDr. 427, Interest on Long-Term DebtCr. 131.1, Cash—GeneralTo record the annual payment to

NRECA for prior service pensioncosts.3. If the RUS borrower elects to fi-

nance prior service pension costs over aperiod of years and such costs are beingdeferred and amortized in accordancewith the provisions of Statement No.71, the following entries shall be re-corded:Dr. 182.3, Other Regulatory AssetsCr. 224, Other Long-Term DebtTo record the liability to NRECA for

prior service pension costs.Dr. Various Operations, Maintenance,


Dr. 107, Construction Work-in-ProgressDr. 108.8, Retirement Work-in-ProgressCr. 182.3, Other Regulatory AssetsTo record the amortization of deferred

prior service pension costs.Dr. 224, Other Long-Term DebtDr. 427, Interest on Long-Term DebtCr. 131.1, Cash—GeneralTo record the annual payment to

NRECA for prior service pensioncosts.4. If the RUS borrower elects to pay

the prior service pension costs in fulland such costs are being deferred andamortized in accordance with the pro-visions of Statement No. 71, the fol-lowing entries shall be recorded:Dr. 182.3, Other Regulatory AssetsCr. 131.1, Cash—GeneralTo record the payment to NRECA for

prior service pension costs.Dr. Various Operations, Maintenance,



prior service pension costs.

It should be noted that although theabove entries relate specifically to theNRECA Retirement and Security Pro-gram, they are applicable to all multi-employer pension plans.

An employer that participates in oneor more multiemployer plans shall dis-close the following separately from dis-closures for a single-employer plan:

1. A description of the multiemployerplan(s) including the employee groupscovered, the type of benefits provided(defined benefit or defined contribu-tion), and the nature and effect of sig-nificant matters affecting com-parability of information for all peri-ods presented.

2. The amount of cost recognized dur-ing the period.

Multiple-Employer Plans

A multiple-employer plan is, in sub-stance, aggregations of single-em-ployer plans combined to pool their as-sets for investment purposes to reducethe cost of plan administration. Undera multiple-employer plan, assets aresegregated and specifically identifiedto an employer. In addition, such plans


892


may have features that allow partici-pating employers to have different ben-efit formulas. Such plans shall be con-sidered single-employer plans for finan-cial accounting purposes and each em-ployer’s accounting shall be based uponits respective interest in the plan.

607 Unproductive Time

Lost time relating to construction,operations and maintenance shall beallocated on the basis of direct payrollcosts to the appropriate construction,operations or maintenance accounts inthe month incurred. Lost time is de-fined as time on duty during which pro-ductive work is not performed due toinclement weather conditions, mate-rial shortages, machine repairs, orother reasons.

If lost time attributable to construc-tion has a material effect on the con-struction accounts in any one month,these costs shall be deferred and dis-tributed over a reasonable period oftime by means of a predetermined per-centage based upon direct labor.

608 Training Costs, Attendance atMeetings, Etc.

Utilities engage in many types oftraining programs. Seminars are con-ducted for directors, managers, officemanagers, attorneys, engineers, andothers. Bookkeepers and office man-agers attend accountants’ meetings.Safety engineers attend safety schoolsand subsequently conduct regular safe-ty meetings at the cooperative. Costsincurred for the various types of train-ing activities shall be accounted for asfollows:

1. Managers’ and directors’ expensesto attend the NRECA national andstate conventions shall be charged toAccount 930.2, Miscellaneous GeneralExpenses.

2. Management or engineering sem-inar fees, salary time attending suchseminars including the associated pen-sions and benefits expense and payrolltaxes, and the related per diem and ex-penses shall be charged to the func-tional expense accounts. Salaries paidto employees shall also be charged tothe appropriate functional expense ac-count. Fees and expenses for directors’attendance shall be charged to Account930.2, Miscellaneous General Expenses.

3. When the office manager, book-keeper, or work order clerk attends astate or regional accounting meeting,their salary time and the associatedemployee pensions and benefits and so-cial security and other payroll taxesshall be charged to the account towhich the employees’ time is ordi-narily charged.

4. Employees’ salary time employeeand the associated pensions and bene-fits and social security and other pay-roll taxes spent attending regular safe-ty meetings conducted by the coopera-tive shall be charged to the account towhich the employees’ time is ordi-narily charged.

5. A safety engineer’s salary time andthe associated employee pensions andbenefits and social security and otherpayroll taxes spent attending a state-wide safety school shall be charged toAccount 925, Injuries and Damages.

6. The salary time and the associatedemployee pensions and benefits and so-cial security and other payroll taxesspent by a manager or line foremanconducting weekly safely meetingsshall be charged to the appropriatefunctional expense accounts includingAccount 590, Maintenance, Supervisionand Engineering, and Account 920, Ad-ministrative and General Services.

609 Maintenance and Operations

‘‘Operations’’ is the general termused to describe activities involved inthe delivery of electric service, bymeans of a distribution system, to theend user. It pertains to the use of theutility’s electric plant facilities anddoes not include activities intended toprevent or remedy an impending or ac-tual breakdown of those facilities.These activities are classified as main-tenance.

‘‘Maintenance’’ is the general termused to describe the activities involvedin the upkeep and repair, but not theenlargement or improvement, of prop-erty owned or leased and operated bythe company. It does not include thereplacement of retirement units.

610 Financial Forecast

Costs incurred and salaries paid toperform a 10-year financial forecast


893


shall be charged to Account 920, Ad-ministrative and General Salaries. Re-lated office supplies and expenses shallbe charged to Account 921, Office Sup-plies and Expenses. When a forecast isperformed by an outside consultant,the cost shall be charged to Account923, Outside Services Employed.

611 Advertising Expense

The cost of advertising and the costof informing the public about the elec-tric cooperative’s activities shall becharged to Account 930.2, Miscella-neous General Expenses.

Most of a cooperative’s advertising isinstructional in nature and relates thecooperative’s history and current ac-tivities. This type of advertising activ-ity should not be confused with that di-rected towards the enactment of a spe-cific law or laws directed toward ob-taining a specific decision from a regu-latory body. Political advertising ofthe type defined above shall be chargedto Account 426.4, Expenditures for Cer-tain Civic, Political, and Related Ac-tivities.

612 Special Power Cost Study

A special power cost study is definedas a study to determine whether suffi-cient power will be available in the fu-ture. If additional power or powersources are needed, the study deter-mines whether generation or purchasewill supply the lesser cost. The studyalso indicates when additional powerwill be needed. As costs are incurred,they shall be charged to a subaccountof Account 186, Miscellaneous DeferredDebits. Upon completion of the study,the costs shall be charged to Account557, Other Expenses, or amortized toAccount 557 over a period of time notto exceed 5 years.

613 Mapping Costs

The purpose of posting completedwork orders to system maps is to im-prove the operation of the system.These costs shall, therefore, be chargedto Account 588, Miscellaneous Distribu-tion Expenses. However, the cost ofsystem mapping in the planning stageof construction is an acceptable over-head cost of the resulting construction.

614 Member Relations Costs

Many electric cooperatives hire em-ployees whose duties concern a mixtureof power use and member relations ac-tivities. The salaries for these employ-ees shall be charged to Account 930.2,Miscellaneous General Expenses, ex-cept as provided below:

1. Account 912, Demonstrating andSelling Expenses, shall be charged withall labor, material, advertising, andother expenses incurred in pro-motional, demonstrating, and sellingactivities; the objective of which is topromote or retain the use of utilityservices by present or prospective cus-tomers.

2. Account 930.1, General AdvertisingExpenses, shall be charged with labor,material, and other expenses incurredin advertising and related activities,the cost of which by their content andpurpose, are not provided for else-where.

3. Account 416, Costs and Expenses ofMerchandising, Jobbing, and ContractWork, shall be charged with all costsspecifically related to merchandisingactivities when the utility is engagedin a major merchandising program.

4. Account 426.4, Expenditures forCertain Civic, Political, and RelatedActivities, shall be charged with ex-penditures for the purpose of influ-encing public opinion with respect tothe election or appointment of publicofficials, referenda, legislation, or ordi-nances (either with respect to the pos-sible adoption of new referenda, legis-lation or ordinances or repeal or modi-fication of existing referenda, legisla-tion or ordinances); or approval, modi-fication, or revocation of franchises; orfor the purpose of influencing the deci-sions of public officials. Account 426.4shall not include expenditures whichare directly related to appearances be-fore regulatory or other governmentalbodies in connection with the bor-rower’s existing or proposed oper-ations.

615 Statewide Fees

Additional fees collected by a state-wide association from its members forconstruction of a statewide buildingshall be charged to Account 930.2, Mis-cellaneous General Expenses. Any


894


amounts that are to be repaid by thestate association shall be charged toAccount 143, Other Accounts Receiv-able, or Account 123.23, Other Invest-ments in Associated Organizations, de-pending upon the terms of the repay-ment.

616 Power Supply/DistributionCooperative Borrowings

When a power supply cooperativeborrows money from a distribution co-operative as the result of a long-termloan agreement, the money shall be re-corded on the books of the power sup-ply cooperative as general funds unlessrestricted to a specific purpose. If re-stricted, the funds shall be recorded inAccount 128, Other Special Funds. Theresulting liability shall be recorded inAccount 224, Other Long-Term Debt.

The transaction shall be charged toAccount 123.23, Other Investments inAssociated Organizations, on the booksof the distribution cooperative.

617 Rate Discount Allowed by thePower Cooperative to DistributionCooperatives Owning ConnectingTransmission Lines

A distribution cooperative purchasespower from a power cooperative. Thedistribution cooperative owns and op-erates the transmission line betweenthe power cooperative’s facilities andthe distribution facilities. Because ofthis, power is sold at the standard rateat which the power cooperative sells toother distribution cooperatives who donot own their transmission lines, less adiscount. The discount or reduction inrate is based upon the distribution co-operative’s expense in operating andmaintaining its transmission facilities.The contract between the power coop-erative and the distribution coopera-tive must specifically state that themember shall receive a reduced rate ordiscount from the seller’s rate to othermember cooperatives.

Under this type of arrangement, thedistribution cooperative shall recordthe cost of purchased power by charg-ing the net amount to Account 555,Purchased Power.

618 Theft Losses not Covered byInsurance

Utilities may suffer losses as a resultof thefts of cash, materials and sup-plies, equipment, or electric plant-in-service that is not covered by insur-ance. The charges for nominal unin-sured losses shall be recorded in thefollowing accounts:

1. Cash—Account 924, Property Insur-ance, shall be charged.

2. Plant materials and operating sup-plies—Account 163, Stores Expense Un-distributed, shall be charged.

3. Equipment—Account 163, StoresExpense Undistributed, shall becharged for stores equipment; and Ac-count 184, Transportation Expense—Clearing, for transportation and garageequipment. The appropriate miscella-neous operations or administrative ex-pense account (Account 506, 524, 539,549, 566, 588, 905, 910, 916, or 930.2, as ap-propriate) shall be charged for all otherequipment.

4. Electric Plant-in-Service—A re-tirement work order shall be preparedfor electric plant constituting a unit ofproperty. The loss due to retirementshall be charged to Account 108.6, Ac-cumulated Provision for Depreciationof Distribution Plant. If the plant doesnot constitute a retirement unit, theloss shall be charged to the appropriatemaintenance expense account.

619 Self Billing

To maintain the books of accountson an accrual basis, bills for customerswho self bill and have not sent in areading or remittance, shall be esti-mated. A journal entry shall be madeto record the estimated revenue andkWh sold by debiting accounts receiv-able and crediting the appropriate rev-enue accounts. The estimated bill shallbe posted to the customer’s accountand identified by an appropriate sym-bol indicating that it is an estimate.Reconciliation with the general ledgercontrol is made in the usual manner.

620 Purchase Rebates

Some vendors from which electric co-operatives purchase plant materialsand supplies and merchandise for resaleare making purchase rebates basedupon the quantity or dollar volume of


895


purchases. These ‘‘quantity discounts’’may be in the form of cash or creditmemoranda, in the form of prepaidpackage travel arrangements, or acombination of such methods. The re-bate shall be accounted for as a reduc-tion in the cost of the material or ap-pliances upon which it was based.

In some instances, the rebate may befor material or appliances that are nolonger in stock or cannot be identified.If the rebate is based upon the pur-chase of plant materials and operatingsupplies that are normally charged toAccount 154, Plant Materials and Oper-ating Supplies, a credit shall be madeto Account 163, Stores Expense Undis-tributed. If the rebate is based upon ap-pliances and equipment held for mer-chandising or contract work, the creditshall be spread over the items in Ac-count 155, Merchandise. To avoid mate-rially distorting the cost of the re-maining appliances, if a portion of theitems upon which the rebate was basedare no longer in stock, a portion of thecredit shall be prorated to Account 416,Cost and Expenses of Merchandising,Jobbing, and Contract Work, on thebasis of the number of items sold to thequantity remaining in stock.

If the rebate is in the form of a travelpackage or travel arrangements, thevalue of the rebate shall be estimatedand recorded as a reduction of the costof the material or appliances uponwhich it was based in a manner similarto that of the cash rebates discussedabove. The beneficiary of the travel ortravel allowance shall be designated byor in accordance with policy estab-lished by the board of directors. Thecontra charge to the reduction in costshall be to an appropriate account de-pending upon the relationship of therecipient to the cooperative. For em-ployees, this shall be Account 926, Em-ployee Pensions and Benefits; for direc-tors or patrons, Account 930.2, Mis-cellaneous General Expenses.

621 Integrity Fund

The CFC Integrity Fund was estab-lished to assist borrowers in their at-tempts to stop takeover bids by inves-tor-owned utilities. A borrower makesa contribution to the Integrity Fund inthe form of cash or patronage capitalrefunds. CFC retains the contribution

for a 5-year period during which timethe borrower earns interest on thebalance in its account. Each year, theborrower receives a statement indi-cating (both for the total fund and theindividual borrower’s share) theamount contributed, interest earned,disbursements made, and the endingbalance. The disbursements from thefund are allocated to each contributingborrower’s account based upon their in-dividual account balances. At the endof the 5-year period, the balance in theaccount, if any, is refunded to the con-tributing borrower.

Since the contributing borrower willreceive a refund only if its funds arenot totally disbursed, the contributionshall be charged to expense in Account426.1, Donations. If any part of the con-tribution is returned at the end of the5-year period, the refund shall be cred-ited to Account 421, MiscellaneousNonoperating Income.

622 In-Substance Defeasance

An in-substance defeasance has beendefined as the process whereby a debtorirrevocably places cash or other assetsin a trust to be used solely for the pur-pose of satisfying scheduled paymentsof both principal and interest relatedto a specific debt obligation. Under thestructural arrangements of an in-sub-stance defeasance, the probability thatthe debtor will be required to make ad-ditional future debt payments is re-mote. In these specific circumstances,debt has been determined to be extin-guished even though the debtor has notbeen legally released from his obliga-tions under the debt instrument.

The trust established in a defeasancetransaction is restricted as to the na-ture of the assets held. The trust mustbe funded with monetary assets thatare essentially risk free as to theamount, timing, and collection of in-terest and principal. For debt denomi-nated in United States dollars, ‘‘riskfree’’ assets are limited to:

1. Direct obligations of the UnitedStates government;

2. Obligations guaranteed by theUnited States government; and

3. Securities that are backed byUnited States government obligationsas collateral under an arrangement by


896


which the interest and principal pay-ments on the collateral, flow imme-diately through to the holder of the se-curity.

The monetary assets of the trustmust provide cash flows sufficient tocoincide with the scheduled interestand principal payments on the defeaseddebt. If the trust is expected to pay thecosts associated with the defeasance,such as trustee fees, these costs mustbe considered in determining theamount of funds required by the trust.

The principles of in-substance defea-sance apply only to debt with specificmaturities and fixed payment sched-ules and, as such, do not apply to debtwith variable terms in which advancedetermination of debt service require-ments is not possible.

Generally accepted accounting prin-ciples (GAAP) address the extinguish-ment of debt in Accounting PrinciplesBoard Opinion No. 26, and Statement ofFinancial Accounting Standard No. 76,Extinguishment of Debt. In accordancewith these two statements, debt whichhas been defeased remains recorded inthe regulated books of account as dothe assets placed in the irrevocabletrust. They are not, however, recog-nized as an asset and liability for fi-nancial reporting purposes. The trans-action, including the total amount ofdebt outstanding and the total amountof debt that is considered extinguishedat the end of the period, must be dis-closed in the footnotes to the financialstatements as long as the debt remainsoutstanding.

Debt is frequently extinguished be-fore its scheduled maturity. Debt maybe extinguished by the use of the bor-rower’s general funds, or by the reac-quisition of another debt issue at a dif-ferent interest rate or varying terms.As these assets are expected to be rev-enue producing during those years,both the assets and the revenue theygenerate may be utilized to meet ma-turing debt payments. Therefore, inmost instances, the dollar value of theassets initially placed in the trust donot equal the dollar value of the out-standing principal balance. The dif-ference represents an ‘‘economic ’’ gainor loss to the borrower.

To provide consistency in reportingamong all RUS borrowers, any gain or

loss that is recognized for financialstatement purposes should be reportedin accordance with the provisions ofGeneral Instruction No. 17 of this part.Therefore, the gain or loss should beamortized (for reporting purposes) inequal monthly amounts over the re-maining life of the original debt issueor the remaining life of the new issue.The gain or loss may be reported in thecurrent period only in those instancesin which it is immaterial to the finan-cial statements.

The RUS Form 7, Financial and Sta-tistical Report, and the RUS Form 12,Operating Report—Financial, must,however, reflect the actual amounts re-corded in the books and records of theborrower.

623 Satellite or Cable TelevisionServices

Many electric borrowers have becomeinvolved in either providing satellite orcable television services or obtainingsatellite or cable television services fortheir own use. This section outlines theaccounting to be followed when record-ing transactions involving satellite orcable television services.

1. Separate Subsidiary

If a borrower provides satellite orcable television services through a sep-arate subsidiary, the investment in thesubsidiary shall be recorded in Account123.11, Investment in Subsidiary Com-panies. The net income or loss of thesubsidiary shall be debited or creditedto Account 123.11, as appropriate, withan offsetting entry to Account 418.1,Equity in Earnings of Subsidiary Com-panies.

2. Segment of Current Operations

If a borrower provides satellite orcable television services as part of itsnormal operations, the investment insatellite or cable television equipmentshall be recorded in Account 121, Non-utility Property. All income associatedwith these services shall be recorded inAccount 417, Revenues from NonutilityOperations, and the associated ex-penses shall be charged to Account417.1, Expenses of Nonutility Oper-ations.

3. Sale and Installation of Satellite orCable Television Equipment


897


If a borrower sells or installs sat-ellite or cable television equipment,the equipment purchased for resaleshall be recorded in Account 156, OtherMaterials and Supplies, until sold. Therevenues generated from such sales orinstallations shall be recorded in Ac-count 415, Revenues from Merchan-dising, Jobbing, and Contract Work,and the associated expenses shall becharged to Account 416, Costs and Ex-penses of Merchandising, Jobbing, andContract Work.

4. Equipment Purchased for Own Use

If a borrower purchases satellite orcable television equipment for its ownuse, the investment in the equipmentshall be recorded in Account 397, Com-munication Equipment.

624 Pollution Control Bonds

The construction and installation ofpollution control facilities are often fi-nanced by issuing tax exempt munic-ipal securities. The funds generatedfrom the sale of these securities are de-posited into an account that is con-trolled by a designated trustee. Thefunds under the control of the trusteeare usually invested, earning interest,until they are needed.

Interest expense accrued on the pol-lution control bonds during the con-struction period shall be capitalized inAccount 107, Construction Work-in-Progress. After construction is com-plete, all subsequent accruals of inter-est expense shall be charged to Ac-count 427, Interest on Long-Term Debt.

Interest income earned during theconstruction period shall be recordedas a debit to Account 171, Interest andDividends Receivable, and a credit toAccount 107, Construction Work-in-Progress. Upon notification of receiptof the interest in the trustee account,Account 221.XX, Long-Term Debt—Pol-lution Control Bonds, shall be debitedand Account 171, Interest and Divi-dends Receivable shall be credited.Upon completion of construction, Ac-count 419, Interest and Dividend In-come, shall be credited for the amountof interest income earned during theperiod.

The entries required to account forthe transactions associated with the

issuance of pollution control bonds areas follows:Dr. 221.XX, Long-Term Debt—Pollution

Control Bonds—TrusteeCr. Account 221.X1, Long-Term

Debt—Pollution Control BondsTo record the sale of pollution control

bonds.Dr. 107, Construction Work-in-Progress

Cr. 232, Accounts PayableTo record costs incurred in construc-

tion of pollution control facilities.Dr. 131.1, Cash—General Funds

Cr. 221.XX, Long-Term Debt—Pollu-tion Control Bonds—Trustee

To record the transfer of funds fromthe trustee.

Dr. 107, Construction Work-in-ProgressCr. 221.XX, Long-Term Debt—Pollu-

tion Control Bonds—TrusteeTo record interest expense on pollution

control bonds.Dr. 171, Interest and Dividends Receiv-

ableCr. 107, Construction Work-in-

ProgressTo record earnings from investments

made by the trustee.Dr. 221.XX, Long-Term Debt—Pollution

Control Bonds—TrusteeCr. 171, Interest and Dividends Re-

ceivableTo record receipt of interest income by

the trustee account.Dr. XXX, Various Plant Accounts

Cr. 107, Construction Work-in-Progress

To close completed construction to theprimary plant accounts.

625 Prepayment of Debt

Many RUS borrowers have decided toredeem (prepay) their issues of long-term debt. As a result of this redemp-tion, the borrower may incur a gain(discount) or a loss (penalty) on theearly extinguishment of debt. The ac-counting for this gain or loss is high-lighted in this section.

If debt is redeemed without refunding(paid with general funds), the gain orloss incurred shall be recorded in Ac-count 189, Unamortized Loss on Reac-quired Debt, or Account 257,Unamortized Gain on Reacquired Debt,as appropriate. The borrower shall am-ortize the recorded deferral on amonthly basis over the remaining life


898


of the old debt issue. Amounts so amor-tized shall be charged to Account 428.1,Amortization of Loss on ReacquiredDebt, or credited to Account 429.1, Am-ortization of Gain on ReacquiredDebt—Credit, as appropriate.

If the debt is redeemed with refund-ing (refinanced), the gain or loss in-curred shall be recorded in Account 189or Account 257, as appropriate. Theborrower may elect to account for thedeferrals as follows:

1. Write them off immediately whenthe amounts are insignificant;

2. Amortize them by equal monthlyamounts over the remaining life of theold debt issue; or

3. Amortize them by equal monthlyamounts over the life of the new debtissue.

Once an election has been made, itshall be applied on a consistent basis.Regardless of the option selected, theamortization shall be charged to eitherAccount 428.1 or 429.1, as appropriate.

Where a regulatory authority havingjurisdiction over the borrower specifi-cally disallows the rate principle ofamortizing gains or losses on the re-demption of long-term debt without re-funding, and does not apply the gain orloss to interest charges in computingthe borrower’s rates, the alternativemethod may be used to account forgains or losses relating to the redemp-tion of long-term debt with or withoutrefunding. The alternative method re-quires that gains or losses be recordedin Account 421, Miscellaneous Nonop-erating Income, or Account 426.5, OtherDeductions, as incurred. When the al-ternative method is used, the borrowershall include a footnote to the finan-cial statements stating the reason forusing this method and its treatmentfor rate making purposes.

626 Rural Economic DevelopmentLoan and Grant Program

On December 21, 1987, Section 313,Cushion of Credits Payments Program,was added to the Rural ElectrificationAct. Section 313 establishes a RuralEconomic Development Subaccountand authorizes the Administrator ofthe Rural Utilities Service to providezero interest loans or grants to RE Actborrowers for the purpose of promoting

rural economic development and jobcreation projects.

Subpart B, Rural Economic Develop-ment Loan and Grant Program, 7 CFRPart 1703, sets forth the policies andprocedures relating to the zero interestloan program and for approving and ad-ministering grants.

The accounting journal entries re-quired to record the transactions asso-ciated with a rural economic develop-ment loan are as follows:

Dr. 224.17, RUS Notes Executed—Eco-nomic Development—Debit

Cr. 224.16, Long-Term Debt—RUSEconomic Development Notes Exe-cuted

To record the contractual obligationto RUS for the Economic DevelopmentNotes.

Dr. 131.12, Cash—General—EconomicDevelopment Funds

Cr. 224.17, RUS Notes Executed—Eco-nomic Development—Debit

To record the receipt of the economicdevelopment loan funds.

Dr. 123, Investment in Associated Orga-nizations or

Dr. 124, Other InvestmentsCr. 131.12, Cash—General—Economic

Development FundsTo record the disbursement of Eco-

nomic development loan funds to theproject.Dr. 131.1, Cash—General Funds

Cr. 421, Miscellaneous NonoperatingIncome

To record payment received from theproject for loan servicing charges.Dr. 171, Interest and Dividends Receiv-

ableCr. 419, Interest and Dividend IncomeTo record the interest earned on the

investment of rural economic develop-ment loan funds.Dr. 426.1, Donations orDr. 426.5, Other Deductions

Cr. 131.1, Cash—General FundsTo record the payment of interest

earned in excess of $500.00 on the in-vestment of rural economic develop-ment loan funds.

NOTE: Interest earned in excess of $500.00must be used for the rural economic develop-ment project for which the loan funds werereceived or returned to RUS.


899


Dr. 131.12, Cash—General—EconomicDevelopment Funds

Cr. 123, Investment in Associated Or-ganizations or

Cr. 124, Other InvestmentsTo record receipt of the repayment,

by the project, of economic develop-ment loan funds.Dr. 224.16, Long-Term Debt—RUS Eco-

nomic Development Notes Exe-cuted

Cr. 131.12, Cash—General—EconomicDevelopment Funds

To record the repayment, to RUS, ofthe economic development loan funds.

The accounting journal entries re-quired to record the transactions asso-ciated with a rural economic develop-ment grant are as follows:Dr. 131.13, Cash—General—Economic

Development Grant FundsCr. 224.18, Other Long-Term Debt—

Grant Funds;Cr. 208, Donated Capital; orCr. 421, Miscellaneous Nonoperating

IncomeTo record grant funds disbursed by

RUS. If the grant agreement requiresrepayment of the funds upon termi-nation of the revolving loan program,Account 224.18 should be credited. Ifthe grant agreement states that thereis absolutely no obligation for repay-ment upon termination of the revolv-ing loan program, the funds should beaccounted for as a permanent infusionof capital by crediting Account 208. If,however, the grant agreement is silentas to the final disposition of the grantfunds, Account 421 should be credited.Dr. 123.3, Investment in Associated Or-

ganizations—Federal Economic De-velopment Loans

Cr. 131.13, Cash—General—EconomicDevelopment Grant Funds

To record advances of Federal fundsto associated organizations for author-ized rural economic developmentprojects.Dr. 124.1, Other Investments—Federal

Economic Development LoansCr. 131.13, Cash—General—Economic

Development Grant FundsTo record advances of Federal funds

to nonassociated organizations for au-thorized rural economic developmentprojects.

Dr. 171, Interest and Dividends Receiv-able

Cr. 419, Interest and Dividend IncomeTo record the accrual of interest on

loans made to associated and nonasso-ciated organizations with Federalfunds for authorized rural economic de-velopment projects.Dr. 131.14, Cash—General—Economic

Development Non-Federal Revolv-ing Funds

Cr. 123.3, Investment in AssociatedOrganizations—Federal EconomicDevelopment Loans or

Cr. 124.1, Other Investments—FederalEconomic Development Loans

To record repayment of loans madewith Federal funds.Dr. 123.4, Investment in Associated Or-

ganizations—Non-Federal Eco-nomic Development Loans

Cr. 131.14, Cash—General—EconomicDevelopment Non-Federal Revolv-ing Funds

To record advances of non-Federalfunds to associated organizations forauthorized rural economic develop-ment projects.Dr. 124.2, Other Investments—Non-Fed-

eral Economic Development LoansCr. 131.14, Cash—General—Economic


To record advances of non-Federalfunds to nonassociated organizationsfor authorized rural economic develop-ment projects.Dr. 171, Interest and Dividends Receiv-

ableCr. 419, Interest and Dividend IncomeTo record the accrual of interest on

loans made to associated and nonasso-ciated organizations with non-Federalfunds for authorized rural economic de-velopment projects.Dr. 131.14, Cash—General—Economic


Cr. 123.4, Investment in AssociatedOrganizations—Non-Federal Eco-nomic Development Loans or

Cr. 124.2, Other Investments—Non-Federal Economic DevelopmentLoans

To record repayment of loans madewith non-Federal funds.


900


627 Postretirement Benefits

Statement of Financial AccountingStandards No. 106, Employers’ Ac-counting for Postretirement BenefitsOther than Pensions (Statement No.106), requires reporting entities to ac-crue the expected cost of postretire-ment benefits during the years the em-ployee provides service to the entity.For purposes of applying the provisionsof Statement No. 106, members of theboard of directors are considered to beemployees of the cooperative. Prior tothe issuance of Statement No. 106,most reporting entities accounted forpostretirement benefit costs on a ‘‘pay-as-you-go’’ basis; that is, costs wererecognized when paid, not when theemployee provided service to the enti-ty in exchange for the benefits.

As defined in Statement No. 106, apostretirement benefit plan is a de-ferred compensation arrangement inwhich an employer promises to ex-change future benefits for an employ-ee’s current services. Postretirementbenefit plans may be funded or un-funded. Postretirement benefits in-clude, but are not limited to, healthcare, life insurance, tuition assistance,day care, legal services, and housingsubsidies provided outside of a pensionplan.

This statement applies to both writ-ten plans and to plans whose existenceis implied from a practice of payingpostretirement benefits. An employer’spractice of providing postretirementbenefits to selected employees underindividual contracts with specifiedterms determined on an employee-by-employee basis does not, however, con-stitute a postretirement benefit planunder the provisions of this statement.

Postretirement benefit plans gen-erally fall into three categories: single-employer defined benefit plans, multi-employer plans, and multiple-employerplans.

The accounting requirements setforth in this interpretation focus onsingle-and multiple-employer plans.The accounting requirements set forthin Statement No. 106 for multiem-ployer plans or defined contributionplans shall be adopted for borrowerselecting those types of plans.

Under the provisions of StatementNo. 106, there are two components of

the postretirement benefit cost: thecurrent period cost and the transitionobligation. The transition obligation isa one-time accrual of the costs result-ing from services already provided.Statement No. 106 allows the transi-tion obligation to be deferred and am-ortized on a straight-line basis over theaverage remaining service period of theactive employees. If the average re-maining service life of the employees isless than 20 years, a 20-year amortiza-tion period may be used.


All RUS borrowers must adopt theaccrual accounting provisions and re-porting requirements set forth inStatement No. 106. The transition obli-gation and accrual of the current pe-riod cost must be based upon an actu-arial study. This study must be up-dated to allow the borrower to complywith the measurement date require-ments of Statement No. 106; however,the study must, at a minimum, be up-dated every five years. RUS will notallow electric borrowers to account forpostretirement benefits on a ‘‘pay-as-you-go’’ basis.

The deferral and amortization of thetransition obligation does not requireRUS approval provided that it complieswith the provisions of Statement No.106. If, however, a borrower elects toexpense the transition obligation inthe current period and subsequentlydefer this expense in accordance withStatement of Financial AccountingStandards No. 71, Accounting for theEffects of Certain Types of Regulation,the deferral must be approved by RUS.In those states in which the commis-sion will not allow the recovery of thetransition obligation through futurerates, the transition obligation mustbe expensed, in its entirety, in the yearin which Statement No. 106 is adopted.A portion of the transition obligationmay be charged to construction and re-tirement activities provided suchcharges are properly supported.


For plans outside the United Statesand for defined benefit plans of employ-ers that (a) are nonpublic enterprisesand (b) sponsor defined benefit post-retirement plans with no more than 500


901


plan participants in the aggregate,Statement No. 106 is effective for fiscalyears beginning after December 15,1994. For all other plans, StatementNo. 106 is effective for fiscal years be-ginning after December 15, 1992.

RUS borrowers must comply with theimplementation dates set forth inStatement No. 106. At the time of theadoption of Statement No. 106, ratesmust be in place sufficient to recoverthe current period expense and any am-ortization of the transition obligation.A copy of a board resolution or com-mission order, as appropriate, indi-cating that the transition obligationand current period expense have beenincluded in the borrower’s rates mustbe submitted to RUS.

Accounting Journal Entries—TransitionObligation

The journal entries required torecord the transition obligation are asfollows:

1. If the borrower elects to expensethe transition obligation in the currentperiod and there is no deferral of costs,the following entry shall be recorded:


orDr. 926, Employee Pensions and Bene-

fitsDr. 107, Construction Work-in-ProgressDr. 108.8, Retirement Work-in-ProgressCr. 228.3, Accumulated Provision for

Pensions and BenefitsTo record the current period recogni-

tion of the transition obligation forpostretirement benefits. Note: A por-tion of the transition obligation maybe charged to construction and re-tirement activities provided suchcharges are properly supported.

2. If the borrower elects to defer andamortize the transition obligation inaccordance with the provisions ofStatement No. 71, the following entryshall be recorded:

Dr. 182.3, Other Regulatory AssetsCr. 228.3, Accumulated Provision for

Pensions and BenefitsTo record the deferral of the transition

obligation under the provisions ofStatement No. 71.


Dr. 107, Construction Work-in-ProgressDr. 108.8, Retirement Work-in-ProgressCr. 182.3, Other Regulatory AssetsTo record the amortization of post-

retirement benefits expenses as theyare recovered through rates in ac-cordance with Statement No. 71.

3. The deferral and amortization ofthe transition obligation under theprovisions of Statement No. 106 is con-sidered to be an off balance sheet item.If, therefore, the borrower elects todefer and amortize the transition obli-gation on a straight-line basis over theaverage remaining service period of theactive employees or 20 years in accord-ance with Statement No. 106, no entryis required. Instead, the transition ob-ligation is recognized as a componentof postretirement benefit cost as it isamortized. It should be noted, however,that the amount of the unamortizedtransition obligation must be disclosedin the notes to the financial state-ments.

Accounting Journal Entries—CurrentPeriod Expense

The current period postretirementexpense should be recorded by the fol-lowing entry:


Dr. 107, Construction Work-in-ProgressDr. 108.8, Retirement Work-in-ProgressCr. 228.3, Accumulated Provision for

Pensions and BenefitsTo record current period postretire-

ment benefit expense.Dr. 228.3X, Accumulated Provision for

Pensions and Benefits—FundedCr. 131.1, Cash—GeneralTo record cash payments on a ‘‘pay-as-

you-go’’ basis for postretirement ben-efits.

Accounting Journal Entry—Funding

If a borrower elects to voluntarilyfund its postretirement benefits obliga-tion in an external, irrevocable trust,the following entry shall be recorded:

Dr. 228.3X, Accumulated Provision forPensions and Benefits—Funded


902


Cr. 131.1, Cash—GeneralTo record the funding of postretire-

ment benefits expense into an exter-nal, irrevocable trust.

If a borrower elects to voluntarilyfund its postretirement benefits obliga-tion in an investment vehicle otherthan an external, irrevocable trust, thefollowing entry shall be recorded:

Dr. 128, Other Special FundsCr. 131.1, Cash—GeneralTo record the funding of postretire-

ment benefits expense into an invest-ment vehicle other than an external,irrevocable trust.

628 Postemployment Benefits

Statement of Financial AccountingStandards No. 112, Employers’ Ac-counting for Postemployment Benefits(Statement No. 112) establishes thestandards of financial accounting andreporting for employers who providebenefits to former or inactive employ-ees after employment but before retire-ment. Inactive employees are thosewho are not currently rendering serv-ice to the employer but who have notbeen terminated, including employeeswho are on disability leave, regardlessof whether they are expected to returnto active service. For purposes of ap-plying the provisions of Statement No.112, former members of the board of di-rectors are considered to be employeesof the cooperative.

Postemployment benefits includebenefits provided to former or inactiveemployees, their beneficiaries, and cov-ered dependents. They include, but arenot limited to, salary continuation,supplemental benefits (including work-men’s compensation), health care, jobtraining and counseling, and life insur-ance coverage. Benefits may be pro-vided in cash or in kind and may bepaid upon cessation of active employ-ment or over a specified period of time.

The cost of providingpostemployment benefits is consideredto be a part of the compensation pro-vided to an employee in exchange forcurrent service and should, therefore,be accrued as the employee earns theright to be paid for futurepostemployment benefits. Applying thecriteria set forth in Statement of Fi-nancial Accounting Standards No. 43,

Accounting for Compensated Absences,a postemployment benefit obligation isaccrued when all of the following con-ditions are met:

1. The employer’s obligation for pay-ment for future absences is attrib-utable to employees’ services alreadyperformed;

2. The obligation relates to employeerights that vest or accumulate. Vestedrights are considered those rights forwhich the employer is obligated tomake payment even if the employeeterminates. Rights that accumulateare those earned, but unused rights tocompensated absences that may be car-ried forward to one or more periodssubsequent to the period in which theyare earned;

3. Payment of the compensation isprobable; and

4. The amount can be reasonably es-timated.

If all of these conditions are not met,the employer must account for itspostemployment benefit obligation inaccordance with Statement of Finan-cial Accounting Standards No. 5, Ac-counting for Contingencies (StatementNo. 5) when it becomes probable that aliability has been incurred and theamount of that liability can be reason-ably estimated.

If an obligation for postemploymentbenefits is not accrued in accordancewith the provisions of Statement No. 5or Statement No. 43 only because theamount cannot be reasonably esti-mated, the financial statements shoulddisclose that fact.


All RUS borrowers must adopt theaccrual accounting provisions and re-porting requirements set forth inStatement No. 112 as of the state-ment’s implementation date. A portionof the cumulative effect may becharged to construction and retirementactivities provided such charges areproperly supported. If a borrower electsto defer the cumulative effect of imple-menting Statement No. 112 in accord-ance with the provisions of Statementof Financial Accounting Standards No.71, Accounting for the Effects of Cer-tain Types of Regulation, the deferralmust be approved by RUS.


903



Statement No. 112 is effective for fis-cal years beginning after December 15,1993. Previously issued financial state-ments should not be restated.

RUS borrowers must comply with theimplementation date set forth inStatement No. 112. At the time of theadoption of Statement No. 112, ratesmust be in place sufficient to recoverthe current period expense.

Accounting Journal Entries

The journal entries required to ac-count for postemployment benefits areas follows:


Dr. 107, Construction Work in ProgressDr. 108.8, Retirement Work in ProgressCr. 228.3, Accumulated Provision for

Pensions and BenefitsTo record the cumulative effect of im-

plementing Statement No. 112.NOTE: A portion of the cumulative effect

may be charged to construction and retire-ment activities provided such charges areproperly supported. Account 435.1 is closed toAccount 219.2, Nonoperating Margins.

If the borrower elects to defer andamortize the cumulative effect in ac-cordance with the provisions of State-ment No. 71, the following entry shallbe recorded:

Dr. 182.3, Other Regulatory AssetsCr. 228.3, Accumulated Provision for

Pensions and BenefitsTo record the deferral of the cumu-

lative effect of implementing State-ment No. 112 in accordance with theprovisions of Statement No. 71.


Dr. 107, Construction Work in ProgressDr. 108.8, Retirement Work in ProgressCr. 182.3, Other Regulatory AssetsTo record the amortization of the cu-

mulative effect of implementingStatement No. 112 as it is recoveredthrough rates in accordance withStatement No. 71.


Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in ProgressCr. 228.3, Accumulated Provision for

Pensions and BenefitsTo record current period

postemployment benefit expense.

NOTE: If postemployment benefits are ac-crued under the criteria set forth in State-ment No. 43, this journal entry is made on amonthly basis. If, however, the accrual isbased upon the provisions of Statement No.5, this is a one-time entry unless the liabil-ity is reevaluated and subsequently adjusted.

629 Investments in Debt and EquitySecurities

Statement of Financial AccountingStandards No. 115, Accounting for Cer-tain Investments in Debt and EquitySecurities (Statement No. 115), estab-lishes the standards of financial ac-counting and reporting for investmentsin debt securities and for investmentsin equity securities that have readilydeterminable fair values. StatementNo. 115 does not apply to investmentsin equity securities accounted forunder the equity method nor to invest-ments in consolidated subsidiaries.

At the time of acquisition, an entitymust classify debt and equity securi-ties into one of three categories: held-to-maturity, available-for-sale, or trad-ing. At the balance sheet date, the ap-propriateness of the classificationsmust be reassessed.

Investments in debt securities areclassified as held-to-maturity and aremeasured at amortized cost in thebalance sheet only if the reporting en-tity has the positive intent and abilityto hold these securities to maturity.Debt securities are not classified asheld-to-maturity if the entity has theintent to hold the security only for anindefinite period; for example, if the se-curity would become available for salein response to changes in market inter-est rates and related changes in the se-curity’s prepayment risk, needs for li-quidity, changes in the availability ofand the yield on alternative invest-ments, changes in funding sources andterms, and changes in foreign currencyrisk.

Investments in debt securities thatare not classified as held-to-maturityand equity securities that have readilydeterminable fair values are classified


904


as either trading securities or avail-able-for-sale securities and are meas-ured at fair value in the balance sheet.Trading securities are those securitiesthat are bought and held principallyfor the purpose of selling them in thenear future. Trading generally reflectsactive and frequent buying and sellingand trading securities are generallyused with the objective of generatingprofits on short-term differences inprices. Available-for-sale securities arethose investments not classified as ei-ther trading securities or held-to-ma-turity securities.

Statement No. 115 requires unreal-ized holding gains and losses for trad-ing securities to be included in earn-ings in the current period. Unrealizedholding gains and losses for available-for-sale securities are excluded fromearnings; however, they are reported asa net amount in a separate componentof shareholders’ equity until realized.

For individual securities classified aseither available-for sale or held-to-ma-turity, an entity must determinewhether a decline in the security’s fairvalue below the amortized cost is otherthan temporary. If the decline in fairvalue is determined to be permanent,that is, it is probable that the entitywill not be able to collect all amountsdue under the contractual terms of thesecurity, the realized loss is accountedfor in earnings of the current period.The new cost basis is not adjusted up-ward for subsequent recoveries in thefair value. Subsequent increases in thefair value of available-for-sale securi-ties are included in the separate com-ponent of equity. Subsequent decreasesare also included in the separate com-ponent of equity.

All trading securities are reported ascurrent assets in the balance sheet andindividual held-to-maturity and avail-able-for-sale securities are classified aseither current or noncurrent, as appro-priate. Cash flows from the purchase,sale, or maturity of available-for-salesecurities and held-to-maturity securi-ties are classified in the statement ofcash flows as cash flows from investingactivities and reported gross for eachsecurity classification.


All RUS borrowers must adopt theaccounting, reporting, and disclosurerequirements set forth in StatementNo. 115 as of the statement’s implemen-tation date. Unrealized holding gainsor losses for trading securities shall berecorded in either Account 421, Mis-cellaneous Nonoperating Income, orAccount 426.5, Other Deductions, as ap-propriate. Unrealized holding gains orlosses for available-for-sale securitiesheld by the corporate entity are recog-nized as a component of stockholder’sequity in Account 215.1, UnrealizedGains and Losses—Debt and Equity Se-curities. A contra account of the in-vestment account shall be debited orcredited accordingly. Unrealized gainsand losses for available-for-sale securi-ties held in a decommissioning fundshall increase or decrease, as appro-priate, the reported value of the fund.


Statement No. 115 is effective for fis-cal years beginning after December 15,1993. At the beginning of the entity’sfiscal year, the entity must classify itsdebt and equity securities on the basisof the entity’s current intent. Thisstatement may not be applied retro-actively to prior years’ financial state-ments. For fiscal years beginning priorto December 16, 1993, reporting entitiesare permitted to apply Statement No.115 as of the end of a fiscal year forwhich annual financial statementshave not previously been issued.

630 Split Dollar Life Insurance

The National Rural Electric Coopera-tive Association Split Dollar Life In-surance provides life insurance benefitsto cooperative employees. The benefitsprovided under this policy consist oftwo components, the face value of theinsurance policy and the accumulatedcash surrender value. While the em-ployee is the owner of the policy, theemployee must sign a collateral assign-ment giving the cooperative absoluteright to the cash surrender value of thepolicy. Under the terms of this collat-eral assignment, the employee must re-imburse the cooperative for the pre-miums paid upon the employee’s termi-nation of employment or attainment of


905


the age of 62 if the employee wishes tomaintain the insurance coverage. Ifdeath occurs prior to either of theseevents, the premiums paid to date bythe cooperative are deducted from thedeath benefits payable to the policybeneficiary.


Financial Accounting StandardsBoard Technical Bulletin 85–4, Ac-counting for Purchase of Life Insur-ance (Bulletin 85–4), states that theamount that could be realized under aninsurance contract as of the date of thefinancial statements should be re-ported as an asset. The change in thecash surrender or contract value ofthat asset during the period should bereported as an adjustment to the pre-miums paid in determining the expenseor income to be recognized for the pe-riod. The cooperative shall, therefore,record the cash surrender value of thepolicy as an asset because of its abso-lute right to receive that value basedupon the employee’s collateral assign-ment. Any receivable that may occuras a result of the employee reimburse-ment for the premiums paid is contin-gent upon the employee electing tomaintain the insurance coverage aftertermination of employment or reach-ing the age of 62 and is not recorded asan asset on the cooperative’s records.


The journal entries required to ac-count for the NRECA Split Dollar LifeInsurance Program are as follows:

Dr. 124, Other InvestmentsCr. Various Operations, Maintenance,


To record an increase in the cash sur-render value of the insurance con-tract.

or


Cr. 124, Other InvestmentsTo record a decrease in the cash sur-

render value of the insurance con-tract.


Dr. 107, Construction Work-in-ProgressDr. 108.8, Retirement Work-in-ProgressCr. 131.1, Cash—GeneralTo record the premium cost of the in-

surance contract.

631 Special Early Retirement Plan

The Special Early Retirement Plan(SERP) being offered through the Na-tional Rural Electric Cooperative Asso-ciation (NRECA) constitutes an amend-ment to its Retirement and Security(R&S) program. The SERP is often cho-sen as a vehicle through which the co-operative may reduce the size of itsworkforce or replace more highly paidemployees with lower paid entry levelemployees. If an employee covered byan NRECA retirement plan chose to re-tire before his/her normal retirementdate, that employee would receive anactuarially reduced benefit. However,when a cooperative elects to offer aSERP, no such reduction is required.The cooperative selects the criteriaunder which an employee will be eligi-ble to participate such as age, years ofservice, or a combination of age andbenefit service requirements. As withother amendments to the R&S pro-gram, NRECA calculates the cost ofthe plan based upon the criteria se-lected by the cooperative and allowsthe cooperative to pay the cost imme-diately or on an installment basis.

Under this plan, the employee re-ceives full retirement benefits in theform of either an immediate lump-sumsettlement or annuity payments. It isnot unusual for the cooperative to addan incentive to encourage participa-tion such as medical or life insurance,either in whole or in part, until age 65.The actuarial analysis provided byNRECA includes the cost of the SERPand the estimated reduction and/or in-crease in costs associated with State-ment of Financial Accounting Stand-ards No. 106, Employer’s Accountingfor Postretirement Benefits OtherThan Pensions (Statement No. 106).


906


Statement of Financial Accounting Stand-ards No. 87, Employer’s Accounting forPensions (Statement No. 87)

In accordance with the provisions ofStatement No. 87, the costs associatedwith an amendment to a multiem-ployer plan are recognized when theybecome due and payable. Since NRECAcalculates the amount due and payableat the time of the amendment, the en-tire amount due, whether paid imme-diately or financed through NRECA orany other institution, must be recog-nized as an expense at that time. Thiscost may, however, be deferred in ac-cordance with the provisions of State-ment of Financial Accounting Stand-ards No. 71, Accounting for the Effectsof Certain Types of Regulation (State-ment No. 71).


The journal entry required to recordthe additional pension costs associatedwith the SERP is as follows:


Dr. 107, Construction Work-in-ProgressDr. 108.8, Retirement Work-in-ProgressCr. 131.1, Cash—GeneralorCr. 224, Other Long-Term DebtTo record the prior service pension

costs incurred as a result of adoptingthe SERP.

If the borrower elects to defer andamortize the cost in accordance withStatement No. 71, the following entriesshall be recorded:

Dr. 182.3, Other Regulatory AssetsCr. 131.1, Cash—GeneralorCr. 224, Other Long-Term DebtTo record, under the provisions of

Statement No. 71, the deferral of theprior service pension costs incurredas a result of adopting the SERP.



prior service pension costs as they

are recovered through rates in ac-cordance with Statement No. 71.

Statement No. 106

In the event that net reductions inpostretirement benefits result fromthis plan amendment, the reductionsare recognized as follows:

1. The amount of the reduction shallfirst reduce any existing unrecognizedprior service cost;

2. Any remaining reductions shallnext reduce any unrecognized transi-tion obligation; and

3. Any remaining reduction shall berecognized in a manner consistent withthe accounting for prior service post-retirement benefit costs.

In accordance with Statement No.106, prior service postretirement ben-efit costs are recognized in equalamounts in each remaining year ofservice for active plan participants. Be-cause it is an off-balance sheet item,only a memorandum entry is requiredto reduce the amount of unrecognizedprior service cost.

At adoption, Statement No. 106 per-mitted the recognition of the transi-tion obligation in one of two ways. Thetransition obligation was recognizedover the longer of the average remain-ing service period of current plan par-ticipants or 20 years, or it may havebeen recognized immediately. If the de-layed recognition option was chosenunder Statement No. 106, this, too, wasan off-balance sheet item that requiresonly a memorandum entry to reducethe amount of unrecognized transitionobligation. However, if the immediaterecognition option was chosen, the co-operative either recorded the expensein that year or, with RUS approval, de-ferred the expense under the provisionsof Statement No. 71. If the expensewere recorded, in total, in the year ofadoption, no unrecognized transitionobligation remains to reduce. If, how-ever, the transition obligation was de-ferred in accordance with StatementNo. 71, the journal entry required to ef-fect the reduction in Statement No. 106expense is as follows:

Dr. 228.3, Accumulated Provision forPensions and Benefits

Cr. 182.3, Other Regulatory Assets


907


To record a reduction in the deferredStatement No. 106 transition obliga-tion resulting from the adoption ofthe SERP.

NOTE: The dollar value of this entry mustnot exceed the deferral shown on the balancesheet.

If, after the two previous reductionshave been made, any net credit re-mains, it shall be recognized in a man-ner consistent with prior service costs;that is, as an off balance sheet itemthat is amortized over the remainingservice lives (to full eligibility) of theactive plan participants. The annualamortization reduces amounts nor-mally charged to the various oper-ations, maintenance, and administra-tive expense accounts and Account228.3 as postretirement benefit ex-penses.

[58 FR 59825, Nov. 10, 1993, as amended at 59FR 27436, May 27, 1994; 60 FR 55430, 55435–55438, Nov. 1, 1995; 62 FR 42319–42321, 42323,42330, Aug. 6, 1997]

§§ 1767.42–1767.45 [Reserved]

Subpart C—Depreciation Ratesand Procedures [Reserved]

§§ 1767.46–1767.65 [Reserved]

Subpart D—Preservation ofRecords [Reserved]

§§ 1767.66–1767.85 [Reserved]

PART 1770—ACCOUNTING RE-QUIREMENTS FOR RUS TELE-PHONE BORROWERS

Subpart A—General Provisions

Sec.1770.1—1770.9 [Reserved]

Subpart B—Uniform System of Accounts

1770.10 General.1770.11 Accounting system requirements.1770.12 Supplementary accounts.1770.13 Accounting requirements.1770.14 Continuing property records.1770.15 Supplementary accounts required of

all borrowers.1770.16 Supplementary accounts required of

nonprofit organizations.1770.17—1770.25 [Reserved]

Subpart C—Accounting Interpretations

1770.26 General.1770.27 Definitions.1770.28–1770.45 [Reserved]

APPENDIX TO SUBPART C TO PART 1770—AC-COUNTING METHODS AND PROCEDURES RE-QUIRED OF ALL BORROWERS

AUTHORITY: 7 U.S.C. 901 et seq.; 7 U.S.C. 1921et seq.; Pub. L. 103–354, 108 Stat. 3178 (7 U.S.C.6941 et seq.).

SOURCE: 55 FR 3388, Feb. 1, 1990, unless oth-erwise noted.

Subpart A—General Provisions

§§ 1770.1—1770.9 [Reserved]

Subpart B—Uniform System ofAccounts

§ 1770.10 General.

This subpart implements provisionsof the standard RUS loan documentswith respect to the accounting systemaccounts to be maintained by tele-communications borrowers of theRural Utilities Service.

§ 1770.11 Accounting system require-ments.

(a) Each RUS borrower subject to thejurisdiction of the Federal Communica-tions Commission (FCC) or a State reg-ulatory body shall maintain its ac-counts and records in accordance withthe rules and regulations prescribed bythat regulatory body.

(b) Each RUS borrower not subject toregulatory control as specified in§ 1770.11(a) shall maintain its accountsand records in accordance with theFCC Uniform System of Accounts asset forth in part 32 of the Commission’sRules and Regulations.

(1) RUS borrowers having annual rev-enues derived from regulated tele-communications operations of$100,000,000 or more shall maintain theaccounts prescribed in part 32 for ClassA companies.

(2) RUS borrowers having annual rev-enues derived from regulated tele-communications operations of lessthan $100,000,000 shall maintain the ac-counts prescribed in part 32 for Class Bcompanies.


Documents

Pt. 1767 7 CFR Ch. XVII (1–1–99 Edition) · Rural Utilities Service, USDA §1767.11 and demonstration costs should be rea-sonably related to the existing or fu-ture utility business,