UNITED STATES DEPARTMENT OF AGRICULTURE

Rural Utilities Service

**BULLETIN 1767B-1**

**SUBJECT:** **[Uniform System of Accounts - Electric]{.underline}**

**TO:** All Electric Borrowers

RUS Electric Staff

Borrower Accounting Division

**EFFECTIVE DATE:** September 5, 1997

**EXPIRATION DATE:** Date of change in 7 CFR Part 1767 by rulemaking

**OFFICE OF PRIMARY INTEREST:** Technical Accounting and Auditing Staff,
Borrower Accounting Division

**PREVIOUS PUBLICATIONS:** This bulletin replaces RUS

Bulletin 1767B-1, Uniform System of Accounts - Electric, dated December
1, 1995.

**FILING INSTRUCTIONS:** Discard RUS Bulletin 1767B-1, Uniform System of
Accounts - Electric, dated December 1, 1995.

**PURPOSE:** This bulletin sets forth, in a more user-friendly format,
the RUS Uniform System of Accounts (USoA) and accounting interpretations
for electric borrowers. This bulletin is a reprint of already codified
policies and procedures found in

7 CFR Part 1767, Accounting Requirements for RUS Electric Borrowers,
revised as of August 6, 1997. This bulletin is for use by borrowers,
consultants, and other interested parties.

Every effort has been made to ensure the accuracy of this document.
However, in case of discrepancies, the regulations at 7 CFR Part 1767,
62 FR 42284, published August 6, 1997, are the authorized sources.

Administrator Date

**TABLE OF CONTENTS**

**TEXT:**

§ 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

[Utility Plant]{.underline}

101 Electric Plant in Service

101.1 Property Under Capital Leases

102 Electric Plant Purchased or Sold

103 Experimental Electric Plant Unclassified

104 Electric Plant Leased to Others

105 Electric Plant Held for Future Use

106 Completed Construction not Classified - Electric

107 Construction Work in Progress - Electric

107.1 Construction Work in Progress - Contract

107.2 Construction Work in Progress - Force Account

107.3 Construction Work in Progress - Special Equipment

108 Accumulated Provision for Depreciation of Electric

Utility Plant

108.1 Accumulated Provision for Depreciation of Steam

Production Plant

108.2 Accumulated Provision for Depreciation of Nuclear

Production Plant

108.3 Accumulated Provision for Depreciation of Hydraulic

Production Plant

108.4 Accumulated Provision for Depreciation of Other

Production Plant

108.5 Accumulated Provision for Depreciation of Transmission

Plant

108.6 Accumulated Provision for Depreciation of Distribution

Plant

108.7 Accumulated Provision for Depreciation of General Plant

108.8 Retirement Work in Progress

109 \[Reserved\]

110 \[Reserved\]

111 Accumulated Provision for Amortization of Electric

Utility Plant

112 \[Reserved\]

113 \[Reserved\]

114 Electric Plant Acquisition Adjustments

115 Accumulated Provision for Amortization of Electric

Plant Acquisition Adjustments

116 Other Electric Plant Adjustments

118 Other Utility Plant

119 Accumulated Provision for Depreciation and Amortization

of Other Utility Plant

120.1 Nuclear Fuel in Process of Refinement, Conversion,

Enrichment, and Fabrication

120.2 Nuclear Fuel Materials and Assemblies - Stock Account

120.3 Nuclear Fuel Assemblies in Reactor

120.4 Spent Nuclear Fuel

120.5 Accumulated Provision for Amortization of Nuclear Fuel

Assemblies

120.6 Nuclear Fuel Under Capital Leases

[Other Property and Investments]{.underline}

121 Nonutility Property

122 Accumulated Provision for Depreciation and Amortization

of Nonutility Property

123 Investment in Associated Companies

123.1 Patronage Capital from Associated Cooperatives

123.11 Investment in Subsidiary Companies

123.21 Subscriptions to Capital Term Certificates -

Supplemental Financing

123.22 Investments in Capital Term Certificates - Supplemental

Financing

123.23 Other Investments in Associated Organizations

123.3 Investment in Associated Organizations - Federal

Economic Development Loans

123.4 Investment in Associated Organizations - Non-Federal

Economic Development Loans

124 Other Investments

124.1 Other Investments - Federal Economic Development Loans

124.2 Other Investments - Non-Federal Economic Development

Loans

125 Sinking Funds

126 Depreciation Fund

128 Other Special Funds

[Current and Accrued Assets]{.underline}

131 Cash

131.1 Cash - General

131.12 Cash - General - Economic Development Loan Funds

131.13 Cash - General - Economic Development Grant Funds

131.14 Cash - General - Economic Development Non-Federal

Revolving Funds

131.2 Cash - Construction Fund - Trustee

131.3 Cash - Installation Loan and Collection Fund

131.4 Transfer of Cash

132 Interest Special Deposits

133 Dividend Special Deposits

134 Other Special Deposits

135 Working Funds

136 Temporary Cash Investments

141 Notes Receivable

141.1 Accumulated Provision for Uncollectible Notes - Credit

142 Customer Accounts Receivable

142.1 Customer Accounts Receivable - Electric

142.2 Customer Accounts Receivable - Other

143 Other Accounts Receivable

144 Accumulated Provision for Uncollectible Accounts -

Credit

144.1 Accumulated Provision for Uncollectible Customer

Accounts - Credit

144.2 Accumulated Provision for Uncollectible Merchandising

Accounts - Credit

144.3 Accumulated Provision for Uncollectible Accounts,

Officers and Employees - Credit

144.4 Accumulated Provision for Other Uncollectible

Accounts - Credit

145 Notes Receivable from Associated Companies

146 Accounts Receivable from Associated Companies

151 Fuel Stock

152 Fuel Stock Expenses Undistributed

153 Residuals

154 Plant Materials and Operating Supplies

155 Merchandise

156 Other Materials and Supplies

157 Nuclear Materials Held for Sale

158.1 Allowance Inventory

158.2 Allowances Withheld

163 Stores Expense Undistributed

165 Prepayments

165.1 Prepayments - Insurance

165.2 Other Prepayments

171 Interest and Dividends Receivable

172 Rents Receivable

173 Accrued Utility Revenues

174 Miscellaneous Current and Accrued Assets

[Deferred Debits]{.underline}

181 Unamortized Debt Expense

182.1 Extraordinary Property Losses

182.2 Unrecovered Plant and Regulatory Study Costs

182.3 Other Regulatory Assets

183 Preliminary Survey and Investigation Charges

184 Clearing Accounts

184.1 Transportation Expense - Clearing

184.2 Clearing Accounts - Other

185 Temporary Facilities

186 Miscellaneous Deferred Debits

187 Deferred Losses from Disposition of Utility Plant

188 Research, Development, and Demonstration Expenditures

189 Unamortized Loss on Reacquired Debt

190 Accumulated Deferred Income Taxes

§ 1767.19 Liabilities and Other Credits

200 Memberships

200.1 Memberships Issued

200.2 Memberships Subscribed But Unissued

201 Patronage Capital

201.1 Patronage Capital Credits

201.2 Patronage Capital Assignable

202 \[Reserved\]

203 \[Reserved\]

204 \[Reserved\]

205 \[Reserved\]

206 \[Reserved\]

207 \[Reserved\]

208 Donated Capital

209 \[Reserved\]

210 \[Reserved\]

211 Consumers\' Contributions for Debt Service

212 \[Reserved\]

213 \[Reserved\]

214 \[Reserved\]

215 Appropriated Margins

215.1 Unrealized Gains and Losses - Debt and Equity

Securities

216 \[Reserved\]

216.1 Unappropriated Undistributed Subsidiary Earnings

217 Retired Capital Credits - Gain

218 Capital Gains and Losses

219 Other Margins and Equities

219.1 Operating Margins

219.2 Nonoperating Margins

219.3 Other Margins

219.4 Other Margins and Equities - Prior Periods

[Long-Term Debt]{.underline}

221 Bonds

222 Reacquired Bonds

223 Advances from Associated Companies

224 Other Long-Term Debt

224.1 Long-Term Debt - RUS Construction Loan Contract

224.2 RUS Loan Contract - Construction - Debit

224.3 Long-Term Debt - RUS Construction Notes Executed

224.4 RUS Notes Executed - Construction - Debit

224.5 Interest Accrued - Deferred - RUS Construction

224.6 Advance Payments Unapplied - RUS Long-Term Debt - Debit

224.7 Long-Term Debt - Installation Loan Contract

224.8 RUS Loan Contract - Installation - Debit

224.9 Long-Term Debt - Installation Notes Executed

224.10 RUS Notes Executed - Installation - Debit

224.11 Other Long-Term Debt - Subscriptions

224.12 Other Long-Term Debt - Supplemental Financing

224.13 Supplemental Financing Notes Executed - Debit

224.14 Other Long-Term Debt - Miscellaneous

224.15 Notes Executed - Other - Debit

224.16 Long-Term Debt - RUS Economic Development Notes

Executed

224.17 RUS Notes Executed - Economic Development - Debit

225 Unamortized Premium on Long-Term Debt

226 Unamortized Discount on Long-Term Debt - Debit

[Other Noncurrent Liabilities]{.underline}

227 Obligations Under Capital Leases - Noncurrent

228.1 Accumulated Provision for Property Insurance

228.2 Accumulated Provision for Injuries and Damages

228.3 Accumulated Provision for Pensions and Benefits

228.4 Accumulated Miscellaneous Operating Provisions

229 Accumulated Provision for Rate Refunds

[Current and Accrued Liabilities]{.underline}

231 Notes Payable

232 Accounts Payable

232.1 Accounts Payable - General

232.2 Accounts Payable - RUS Construction

232.3 Accounts Payable - Other

233 Notes Payable to Associated Companies

234 Accounts Payable to Associated Companies

235 Customer Deposits

236 Taxes Accrued

236.1 Accrued Property Taxes

236.2 Accrued U.S. Social Security Tax - Unemployment

236.3 Accrued U.S. Social Security Tax - F.I.C.A.

236.4 Accrued State Social Security Tax - Unemployment

236.5 Accrued State Sales Tax - Consumers

236.6 Accrued Gross Revenue or Gross Receipts Tax

236.7 Accrued Taxes - Other

237 Interest Accrued

238 Patronage Capital and Patronage Refunds Payable

238.1 Patronage Capital Payable

238.2 Patronage Refunds Payable

239 Matured Long-Term Debt

240 Matured Interest

241 Tax Collections Payable

242 Miscellaneous Current and Accrued Liabilities

242.1 Accrued Rentals

242.2 Accrued Payroll

242.3 Accrued Employees\' Vacations and Holidays

242.4 Accrued Insurance

242.5 Other Current and Accrued Liabilities

243 Obligations Under Capital Leases - Current

251 \[Reserved\]

252 Customer Advances for Construction

253 Other Deferred Credits

253.1 Other Deferred Credits - Consumers\' Energy Prepayments

254 Other Regulatory Liabilities

255 Accumulated Deferred Investment Tax Credits

256 Deferred Gains from Disposition of Utility Plant

257 Unamortized Gain on Reacquired Debt

281 Accumulated Deferred Income Taxes - Accelerated

Amortization Property

282 Accumulated Deferred Income Taxes - Other Property

283 Accumulated Deferred Income Taxes - Other

§ 1767.20 Plant Accounts

[Intangible Plant]{.underline}

301 Organization

302 Franchises and Consents

303 Miscellaneous Intangible Plant

[Steam Production Plant]{.underline}

310 Land and Land Rights

311 Structures and Improvements

312 Boiler Plant Equipment

313 Engines and Engine Driven Generators

314 Turbogenerator Units

315 Accessory Electric Equipment

316 Miscellaneous Power Plant Equipment

[Nuclear Production Plant]{.underline}

320 Land and Land Rights

321 Structures and Improvements

322 Reactor Plant Equipment

323 Turbogenerator Units

324 Accessory Electric Equipment

325 Miscellaneous Power Plant Equipment

[Hydraulic Production Plant]{.underline}

330 Land and Land Rights

331 Structures and Improvements

332 Reservoirs, Dams and Waterways

333 Water Wheels, Turbines and Generators

334 Accessory Electric Equipment

335 Miscellaneous Power Plant Equipment

336 Roads, Railroads and Bridges

[Other Production Plant]{.underline}

340 Land and Land Rights

341 Structures and Improvements

342 Fuel Holders, Producers and Accessories

343 Prime Movers

344 Generators

345 Accessory Electric Equipment

346 Miscellaneous Power Plant Equipment

[Transmission Plant]{.underline}

350 Land and Land Rights

351 \[Reserved\]

352 Structures and Improvements

353 Station Equipment

354 Tower and Fixtures

355 Poles and Fixtures

356 Overhead Conductors and Devices

357 Underground Conduit

358 Underground Conductors and Devices

359 Roads and Trails

[Distribution Plant]{.underline}

360 Land and Land Rights

361 Structures and Improvements

362 Station Equipment

363 Storage Battery Equipment

364 Poles, Towers and Fixtures

365 Overhead Conductors and Devices

366 Underground Conduit

367 Underground Conductors and Devices

368 Line Transformers

369 Services

370 Meters

371 Installations on Customers\' Premises

372 Leased Property on Customers\' Premises

373 Street Lighting and Signal Systems

[General Plant]{.underline}

389 Land and Land Rights

390 Structures and Improvements

391 Office Furniture and Equipment

392 Transportation Equipment

393 Stores Equipment

394 Tools, Shop and Garage Equipment

395 Laboratory Equipment

396 Power Operated Equipment

397 Communication Equipment

398 Miscellaneous Equipment

399 Other Tangible Property

§ 1767.21 Operating Income

400 Operating Revenues

401 Operation Expense

402 Maintenance Expense

403 Depreciation Expense

403.1 Depreciation Expense - Steam Production Plant

403.2 Depreciation Expense - Nuclear Production Plant

403.3 Depreciation Expense - Hydraulic Production Plant

403.4 Depreciation Expense - Other Production Plant

403.5 Depreciation Expense - Transmission Plant

403.6 Depreciation Expense - Distribution Plant

403.7 Depreciation Expense - General Plant

404 Amortization of Limited-Term Electric Plant

405 Amortization of Other Electric Plant

406 Amortization of Electric Plant Acquisition Adjustments

407 Amortization of Property Losses, Unrecovered Plant and

Regulatory Study Costs

407.3 Regulatory Debits

407.4 Regulatory Credits

408 Taxes Other than Income Taxes

408.1 Taxes - Property

408.2 Taxes - U.S. Social Security - Unemployment

408.3 Taxes - U.S. Social Security - F.I.C.A.

408.4 Taxes - State Social Security - Unemployment

408.5 Taxes - State Sales - Consumers

408.6 Taxes - Gross Revenue or Gross Receipts Tax

408.7 Taxes - Other

409 \[Reserved\]

409.1 Income Taxes, Utility Operating Income

409.2 Income Taxes, Other Income and Deductions

409.3 Income Taxes, Extraordinary Items

410 \[Reserved\]

410.1 Provision for Deferred Income Taxes, Utility Operating

Income

410.2 Provision for Deferred Income Taxes, Other Income and

Deductions

411 \[Reserved\]

411.1 Provision for Deferred Income Taxes - Credit, Utility

Operating Income

411.2 Provision for Deferred Income Taxes - Credit, Other

Income and Deductions

411.3 \[Reserved\]

411.4 Investment Tax Credit Adjustments, Utility Operations

411.5 Investment Tax Credit Adjustments, Nonutility

Operations

411.6 Gains from Disposition of Utility Plant

411.7 Losses from Disposition of Utility Plant

411.8 Gains from Disposition of Allowances

411.9 Losses from Disposition of Allowances

412 Revenues from Electric Plant Leased to Others

413 Expenses of Electric Plant Leased to Others

414 Other Utility Operating Income

§ 1767.22 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 Operations

417.1 Expenses of Nonutility Operations

418 Nonoperating Rental Income

418.1 Equity in Earnings of Subsidiary Companies

419 Interest and Dividend Income

419.1 Allowance for Funds Used During Construction

420 Investment Tax Credits

421 Miscellaneous Nonoperating Income

421.1 Gain on Disposition of Property

421.2 Loss on Disposition of Property

422 Nonoperating Taxes

423 Generation and Transmission Cooperative Capital Credits

424 Other Capital Credits and Patronage Capital Allocations

425 Miscellaneous Amortization

426 \[Reserved\]

426.1 Donations

426.2 Life Insurance

426.3 Penalties

426.4 Expenditures for Certain Civic, Political, and Related

Activities

426.5 Other Deductions

§ 1767.23 Interest Charges

427 Interest on Long-Term Debt

427.3 Interest Charged to Construction - Credit

428 Amortization of Debt Discount and Expense

428.1 Amortization of Loss on Reacquired Debt

429 Amortization of Premium on Debt - Credit

429.1 Amortization of Gain on Reacquired Debt - Credit

430 Interest on Debt to Associated Companies

431 Other Interest Expense

432 Allowance for Borrowed Funds Used During Construction -

Credit

§ 1767.24 Extraordinary Items

434 Extraordinary Income

435 Extraordinary Deductions

435.1 Cumulative Effect on Prior Years of a Change in

Accounting Principle

§ 1767.25 Retained earnings

433 \[Reserved\]

436 \[Reserved\]

437 \[Reserved\]

438 \[Reserved\]

439 \[Reserved\]

§ 1767.26 Operating Revenue

[Sales of Electricity]{.underline}

440 Residential Sales

440.1 Residential Sales - Excluding Seasonal

440.2 Residential Sales - Seasonal

441 Irrigation Sales

442 Commercial and Industrial Sales

442.1 Commercial and Industrial Sales - 1000 kVA or Less

442.2 Commercial and Industrial Sales - Over 1000 kVA

444 Public Street and Highway Lighting

445 Other Sales to Public Authorities

446 Sales to Railroads and Railways

447 Sales for Resale

447.1 Sales for Resale - RUS Borrowers

447.2 Sales for Resale - Other

448 Interdepartmental Sales

449.1 Provision for Rate Refunds

[Other Operating Revenues]{.underline}

450 Forfeited Discounts

451 Miscellaneous Service Revenues

453 Sales of Water and Water Power

454 Rent from Electric Property

455 Interdepartmental Rents

456 Other Electric Revenues

§ 1767.27 Operation and Maintenance Expense

[Steam Power Generation Operations]{.underline}

500 Operation Supervision and Engineering

501 Fuel

502 Steam Expenses

503 Steam from Other Sources

504 Steam Transferred - Credit

505 Electric Expenses

506 Miscellaneous Steam Power Expenses

507 Rents

509 Allowances

[Steam Power Generation Maintenance]{.underline}

510 Maintenance Supervision and Engineering

511 Maintenance of Structures

512 Maintenance of Boiler Plant

513 Maintenance of Electric Plant

514 Maintenance of Miscellaneous Steam Plant

[Nuclear Power Generation Operations]{.underline}

517 Operation Supervision and Engineering

518 Nuclear Fuel Expense

519 Coolants and Water

520 Steam Expenses

521 Steam from Other Sources

522 Steam Transferred - Credit

523 Electric Expenses

524 Miscellaneous Nuclear Power Expenses

525 Rents

[Nuclear Power Generation Maintenance]{.underline}

528 Maintenance Supervision and Engineering

529 Maintenance of Structures

530 Maintenance of Reactor Plant Equipment

531 Maintenance of Electric Plant

532 Maintenance of Miscellaneous Nuclear Plant

[Hydraulic Power Generation Operations]{.underline}

535 Operation Supervision and Engineering

536 Water for Power

537 Hydraulic Expenses

538 Electric Expenses

539 Miscellaneous Hydraulic Power Generation Expenses

540 Rents

[Hydraulic Power Generation Maintenance]{.underline}

541 Maintenance Supervision and Engineering

542 Maintenance of Structures

543 Maintenance of Reservoirs, Dams, and Waterways

544 Maintenance of Electric Plant

545 Maintenance of Miscellaneous Hydraulic Plant

[Other Power Generation Operations]{.underline}

546 Operation Supervision and Engineering

547 Fuel

548 Generation Expenses

549 Miscellaneous Other Power Generation Expenses

550 Rents

[Other Power Generation Maintenance]{.underline}

551 Maintenance Supervision and Engineering

552 Maintenance of Structures

553 Maintenance of Generating and Electric Equipment

554 Maintenance of Miscellaneous Other Power Generation

Plant

[Other Power Supply Expenses]{.underline}

555 Purchased Power

556 System Control and Load Dispatching

557 Other Expenses

[Transmission Operation Expenses]{.underline}

560 Operation Supervision and Engineering

561 Load Dispatching

562 Station Expenses

563 Overhead Line Expenses

564 Underground Line Expenses

565 Transmission of Electricity by Others

566 Miscellaneous Transmission Expenses

567 Rents

[Transmission Maintenance Expenses]{.underline}

568 Maintenance Supervision and Engineering

569 Maintenance of Structures

570 Maintenance of Station Equipment

571 Maintenance of Overhead Lines

572 Maintenance of Underground Lines

573 Maintenance of Miscellaneous Transmission Plant

[Distribution Operations Expenses]{.underline}

580 Operation Supervision and Engineering

581 Load Dispatching

582 Station Expenses

583 Overhead Line Expenses

584 Underground Line Expenses

585 Street Lighting and Signal System Expenses

586 Meter Expenses

587 Customer Installations Expenses

588 Miscellaneous Distribution Expenses

589 Rents

[Distribution Maintenance Expenses]{.underline}

590 Maintenance Supervision and Engineering

591 Maintenance of Structures

592 Maintenance of Station Equipment

593 Maintenance of Overhead Lines

594 Maintenance of Underground Lines

595 Maintenance of Line Transformers

596 Maintenance of Street Lighting and Signal Systems

597 Maintenance of Meters

598 Maintenance of Miscellaneous Distribution Plant

§ 1767.28 Customer Accounts Expenses

[Customer Accounts Operations Expenses]{.underline}

901 Supervision

902 Meter Reading Expenses

903 Customer Records and Collection Expenses

904 Uncollectible Accounts

905 Miscellaneous Customer Accounts Expenses

§ 1767.29 Customer Service and Informational Expenses

907 Supervision

908 Customer Assistance Expenses

909 Informational and Instructional Advertising Expenses

910 Miscellaneous Customer Service and Informational

Expenses

§ 1767.30 Sales Expenses

911 Supervision

912 Demonstrating and Selling Expenses

913 Advertising Expenses

916 Miscellaneous Sales Expenses

§ 1767.31 Administrative and General Expenses

[Administrative and General Operations Expenses]{.underline}

920 Administrative and General Salaries

921 Office Supplies and Expenses

922 Administrative Expenses Transferred - Credit

923 Outside Services Employed

924 Property Insurance

925 Injuries and Damages

926 Employee Pensions and Benefits

927 Franchise Requirements

928 Regulatory Commission Expenses

929 Duplicate Charges - Credit

930.1 General Advertising Expenses

930.2 Miscellaneous General Expenses

931 Rents

[Administrative and General Maintenance Expenses]{.underline}

935 Maintenance of General Plant

§ 1767.32 - 1767.40 \[Reserved\]

§ 1767.41 Accounting Methods and Procedures Required of All

RUS Borrowers

101 Work Order Procedures

102 Line Conversion

103 Sacrificial Anodes and the Replacement of a Neutral

104 Terminal Facilities

105 Pole Top Disconnect Switch

106 Steel Pole Reinforcers

107 Mobile Substations

108 Security Lights

109 Joint Use

110 First Clearing and Grading of Land and Rights of Way

111 Engineering Contracts for System Planning

112 Determination of Availability of Service

113 Temporary Facilities (Services)

114 Construction Work in Progress Damaged or Destroyed by

Storm

115 Liquidated Damages

116 Nonrefundable Payments for Construction

117 Refunds of Overpayments for Materials and Supplies

118 Load Control Equipment

119 Special Equipment

120 Meter Sockets and Meters

121 Minimum - Maximum Voltmeters

122 Retrofitting Demand Meters

123 Transformer Conversions

124 Transclosures

125 Retirement Units

126 Establishment of Continuing Property Records

127 Continuing Property Records for Buildings

128 Sale of Property

129 Gain or Loss on the Sale of an Office Building

130 Salvage and Obsolete Material

131 Plant Acquisition Adjustments

132 General Plant

133 Plant Abandonments and Disallowances of Plant Costs

134 Utility Plant Phase-in Plans

135 Accounting for Removal or Relocation of Electric

Facilities Resulting from the Action of Others

136 Storm Damage

137 Impairment of Long-Lived Assets

138 Automatic Meter Reading Systems - Turtles

139 Global Positioning Systems

140 Radio-Based Automatic Meter Reading Systems

201 Supplemental Financing

301 Forfeited Customers\' Deposits

401 Computer Software Costs

402 Legal Expenses

403 Leases

404 Consolidated Financial Statements

501 Patronage Capital Assignments

502 Patronage Capital Retirements

503 Operating and Nonoperating Margins

504 Patronage Capital from G&T Cooperatives

505 Patronage Capital Furnished by Other Cooperative

Service Organizations

506 Forfeited Membership Fees

601 Employee Benefits

602 Compensated Absences

603 Employee Retirement and Group Insurance

604 Deferred Compensation

605 Life Insurance Premium on Life of a Borrower Employee

606 Pension Costs

607 Unproductive Time

608 Training Costs, Attendance at Meetings, etc.

609 Maintenance and Operations

610 Financial Forecast

611 Advertising Expense

612 Special Power Cost Study

613 Mapping Costs

614 Member Relations Costs

615 Statewide Fees

616 Power Supply/Distribution Cooperative Borrowings

617 Rate Discount Allowed by Power Cooperative to

Distribution Cooperative Owning Connecting

Transmission Lines

618 Theft Losses not Covered by Insurance

619 Self Billing

620 Purchase Rebates

621 Integrity Fund

622 In-Substance Defeasance

623 Satellite or Cable Television Services

624 Pollution Control Bonds

625 Prepayment of Debt

626 Rural Economic Development Loan and Grant Program

627 Postretirement Benefits

628 Postemployment Benefits

629 Investments in Debt and Equity Securities

630 Split Dollar Life Insurance

631 Special Early Retirement Plan

INDEX:

Accounting

Uniform System of Accounts

**ABBREVIATIONS**

CFC National Rural Utilities Cooperative Finance

Corporation

CTCs Capital Term Certificates

GAAP Generally Accepted Accounting Principles

G&T Generation and Transmission

kW Kilowatts

kWh Kilowatt-hours

RD&D Research, Development, and Demonstration

RUS Rural Utilities Service

SFAS Statement of Financial Accounting Standards

Statement No. 43 Accounting for Compensated Absences

Statement No. 71 Accounting for the Effects of Certain Types

of Regulation

Statement No. 87 Employers\' Accounting for Pensions

Statement No. 90 Regulated Enterprises - Accounting for

Abandonments

Statement No. 92 Regulated Enterprises - Accounting for

Phase-in Plans

Statement No. 94 Consolidation of All Majority-Owned

Subsidiaries

Statement No. 106 Employers\' Accounting for Postretirement

Benefits Other than Pensions

USoA Uniform System of Accounts

**§ 1767.10 DEFINITIONS:**

As used in this part:

[Accounting borrower]{.underline} is an RUS borrower.

[Accounts]{.underline} are the accounts prescribed in this system of
accounts.

[Actually issued]{.underline} as applied to securities issued or assumed
by the utility, are those which have been sold to bona fide purchasers
for a valuable consideration, those issued as dividends on stock, and
those which have been issued in accordance with contractual requirements
direct to trustees of sinking funds.

[Actually outstanding]{.underline} as applied to securities issued or
assumed by the utility, are those which have been actually issued and
are neither retired nor held by or for the utility; provided, however,
that securities held by trustees shall be considered as actually
outstanding.

[Amortization]{.underline} is the gradual extinguishment of an amount in
an account by distributing such amount over a fixed period, over the
life of the asset or liability to which it applies, or over the period
during which it is anticipated the benefit will be realized.

[Associated (affiliated) companies]{.underline} are companies or persons
that directly, or indirectly through one or more intermediaries,
control, or are controlled by, or under common control with, the
accounting company.

[Book Cost]{.underline} means the amount at which property is recorded
in these accounts without deduction of related provisions for accrued
depreciation, amortization, or for other purposes.

[Capital lease]{.underline} is a lease of property used in utility or
nonutility operations, which meets one or more of the criteria stated in
§ 1767.15 (s).

[CFC]{.underline} is the National Rural Utilities Cooperative Finance
Corporation.

[Continuing Property Records]{.underline} are company plant records for
retirement units and mass property that provide, as either a single
record, or in separate records readily obtainable by references made in
a single record, the following 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 property:

\(i\) A general description of the property 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]{.underline} (including the terms [controlling]{.underline},
[controlled by]{.underline}, and [under common control
with]{.underline}) is the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
a company, whether such power is exercised through one or more
intermediary companies, or alone, or in conjunction with, or pursuant to
an agreement, and whether such power is established through a majority
or minority ownership or through voting of securities; common directors,
officers, or stockholders; voting trusts; holding trusts; associated
companies; contracts; or any other direct or indirect means.

[Cost]{.underline} is the amount of money actually paid for property or
services. When the consideration given is other than cash in a purchase
and sale transaction, as distinguished from a transaction involving the
issuance of common stock in a merger or a pooling of interest, the value
of such consideration shall be determined on a cash basis.

[Cost of removal]{.underline} is the cost of demolishing, dismantling,
tearing down or otherwise removing electric plant, including the cost of
transportation and handling incidental thereto.

[Customer]{.underline} is a consumer or patron.

[Debt expense]{.underline} includes all expenses incurred in connection
with the issuance and initial sale of evidence of debt, such as fees for
drafting mortgages and trust deeds; fees and taxes for issuing or
recording evidences of debt; costs of engraving and printing bonds and
certificates of indebtedness; fees paid to trustees; specific costs of
obtaining governmental authority; fees for legal services; fees and
commissions paid underwriters, brokers, and salesmen for marketing such
evidences of debt; fees and expenses of listing on exchanges; and other
like costs.

[Depreciation]{.underline}, as applied to depreciable electric plant, is
the loss in service value, not restored by current maintenance, incurred
in connection with the consumption or prospective retirement of electric
plant in the course of service from causes which are known to be in
current operation and against which the utility is not protected by
insurance. Among the causes to be given consideration are wear and tear,
decay, action of the elements, inadequacy, obsolescence, changes in the
art, changes in demand and requirements of public authorities.

[Discount]{.underline}, as applied to the securities issued or assumed
by the utility, is the excess of the par (stated value of no-par stocks)
or face value of the securities plus interest or dividends accrued at
the date of the sale over the cash value of the consideration received
from their sale.

[FASB]{.underline} is the Financial Accounting Standards Board.

[G&T]{.underline} is a generation and transmission cooperative.

[Investment advances]{.underline} are advances, represented by notes or
by book accounts only, with respect to which it is mutually agreed or
intended between the creditor and debtor that they shall be settled by
the issuance of securities or shall not be subject to current
settlement.

[Minor items of property]{.underline} are the associated parts or items
of which retirement units are composed.

[Net salvage value]{.underline} is the salvage value of property retired
less the cost of removal.

[Nominally issued]{.underline}, as applied to securities issued or
assumed by the utility, are those which have been signed, certified, or
otherwise executed, and placed with the proper officer for sale and
delivery, or pledged, or otherwise placed in some special funds of the
utility, but which have not been sold, or issued direct to trustees of
sinking funds in accordance with contractual requirements.

[Nominally outstanding]{.underline}, as applied to securities issued or
assumed by the utility, are those which, after being actually issued,
have been reacquired by or for the utility under circumstances which
require them to be considered as held alive and not retired, provided,
however, that securities held by trustees shall be considered as
actually outstanding.

[NRECA]{.underline} is the National Rural Electric Cooperative
Association.

[Operating lease]{.underline} is a lease of property used in utility or
nonutility operations, which does not meet any of the criteria stated in
§ 1767.15 (s).

[Original cost]{.underline}, as applied to electric plant, is the cost
of such property to the person first devoting it to public service.

[Person]{.underline} is an individual, a corporation, a partnership, an
association, a joint stock company, a business trust, or any organized
group of persons, whether incorporated or not, or any receiver or
trustee.

[Premium]{.underline}, as applied to securities issued or assumed by the
utility, is the excess of the cash value of the consideration received
from their sale over the sum of their par (stated value of no-par
stocks) or face value and interest or dividends accrued at the date of
sale.

[Project]{.underline} is a complete unit of improvement or development,
consisting of a power house, all water conduits, all dams and
appurtenant works and structures (including navigation structures) which
are a part of said unit, and all storage, diverting, or forebay
reservoirs directly connected therewith, the primary line or lines
transmitting power therefrom to the point of junction with the
distribution system or with the interconnected primary transmission
system, all miscellaneous structures used and useful in connection with
said unit or any part thereof, and all water rights, rights of way,
ditches, dams, reservoirs, lands, or interest in lands the use and
occupancy of which are necessary or appropriate in the maintenance and
operation of such unit.

[Property retired]{.underline}, as applied to electric plant, is
property which has been removed, sold, abandoned, destroyed, or which
for any cause has been withdrawn from service.

[RUS]{.underline} is the Rural Utilities Service, an agency of the
United States Department of Agriculture, or its successor.

[RUS Form 7]{.underline} is the August 1988 revision (or the revision of
any other date which may be specified) of such RUS Form 7, Financial and
Statistical Report, or any later revision which shall have been at the
time prescribed for use by RUS.

[RUS Form 12]{.underline} is the November 1979 revision (or the revision
of any other date which may be specified) of such RUS Form 12, Operating
Report - Financial, or any later revision which shall have been at the
time prescribed for use by RUS.

[RUS USoA]{.underline} is the USoA prescribed in this subpart.

[Regulatory Assets and Liabilities]{.underline} are assets and
liabilities that result from rate actions of regulatory agencies.
Regulatory assets and liabilities arise from specific revenues,
expenses, gains, or losses that would have been included in net income
determinations in one period under the general requirements of the
Uniform System of Accounts but for it being probable:

\(1\) That such items will be included in a different period(s) for
purposes of developing the rates the utility is authorized to charge for
its utility services; or

\(2\) In the case of regulatory liabilities, that refunds to customers,
not provided for in the other accounts, will be required.

[Replacing (including replacement)]{.underline} when not otherwise
indicated in the context, is the construction or installation of
electric plant in place of property retired, together with the removal
of the property retired.

[Research, Development, and Demonstration]{.underline} (RD&D) includes
all expenditures incurred by borrowers either directly or through
another person or organization (such as a research institute, industry
association, foundation, university, engineering company or similar
contractor) in pursuing research, development, and demonstration
activities including experiment, design, installation, construction, or
operation. This definition includes expenditures for the implementation
or development of new and/or existing concepts until technically
feasible and commercially feasible operations are verified. Such
research, development, and demonstration costs should be reasonably
related to the existing or future utility business, broadly defined, of
the borrower or in the environment in which it operates or expects to
operate. The term includes, but is not limited to, all such costs
incidental to the design, development or implementation of an
experimental facility, a plant process, a product, a formula, an
invention, a system or similar items, and the improvement of already
existing items of a like nature; amounts expended in connection with the
proposed development and/or proposed delivery of alternate sources of
electricity; and the costs of obtaining its own patent, such as
attorney\'s fees expended in making and perfecting a patent application.
The term includes preliminary investigations and detailed planning of
specific projects for securing for customers non-conventional electric
power supplies that rely on technology that has not been verified
previously to be feasible. The term does not include expenditures for
efficiency surveys; studies of management, management techniques, and
organization; or consumer surveys, advertising, promotions, or items of
a like nature.

[Retirement units]{.underline} are those items of electric plant which,
when retired with or without replacement, are accounted for by crediting
the book cost thereof to the electric plant accounts in which included.

[Salvage value]{.underline} is the amount received for property retired,
less any expenses incurred in connection with the sale or in preparing
the property for sale; or, if retained, the amount at which the material
recovered is chargeable to materials and supplies, or other appropriate
accounts.

[Service life]{.underline} is the time between the date electric plant
is includible in electric plant in service, or electric plant leased to
others, and the date of its retirement. If depreciation is accounted for
on a production basis rather than on a time basis, service life should
be measured in terms of the appropriate unit of production.

[Service value]{.underline} is the difference between original cost and
net salvage value of electric plant.

[State]{.underline} is a State admitted to the Union, the District of
Columbia, and any organized Territory of the United States.

[Subsidiary company]{.underline} is a company which is controlled by the
utility through ownership of voting stock. (See the definition of
control in § 1767.10.) A corporate joint venture in which a corporation
is owned by a small group of businesses as a separate and specific
business or project for the mutual benefit of the members of the group
is a subsidiary company for the purposes of this system of accounts.

[Utility]{.underline} is an RUS borrower.

[Work order]{.underline} is an order authorizing the construction of
utility plant. It serves as the basis for the accounts or subaccounts in
which costs are recorded.

**§ 1767.11 PURPOSE:**

\(a\) The standard form of RUS loan documents for electric borrowers
requires that the borrower keep books, records, and accounts in which
full and true entries will be made of all of the dealings, business and
affairs of the borrower in accordance with the methods and principles of
accounting of this part.

\(b\) This subpart implements these provisions of the RUS loan documents
by prescribing the RUS USoA for electric borrowers and by providing
accounting methodologies and procedures which are applicable to
particular situations.

**§ 1767.12 ACCOUNTING SYSTEM REQUIREMENTS:**

\(a\) Each RUS electric borrower must maintain and keep its books of
accounts and all other books and records that support the entries in
such books of accounts in accordance with

§ 1767.18 - § 1767.31.

\(b\) Each RUS electric borrower shall maintain and keep its books of
accounts and all other books and records which support the entries in
such books of accounts in accordance with

§ 1767.41, Accounting Methods and Procedures Required of All RUS
Borrowers, herein, which prescribes accounting principles to be applied
to specific factual circumstances.

**§ 1767.13 DEPARTURES FROM THE PRESCRIBED RUS UNIFORM SYSTEM OF**

**ACCOUNTS:**

\(a\) No departures are to be made to the prescribed RUS USoA without
the prior written approval of RUS. RUS grants a departure to any
borrower electing to delay implementation of the functional
(activity-based) accounting requirements of this part through December
31, 1997. Requests for departures from the RUS USoA shall be addressed,
in writing, to the Director, Program Accounting Services Division
(PASD).

\(b\) RUS borrowers subject to the jurisdiction of a state regulatory
authority with jurisdiction over rates and/or accounting for electric
utilities will not:

\(1\) Request approval of such authority to use accounting methodologies
and principles that depart from the provisions herein; or

\(2\) File with such authority, any documents or information, including
without limitation, any filings associated with the borrower\'s rates,
based upon accounting methods and principles inconsistent with the
provisions of this part.

\(c\) If any state regulatory authority with jurisdiction over an RUS
borrower prescribes accounting methods or principles for the borrower
that are inconsistent with the provisions of this part, the borrower
must immediately notify the Director, BAD, and provide such documents,
information, and reports as RUS may request to evaluate the impact that
such accounting methods or principles may have on the interests of RUS.

\(1\) If RUS determines that the accounting methods and principles do
not adversely impact RUS interests, RUS will permit the borrower to use
the accounting methods and principles as prescribed by the state
regulatory authority to comply with the provisions of the RUS loan
documents.

\(2\) If RUS determines that the accounting methods and principles may
adversely impact RUS\'s interests, RUS may require that, for the
purposes of complying with provisions of RUS loan documents, including,
without limitation, those provisions relating to financial coverage
standards (e.g. \"TIER\"), the borrower continue to maintain books,
records, and accounts in accordance with this subpart.

\(i\) RUS may, however, approve requests by the borrower to maintain
such additional books, records, and accounts as necessary to comply with
the requirements of the state regulatory authority.

\(ii\) Such approval will not waive, modify or amend the requirements of
the RUS loan documents or of this subpart.

\(d\) RUS borrowers will not implement the provisions of Statement of
Financial Accounting Standards (SFAS) No. 71, Accounting for the Effects
of Certain Types of Regulation, SFAS No. 90, Regulated Enterprises -
Accounting for Abandonments and Disallowances of Plant Costs, SFAS No.
92, Regulated Enterprises-Accounting for Phase-in Plans, without the
prior written approval of RUS except as provided for in paragraphs
(d)(1) through (d)(5) of this section. Requests for approval shall be
addressed, in writing, to the Director, PASD. The specific deferrals set
forth in paragraphs (d)(1) through (d)(5) of this section may be
implemented without the prior written approval of RUS provided that the
deferrals comply with Statement No. 71 and that the RUS borrowers
implementing such deferrals continue to meet the requirements set forth
in Statement No. 71 for doing so:

\(1\) The deferral and amortization of prior service pension costs (See
§ 1767.41, Interpretation No. 606, Pension Costs), remapping expenses
(See § 1767.41, Interpretation

No. 613, Mapping Costs), and preliminary survey and investigation
charges (See § 1767.17, Interpretation No. 111, Engineering Contracts
for System Planning);

\(2\) The deferral of any current period expense or expenses, on a
cumulative basis for the fiscal year, only if a borrower would have met
each of its financial tests or coverage ratios that it has covenanted
with RUS to meet for that fiscal year, had the deferral not been made;

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

\(4\) The accelerated amortization of any previously deferred expense;
and

\(5\) The deferral of revenues coincident with a moratorium imposed by
the National Rural Electric Cooperative Association on its Retirement
and Security Program, provided, however, that the deferral is for the
sole purpose of offsetting future pension costs.

\(e\) RUS will consider approval of specific departures from this part
upon submission of:

\(1\) A detailed description of the proposed departure;

\(2\) The specific accounting journal entries that will be used
including the account number and title, and the dollar amounts where
appropriate;

\(3\) The total dollar amount of the departure and the impact on margins
during the time period of the departure; and

\(4\) Any additional information RUS may deem necessary to adequately
evaluate the borrower\'s request.

\(f\) RUS will, within 90 days of final receipt of this information,
render a decision on the borrower\'s request for a departure from the
prescribed RUS USoA.

\(1\) If, due to extenuating circumstances, RUS is unable to reach a
decision within the required time period, RUS will notify the borrower
of the delay within this same 90-day period, and provide a projected
decision date.

\(2\) The requested departure from the prescribed RUS USoA must not be
implemented until final approval is granted by RUS.

**§ 1767.14 INTERPRETATIONS OF THE RUS UNIFORM SYSTEM OF ACCOUNTS:**

To maintain uniformity in accounting, borrowers must submit questions
concerning interpretations of the RUS USoA, in writing, to the Director,
BAD, for consideration and decision.

(Approved by the Office of Management and Budget under control number
0572-0002.)

**§ 1767.15 GENERAL INSTRUCTIONS:**

\(a\) **[Records]{.underline}**.

\(1\) Each utility shall keep its books of account, and all other books,
records, and memoranda which support the entries in such books of
account so as to be able to furnish readily full information as to any
item included in any account.

\(2\) Each entry shall be supported by such detailed information as will
permit ready identification, analysis, and verification of all facts
relevant thereto.

\(3\) The books and records referred to herein include not only
accounting records in a limited technical sense, but all other records,
such as minute books, stock books, reports, correspondence, memoranda,
etc., which may be useful in developing the history of or facts
regarding any transaction.

\(4\) No utility shall destroy any such books or records unless the
destruction thereof is permitted by the rules and regulations of RUS in
7 CFR chapter XVII.

\(5\) In addition to the prescribed accounts, clearing accounts,
temporary or experimental accounts, and subdivisions of any accounts,
may be kept, provided the integrity of the prescribed accounts is not
impaired.

\(6\) All amounts included in the accounts prescribed herein for
electric plant and operating expenses shall be just and reasonable and
any payments or accruals by the utility in excess of just and reasonable
charges shall be included in

Account 426.5, Other Deductions.

\(7\) The arrangement or sequence of the accounts prescribed herein
shall not be controlling as to the arrangement or sequence in report
forms which may be prescribed by RUS.

\(b\) **[Numbering system]{.underline}**.

\(1\) The account numbering plan used herein consists of a system of
three-digit whole numbers as 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 distribution expenses.
>
> 900-949 Customer accounts, customer service and informational, sales,
> and general and administrative expenses.

\(2\) In certain instances, numbers have been skipped in order to allow
for possible later expansion or to permit better coordination with the
numbering system for other utility departments.

\(3\) The numbers prefixed to account titles are to be considered as
parts of the titles.

\(i\) Each utility, however, may adopt, for its own purposes, a
different system of account numbers provided that the numbers herein
prescribed shall appear in the descriptive headings of the ledger
accounts and in the various sources of original entry.

\(ii\) If a utility uses a different group of account numbers and it is
not practicable to show the prescribed account numbers in the various
sources of original entry, such reference to the prescribed account
numbers may be omitted from the various sources of original entry.

\(iii\) Each utility using different account numbers for its own
purposes shall keep readily available, a list of such account numbers
which it uses and a reconciliation of such account numbers with the
account numbers provided herein.

\(iv\) The utility\'s records shall be so kept as to permit ready
analysis by prescribed accounts (by direct reference to sources of
original entry to the extent practicable) and to permit preparation of
financial and operating statements directly from such records at the end
of each accounting period according to the prescribed accounts.

\(c\) **[Accounting period]{.underline}**.

\(1\) Each utility shall keep its books on a monthly basis so that for
each month, all transactions applicable thereto, as nearly as may be
ascertained, shall be entered in the books of the utility.

\(2\) Amounts applicable or assignable to specific utility departments
shall be so segregated monthly.

\(3\) Each utility shall close its books at the end of each fiscal year
unless otherwise authorized by RUS.

\(d\) **[Submission of questions]{.underline}**. To maintain uniformity
of accounting, utilities shall submit questions of doubtful
interpretation to RUS for consideration and decision.

\(e\) **[Item lists]{.underline}**.

\(1\) Lists of \"items\" appearing in the texts of the accounts or
elsewhere herein are for the purpose of more clearly indicating the
application of the prescribed accounting.

\(2\) The lists are intended to be representative, but not exhaustive.

\(3\) The appearance of an item in a list warrants the inclusion of the
item in the account mentioned only when the text of the account also
indicates inclusion inasmuch as the same item frequently appears in more
than one list.

\(4\) The proper entry in each instance must be determined by the texts
of the accounts.

\(f\) **[Extraordinary items]{.underline}**.

\(1\) Net income shall reflect all items of profit and loss during the
period with the exception of prior period adjustments as described in §
1767.15 (g) and long-term debt as described in § 1767.15 (q).

\(2\) Those items related to the effects of events and transactions
which have occurred during the current period and which are not typical
or customary business activities of the company shall be considered
extraordinary items.

\(3\) They will be events and transactions of significant effect which
would not be expected to recur frequently and which would not be
considered as recurring factors in any evaluation of the ordinary
operating processes of business.

\(i\) In determining significance, items of a similar nature should be
considered in the aggregate.

\(ii\) Dissimilar items should be considered individually; however, if
they are few in number, they may be considered in the aggregate.

\(iii\) To be considered as extraordinary under the above guidelines, an
item should be more than approximately 5 percent of income, computed
before extraordinary items.

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

\(g\) **[Prior period items]{.underline}**.

\(1\) Items of profit and loss related to the following shall be
accounted for as prior period adjustments and excluded from the
determination of net income for the current year:

\(i\) Correction of an error in the financial statements of a prior
year.

\(ii\) Adjustments that result from realization of income tax benefits
of preacquisition operating loss carryforwards of purchased
subsidiaries.

\(2\) All other items of profit and loss recognized during the year
shall be included in the determination of net income for that year.

\(h\) **[Unaudited items]{.underline}**.

\(1\) Whenever a financial statement is required by RUS, if it is known
that a transaction has occurred which affects the accounts but the
amount involved in the transaction and its effect upon the accounts
cannot be determined with absolute accuracy, the amount shall be
estimated and such estimated amount included in the proper accounts.

\(2\) The utility is not required to anticipate minor items which would
not appreciably affect the accounts.

\(i\) **[Distribution of pay and expenses of employees]{.underline}**.
Charges to electric plant, operating expense, and other accounts for
services and expenses of employees engaged in activities chargeable to
various accounts, such as construction, maintenance, and operations,
shall be based upon the actual time engaged in the respective classes of
work, or in case that method is impracticable, upon the basis of a study
of the time actually engaged during a representative period.

\(j\) **[Payroll distribution]{.underline}**.

\(1\) Underlying accounting data shall be maintained so that the
distribution of the cost of labor charged direct to the various accounts
will be readily available.

\(2\) Such underlying data shall permit a reasonably accurate
distribution to be made of the cost of labor charged initially to
clearing accounts so that the total labor cost may be classified among
construction, cost of removal, electric operating functions (steam
generation, nuclear generation, hydraulic generation, transmission,
distribution, etc.) and nonutility operations.

\(k\) **[Accounting on an accrual basis]{.underline}**.

\(1\) The utility is required to keep its accounts on the accrual basis.

\(i\) This requires the inclusion, in its accounts, of all known
transactions of appreciable amount which affect the accounts.

\(ii\) If bills covering such transactions have not been received or
rendered, the amounts shall be estimated and appropriate adjustments
made when the bills are received.

\(2\) When payments are made in advance for items such as insurance,
rents, taxes, or interest, the amount applicable to future periods shall
be charged to Account 165, Prepayments, and spread over the periods to
which applicable, by credits to Account 165, and charges to the accounts
appropriate for the expenditure.

\(l\) **[Records for each plant]{.underline}**.

\(1\) Separate records shall be maintained by electric plant accounts of
the book cost of each plant owned, including additions by the utility to
plant leased from others, and of the cost of operating and maintaining
each plant owned or operated.

\(2\) The term \"plant\" as used herein includes each generating station
and each transmission line or appropriate group of transmission lines.

\(m\) **[Accounting for other departments]{.underline}**.

\(1\) If the utility also operates other utility departments, such as
gas or water, it shall keep such accounts for the other departments as
may be prescribed by proper authority and in the absence of prescribed
accounts, it shall keep such accounts as are proper or necessary to
reflect the results of operating each such department.

\(2\) It is not intended that proprietary and similar accounts which
apply to the utility as a whole shall be departmentalized.

\(n\) **[Transactions with associated companies]{.underline}**.

\(1\) Each utility shall keep its accounts and records so as to be able
to furnish accurately and expeditiously statements of all transactions
with associated companies.

\(2\) The statements may be required to show the general nature of the
transactions, the amounts involved therein and the amounts included in
each account prescribed herein with respect to such transactions.
Transactions with associated companies shall be recorded in the
appropriate accounts for transactions of the same nature. Nothing herein
contained, however, shall be construed as restraining the utility from
subdividing accounts for the purpose of recording separately
transactions with associated companies.

\(o\) **[Contingent assets and liabilities]{.underline}**.

\(1\) Contingent assets represent a possible source of value to the
utility contingent upon the fulfillment of conditions regarded as
uncertain.

\(2\) Contingent liabilities include items which may, under certain
conditions, become obligations of the utility but which are neither
direct nor assumed liabilities at the date of the balance sheet. The
utility shall be prepared to give a complete statement of significant
contingent assets and liabilities (including cumulative dividends on
preference stock) in its audited financial statements; its RUS Form 7,
Financial and Statistical Report, or its RUS Form 12, Operating Report -
Financial; and at such other times as may be requested by RUS.

\(p\) **[Separate accounts or records for each licensed
project]{.underline}**. The accounts or records of each borrower shall
be so kept as to show for each project (including pumped storage) under
license:

\(1\) The actual legitimate original cost of the project, including the
original cost of the original project, the original cost of additions
thereto and betterments thereof, and credits for property retired from
service, as determined under RUS\'s regulations in 7 CFR chapter XVII;

\(2\) The charges for operation and maintenance of the project property
directly assignable to the project;

\(3\) The credits and debits to the depreciation and amortization
accounts, and the balances in such accounts; and

\(4\) The credits and debits to the operating revenue, income, and
retained earnings accounts that can be identified with and directly
assigned to the project.

Note: The purpose of this instruction is to insure that accounts or
records are currently maintained by each borrower from which reports may
be made to RUS for use in determining the net investment in each
licensed project. The instruction covers only the debit and credit items
appearing in the borrower\'s accounts which may be identified with and
assigned directly to any project. In the determination of the net
investment, allocations of items affecting the net investment may be
required where direct assignment is not practicable.

\(q\) **[Long-term debt: premium, discount and expense, and gain
or]{.underline}**

**[loss on reacquisition]{.underline}**.

\(1\) [Premium, discount and expense]{.underline}.

\(i\) A separate premium, discount and expense account shall be
maintained for each class and series of long-term debt (including
receivers\' certificates) issued or assumed by the utility.

\(ii\) The premium will be recorded in Account 225, Unamortized Premium
on Long-Term Debt, the discount will be recorded in Account 226,
Unamortized Discount on Long-Term Debt - Debit, and the expense of
issuance shall be recorded in Account 181, Unamortized Debt Expense.

\(iii\) The premium, discount and expense shall be amortized over the
life of the respective issues under a plan which will distribute the
amounts equitably over the life of the securities.

\(A\) The amortization shall be charged or credited on a monthly basis
with the amounts relating to discount and expense charged to Account
428, Amortization of Debt Discount and Expense.

\(B\) The amounts relating to premium shall be credited to Account 429,
Amortization of Premium on Debt - Credit.

\(2\) [Reacquisition, without refunding]{.underline}.

\(i\) When long-term debt is reacquired or redeemed without being
converted into another form of long-term debt and when the transaction
is not in connection with a refunding operation (primarily redemptions
for sinking fund purposes), the difference between the amount paid upon
reacquisition and the face value; plus any unamortized premium less any
related unamortized debt expense and reacquisition costs; or less any
unamortized discount, related debt expense and reacquisition costs
applicable to the debt redeemed, retired and cancelled, shall be
included in Account 189, Unamortized Loss on Reacquired Debt, or Account
257, Unamortized Gain on Reacquired Debt, as appropriate.

\(ii\) The utility shall amortize the recorded amounts equally on a
monthly basis over the remaining life of the respective security issues
(old original debt).

\(iii\) The amount so amortized shall be charged to

Account 428.1, Amortization of Loss on Reacquired Debt, or credited to
Account 429.1, Amortization of Gain on Reacquired Debt - Credit, as
appropriate.

\(3\) [Reacquisition, with refunding]{.underline}.

\(i\) When the redemption of one issue or series of bonds or other
long-term obligations is financed by another issue or series before the
maturity date of the first issue, the difference between the amount paid
upon refunding and the face value; plus any unamortized premium less
related debt expense or less any unamortized discount and related debt
expense, applicable to the debt refunded, shall be included in

Account 189, Unamortized Loss on Reacquired Debt, or Account 257,
Unamortized Gain on Reacquired Debt, as appropriate.

\(ii\) The utility may elect to account for such amounts as follows:

\(A\) Write them off immediately when the amounts are insignificant;

\(B\) Amortize them by equal monthly amounts over the remainder of the
original life of the issue retired; or

\(C\) Amortize them by equal monthly amounts over the life of the new
issue.

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

\(iv\) The amounts in paragraphs (q)(3)(ii)(A), (B), or (C) of this
section shall be charged to Account 428.1, Amortization of Loss on
Reacquired Debt, or credited to Account 429.1, Amortization of Gain on
Reacquired Debt - Credit, as appropriate.

\(4\) Under methods in paragraphs (q)(3)(ii)(B) and (C) of this section,
the increase or reduction in current income taxes resulting from the
reacquisition should be apportioned over the remainder of the original
life of the issued retired or over the life of the new issue, as
appropriate, as directed more specifically in paragraphs (q)(5) and (6)
of this section.

\(5\) When the utility recognizes the loss in the year of reacquisition
as a tax deduction, Account 410.1, Provision for Deferred Income Taxes,
Utility Operating Income, shall be debited and Account 283, Accumulated
Deferred Income Taxes - Other, shall be credited with the amount of the
related tax effect, such amount to be allocated to the periods affected
in accordance with the provisions of Account 283.

\(6\) When the utility chooses to recognize the gain in the year of
reacquisition as a taxable gain, Account 411.1, Provision for Deferred
Income Taxes - Credit, Utility Operating Income, shall be debited with
the amount of the related tax effect, such amount to be allocated to the
periods affected in accordance with the provisions of Account 190,
Accumulated Deferred Income Taxes.

\(7\) When the utility chooses to use the optional privilege of
deferring the tax on the gain attributable to the reacquisition of debt
by reducing the depreciable basis of utility property for tax purposes,
pursuant to Section 108 of the Internal Revenue Code (26 U.S.C. 108),
the related tax effects shall be deferred as the income is recognized
for accounting purposes, and the deferred amounts shall be amortized
over the life of the associated property on a vintage year basis.

\(i\) Account 410.1, Provision for Deferred Income Taxes, Utility
Operating Income, shall be debited, and Account 282, Accumulated
Deferred Income Taxes - Other Property, shall be credited with an amount
equal to the estimated income tax effect applicable to the portion of
the income, attributable to reacquired debt, recognized for accounting
purposes during the period.

\(ii\) Account 282 shall be debited and Account 411.1, Provision for
Deferred Income Taxes - Credit, Utility Operating Income, shall be
credited with an amount equal to the estimated income tax effects,
during the life of the property, attributable to the reduction in the
depreciable basis for tax purposes.

\(8\) The tax effects relating to gain or loss shall be allocated as
above to utility operations except in cases where a portion of the debt
reacquired is directly applicable to nonutility operations.

\(i\) In that event, the related portion of the tax effects shall be
allocated to nonutility operations.

\(ii\) Where it can be established that reacquired debt is generally
applicable to both utility and nonutility operations, the tax effects
shall be allocated between utility and nonutility operations based on
the ratio of net investment in utility plant to net investment in
nonutility plant.

\(9\) Premium, discount, or expense on debt shall not be included as an
element in the cost of construction or acquisition of property (tangible
or intangible), except under the provisions of Account 432, Allowance
for Borrowed Funds Used During Construction - Credit.

\(10\) [Alternate method]{.underline}. Where a regulatory authority or a
group of regulatory authorities having prime rate jurisdiction over the
utility specifically disallows the rate principle of amortizing gains or
losses on reacquisition of long-term debt without refunding, and does
not apply the gain or loss to reduce interest charges in computing the
allowed rate of return for rate purposes, the following alternate method
may be used to account for gains or losses relating to reacquisition of
long-term debt, with or without refunding:

\(i\) The difference between the amount paid upon reacquisition of any
long-term debt and the face value, adjusted for unamortized discount,
expenses or premium, as the case may be, applicable to the debt redeemed
shall be recognized currently in income and recorded in Account 421,
Miscellaneous Nonoperating Income, or Account 426.5, Other Deductions.

\(ii\) When this alternate method of accounting is used, the utility
shall include a footnote to each financial statement, prepared for
public use, explaining why this method is being used along with the
treatment given for ratemaking purposes.

\(r\) **[Comprehensive interperiod income tax allocation]{.underline}**.

\(1\) Where there are timing differences between the periods in which
transactions affect taxable income and the periods in which they enter
into the determination of pretax accounting income, the income tax
effects of such transactions are to be recognized in the periods in
which the differences between book accounting income and taxable income
arise and in the periods in which the differences reverse using the
deferred tax method.

\(2\) Comprehensive interperiod tax allocation should be followed
whenever transactions enter into the determination of pretax accounting
income for the period even though some transactions may affect the
determination of taxes payable in a different period.

\(3\) Utilities are not required to utilize comprehensive interperiod
income tax allocation until the deferred income taxes are included as an
expense in the rate level by the regulatory authority having rate
jurisdiction over the utility.

\(4\) Where comprehensive interperiod tax allocation accounting is not
practiced the utility shall include as a note to each financial
statement, prepared for public use, a footnote explanation setting forth
the utility\'s accounting policies with respect to interperiod tax
allocation and describing the treatment for rate making purposes of the
tax timing differences by regulatory authorities having rate
jurisdiction.

\(5\) Should the utility be subject to more than one agency having rate
jurisdiction, its accounts shall appropriately reflect the ratemaking
treatment (deferral or flow through) of each jurisdiction.

\(6\) Once comprehensive interperiod tax allocation has been initiated
either in whole or in part it shall be practiced on a consistent basis
and shall not be changed or discontinued without prior RUS approval.

\(7\) Tax effects deferred currently will be recorded as deferred debits
or deferred credits in Accounts 190, Accumulated Deferred Income Taxes;
281, Accumulated Deferred Income Taxes - Accelerated Amortization
Property; 282, Accumulated Deferred Income Taxes - Other Property, and
283, Accumulated Deferred Taxes - Other, as appropriate.

\(8\) The resulting amounts recorded in these accounts shall be disposed
of as prescribed in this system of accounts or as otherwise authorized
by RUS.

\(s\) **[Criteria for classifying leases]{.underline}**.

\(1\) If, at its inception, a lease meets one or more of the following
criteria, the lease shall be classified as a capital lease:

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

\(ii\) The lease contains a bargain purchase option.

\(iii\) The lease term is equal to 75 percent or more of the estimated
economic life of the leased property. However, if the beginning of the
lease term falls within the last 25 percent of the total estimated
economic life of the leased property, including earlier years of use,
this criterion shall not be used for purposes of classifying the lease.

\(iv\) The present value at the beginning of the lease term of the
minimum lease payments, excluding that portion of the payments
representing executory costs such as insurance, maintenance, and taxes
to be paid by the lessor, including any profit thereon, equals or exceed
90 percent of the excess of the fair value of the leased property to the
lessor at the inception of the lease over any related investment tax
credit retained by the lessor and expected to be realized by lessor.

\(A\) However, if the beginning of the lease term falls within the last
25 percent of the total estimated economic life of the leased property,
including earlier years of use, this criterion shall not be used for
purposes of classifying the lease.

\(B\) The lessee utility shall compute the present value of the minimum
lease payments using its incremental borrowing rate, unless it is
practicable for the utility to learn the implicit rate computed by the
lessor, and the implicit rate computed by the lessor is less than the
lessee\'s incremental borrowing rate. If both of those conditions are
met, the lessee shall use the implicit rate.

\(2\) If, at any time, the lessee and lessor agree to change the
provisions of the lease, other than by renewing the lease or extending
its term, in a manner that would have resulted in a different
classification of the lease under the criteria in paragraph (s)(1) of
this section had the changed terms been in effect at the inception of
the lease, the revised agreement shall be considered as a new agreement
over its term, and the criteria in paragraph (s)(1) of this section
shall be applied for purposes of the expiration of the existing lease
term, such as the exercise of a lease renewal option other than those
already included in the lease term, shall be considered as a new
agreement and shall be classified according to the above provision.
Changes in estimates (for example, changes in estimates of the economic
life or of the residual value of the leased property) or changes in
circumstances (for example, default by the lessee) shall not give rise
to a new classification of a lease for accounting purposes.

\(t\) **[Accounting for leases]{.underline}**.

\(1\) All leases shall be classified as either capital or operating
leases.

\(2\) The utility shall record a capital lease as an asset in
Account 101.1, Property Under Capital Leases, and Account 120.6, Nuclear
Fuel Under Capital Leases; as appropriate, and an obligation in Account
227, Obligations Under Capital Leases - Noncurrent, or Account 243,
Obligations Under Capital

Leases - Current, at an amount equal to the present value at the
beginning of the lease term of minimum lease payments during the lease
term, excluding that portion of the payments representing executory
costs such as insurance, maintenance, and taxes to be paid by the
lessor, together with any profit thereon. However, if the amount so
determined exceeds the fair value of the leased property at the
inception of the lease, the amount recorded as the asset and obligation
shall be the fair value.

\(3\) Rental payments on all leases shall be charged to rent expense,
fuel expense, construction work in progress, or other appropriate
accounts as they become payable.

\(4\) For a capital lease, for each period during the lease term, the
amounts recorded for the asset and obligation shall be reduced by an
amount equal to the portion of each lease payment that would have been
allocated to the reduction of the obligation, if the payment had been
treated as a payment on an installment obligation (liability) and
allocated between interest expense and a reduction of the obligation so
as to produce a constant periodic rate of interest on the remaining
balance.

\(u\) **[Allowances]{.underline}**.

\(1\) Title IV of the Clean Air Act Amendments of 1990, Pub. L. 101-549,
104 Stat. 2399, 2584 (42 U.S.C. 7407 and 42 U.S.C. 7651), provides for
the issuance of allowances as a means to limit the emissions of certain
airborne pollutants by various entities, including utilities. Utilities
owning allowances, other than those acquired for speculative purposes,
shall account for such allowances at cost in Account 158.1, Allowance
Inventory, or Account 158.2, Allowances Withheld, as appropriate.
Allowances acquired for speculative purposes and identified as such in
contemporaneous records at the time of purchase shall be accounted for
in Account 124, Other Investments.

\(2\) When purchased, allowances become eligible for use in different
years, and the allocation of the purchase cost cannot be determined by
fair value, the purchase cost allocated to allowances of each vintage
shall be determined through use of a present-value based measurement.
The interest rate used in the present-value measurement shall be the
utility\'s incremental borrowing rate, in the month in which the
allowances are acquired, for a loan with a term similar to the period
that it will hold the allowances and in an amount equal to the purchase
price.

\(3\) The underlying records supporting Account 158.1 and

Account 158.2 shall be maintained in sufficient detail so as to provide
the number of allowances and the related cost by vintage year.

\(4\) Issuances from inventory included in Account 158.1 and Account
158.2 shall be accounted for on a vintage basis using a monthly
weighted-average method of cost determination. The cost of eligible
allowances not used in the current year shall be transferred to the
vintage for the immediately following year.

\(5\) Account 158.1 shall be credited and Account 509, Allowances,
debited so that the cost of the allowances to be remitted for the year
is charged to expense monthly based on each month\'s emissions. This
may, in certain circumstances, require allocation of the cost of an
allowance between months on a fractional basis.

\(6\) In any period in which actual emissions exceed the amount
allowable based on eligible allowances owned, the utility shall estimate
the cost to acquire the additional allowances needed and charge Account
158.1 with the estimated cost. This estimated cost of future allowance
acquisitions shall be credited to Account 158.1 and charged to Account
509 in the same accounting period as the related charge to Account
158.1. Should the actual cost of these allowances differ from the
estimated cost, the differences shall be recognized in the then-current
period\'s inventory issuance cost.

\(7\) Any penalties assessed by the Environmental Protection Agency for
the emission of excess pollutants shall be charged to Account 426.3,
Penalties.

\(8\) Gains on dispositions of allowances, other than allowances held
for speculative purposes, shall be accounted for as follows. First, if
there is uncertainty as to the regulatory treatment, the gain shall be
deferred in Account 254, Other Regulatory Liabilities, pending
resolution of the uncertainty. Second, if there is certainty as to the
existence of a regulatory liability, the gain will be credited to
Account 254, with subsequent recognition in income when reductions in
charges to customers occur or the liability is otherwise satisfied.
Third, all other gains will be credited to Account 411.8, Gains from
Disposition of Allowances. Losses on disposition of allowances, other
than allowances held for speculative purposes, shall be accounted for as
follows. Losses that qualify as regulatory assets shall be charged
directly to Account 182.3, Other Regulatory Assets. All other losses
shall be charged to Account 411.9, Losses from Disposition of
Allowances. (See the definition of regulatory assets and liabilities.)
Gains or losses on disposition of allowances held for speculative
purposes shall be recognized in Account 421, Miscellaneous Nonoperating
Income, or Account 426.5, Other Deductions, as appropriate.

\(9\) The costs and benefits of exchange-traded allowance futures
contracts used to protect the utility from the risk of unfavorable price
changes (\"hedging transactions\") shall be deferred in Account 186,
Miscellaneous Deferred Debits, or Account 253, Other Deferred Credits,
as appropriate. Such deferred amounts shall be included in Account
158.1, Allowance Inventory, in the month in which the related allowances
are acquired, sold or otherwise disposed of. Where the costs or benefits
of hedging transactions are not identifiable with specific allowances,
the amounts shall be included in

Account 158.1 when the futures contract is closed. The costs and
benefits of exchange-traded allowance futures contracts entered into as
a speculating activity shall be charged or credited to Account 421,
Miscellaneous Nonoperating Income, or Account 426.5, Other Deductions,
as appropriate.

**§ 1767.16 ELECTRIC PLANT INSTRUCTIONS:**

\(a\) **[Classification of electric plant at effective date of system of
accounts]{.underline}**.

\(1\) The electric plant accounts provided herein are the same as those
contained in the prior system of accounts except for inclusion of
accounts for nuclear production plant and some changes in classification
in the general equipment accounts. Except for these changes, the
balances in the various plant accounts, as determined under the prior
system of accounts, should be carried forward. Any remaining balance of
plant which has not yet been classified, pursuant to the requirements of
the prior system, shall be classified in accordance with the following
instructions.

\(2\) The cost to the utility of its unclassified plant shall be
ascertained by analysis of the utility\'s records. Adjustments shall not
be made to record in utility plant accounts amounts previously charged
to operating expenses or to income deductions in accordance with the
USoA in effect at the time or in accordance with the discretion of
management as exercised under a USoA, or under accounting practices
previously followed.

\(3\) The detailed electric plant accounts (301 to 399, inclusive) shall
be stated on the basis of cost to the utility of plant constructed by it
and the original cost, estimated if not known, of plant acquired as an
operating unit or system. The difference between the original cost, as
above, and the cost to the utility of electric plant after giving effect
to any accumulated provision for depreciation or amortization shall be
recorded in Account 114, Electric Plant Acquisition Adjustments. The
original cost of electric plant shall be determined by analysis of the
utility\'s records or those of the predecessor or vendor companies with
respect to electric plant previously acquired as operating units or
systems and the difference between the original cost so determined, less
accumulated provisions for depreciation and amortization and the cost to
the utility with necessary adjustments for retirements from date of
acquisition, shall be entered in Account 114, Electric Plant Acquisition
Adjustments. Any difference between the cost of electric plant and its
book cost, when not properly includible in other accounts, shall be
recorded in Account 116, Other Electric Plant Adjustments.

\(b\) **[Electric plant to be recorded at cost]{.underline}**.

\(1\) All amounts included in the accounts for electric plant acquired
as an operating unit or system, except as otherwise provided in the
texts of the intangible plant accounts, shall be stated at the cost
incurred by the person who first devoted the property to utility
service. All other electric plant shall be included in the accounts at
the cost incurred by the utility except for property acquired by lease
which qualifies as capital lease property under § 1767.15 (s), Criteria
for Classifying Leases, and is recorded in Account 101.1, Property Under
Capital Lease, or Account 120.6, Nuclear Fuel Under Capital Leases.
Where the term \"cost\" is used in the detailed plant accounts, it shall
have the meaning stated in this paragraph (b).

\(2\) When the consideration given for property is other than cash, the
value of such consideration shall be determined on a cash basis (see,
however, the definition of cost in § 1767.10). In the entry recording
such transition, the actual consideration shall be described with
sufficient particularity to identify it. The utility shall be prepared
to furnish RUS the particulars of its determination of the cash value of
the consideration if other than cash.

\(3\) When property is purchased under a plan involving deferred
payments, no charge shall be made to the electric plant accounts for
interest, insurance, or other expenditures occasioned solely by such
form of payment.

\(4\) The electric plant accounts shall not include the cost or other
value of electric plant contributed to the company. Contributions in the
form of money or its equivalent toward the construction of electric
plant shall be credited to accounts charged with the cost of such
construction. Plant constructed from contributions of cash or its
equivalent shall be shown as a reduction to gross plant constructed when
assembling cost data in work orders for posting to plant ledgers of
accounts. The accumulated gross costs of plant accumulated in the work
order shall be recorded as a debit in the plant ledger of accounts along
with the related amount of contributions concurrently be recorded as a
credit.

\(c\) **[Components of construction cost]{.underline}**. The cost of
construction properly includible in the electric plant accounts shall
include, where applicable, the direct and overhead costs as listed and
defined hereunder:

\(1\) [Contract work]{.underline} includes amounts paid for work
performed under contract by other companies, firms, or individuals,
costs incident to the award of such contracts, and the inspection of
such work.

\(2\) [Labor]{.underline} includes the pay and expenses of employees of
the utility engaged on construction work, and related workmen\'s
compensation insurance, payroll taxes, and similar items of expense. It
does not include the pay and expenses of employees which are distributed
to construction through clearing accounts nor the pay and expenses
included in other items hereunder.

\(3\) [Materials and supplies]{.underline} includes the purchase price
at the point of free delivery plus customs duties, excise taxes, the
cost of inspection, loading and transportation, the related stores
expenses, and the cost of fabricated materials from the utility\'s shop.
In determining the cost of materials and supplies used for construction,
proper allowance shall be made for unused materials and supplies, for
materials recovered from temporary structures used in performing the
work involved, and for discounts allowed and realized in the purchase of
materials and supplies.

Note: The cost of individual items of equipment of small value (for
example, \$500 or less) or of short life, including small portable tools
and implements, shall not be charged to utility plant accounts unless
the correctness of the accounting therefor is verified by current
inventories. The cost shall be charged to the appropriate operating
expense or clearing accounts, according to the use of such items, or, if
such items are consumed directly in construction work, the cost shall be
included as part of the cost of the construction.

\(4\) [Transportation]{.underline} includes the cost of transporting
employees, materials and supplies, tools, purchased equipment, and other
work equipment (when not under own power) to and from points of
construction. It includes amounts paid to others as well as the cost of
operating the utility\'s own transportation equipment. (See Item in
paragraph (c)(5) of this section.)

\(5\) [Special machine service]{.underline} includes the cost of labor
(optional), materials and supplies, depreciation, and other expenses
incurred in the maintenance, operation and use of special machines, such
as steam shovels, pile drivers, derricks, ditchers, scrapers, material
unloaders, and other labor saving machines; also expenditures for
rental, maintenance and operation of machines of others. It does not
include the cost of small tools and other individual items of small
value or short life which are included in the cost of materials and
supplies. (See Item in paragraph (c)(3) of this section.) When a
particular construction job requires the use for an extended period of
time of special machines, transportation or other equipment, the net
book cost thereof, less the appraised or salvage value at time of
release from the job, shall be include in the cost of construction.

\(6\) [Shop service]{.underline} includes the proportion of the expense
of the utility\'s shop department assignable to construction work except
that the cost of fabricated materials from the utility\'s shop shall be
included in \"materials and supplies.\"

\(7\) [Protection]{.underline} includes the cost of protecting the
utility\'s property from fire or other casualties and the cost of
preventing damages to others, or to the property of others, including
payments for discovery or extinguishment of fires, cost of apprehending
and prosecuting incendiaries, witness fees in relation thereto, amounts
paid to municipalities and others for fire protection, and other
analogous items of expenditures in connection with construction work.

\(8\) [Injuries and damages]{.underline} includes expenditures or losses
in connection with construction work on account of injuries to persons
and damages to the property of others; also the cost of investigation of
and defense against actions for such injuries and damages. Insurance
recovered or recoverable on account of compensation paid for injuries to
persons incident to construction shall be credited to the account or
accounts to which such compensation is charged. Insurance recovered or
recoverable on account of property damages incident to construction
shall be credited to the account or accounts charged with the cost of
the damages.

\(9\) [Privileges and permits]{.underline} includes payments for and
expenses incurred in securing temporary privileges, permits or rights in
connection with construction work, such as for the use of private or
public property, streets, or highways, but it does not include rents, or
amounts chargeable as franchises and consents for which see Account 302,
Franchises and Consents.

\(10\) [Rents]{.underline} includes amounts paid for the use of
construction quarters and office space occupied by construction forces
and amounts properly includible in construction costs for such
facilities jointly used.

\(11\) [Engineers and supervision]{.underline} includes the portion of
the pay and expenses of engineers, surveyors, draftsmen, inspectors,
superintendents and their assistants applicable to construction work.

\(12\) [General administration capitalized]{.underline} includes the
portion of the pay and expenses of the general officers and
administrative and general expenses applicable to construction work.

\(13\) [Engineering services]{.underline} includes amounts paid to other
companies, firms, or individuals engaged by the utility to plan, design,
prepare estimates, supervise, inspect, or give general advice and
assistance in connection with construction work.

\(14\) [Insurance]{.underline} includes premiums paid or amounts
provided or reserved as self-insurance for the protection against loss
and damages in connection with construction, by fire or other casualty,
injuries or deaths of persons other than employees, damages to property
of others, defalcation of employees and agents, and the nonperformance
of contractual obligations of others. It does not include workmen\'s
compensation or similar insurance on employees included as \"labor\" in
Item in paragraph (c)(2) of this section.

\(15\) [Law expenditures]{.underline} includes the general law
expenditures incurred in connection with construction and the court and
legal costs directly related thereto, other than law expenses included
in \"Protection,\" Item in paragraph (c)(7) of this section, and in
Injuries and damages, Item in paragraph (c)(8) of this section.

\(16\) [Taxes]{.underline} includes taxes on physical property
(including land) during the period of construction and other taxes
properly includible in construction costs before the facilities become
available for service.

\(17\) [Allowance for funds used during construction]{.underline}
includes the net cost for the period of construction of borrowed funds
used for construction purposes and a reasonable rate on other funds when
so used, not to exceed, without prior approval of RUS, allowances
computed in accordance with the formula prescribed in Item in paragraph
(c)(17)(i) of this section. No allowance for funds used during
construction charges shall be included in these accounts upon
expenditures for construction projects which have been abandoned.

\(i\) The formula and elements for the computation of the allowance for
funds used during construction shall be:

Ai= Gross allowance for borrowed funds used during construction rate.

Ac= Allowance for other funds used during construction 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 refinement, conversion, enrichment, and fabrication.

\(ii\) The rate shall be determined annually.

\(A\) The balance for long-term debt, preferred stock, and patronage
capital assigned shall be the actual book balances as of the end of the
prior year.

\(B\) The cost rate for long-term debt and preferred stock shall be the
weighted average cost.

\(C\) The cost rate for patronage capital assigned shall be the
entity\'s incremental borrowing rate.

\(D\) The short-term debt balances and related cost and the average
balance for construction work in progress plus nuclear fuel in process
of refinement, conversion, enrichment, and fabrication shall be
estimated for the current year with appropriate adjustments as actual
data becomes available.

Note: When only a portion of a plant or project is placed in operation
or is completed and ready for service but the construction work as a
whole is incomplete, that part of the cost of the property placed in
operation or ready for service shall be treated as \"Electric Plant in
Service,\" and an allowance for funds used during construction thereon
as a charge to construction shall cease. Allowance for funds used during
construction on that part of the cost of the plant which is incomplete
may continue to be charged to construction until such time as it is
placed in operation or is ready for service, except as limited in Item
in paragraph (c)(17) of this section.

\(18\) [Earnings and expenses during construction]{.underline}. The
earnings and expenses during construction shall constitute a component
of construction costs.

\(i\) The earnings shall include revenues received or earned for power
produced by generating plants during the construction period and sold or
used by the utility.

\(A\) Where such power is sold to an independent purchaser before
intermingling with power generated by other plants, the credit shall
consist of the selling price of the energy.

\(B\) Where the power generated by a plant under construction is
delivered to the utility\'s electric system for distribution and sale,
or is delivered to an associated company, or is delivered to and used by
the utility for purposes other than distribution and sale (for
manufacturing or industrial use, for example), the credit shall be the
fair value of the energy so delivered.

\(C\) Revenue shall also include rentals for lands, buildings, and other
property, and miscellaneous receipts not properly includible in other
accounts.

\(ii\) Expenses shall consist of the cost of operating the power plant,
and other costs incident to the production and delivery of the power for
which construction is credited under paragraph (c)(18)(i) of this
section, including the cost of repairs and other expenses of operating
and maintaining lands, buildings, and other property, and other
miscellaneous and like expenses not properly includible in other
accounts.

\(19\) [Training costs]{.underline}.

\(i\) When it is necessary that employees be trained to operate or
maintain plant facilities that are being constructed and such facilities
are not conventional in nature, or are new to the company\'s operations,
these costs may be capitalized as a component of construction cost.

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

\(20\) [Studies]{.underline}.

\(i\) Studies include the costs of studies such as nuclear operational,
safety, or seismic studies, or environmental studies mandated by
regulatory bodies relative to plant under construction.

\(ii\) Studies relative to facilities in service shall be charged to
Account 183, Preliminary Survey and Investigation Charges.

\(d\) **[Overhead construction costs]{.underline}**.

\(1\) All overhead construction costs, such as engineering, supervision,
general office salaries and expenses, construction engineering and
supervision performed by others than the accounting utility, law
expenses, insurance, injuries and damages, relief and pensions, taxes
and interest, shall be charged to particular jobs or units on the basis
of the amounts of such overheads reasonably applicable thereto, to the
end that each job or unit shall bear its equitable proportion of such
costs and that the entire cost of the unit, both direct and overhead,
shall be deducted from the plant accounts as the time the property is
retired.

\(2\) As far as practicable, the determination of payroll charges
includible in construction overheads shall be based on time card
distributions thereof.

\(i\) Where this procedure is impractical, special studies shall be made
periodically of the time of supervisory employees devoted to
construction activities to the end that only such overhead costs as have
a definite relation to construction shall be capitalized.

\(ii\) The addition to direct construction cost of arbitrary percentages
or amounts to cover assumed overhead costs is not permitted.

\(3\) The records supporting the entries for overhead constructions
costs shall be so kept as to show:

\(i\) The total amount of each overhead for each year;

\(ii\) The nature and amount of each overhead expenditure charged to
each construction work order and to each electric plant account; and

\(iii\) The bases of distribution of such costs.

\(e\) **[Electric plant purchased or sold]{.underline}**.

\(1\) When electric plant constituting an operating unit or system is
acquired by purchase, merger, consolidation, liquidation, or otherwise,
after the effective date of this system of accounts, the costs of
acquisition, including expenses incidental thereto properly includible
in electric plant, shall be charged to Account 102, Electric Plant
Purchased or Sold.

\(2\) The accounting for the acquisition shall then be completed as
follows:

\(i\) The original cost of plant, estimated if not known, shall be
credited to Account 102, Electric Plant Purchased or Sold, and
concurrently charged to the appropriate electric plant in service
accounts and to Account 104, Electric Plant Leased to Others; Account
105, Electric Plant Held for Future Use; and Account 107, Construction
Work in Progress - Electric, as appropriate.

\(ii\) The depreciation and amortization applicable to the original cost
of the properties purchased shall be charged to Account 102, Electric
Plant Purchased or Sold, and concurrently credited to the appropriate
account for accumulated provision for depreciation or amortization.

\(iii\) The cost to the utility of any property includible in
Account 121, Nonutility Property, shall be transferred thereto.

\(iv\) The amount remaining in Account 102, Electric Plant Purchased or
Sold, shall then be closed to Account 114, Electric Plant Acquisition
Adjustments.

\(3\) If property acquired in the purchase of an operating unit or
system is in such physical condition when acquired that it is necessary
to substantially rehabilitate it in order to bring the property up to
the standards of the utility, the cost of such work, except
replacements, shall be accounted for as a part of the purchase price of
the property.

\(4\) When any property acquired as an operating unit or system includes
duplicate or other plant which will be retired by the accounting utility
in the reconstruction of the acquired property or its consolidation with
previously owned property, the proposed accounting for such property
shall be presented to RUS.

\(5\) In connection with the acquisition of electric plant constituting
an operating unit or system, the utility shall procure, if possible, all
existing records relating to the property acquired or certified copies
thereof, and shall preserve such records in conformity with regulations
or practices governing the preservation of records of its own
construction.

\(6\) When electric plant constituting an operating unit or system is
sold, conveyed, or transferred to another by sale, merger,
consolidation, or otherwise, the book cost of the property sold or
transferred to another shall be credited to the appropriate utility
plant accounts, including amounts carried in Account 114, Electric Plant
Acquisition Adjustments, and the amounts (estimated if not known)
carried with respect thereto in the accounts for accumulated provision
for depreciation and amortization and in Account 252, Customer Advances
for Construction, shall be charged to such accounts and contra entries
made to Account 102, Electric Plant Purchased or Sold. Unless otherwise
ordered by RUS, the difference, if any, between:

\(i\) The net amount of debits and credits, and

\(ii\) The consideration received for the property (less commissions and
other expenses of making the sale) shall be included in Account 421.1,
Gain on Disposition of Property, or Account 421.2, Loss on Disposition
of Property. (See

Account 102, Electric Plant Purchased or Sold.)

Note: In cases where existing utilities merge or consolidate because of
financial or operating reasons or statutory requirements rather than as
a means of transferring title of purchased properties to a new owner,
the accounts of the constituent utilities, with the approval of RUS, may
be combined. In the event original cost has not been determined, the
resulting utility shall proceed to determine such cost as outlined
herein.

\(f\) **[Expenditures on leased property]{.underline}**.

\(1\) The cost of substantial initial improvements (including repairs,
rearrangements, additions, and betterments) made in the course of
preparing for utility service property leased for a period of more than
one year, and the cost of subsequent substantial additions,
replacements, or betterments to such property, shall be charged to the
electric plant account appropriate for the class of property leased.

\(i\) If the service life of the improvements is terminable by action of
the lease, the cost, less net salvage, of the improvements shall be
spread over the life of the lease by charges to Account 404,
Amortization of Limited-Term Electric Plant.

\(ii\) If the service life is not terminated by action of the lease but
by depreciation proper, the cost of the improvements, less net salvage,
shall be accounted for as depreciable plant. The provisions of (1) are
applicable to property leased under either capital leases or operating
leases.

\(2\) If improvements made to property leased for a period of more than
one year are of relatively minor cost, or if the lease is for a period
of not more than one year, the cost of the improvements shall be charged
to the account in which the rent is included, either directly or by
amortization thereof.

\(g\) **[Land and land rights]{.underline}**.

\(1\) The accounts for land and land rights shall include the cost of
land owned in fee by the utility and rights, interests, and privileges
held by the utility in land owned by others, such as leaseholds,
easements, water and water power rights, diversion rights, submersion
rights, rights-of-way, and other like interests in land.

\(i\) Do not include in the accounts for land and land rights and
rights-of-way costs incurred in connection with first clearing and
grading of land and rights-of-way and the damage costs associated with
the construction and installation of plant.

\(ii\) Such costs shall be included in the appropriate plant accounts
directly benefited.

\(2\) Where special assessments for public improvements provide for
deferred payments, the full amount of the assessments shall be charged
to the appropriate land account and the unpaid balance shall be carried
in an appropriate liability account.

\(i\) Interest on unpaid balances shall be charged to the appropriate
interest account.

\(ii\) If any part of the cost of public improvements is included in the
general tax levy, the amount thereof shall be charged to the appropriate
tax account.

\(3\) The net profit from the sale of timber, cord wood, sand, gravel,
other resources or other property acquired with the rights-of-way or
other lands shall be credited to the appropriate plant accounts to which
related. Where land is held for a considerable period of time and timber
and other natural resources on the land at the time of purchase increase
in value, the net profit (after giving effect to the cost of the natural
resources) from the sale of timber or its products or other natural
resources shall be credited to the appropriate utility operating income
account when such land has been recorded in Account 105, Electric Plant
Held for Future Use, or classified as plant in service, otherwise to
Account 421, Miscellaneous Nonoperating Income.

\(4\) Separate entries shall be made for the acquisition, transfer, or
retirement of each parcel of land, and each land right (except
rights-of-way for distribution lines), or water right, having a life of
more than one year.

\(i\) A record shall be maintained showing the nature of ownership, full
legal 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 recording of deed, and book and page of record.

\(ii\) Entries transferring or retiring land or land rights shall refer
to the original entry recording its acquisition.

\(5\) Any difference between the amount received from the sale of land
or land rights, less agents\' commissions and other costs incident to
the sale, and the book cost of such land or rights, shall be included in
Account 411.6, Gains from Disposition of Utility Plant, or 411.7, Losses
from Disposition of Utility Plant, when such property has been recorded
in Account 105, Electric Plant Held for Future Use, otherwise to Account
421.1, Gain on Disposition of Property, or 421.2, Loss on Disposition of
Property, as appropriate, unless a reserve therefor has been authorized
and provided. Appropriate adjustments of the accounts shall be made with
respect to any structures or improvements located on land sold.

\(6\) The cost of buildings and other improvements (other than public
improvements) shall not be included in the land accounts. If, at the
time of acquisition of an interest in land, such interest extends to
buildings or other improvements (other than public improvements) which
are then devoted to utility operations, the land and improvements shall
be separately appraised and a cost allocated to land and buildings or
improvements on the basis of the appraisals. If the improvements are
removed or wrecked without being used in operations, the cost of
removing or wrecking shall be charged and the salvage credited to the
account in which the cost of land is recorded.

\(7\) When the purchase of land for electric operations requires the
purchase of more land than needed for such purposes, the charge to the
specific land account shall be based upon the cost of the land
purchased, less the fair market value of that portion of the land which
is not to be used in utility operations. The portion of the cost
measured by the fair market value of the land not to be used shall be
included in Account 105, Electric Plant Held for Future Use, or Account
121, Nonutility Property, as appropriate.

\(8\) Provisions shall be made for amortizing amounts carried in the
accounts for limited-term interest in land so as to apportion equitably
the cost of each interest over the life thereof. (See Account 111,
Accumulated Provision for Amortization of Electric Utility Plant, and
Account 404, Amortization of Limited-Term Electric Plant.)

\(9\) The items of cost to be included in the accounts for land and land
rights are as follows:

\(i\) Bulkheads, buried, not requiring maintenance or replacement;

\(ii\) First cost of acquisition including mortgages and other liens
assumed (but not subsequent interest thereon);

\(iii\) Condemnation proceedings, including 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
connection with the acquisition of the land or land rights;

\(vii\) Leases, cost of voiding upon purchase to secure possession of
land;

\(viii\) Removing, relocating, or reconstructing property of others,
such as buildings, highways, railroads, bridges, cemeteries, churches,
telephone and power lines, etc., in order to acquire quiet possession;

\(ix\) Retaining walls unless identified with structures;

\(x\) Special assessments levied by public authorities for public
improvements on the basis of benefits for new roads, new bridges, new
sewers, new curbing, new pavements, and other public improvements, but
not taxes levied to provide for the maintenance of such improvements;

\(xi\) Surveys in connection with the acquisition, but not amounts paid
for topographical surveys and maps where such costs are attributable to
structures or plant equipment erected or to be erected or installed on
such land;

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

\(xiii\) Title, examining, clearing, insuring, and registering in
connection with the acquisition and defending against claims relating to
the period prior to the acquisition;

\(xiv\) Appraisals prior to closing title;

\(xv\) Cost of dealing with distributees or legatees residing outside of
the state or county, such as recording power of attorney, recording will
or exemplification of will, recording satisfaction of state tax;

\(xvi\) Filing satisfaction of mortgage;

\(xvii\) Documentary stamps;

\(xviii\) Photographs of property at acquisition;

\(xix\) Fees and expenses incurred in the acquisition of water rights
and grants;

\(xx\) Cost of fill to extend bulkhead line over land under water, where
riparian rights are held, which is not occasioned by the erection of a
structure;

\(xxi\) Sidewalks and curbs constructed by the utility on public
property; and

\(xxii\) Labor and expenses in connection with securing rights of way,
where performed by company employees and company agents.

\(h\) **[Structures and improvements]{.underline}**.

\(1\) The accounts for structures and improvements shall include the
cost of all buildings and facilities to house, support, or safeguard
property or persons, including all fixtures permanently attached to and
made a part of buildings and which cannot be removed therefrom without
cutting into the walls, ceilings, or floors, or without in some way
impairing the buildings, and improvements of a permanent character on or
to land.

\(2\) Also include those costs incurred in connection with the first
clearing and grading of land and rights-of-way and the damage costs
associated with construction and installation of plant.

\(3\) The cost of specially provided foundations not intended to outlast
the machinery or apparatus for which provided, and the cost of angle
irons, and castings installed at the base of an item of equipment, shall
be charged to the same account as the cost of the machinery, apparatus,
or equipment.

\(4\) Minor buildings and structures, such as valve towers, patrolmen\'s
towers, telephone stations, fish and wildlife, and recreation facilities
which are used directly in connection with or form a part of a
reservoir, dam or waterway shall be considered a part of the facility in
connection with which constructed or operated and the cost thereof
accounted for accordingly.

\(5\) Where furnaces and boilers are used primarily for furnishing steam
for some particular department and only incidentally for furnishing
steam for heating a building and operating the equipment therein, the
entire cost of such furnaces and boilers shall be charged to the
appropriate plant account, and no part to the building account.

\(6\) Where the structure of a dam forms also the foundation of the
power plant building, such foundation shall be considered a part of the
dam.

\(7\) The cost of disposing of materials excavated in connection with
construction of structures shall be considered as a part of the cost of
such work, except when such material is used for filling, the cost of
loading, hauling, and dumping shall be equitably apportioned between the
work in connection with which the removal occurs and the work in
connection with which the material is used; and when such material is
sold, the net amount realized from such sales shall be credited to the
work in connection with which the removal occurs. If the amount realized
from the sale of excavated materials exceeds the removal costs and the
costs in connection with the sale, the excess shall be credited to the
land account in which the site is carried.

\(8\) Lighting or other fixtures temporarily attached to building for
purposes of display or demonstration shall not be included in the cost
of the building but in the appropriate equipment account.

\(9\) The items of cost to be included in the accounts for structures
and improvements are as follows:

\(i\) Architects\' plans and specifications including supervision;

\(ii\) Ash pits (when located within the building);

\(iii\) Athletic field structures and improvements;.

\(iv\) Boilers, furnaces, piping, wiring, fixtures, and machinery for
heating, lighting, signaling, ventilating, and air conditioning systems,
plumbing, vacuum cleaning systems, incinerator and smoke pipe, flues,
etc;

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

\(vi\) Chimneys;

\(vii\) Coal bins and bunkers;

\(viii\) Commissions and fees to brokers, 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 of excess excavated material, cofferdams around foundation,
pumping water from cofferdams during construction and test borings;

\(xvi\) Fences and fence curbs (not including protective fences
isolating items of equipment, which shall be charged to the appropriate
equipment accounts);

\(xvii\) Fire protection systems when forming a part of a structure;

\(xviii\) Flagpole;

\(xix\) Floor covering (permanently attached);

\(xx\) Foundations and piers for machinery, constructed as a permanent
part of a building or other item listed herein;

\(xxi\) Grading and clearing when directly occasioned by the building of
a structure;

\(xxii\) Intrasite communication system, poles, pole fixtures, wires,
and cable;

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

\(xxiv\) Leases, voiding upon purchase to secure possession of
structures;

\(xxv\) Leased property, expenditures on;

\(xxvi\) Lighting fixtures and outside lighting system;

\(xxvii\) Mailchutes when part of a building;

\(xxviii\) Marquee, permanently attached to the building;

\(xxix\) Painting, first cost;

\(xxx\) Permanent paving, concrete, brick, flagstone, asphalt, etc.,
within the property lines;

\(xxxi\) Partitions, including movable;

\(xxxii\) Permits and privileges;

\(xxxiii\) Platforms, railings and gratings when constructed as a part
of a structure;

\(xxxiv\) Power boards for services to a building;

\(xxxv\) Refrigerating systems for general use;

\(xxxvi\) Retaining walls except when identified with land;

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

\(xxxviii\) Roofs;

\(xxxix\) Scales, connected to and forming a part of a structure;

\(xl\) Screens;

\(xli\) Sewer systems, for general use;

\(xlii\) Sidewalks, culverts, curbs and streets constructed by the
utility on its property;

\(xliii\) Sprinkling systems;

\(xliv\) Sump pumps and pits;

\(xlv\) Stacks - brick, steel, or concrete, when set on foundation
forming part of general foundation and steelwork of a building;

\(xlvi\) Steel inspection during construction;

\(xlvii\) Storage facilities constituting a part of a building;

\(xlviii\) Storm doors and windows;

\(xlix\) Subways, areaways, and tunnels, directly connected to and
forming part of a structure;

\(l\) Tanks, constructed as part of a building or as a distinct
structural unit;

\(li\) Temporary heating during construction (net cost);

\(lii\) Temporary water connection during construction (net cost);

\(liii\) Temporary shanties and other facilities used during
construction (net cost);

\(liv\) Topographical maps;

\(lv\) Tunnels, intake and discharge, when constructed as part of a
structure, including sluice gates, and those constructed to house mains;

\(lvi\) Vaults constructed as part of a building;

\(lvii\) Watchmen\'s sheds and clock systems (net cost when used during
construction only);

\(lviii\) Water basins or reservoirs;

\(lix\) Water front improvements;

\(lx\) Water meters and supply system for a building or for general
company purposes;

\(lxi\) 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, concrete, or oil (First cost only).

Note: Structures and improvements accounts shall be credited with the
cost of coal bunkers, stacks, foundations, subways, and tunnels, the use
of which has terminated with the removal of the equipment with which
they are associated even though they have not been physically removed.

\(i\) **[Equipment]{.underline}**.

\(1\) The cost of equipment chargeable to the electric plant accounts,
unless otherwise indicated in the text of an equipment account, includes
the net purchase price thereof, sales taxes, investigation and
inspection expenses necessary to such purchase, expenses of
transportation when borne by the utility, labor employed, materials, and
supplies consumed, and expenses incurred by the utility in unloading and
placing the equipment in readiness to operate.

\(2\) Also include those costs incurred in connection with the first
clearing and grading of land and rights-of-way and the damage costs
associated with construction and installation of plant.

\(3\) Exclude from equipment accounts hand and other portable tools,
which are likely to be lost or stolen or which have relatively small
value (for example, \$500 or less) or short life, unless the correctness
of the accounting therefor as electric plant is verified by current
inventories.

\(i\) Special tools acquired and included in the purchase price of
equipment shall be included in the appropriate plant accounts.

\(ii\) Portable drills and similar tool equipment when used in
connection with the operation and maintenance of a particular plan or
department, such as production, transmission, or distribution or in
\"stores\", shall be charged to the plant accounts appropriate for their
use.

\(4\) The equipment accounts shall include angle irons and similar items
which are installed at the base of an item of equipment, but piers and
foundations which are designed to be as permanent as the buildings which
house the equipment, or which are constructed as a part of the building
and which cannot be removed without cutting into the walls, ceilings, or
floors or, without in some way impairing the building, shall be included
in the building accounts.

\(5\) The equipment accounts shall include the necessary costs of
testing or running a plant or parts thereof during an experimental or
test period prior to such plant becoming ready for or placed in service.

\(i\) The utility shall furnish RUS with full particulars of and
justification for any test or experimental run extending beyond a period
of 120 days for nuclear plant, and a period of 90 days for all other
plant.

\(ii\) Such particulars shall include a detailed operational and
downtime log showing days of production, gross kilowatts generated by
hourly increments, types, and periods of outages by hours with
explanation thereof, beginning with the first date the equipment was
either tested or synchronized on the line to the end of the test period.

\(6\) The cost of efficiency or other tests made subsequent to the date
equipment becomes available for service shall be charged to the
appropriate expense accounts, except that tests to determine whether
equipment meets the specifications and requirements as to efficiency, or
performance guaranteed by manufacturers, made after operations have
commenced and within the period specified in the agreement or contract
of purchase, may be charged to the appropriate electric plant accounts.

\(j\) **[Additions and retirements of electric plant]{.underline}**.

\(1\) For the purpose of avoiding undue refinement in accounting for
additions to and retirements and replacements of electric plant, all
property shall be considered as consisting of retirement units and minor
items of property.

\(2\) The addition and retirement of retirement units shall be accounted
for as follows:

\(i\) When a retirement unit is added to electric plant, the cost
thereof shall be added to the appropriate electric plant account, except
that when units are acquired in the acquisition of any electric plant
constituting an operating system, they shall be accounted for as
provided in paragraph (e) of this section.

\(ii\) When a retirement unit is retired from electric plant, with or
without replacement, the book cost thereof shall be credited to the
electric plant account in which it is included, determined in the manner
set forth in Item in paragraph (j)(4) of this section. If the retirement
unit is of a depreciable class, the book cost of the unit retired and
credited to electric plant shall be charged to the accumulated provision
for depreciation applicable to such property. The cost of removal and
the salvage shall be charged or credited, as appropriate, to such
depreciation account.

\(3\) The addition and retirement of minor items of property shall be
accounted for as follows:

\(i\) When a minor item of property which did not previously exist is
added to plant, the cost thereof shall be accounted for in the same
manner as for the addition of a retirement unit, as set forth in Item in
paragraph (j)(2)(i) of this section, if a substantial addition results,
otherwise the charge shall be to the appropriate maintenance expense
account.

\(ii\) When a minor item of property is retired and not replaced, the
book cost thereof shall be credited to the electric plant account in
which it is included; and, in the event the minor item is a part of
depreciable plant, the account for accumulated provision for
depreciation shall be charged with the book cost and cost of removal and
credited with the salvage. If, however, the book cost of the minor item
retired and not replaced has been or will be accounted for by its
inclusion in the retirement unit of which it is a part when such unit is
retired, no separate credit to the property account is required when
such minor item is retired.

\(iii\) When a minor item of depreciable property is replaced
independently of the retirement unit of which it is a part, the cost of
replacement shall be charged to the maintenance account appropriate for
the item, except that if the replacement effects a substantial
betterment (the primary aim of which is to make the property affected
more useful, more efficient, of greater durability, or of greater
capacity), the excess cost of the replacement over the estimated cost at
current prices of replacing without betterment shall be charged to the
appropriate electric plant accounts.

\(4\) The book cost of electric plant retired shall be the amount at
which such property is included in the electric plant accounts,
including all components of construction costs. The book cost shall be
determined from the utility\'s records and if this cannot be done, it
shall be estimated. When it is impracticable to determine the book cost
of each unit, due to the relatively large number or small cost thereof,
an appropriate average book cost of the units with due allowance for any
differences in size and character, shall be used as the book cost of the
units retired.

\(5\) The book cost of land retired shall be credited to the appropriate
land accounts. If the land is sold, the difference between the book cost
(less any accumulated provision for depreciation or amortization
therefore which has been authorized and provided) and the sale price of
the land (less commissions and other expenses of making the sale) shall
be recorded in Account 411.6, Gains from Disposition of Utility Plant,
or Account 411.7, Losses from Disposition of Utility Plant, when the
property has been recorded in Account 105, Electric Plant Held for
Future Use, otherwise to Accounts 421.1, Gain on Disposition of
Property, or 421.2, Loss on Disposition of Property, as appropriate. If
the land is not used in utility service but is retained by the utility,
the book cost shall be charged to Account 105, Electric Plant Held for
Future Use, or Account 121, Nonutility Property, as appropriate.

\(6\) The book cost less net salvage of depreciable electric plant
retired shall be charged in its entirety to Account 108, Accumulated
Provision for Depreciation of Electric Utility Plant in Service. Any
amounts which, by approval or order of RUS, are charged to Account
182.1, Extraordinary Property Losses, shall be credited to Account 108.

\(7\) The accounting for the retirement of amounts included in
Account 302, Franchises and Consents, and Account 303, Miscellaneous
Intangible Plant, and the items of limited-term interest in land
included in the accounts for land and land rights, shall be as provided
for in the text of Account 111, Accumulated Provision for Amortization
of 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 system required]{.underline}**.

\(1\) Each utility shall record all construction and retirements of
electric plant by means of work orders or job orders. Separate work
orders may be opened for additions to and retirements of electric plant
or the retirements may be included with the construction work order,
provided, however, that all items relating to the retirements shall be
kept separate from those relating to construction and provided, further,
that any maintenance costs involved in the work shall likewise be
segregated.

\(2\) Each utility shall keep its work order system so as to show the
nature of each addition to or retirement of electric plant, the total
cost thereof, the source or sources of costs, and the electric plant
account or accounts to which charged or credited. Work orders covering
jobs of short duration may be cleared monthly.

\(3\) Each utility shall maintain records in which, for each plant
account, the amounts of the annual additions and retirements are
classified so as to show the number and cost of the various record units
or retirement units.

\(l\) **[Transfers of property]{.underline}**. When property is
transferred from one electric plant account to another, from one utility
department to another, such as from electric to gas, from one operating
division or area to another, to or from Account 101, Electric Plant in
Service; Account 104, Electric Plant Leased to Others; Account 105,
Electric Plant Held for Future Use, and Account 121, Nonutility
Property, the transfer shall be recorded by transferring the original
cost thereof from the one account, department, or location to the other.
Any related amounts carried in the accounts for accumulated provision
for depreciation or amortization shall be transferred in accordance with
the segregation of such accounts.

\(m\) **[Common utility plant]{.underline}**.

\(1\) If the utility is engaged in more than one utility service, such
as electric, gas, and water, and any of its utility plant is used in
common for several utility services or for other purposes to such an
extent and in such manner that it is impracticable to segregate it by
utility services currently in the accounts, such property, with the
approval of RUS, may be designated and classified as \"common utility
plant.\"

\(2\) The book amount of utility plant designated as common plant shall
be included in Account 118, Other Utility Plant, and if applicable in
part to the electric department, shall be segregated and accounted for
in subaccounts as electric plant is accounted for in Accounts 101 to
107, inclusive, and electric plant adjustments in Account 116, Other
Electric Plant Adjustments; any amounts classifiable as common plant
acquisition adjustments or common plant adjustments shall be subject to
disposition as provided in Paragraphs C and B of Accounts 114 and 116,
respectively, for amounts classified in those accounts. The original
cost of common utility plant in service shall be classified according to
the detailed utility plant accounts appropriate for the property.

\(3\) The utility shall be prepared to show, at any time, and to report
to RUS annually, or more frequently, if required, and by utility plant
accounts (301 to 399) the book cost of common utility plant, the
allocation of such cost to the respective departments using the common
utility plant, and the basis of the allocation.

\(4\) The accumulated provision for depreciation and amortization of the
utility shall be segregated so as to show the amount applicable to the
property classified as common utility plant.

\(5\) The expenses of operation, maintenance, rents, depreciation and
amortization of common utility plant shall be recorded in the accounts
prescribed herein, but designated as common expenses, and the allocation
of such expenses to the departments using the common utility plant shall
be supported in such manner as to reflect readily the basis of
allocation used.

\(n\) **[Transmission and distribution plant]{.underline}**. For the
purpose of this system of accounts:

\(1\) [Transmission system]{.underline} is all land, conversion
structures, and equipment employed at a primary source of supply (i.e.
generating station, or point of receipt in the case of purchased power)
to change the voltage or frequency of electricity for the purpose of its
more efficient or convenient transmission; all land, structures, lines,
switching and conversion stations, high tension apparatus, and their
control and protective equipment between a generating or receiving point
and the entrance to a distribution center or wholesale point; and all
lines and equipment whose primary purpose is to augment, integrate or
tie together the sources of power supply.

\(2\) [Distribution system]{.underline} is all land, structures,
conversion equipment, lines, line transformers, and other facilities
employed between the primary source of supply (i.e. generating station,
or point of receipt in the case of purchased power) and of delivery to
customers, which are not includible in transmission system, as defined
in Item in paragraph (n)(1) of this section, whether or not such land,
structures, and facilities are operated as part of a transmission system
or as part of a distribution system.

Note: Stations which change electricity from transmission to
distribution voltage shall be classified as distribution stations.

\(3\) Where poles or towers support both transmission and distribution
conductors, the poles, towers, anchors, guys, and rights-of-way shall be
classified as transmission system. The conductors, cross-arms, braces,
grounds, tiewire, and insulators shall be classified as transmission or
distribution facilities, according to the purpose for which used.

\(4\) Where underground conduit contains both transmission and
distribution conductors, the underground conduit and right-of-way shall
be classified as distribution system. The conductors shall be classified
as transmission or distribution facilities according to the purpose for
which used.

\(5\) Land (other than rights-of-way) and structures used jointly for
transmission and distribution purposes shall be classified as
transmission or distribution according to the major use thereof.

\(o\) **[Hydraulic production plant]{.underline}**. For purpose of this
system of accounts hydraulic production plant is all land and land
rights, structures and improvements used in connection with hydraulic
power generation, reservoirs, dams and waterways, water wheels,
turbines, generators, accessory electric equipment, roads, railroads,
and bridges and structures and improvements used in connection with fish
and wildlife, and recreation.

\(p\) **[Nuclear fuel records required]{.underline}**. Each utility
shall keep all the necessary records to support the entries to the
various nuclear fuel plant accounts classified under \"Assets and Other
Debits,\" Utility Plant Accounts 120.1 through 120.5, inclusive; Account
518, Nuclear Fuel Expense; and Account 157, Nuclear Materials Held for
Sale. These records shall be so kept as to readily furnish the basis of
the computation of the net nuclear fuel costs.

**§ 1767.17 OPERATING EXPENSE INSTRUCTIONS:**

\(a\) **[Supervision and engineering]{.underline}**. The supervision and
engineering includible in the operating expense accounts shall consist
of the salary, employee pensions and benefits, social security and other
payroll taxes, injuries and damages, and other expenses of
superintendents, engineers, clerks, other employees, and consultants
engaged in supervising and directing the operation and maintenance of
each utility function. Whenever allocations are necessary in order to
arrive at the amount to be included in any account, the method and basis
of allocation shall be reflected by underlying records.

\(1\) [Labor items]{.underline}:

\(i\) Special tests to determine efficiency of equipment operation;

\(ii\) Preparing or reviewing budgets, estimates, and drawings relating
to operation or maintenance for departmental approval;

\(iii\) Preparing instructions for operations and maintenance
activities;

\(iv\) Reviewing and analyzing operating results;

\(v\) Establishing organizational setup of departments and executing
changes therein;

\(vi\) Formulating and reviewing routines of departments and executing
changes therein;

\(vii\) General training and instruction of employees by supervisors
whose pay is chargeable hereto. Specific instructions and training in a
particular type of work is chargeable to the appropriate functional
account (See

paragraph (c) (19) of this section);

\(viii\) Secretarial work for supervisory personnel, but not general
clerical and stenographic work chargeable to other accounts.

\(2\) [Expense items]{.underline}:

\(i\) 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]{.underline}**. (1) The cost of maintenance
chargeable to the various operating expense and clearing accounts
includes labor, employee pensions and benefits, social security and
other payroll taxes, injuries and damages, materials, overheads, and
other expenses incurred in maintenance work. A list of work operations
applicable generally to utility plant is included in this paragraph (b).
Other work operations applicable to specific classes of plant are listed
in functional maintenance expense accounts.

\(2\) Materials recovered in connection with the maintenance of property
shall be credited to the same account to which the maintenance cost was
charged.

\(3\) If the book cost of any property is carried in Account 102,
Electric Plant Purchased or Sold, the cost of maintaining such property
shall be charged to the accounts for maintenance of property of the same
class and use, the book cost of which is carried in other electric plant
in service accounts. Maintenance of property leased from others shall be
treated as provided in

paragraph (c) of this section.

\(4\) [Items]{.underline}:

\(i\) Direct field supervision of maintenance;

\(ii\) Inspecting, testing, and reporting on condition of plant
specifically to determine the need for repairs, replacements,
rearrangements and changes and inspecting and testing the adequacy of
repairs which have been made;

\(iii\) Work performed specifically for the purpose of preventing
failure, restoring serviceability or maintaining life of plant;

\(iv\) Rearranging and changing the location of plant not retired;

\(v\) Repairing for reuse materials recovered from plant;

\(vi\) Testing for, locating, and clearing trouble;

\(vii\) Net cost of installing, maintaining, and removing temporary
facilities to prevent interruptions in service; and

\(viii\) Replacing or adding minor items of plant which do not
constitute a retirement unit.

\(c\) **[Rents]{.underline}**.

\(1\) The rent expense accounts provided under the several functional
groups of expense accounts shall include all rents, including taxes paid
by the lessee on leased property, for property used in utility
operations, except minor amounts paid for occasional or infrequent use
of any property or equipment and all amounts paid for use of equipment
that, if owned, would be includible in plant Accounts 391 to 398
inclusive, which shall be treated as an expense item and included in the
appropriate function account and rents which are chargeable to clearing
accounts, and distributed therefrom to the appropriate account.

\(2\) If rents cover property used for more than one function such as
production and transmission, or by more than one department, the rents
shall be apportioned to the appropriate rent expense or clearing
accounts of each department on an actual, or if necessary, an estimated
basis.

\(3\) When a portion of property or equipment rented from others for use
in connection with utility operations is subleased, the revenue derived
from such subleasing shall be credited to the rent revenue account in
operating revenues; provided, however, that in case the rent was charged
to a clearing account, amounts received from subleasing the property
shall be credited to such clearing account.

\(4\) The cost, when incurred by the lessee, of operating and
maintaining leased property, shall be charged to the accounts
appropriate for the expense if the property were owned.

\(5\) The cost incurred by the lessee of additions and replacements to
electric plant leased from others shall be account for as provided in §
1767.16 (f).

\(d\) **[Training costs]{.underline}**.

\(1\) When it is necessary that employees be trained to specifically
operate or maintain plant facilities that are being constructed, the
related costs shall be accounted for as a current operating and
maintenance expense.

\(2\) These expenses shall be charged to the appropriate functional
accounts currently as they are incurred.

\(3\) When the training costs involved relate to facilities which are
not conventional in nature, or are new to the company\'s operations, see
§ 1767.16 (c) (19), for the accounting.

**§ 1767.18 ASSETS AND OTHER DEBITS:**

The asset and other debits accounts identified in this section shall be
used by all RUS borrowers.

ASSETS AND OTHER DEBITS

[Utility Plant]{.underline}

101 Electric Plant in Service

101.1 Property Under Capital Leases

102 Electric Plant Purchased or Sold

103 Experimental Electric Plant Unclassified

104 Electric Plant Leased to Others

105 Electric Plant Held for Future Use

106 Completed Construction not Classified - Electric

107 Construction Work in Progress - Electric

107.1 Construction Work in Progress - Contract

107.2 Construction Work in Progress - Force Account

107.3 Construction Work in Progress - Special Equipment

108 Accumulated Provision for Depreciation of Electric

Utility Plant

108.1 Accumulated Provision for Depreciation of Steam

Production Plant

108.2 Accumulated Provision for Depreciation of Nuclear

Production Plant

108.3 Accumulated Provision for Depreciation of Hydraulic

Production Plant

108.4 Accumulated Provision for Depreciation of Other

Production Plant

108.5 Accumulated Provision for Depreciation of Transmission

Plant

108.6 Accumulated Provision for Depreciation of Distribution

Plant

108.7 Accumulated Provision for Depreciation of General Plant

108.8 Retirement Work in Progress

109 \[Reserved\]

110 \[Reserved\]

111 Accumulated Provision for Amortization of Electric

Utility Plant

112 \[Reserved\]

113 \[Reserved\]

114 Electric Plant Acquisition Adjustments

115 Accumulated Provision for Amortization of Electric

Plant Acquisition Adjustments

116 Other Electric Plant Adjustments

118 Other Utility Plant

119 Accumulated Provision for Depreciation and Amortization

of Other Utility Plant

120.1 Nuclear Fuel in Process of Refinement, Conversion,

Enrichment, and Fabrication

120.2 Nuclear Fuel Materials and Assemblies - Stock Account

120.3 Nuclear Fuel Assemblies in Reactor

120.4 Spent Nuclear Fuel

120.5 Accumulated Provision for Amortization of Nuclear Fuel

Assemblies

120.6 Nuclear Fuel Under Capital Leases

[Other Property and Investments]{.underline}

121 Nonutility Property

122 Accumulated Provision for Depreciation and Amortization

of Nonutility Property

123 Investment in Associated Companies

123.1 Patronage Capital from Associated Cooperatives

123.11 Investment in Subsidiary Companies

123.21 Subscriptions to Capital Term Certificates -

Supplemental Financing

123.22 Investments in Capital Term Certificates - Supplemental

Financing

123.23 Other Investments in Associated Organizations

123.3 Investment in Associated Organizations - Federal

Economic Development Loans

123.4 Investment in Associated Organizations - Non-Federal

Economic Development Loans

124 Other Investments

124.1 Other Investments - Federal Economic Development Loans

124.2 Other Investments - Non-Federal Economic Development

Loans

125 Sinking Funds

126 Depreciation Fund

128 Other Special Funds

[Current and Accrued Assets]{.underline}

131 Cash

131.1 Cash - General

131.12 Cash - General - Economic Development Loan Funds

131.13 Cash - General - Economic Development Grant Funds

131.14 Cash - General - Economic Development Non-Federal

Revolving Funds

131.2 Cash - Construction Fund - Trustee

131.3 Cash - Installation Loan and Collection Fund

131.4 Transfer of Cash

132 Interest Special Deposits

133 Dividend Special Deposits

134 Other Special Deposits

135 Working Funds

136 Temporary Cash Investments

141 Notes Receivable

141.1 Accumulated Provision for Uncollectible Notes - Credit

142 Customer Accounts Receivable

142.1 Customer Accounts Receivable - Electric

142.2 Customer Accounts Receivable - Other

143 Other Accounts Receivable

144 Accumulated Provision for Uncollectible Accounts -

Credit

144.1 Accumulated Provision for Uncollectible Customer

Accounts - Credit

144.2 Accumulated Provision for Uncollectible Merchandising

Accounts - Credit

144.3 Accumulated Provision for Uncollectible Accounts,

Officers and Employees - Credit

144.4 Accumulated Provision for Other Uncollectible

Accounts - Credit

145 Notes Receivable from Associated Companies

146 Accounts Receivable from Associated Companies

151 Fuel Stock

152 Fuel Stock Expenses Undistributed

153 Residuals

154 Plant Materials and Operating Supplies

155 Merchandise

156 Other Materials and Supplies

157 Nuclear Materials Held for Sale

158.1 Allowance Inventory

158.2 Allowances Withheld

163 Stores Expense Undistributed

165 Prepayments

165.1 Prepayments - Insurance

165.2 Other Prepayments

171 Interest and Dividends Receivable

172 Rents Receivable

173 Accrued Utility Revenues

174 Miscellaneous Current and Accrued Assets

[Deferred Debits]{.underline}

181 Unamortized Debt Expense

182.1 Extraordinary Property Losses

182.2 Unrecovered Plant and Regulatory Study Costs

182.3 Other Regulatory Assets

183 Preliminary Survey and Investigation Charges

184 Clearing Accounts

184.1 Transportation Expense - Clearing

184.2 Clearing Accounts - Other

185 Temporary Facilities

186 Miscellaneous Deferred Debits

187 Deferred Losses from Disposition of Utility Plant

188 Research, Development, and Demonstration Expenditures

189 Unamortized Loss on Reacquired Debt

190 Accumulated Deferred Income Taxes

ASSETS AND OTHER DEBITS

[Utility Plant]{.underline}

**101 Electric Plant in Service.**

A. This account shall include the original cost of electric plant,
included in Accounts 301 to 399, prescribed herein, owned and used by
the utility in its electric utility operations, and having an
expectation of life in service of more than one year from date of
installation, including such property owned by the utility but held by
nominees.

B. (See also Account 106 for unclassified construction costs of
completed plant actually in service.)

C. The cost of additions to and betterments of property leased from
others, which are includible in this account, shall

be recorded in subdivisions separate and distinct from those relating to
owned property. (See § 1767.16 (f).)

**101.1 Property Under Capital Leases.**

A. This account shall include the amount recorded under capital leases
for plant leased from others and used by the utility in its utility
operations.

B. The electric property included in this account shall be classified
separately according to the detailed accounts (301 to 399) prescribed
for electric plant in service.

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

**102 Electric Plant Purchased or Sold.**

A. This account shall be charged with the cost of electric plant
acquired as an operating unit or system by purchase, merger,
consolidation liquidation, or otherwise, and shall be credited with the
selling price of like property transferred to others pending the
distribution to appropriate accounts in accordance with § 1767.16 (e).

B. Within 6 months from the date of acquisition or sale of property
recorded herein, the borrower shall file with RUS the proposed journal
entries to clear from this account the amounts recorded herein.

**103 Experimental Electric Plant Unclassified.**

A. This account shall include the cost of electric plant

which was constructed as a research, development, and demonstration
plant under the provisions of Paragraph C,

Account 107, Construction Work in Progress - Electric, and due to the
nature of the plant, it is desirous to operate it for a period of time
in an experimental status.

B. Amounts in this account shall be transferred to

Account 101, Electric Plant in Service, or Account 121, Nonutility
Property, as appropriate when the project is no longer considered as
experimental.

C. The depreciation on property in this account shall be charged to
Account 403, Depreciation Expense, and credited to Account 108,
Accumulated Provision for Depreciation of Electric Utility Plant. The
amounts herein shall be depreciated over a period which would correspond
to the estimated useful life of the relevant project considering the
characteristics involved. However, when projects are transferred to
Account 101, Electric Plant in Service, a new depreciation rate based
upon the remaining service life and undepreciated amounts, will be
established.

D. Records shall be maintained with respect to each unit of experiment
so that full details may be obtained as to the cost, depreciation, and
the experimental status.

E. Should it be determined that experimental plant recorded in this
account will fail to satisfactorily perform its function, the costs
thereof shall be accounted for as directed or authorized by RUS.

**104 Electric Plant Leased to Others.**

A. This account shall include the original cost of electric plant owned
by the utility, but leased to others as operating units or systems,
where the lessee has exclusive possession.

B. The property included in this account shall be classified according
to the detailed accounts (301 to 399) prescribed for electric plant in
service and this account shall be maintained in such detail as though
the property were used by the owner in its utility operations.

**105 Electric Plant Held for Future Use.**

A. This account shall include the original cost of electric plant
(except land and land rights) owned and held for future use in electric
service under a definite plan for such use, to include: (1) Property
acquired (except land and land rights) but never used by the utility in
electric service, but held for such service in the future under a
definite plan, and (2) property (except land and land rights) previously
used by the utility in service but retired from such service and held
pending its reuse in the future, under a definite plan, in electric
service.

B. This account shall also include the original cost of land and land
rights owned and held for future use in electric service under a plan
for such use, to include land and land rights: (1) Acquired but never
used by the utility in electric service, but held for such service in
the future under a plan, and (2) previously held by the utility in
service, but retired from such service and held pending its reuse in the
future under a plan, in electric service. (See § 1767.16 (g).)

C. In the event that property recorded in this account shall no longer
be needed or appropriate for future utility operations, the borrower
shall notify RUS of such condition and request approval of journal
entries to remove such property from this account.

D. Gains or losses from the sale of land and land rights or other
disposition of such property previously recorded in this account and not
placed in utility service shall be recorded directly in Accounts 411.6
or 411.7, as appropriate, except when determined to be significant by
RUS. Upon such a determination, the amounts shall be transferred to
Account 256, Deferred Gains from Disposition of Utility Plant, or
Account 187, Deferred Losses from Disposition of Utility Plant, and
amortized to Account 411.6, Gains from Disposition of Utility Plant, or
Account 411.7, Losses from Disposition of Utility Plant, as appropriate.

E. The property included in this account shall be classified according
to the detail accounts (301 to 399) prescribed for electric plant in
service and the account shall be maintained in such detail as though the
property were in service.

Note: Materials and supplies, meters and transformers held in reserve,
and normal spare capacity of plant in service shall not be included in
this account.

**106 Completed Construction not Classified - Electric.**

At the end of the year or such other date as a balance sheet may be
required by RUS, this account shall include the total of the balances of
work orders for electric plant which has been completed and placed in
service but which work orders have not been classified for transfer to
the detailed electric plant accounts.

Note: For the purpose of reporting to RUS, the classification of
electric plant in service by accounts is required, the utility shall
also report the balance in this account tentatively classified as
accurately as practicable according to prescribed account
classifications. The purpose of this provision is to avoid any
significant omissions in reported amounts of electric plant in service.

**107 Construction Work in Progress - Electric.**

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

B. Work orders shall be cleared from this account as soon as
practicable, after completion of the job. Further, if a project, such as
a hydroelectric project, a steam station, or a transmission line, is
designed to consist of two or more units or circuits which may be placed
in service at different dates, any expenditures which are common to and
which will be used in the operation of the project as a whole shall be
included in electric plant in service upon the completion and the
readiness for service of the first unit. Any expenditures which are
identified exclusively with units of property not yet in service shall
be included in this account.

C. Expenditures on research, development, and demonstration projects for
construction of utility facilities are to be included in a separate
subdivision in this account. Records must be maintained to show
separately each project along with complete detail of the nature and
purpose of the research, development, and demonstration project together
with the related costs.

D. Account 107 shall be subaccounted as follows:

107.1 Construction Work in Progress - Contract

107.2 Construction Work in Progress - Force Account

107.3 Construction Work in Progress - Special Equipment

**108 Accumulated Provision for Depreciation of Electric**

**Utility Plant.**

A. This account shall be credited with the following:

1\. Amounts charged to Account 403, Depreciation Expense, or to clearing
accounts for current depreciation expense for electric plant in service.

2\. Amounts charged to Account 421, Miscellaneous Nonoperating Income,
for depreciation expense on property included in Account 105, Electric
Plant Held for Future Use. Include, also, the balance of accumulated
provision for depreciation on property when transferred to Account 105,
Electric Plant Held for Future Use, from other property accounts.
Normally, Account 108 will not be used for current depreciation
provision because, as provided herein, the service life during which
depreciation is computed commences with the date property is includible
in electric plant in service; however, if special circumstances indicate
the propriety of current accruals for depreciation, such charges shall
be made to Account 421, Miscellaneous Nonoperating Income.

3\. Amounts charged to Account 413, Expenses of Electric Plant Leased to
Others, for electric plant included in Account 104, Electric Plant
Leased to Others.

4\. Amounts charged to Account 416, Costs and Expenses of Merchandising,
Jobbing, and Contract Work, or to clearing accounts for current
depreciation expense.

5\. Amounts of depreciation applicable to electric properties acquired
as operating units or systems. (See

§ 1767.16 (e).)

6\. Amounts charged to Account 182.1, Extraordinary Property Losses,
when authorized by RUS.

7\. Amounts of depreciation applicable to electric plant donated to the
utility.

The utility shall maintain separate subaccounts for depreciation
applicable to electric plant in service, electric plant leased to
others, and electric plant held for future use.)

B. At the time of retirement of depreciable electric utility plant, this
account shall be charged with the book cost of the property retired and
the cost of removal and shall be credited with the salvage value and any
other amounts recovered, such as insurance. When retirement, costs of
removal and salvage are entered originally in retirement work orders,
the net total of such work orders may be included in a separate
subaccount hereunder. Upon completion of the work order, the proper
distribution to subdivisions of this account shall be made as provided
in the following paragraph.

C. Account 108 shall be subaccounted as follows:

108.1 Accumulated Provision for Depreciation of Steam

Production Plant

108.2 Accumulated Provision for Depreciation of Nuclear

Production Plant

108.3 Accumulated Provision for Depreciation of Hydraulic

Production Plant

108.4 Accumulated Provision for Depreciation of Other

Production Plant

108.5 Accumulated Provision for Depreciation of Transmission

Plant

108.6 Accumulated Provision for Depreciation of Distribution

Plant

108.7 Accumulated Provision for Depreciation of General Plant

108.8 Retirement Work in Progress

These subsidiary records shall reflect the current credits and debits to
this account in sufficient detail to show separately for each such
functional classification: (1) the amount of accrual for depreciation,
(2) the book cost of property retired, (3) cost of removal, (4) salvage,
and (5) other items, including recoveries from insurance.

D. When transfers of plant are made from one electric plant account to
another, or from or to another utility department, of from or to
nonutility property accounts, the accounting for depreciation shall be
as provided in

§ 1767.16 (l).

E. The utility is restricted in its use of the accumulated provision for
depreciation to the purposes set forth above. It shall not transfer any
portion of this account to retained earnings or make any other use
thereof without authorization by RUS.

**109 \[Reserved\]**

**110 \[Reserved\]**

**111 Accumulated Provision for Amortization of Electric**

**Utility Plant.**

A. This account shall be credited with the following:

1\. Amounts charged to Account 404, Amortization of Limited-Term
Electric Plant, for the current amortization of limited-term electric
plant investments.

2\. Amounts charged to Account 421, Miscellaneous Nonoperating Income,
for amortization expense on property included in Account 105, Electric
Plant Held for Future Use. Include also the balance of accumulated
provision for amortization on property when transferred to Account 105,
Electric Plant Held for Future Use, from other property accounts. See
also Paragraph A(2), Account 108, Accumulated Provision for Depreciation
of Electric Utility Plant.

3\. Amounts charged to Account 405, Amortization of Other Electric
Plant.

4\. Amounts charged to Account 413, Expenses of Electric Plant Leased to
Others, for the current amortization of limited-term or other
investments subject to amortization included in Account 104, Electric
Plant Leased to Others.

5\. Amounts charged to Account 425, Miscellaneous Amortization, for the
amortization of intangible or other electric plant which does not have a
definite or terminable life and is not subject to charges for
depreciation expense, with RUS approval.

(The utility shall maintain subaccounts of this account for the
amortization applicable to electric plant in service, electric plant
leased to others and electric plant held for future use.)

B. When any property to which this account applies is sold,
relinquished, or otherwise retired from service, this account shall be
charged with the amount previously credited in respect to such property.
The book cost of the property so retired less the amount chargeable to
this account and less the net proceeds realized at retirement shall be
included in

Account 421.1, Gain on Disposition of Property, or Account 421.2, Loss
on Disposition of Property, as appropriate.

C. For general ledger and balance sheet purposes, this account shall be
regarded and treated as a single composite provision for amortization.
For purposes of analysis, however, each utility shall maintain
subsidiary records in which this account is segregated according to the
following functional classification for electric plant: (1) Steam
production, (2) Nuclear production, (3) Hydraulic production, (4) Other
production, (5) Transmission, (6) Distribution, and (7) General. These
subsidiary records shall reflect the current credits and debits to this
account in sufficient detail to show separately for each such functional
classification: (1) the amount of accrual for amortization, (2) the book
cost of property retired, (3) cost of removal, (4) salvage, and (5)
other items, including recoveries from insurance.

D. The utility is restricted in its use of the accumulated provision for
amortization to the purposes set forth above. It shall not transfer any
portion of this account to retained earnings or make any other use
thereof without authorization by RUS.

**112 \[Reserved\]**

**113 \[Reserved\]**

**114 Electric Plant Acquisition Adjustments.**

A. This account shall include the difference between the cost to the
accounting utility of electric plant acquired as an operating unit or
system by purchase, merger, consolidation, liquidation, or otherwise,
and the original cost, estimated, if not known, of such property, less
the amount or amounts credited by the accounting utility at the time of
acquisition to accumulated provisions for depreciation and amortization
and contributions in aid of construction with respect to such property.

B. With respect to acquisitions after the effective date of this system
of accounts, this account shall be subdivided so as to show the amounts
included herein for each property acquisition and to electric plant in
service, electric plant held for future use, and electric plant leased
to others. (See

§ 1767.16 (e).)

C. Debit amounts recorded in this account related to plant and land
acquisition may be amortized to Account 425, Miscellaneous Amortization,
over a period not longer than the estimated remaining life of the
properties to which such amounts relate. Amounts related to the
acquisition of land only may be amortized to Account 425 over a period
of not more than 15 years. Should a utility wish to account for debit
amounts in this account in any other manner, it shall petition RUS for
authority to do so. Credit amounts recorded in this account shall be
accounted for as directed by RUS.

**115 Accumulated Provision for Amortization of Electric**

**Plant Acquisition Adjustments.**

This account shall be credited or debited with amounts which are
includible in Account 406, Amortization of Electric Plant Acquisition
Adjustments, or Account 425, Miscellaneous Amortization, for the purpose
of providing for the extinguishment of amounts in Account 114, Electric
Plant Acquisition Adjustments, in instances where the amortization of
Account 114 is not being made by direct write-off of the account.

**116 Other Electric Plant Adjustments.**

A. This account shall include the difference between the original cost,
estimated if not known, and the book cost of electric plant to the
extent that such difference is not properly includible in Account 114,
Electric Plant Acquisition Adjustments. (See § 1767.16 (a) (3))

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

Note: The provisions of this account shall not be construed as approving
or authorizing the recording of appreciation of electric plant.

**118 Other Utility Plant.**

This account shall include the balances in accounts for utility plant,
other than electric plant, such as gas, or railway.

**119 Accumulated Provision for Depreciation and Amortization**

**of Other Utility Plant.**

This account shall include the accumulated provision for depreciation
and amortization applicable to utility property other than electric
plant.

**120.1 Nuclear Fuel in Process of Refinement, Conversion,**

**Enrichment, and Fabrication.**

A. This account shall include the original cost to the utility of
nuclear fuel materials while in process of refinement, conversion,
enrichment, and fabrication into nuclear fuel assemblies and components,
including processing, fabrication, and necessary shipping costs. This
account shall also include the salvage value of nuclear materials which
are actually being reprocessed for use and were transferred from Account
120.5, Accumulated Provision for Amortization of Nuclear Fuel
Assemblies. (See § 1767.10 (a) (27).)

B. This account shall be credited and Account 120.2, Nuclear Fuel
Materials and Assemblies - Stock Account, shall be debited for the cost
of completed fuel assemblies delivered for use in refueling or to be
held as spares. In the case of the initial core loading, the transfer
shall be made directly to Account 120.3, Nuclear Fuel Assemblies in
Reactor, upon the conclusion of the experimental or test period of the
plant prior to its becoming available for service.

[Items]{.underline}

1\. Cost of natural uranium, uranium ores concentrates or other nuclear
fuel sources, such as thorium, plutonium, and U-233.

2\. Value of recovered nuclear materials being 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 suitable for insertion in the
reactor.

8\. All shipping costs of materials and components, including shipping
of fabricated fuel assemblies to the reactor site.

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

**120.2 Nuclear Fuel Materials and Assemblies - Stock Account.**

A. This account shall be debited and Account 120.1, Nuclear Fuel in
Process of Refinement, Conversion, Enrichment and Fabrication, shall be
credited with the cost of fabricated fuel assemblies delivered for use
in refueling or to be carried in stock as spares. It shall also include
the original cost of fabricated fuel assemblies purchased in completed
form. This account shall also include the original cost of partially
irradiated fuel assemblies being held in stock for reinsertion in a
reactor which had been transferred from Account 120.3, Nuclear Fuel
Assemblies in Reactor.

B. When fuel assemblies included in this account are inserted in a
reactor, this account shall be credited and

Account 120.3, Nuclear Fuel Assemblies in Reactor, debited for the cost
of such assemblies.

C. This account shall also include the cost of nuclear materials and
byproduct materials being held for future use and not actually in
process in Account 120.1, Nuclear Fuel in Process of Refinement,
Conversion, Enrichment and Fabrication.

**120.3 Nuclear Fuel Assemblies in Reactor.**

A. This account shall include the cost of nuclear fuel assemblies when
inserted in a reactor for the production of electricity. The amounts
included herein shall be transferred from Account 120.2, Nuclear Fuel
Materials and Assemblies - Stock Account, except for the initial core
loading which will be transferred directly from Account 120.1, Nuclear
Fuel in Process of Refinement, Conversion, Enrichment and Fabrication.

B. Upon removal of fuel assemblies from a reactor, the original cost of
the assemblies removed shall be transferred to Account 120.4, 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 original cost of nuclear fuel
assemblies, in the process of cooling, transferred from Account 120.3,
Nuclear Fuel Assemblies in Reactor, upon removal from a reactor pending
reprocessing.

B. This account shall be credited and Account 120.5, Accumulated
Provision for Amortization of Nuclear Fuel Assemblies, debited for fuel
assemblies, after the cooling period is over, at the cost recorded in
this account.

**120.5 Accumulated Provision for Amortization of Nuclear Fuel**

**Assemblies.**

A. This account shall be credited and Account 518, Nuclear Fuel Expense,
shall be debited for the amortization of the net cost of nuclear fuel
assemblies used in the production of energy. The net cost of nuclear
fuel assemblies subject to amortization shall be the original cost of
nuclear fuel assemblies, plus or less the expected net salvage value of
uranium, plutonium, and other by-products.

B. This account shall be credited with the net salvage value of uranium,
plutonium, and other nuclear by-products when such items are sold,
transferred or otherwise disposed.

Account 120.1, Nuclear Fuel in Process of Refinement, Conversion,
Enrichment and Fabrication, shall be debited with the net salvage value
of nuclear materials to be reprocessed. Account 157, Nuclear Materials
Held for Sale, shall be debited for the net salvage value of nuclear
materials not to be reprocessed but to be sold or otherwise disposed of
and Account 120.2, Nuclear Fuel Materials and Assemblies - Stock
Account, will be debited with the net salvage value of nuclear materials
that will be held for future use and not actually in process, in Account
120.1, Nuclear Fuel in Process of Refinement, Conversion, Enrichment,
and Fabrication.

C. This account shall be debited and Account 120.4, Spent Nuclear Fuel,
shall be credited with the cost of fuel assemblies at the end of the
cooling period.

**120.6 Nuclear Fuel Under Capital Leases.**

A. This account shall include the amount recorded under capital leases
for nuclear fuel leased from others for use by the utility in its
utility operations.

B. Records shall be maintained with respect to each capital lease
reflecting: (1) name of lessor, (2) basic details of lease, (3) terminal
date, (4) original cost or fair market value of nuclear fuel leased, (5)
future minimum lease payments, (6) the amount representing interest and
the interest rate used, and (7) expenses paid.

[Other Property and Investments]{.underline}

**121 Nonutility Property.**

A. This account shall include the book cost of land, structures,
equipment, or other tangible or intangible property owned by the
utility, but not used in utility service and not properly includible in
Account 105, Electric Plant Held for Future Use.

B. This account shall also include the amount recorded under capital
leases for property leased from others and used by the utility in its
nonutility operations. Records shall be maintained with respect to each
lease reflecting: (1) name of lessor, (2) basic details of lease, (3)
terminal date, (4) original cost or fair market value of property
leased, (5) future minimum lease payments, (6) executory costs, (7)
present value of minimum lessee payments, (8) the amount representing
interest and the interest rate used, and (9) expenses paid.

C. This account shall be subdivided so as to show the amount of property
used in operations which are nonutility in character but nevertheless
constitute a distinct operating activity of the company (such as
operation of an ice department where such activity is not classed as a
utility) and the amount of miscellaneous property not used in
operations. The records in support of each subaccount shall be
maintained so as to show an appropriate classification of the property.

Note: The gain from the sale or other disposition of property included
in this account which had been previously recorded in Account 105,
Electric Plant Held for Future Use, shall be accounted for in accordance
with Paragraph C of

Account 105.

**122 Accumulated Provision for Depreciation and Amortization**

**of Nonutility Property.**

This account shall include the accumulated provision for depreciation
and amortization applicable to nonutility property.

**123 Investment in Associated Companies.**

A. This account shall include the book cost of investments in securities
issued or assumed by associated companies and investment advances to
such companies, including interest accrued thereon when such interest is
not subject to current settlement, provided that the investment does not
relate to a subsidiary company. (If the investment relates to a
subsidiary company, it shall be included in Account 123.11, Investment
in Subsidiary Companies.) Include herein the offsetting entry to the
recording of amortization of discount or premium on interest bearing
investments. (See Account 419, Interest and Dividend Income.)

B. This account shall be maintained in such manner as to show the
investment in securities of, and advances to, each associated company
together with full particulars regarding any of such investments that
are pledged.

Note A: Securities and advances of associated companies owned and
pledged shall be included in this account, but such securities, if held
in special deposits or in special funds, shall be included in the
appropriate deposit or fund account. A complete record of securities
pledged shall be maintained.

Note B: Securities of associated companies held as temporary cash
investments are includible in Account 136, Temporary Cash Investments.

Note C: Balances in open accounts with associated companies, which are
subject to current settlement, are includible in Account 146, Accounts
Receivable from Associated Companies.

Note D: The utility may write down the cost of any security in
recognition of a decline in the value thereof. Securities shall be
written off or written down to a nominal value if there is no reasonable
prospect of substantial value. Fluctuations in market value shall not be
recorded but a permanent impairment in the value of securities shall be
recognized in the accounts. When securities are written off or written
down, the amount of the adjustment shall be charged to Account 426.5,
Other Deductions, or to an appropriate account for accumulated
provisions for loss in value established as a separate subdivision of
this account.

C. Account 123 shall be subaccounted as follows:

123.1 Patronage Capital from Associated Cooperatives

123.11 Investment in Subsidiary Companies

123.21 Subscriptions to Capital Term Certificates - Supplemental

Financing

123.22 Investments in Capital Term Certificates - Supplemental

Financing

123.23 Other Investments in Associated Organizations

123.3 Investment in Associated Organizations - Federal Economic

Development Loans

123.4 Investment in Associated Organizations - Non-Federal

Economic Development Loans

**123.1 Patronage Capital from Associated Cooperatives.**

This account shall include patronage capital credits allocated to the
accounting borrower by G&T cooperatives. It shall also include capital
credits, deferred patronage refunds, or like items from other associated
cooperatives. The account shall be maintained so as to reflect
separately, the allocations of patronage capital and patronage refunds
from each organization that makes such allocations to the borrower.

**123.11 Investment in Subsidiary Companies.**

A. This account shall include the cost of investments in securities
issued or assumed by subsidiary companies and investment advances to
such companies, including interest accrued thereon when such interest is
not subject to current settlement, plus the equity in undistributed
earnings or losses of such subsidiary companies since acquisition. This
account shall be credited with any dividends declared by such
subsidiaries.

B. This account shall be maintained in such a manner as to show
separately for each subsidiary: the cost of such investments in the
securities of the subsidiary at the time of acquisition; the amount of
equity in the subsidiary\'s undistributed net earnings or net losses
since acquisition; advances or loans to such subsidiary; and full
particulars regarding any such investments that are pledged.

**123.21 Subscriptions to Capital Term Certificates - Supplemental**

**Financing.**

This account shall include the total subscriptions to capital term
certificates of CFC. When subscriptions are paid, this account shall be
credited and Account 123.22, Investments in Capital Term Certificates -
Supplemental Financing, debited.

**123.22 Investments in Capital Term Certificates - Supplemental**

**Financing.**

This account shall include paid subscriptions in capital term
certificates of CFC or other supplemental lenders.

**123.23 Other Investments in Associated Organizations.**

This account shall include investments in capital stock, securities,
membership fees, and investment advances to associated organizations
other than provided for elsewhere. This account shall be maintained in
such a manner as to show the investment in stock and securities of and
advances to each associated organization.

[Items]{.underline}

1\. Investments in capital stock of associated organizations.

2\. Investments in securities issued by associated organizations.

3\. Membership fees in associated organizations, including NRECA, and
Statewide associations of RUS-financed borrowers.

4\. Investment advances to associated organizations.

**123.3 Investment in Associated Organizations - Federal Economic**

**Development Loans.**

This account shall include investment advances of Federal funds received
from a Rural Economic Development Grant to associated organizations for
authorized rural economic development projects.

**123.4 Investment in Associated Organizations - Non-Federal**

**Economic Development Loans.**

This account shall include investment advances of non-Federal funds from
the Rural Economic Development Grant revolving fund to associated
organizations for authorized rural economic development projects.

**124 Other Investments.**

A. This account shall include the book cost of investments in securities
issued or assumed by nonassociated companies, investment advances to
such companies, and any investments not accounted for elsewhere. Include
also the offsetting entry to the recording of amortization of discount
or premium on interest bearing investments. (See Account 419, Interest
and Dividend Income.)

B. The records shall be maintained in such manner as to show the amount
of each investment and the investment advances to each person.

Note A: Securities owned and pledged shall be included in this account,
but securities held in special deposits or in special funds shall be
included in appropriate deposit or fund accounts. A complete record of
securities pledged shall be maintained.

Note B: Securities held as temporary cash investments shall not be
included in this account.

Note C: See Note D of Account 123.

C. Account 124 shall be subaccounted as follows:

124.1 Other Investments - Federal Economic Development Loans

124.2 Other Investments - Non-Federal Economic Development

Loans

**124.1 Other Investments - Federal Economic Development Loans.**

This account shall include investment advances of Federal funds received
from a Rural Economic Development Grant to nonassociated organizations
for authorized rural economic development projects.

**124.2 Other Investments - Non-Federal Economic Development**

**Loans.**

This account shall include investment advances of non-Federal funds from
the Rural Economic Development Grant revolving fund to nonassociated
organizations for authorized rural economic development projects.

**125 Sinking Funds.**

This account shall include the amount of cash and book cost of
investments held in sinking funds. A separate account, with appropriate
title, shall be kept for each sinking fund. Transfers from this account
to special deposit accounts, may be made as necessary for the purpose of
paying matured sinking fund obligations, or obligations called for
redemption but not presented, or the interest thereon.

**126 Depreciation Fund.**

This account shall include the amount of cash and the book cost of
investments which have been segregated in a special fund for the purpose
of identifying such assets with the accumulated provisions for
depreciation.

**128 Other Special Funds.**

This account shall include the amount of cash and book cost of
investments which have been segregated in special funds for insurance,
employee pensions, savings, relief, hospital, and other purposes not
provided for elsewhere. A separate account, with appropriate title,
shall be kept for each fund.

Note: Amounts deposited with a trustee under the terms of an irrevocable
trust agreement for pensions or other employee benefits shall not be
included in this account.

[Current and Accrued Assets]{.underline}

Current and accrued assets are cash, those assets which are readily
convertible into cash or are held for current use in operations or
construction, current claims against others, payment of which is
reasonably assured, and amounts accruing to the utility which are
subject to current settlement, except such items for which accounts
other than those designated as current and accrued assets are provided.
There shall not be included in the category of accounts designated as
current and accrued assets any item, the amount or collectibility of
which is not reasonably assured, unless an adequate provision for
possible loss has been made therefor. Items of current character but of
doubtful value may be written down, and for record purposes carried in
these accounts at nominal value.

**131 Cash.**

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

B. Account 131 shall be subaccounted as follows:

131.1 Cash - General

131.12 Cash - General - Economic Development Loan Funds

131.13 Cash - General - Economic Development Grant Funds

131.14 Cash - General - Economic Development Non-Federal

Revolving Funds

131.2 Cash - Construction Fund - Trustee

131.3 Cash - Installation Loan and Collection Fund

131.4 Transfer of Cash

**131.1 Cash - General.**

This account shall include all cash of the organization not provided for
elsewhere. Separate subaccounts may be maintained for each bank account
in which general cash is maintained. Funds held by others for current
obligations shall be recorded in Account 134, Other Special Deposits.

**131.12 Cash - General - Economic Development Loan Funds.**

This account shall include the cash received from the Rural Utilities
Service for Rural Economic Development Loans. Economic development loan
advances shall be charged to this account and credited to Account
224.17, RUS Notes Executed - Economic Development - Debit.

**131.13 Cash - General - Economic Development Grant Funds.**

This account shall include cash received from the Rural Utilities
Service for Rural Economic Development Grants. Economic development
grant funds shall be charged to this account and credited to Account
224.18, Other Long-Term Debt - Grant Funds; Account 208, Donated
Capital; or Account 421, Miscellaneous Nonoperating Income, as
appropriate. This account shall be credited and either Account 123.3,
Investment in Associated Organizations - Federal Economic Development
Loans, or Account 124.1, Other Investments - Federal Economic
Development Loans, shall be debited, as appropriate, with the amount of
an economic development revolving fund loan.

**131.14 Cash - General - Economic Development Non-Federal**

**Revolving Funds.**

This account shall include all non-Federal funds comprising the economic
development revolving fund. It shall include all funds supplied by the
borrower as well as all cash received from the repayment of loans made
from the economic development revolving fund. This account shall be
credited and either Account 123.4, Investment in Associated
Organizations - Non-Federal Economic Development Loans, or Account
124.2, Other Investments - Non-Federal Economic Development Loans, shall
be debited, as appropriate, with the amount of an economic development
revolving fund loan.

**131.2 Cash - Construction Fund - Trustee.**

This account shall include the cash received from the Rural Utilities
Service, CFC, and any other source of supplemental financing for
financing the construction, purchase, and operation of electric
facilities. RUS construction loan fund advances shall be charged to this
account and credited to

Account 224.4, RUS Notes Executed - Construction - Debit. CFC and other
supplemental lender construction loan fund advances shall be charged to
this account and credited to Account 224.13, Supplemental Financing
Notes Executed - Debit.

**131.3 Cash - Installation Loan and Collection Fund.**

A. This account shall include the cash advanced on installation loans
made subsequent to September 13, 1957. Such advances shall be debited to
this account as received and credited to Account 224.10, RUS Notes
Executed - Installation - Debit. This account shall also include
interest and principal collections received on consumers\' loans
financed from RUS loans made subsequent to September 13, 1957.

B. Payments shall be made from this account solely for financing
consumers\' loans for the purpose of wiring of consumers\' premises, and
the acquisition and installation of electrical and plumbing appliances
and equipment by consumers. The cash in this account is also used for
the payment of principal and interest on installation loans made by RUS,
subsequent to September 13, 1957, in accordance with the terms of the
loan agreement.

**131.4 Transfer of Cash.**

This account shall be used in transferring funds from one bank account
to another. This account is charged when the check is drawn for the
transfer and entered in the check register, and credited when the amount
transferred is entered in the cash receipts book. This account is to be
used as a clearing account and should not have a balance at the end of
an accounting period.

**132 Interest Special Deposits.**

This account shall include special deposits with fiscal agents or others
for the payment of interest.

**133 Dividend Special Deposits.**

This account shall include special deposits with fiscal agents or others
for the payment of dividends.

**134 Other Special Deposits.**

This account shall include deposits with fiscal agents or others for
special purposes other than the payment of interest and dividends. Such
special deposits may include cash deposited with Federal, state, or
municipal authorities as a guaranty for the fulfillment of obligations;
cash deposited with trustees to be held until mortgaged property sold,
destroyed, or otherwise disposed of is replaced; and cash realized from
the sale of the accounting utility\'s securities and deposited with
trustees to be held until invested in property of the utility. Entries
to this account shall specify the purpose for which the deposit is made.

Note: Assets available for general corporate purposes shall not be
included in this account. Further, deposits for more than one year,
which are not offset by current liabilities, shall not be charged to
this account but to Account 128, Other Special Funds.

**135 Working Funds.**

This account shall include cash advanced to officers, agents, employees,
and others as petty cash or working funds.

**136 Temporary Cash Investments.**

A. This account shall include the book cost of investments, such as
demand and time loans, bankers\' acceptances, United States Treasury
certificates, marketable securities, and other similar investments,
acquired for the purpose of temporarily investing cash.

B. This account shall be so maintained as to show separately temporary
cash investments in securities of associated companies and of others.
Records shall be kept of any pledged investments.

**141 Notes Receivable.**

A. This account shall include the book cost, not includible elsewhere,
of all collectible obligations in the form of notes receivable and
similar evidences (except interest coupons) of money due on demand or
within one year from the date of issue, except, however, notes
receivable from associated companies. (See Account 136, Temporary Cash
Investments, and Account 145, Notes Receivable from Associated
Companies.)

Note: The face amount of notes receivable discounted, sold, or
transferred without releasing the utility from liability as endorser
thereon, shall be credited to a separate subdivision of this account and
appropriate disclosure shall be made in the financial statements of any
contingent liability arising from such transactions.

B. Account 141 shall be subaccounted as follows:

141.1 Accumulated Provision for Uncollectible Notes - Credit

**141.1 Accumulated Provision for Uncollectible Notes - Credit.**

This account shall be credited with amounts provided for losses on notes
receivable which may become uncollectible, and also with collections on
notes previously charged hereto. Concurrent charges shall be made to
Account 904, Uncollectible Accounts.

**142 Customer Accounts Receivable.**

A. This account shall include amounts due from customers for utility
service and for merchandising, jobbing, and contract work. This account
shall not include amounts due from associated companies.

B. This account shall be maintained so as to permit ready segregation of
the amounts due for merchandising, jobbing, and contract work.

C. Account 142 shall be subaccounted as follows:

142.1 Customer Accounts Receivable - Electric

142.2 Customer Accounts Receivable - Other

**142.1 Customer Accounts Receivable - Electric.**

This account shall include amounts due from customers for utility
service.

**142.2 Customer Accounts Receivable - Other.**

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

**143 Other Accounts Receivable.**

A. This account shall include amounts due the utility upon open
accounts, other than amounts due from associated companies and from
customers for utility services and merchandising, jobbing and contract
work.

B. This account shall be maintained so as to show separately amounts due
on subscriptions to capital stock and from officers and employees. The
account shall not include amounts advanced to officers or others as
working funds. (See

Account 135, Working Funds.)

**144 Accumulated Provision for Uncollectible Accounts -**

**Credit.**

A. This account shall include amounts provided for losses on accounts
receivable which may become uncollectible, and also with collections on
accounts previously charged hereto. Concurrent charges shall be made to
Account 904, Uncollectible Accounts, for amounts applicable to utility
operations, and to corresponding accounts for other operations. Records
shall be maintained so as to show the write-offs of accounts receivable
for each utility department.

B. Account 144 shall be subaccounted as follows:

144.1 Accumulated Provision for Uncollectible Customer Accounts

\- Credit

144.2 Accumulated Provision for Uncollectible Merchandising

Accounts - Credit

144.3 Accumulated Provision for Uncollectible Accounts,

Officers and Employees - Credit

144.4 Accumulated Provision for Other Uncollectible Accounts -

Credit

**144.1 Accumulated Provision for Uncollectible Customer Accounts**

**- Credit.**

This account shall be credited with amounts provided for losses on
accounts receivable which may become uncollectible, and also with
collections on accounts previously charged hereto. Concurrent charges
shall be made to Account 904, Uncollectible Accounts.

**144.2 Accumulated Provision for Uncollectible Merchandising**

**Accounts - Credit.**

This account shall be credited with amounts provided for losses on
merchandising, jobbing, and contract work which may become
uncollectible, and also with collections on accounts previously charged
hereto. Concurrent charges shall be made to Account 904, Uncollectible
Accounts, for amounts applicable to utility operations, and to
corresponding accounts for other operations.

**144.3 Accumulated Provision for Uncollectible Accounts,**

**Officers and Employees - Credit.**

This account shall be credited with amounts provided for losses on
accounts receivable from officers and employees which may become
uncollectible and also with collections on accounts previously charged
hereto. Concurrent charges shall be made to Account 904, Uncollectible
Accounts.

**144.4 Accumulated Provision for Other Uncollectible Accounts -**

**Credit.**

This account shall be credited with amounts provided for losses on
accounts receivable which may become uncollectible and for which the
recording of this credit has not been provided for elsewhere. This
account shall also be credited with collections on accounts previously
charged hereto. Concurrent charges shall be made to Account 904,
Uncollectible Accounts, for amounts applicable to utility operations and
to corresponding accounts for other operations.

**145 Notes Receivable from Associated Companies.**

This account shall include notes upon which associated companies are
liable, and which mature and are expected to be paid in full not later
than one year from the date of issue, together with any interest
thereon, and debit balances subject to current settlement in open
accounts with associated companies. Items which do not bear a specified
due date but which have been carried for more than twelve months and
items which are not paid within twelve months from due date shall be
transferred to Account 123, Investment in Associated Companies.

Note: The face amount of notes receivable discounted, sold or
transferred without releasing the utility from liability as endorser
thereon, shall be credited to a separate subdivision of this account and
appropriate disclosure shall be made in the financial statements of any
contingent liability arising from such transactions.

**146 Accounts Receivable from Associated Companies.**

This account shall include drafts upon which associated companies are
liable, and which mature and are expected to be paid in full not later
than one year from the date of issue, together with any interest
thereon, and debit balances subject to current settlement in open
accounts with associated companies. Items

which do not bear a specified due date but which have been carried for
more than twelve months and items which are not paid within twelve
months from due date shall be transferred to Account 123, Investment in
Associated Companies.

Note: On the balance sheet, accounts receivable from an associated
company may be offset against accounts payable to the same company.

**151 Fuel Stock.**

This account shall include the book cost of fuel on hand.

[Items]{.underline}

1\. Invoice price of fuel less any cash or other discounts.

2\. Freight, switching, demurrage, and other transportation charges, not
including, however, any charges for unloading from the shipping medium.

3\. Excise taxes, purchasing agents\' commissions, insurance, and other
expenses directly assignable to cost of fuel.

4\. Operating, maintenance and depreciation expenses, and ad valorem
taxes on utility-owned transportation equipment used to transport fuel
from the point of acquisition to the unloading point.

5\. Lease or rental costs of transportation equipment used to transport
fuel from the point of acquisition to the unloading point.

**152 Fuel Stock Expenses Undistributed.**

A. This account may include the cost of labor and of supplies used and
expenses incurred in unloading fuel from the shipping medium and in the
handling thereof prior to its use, if such expenses are sufficiently
significant in amount to warrant being treated as a part of the cost of
fuel inventory rather than being charged direct to expense as incurred.

B. Amounts included herein shall be charged to expense as the fuel is
used to the end that the balance herein shall not exceed the expenses
attributable to the inventory of fuel on hand.

[Items]{.underline}

[Labor]{.underline}:

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 transferring from one station to
another.

5\. Handling from storage or shipping facility to first bunker, hopper,
bucket, tank, or holder of boiler house structure.

6\. Operation of mechanical equipment such as locomotives, trucks, cars,
boats, barges, and cranes.

[Supplies and Expenses]{.underline}:

1\. Tools, lubricants and other supplies.

2\. Operating supplies for mechanical equipment.

3\. Transportation and other expenses in moving fuel.

4\. Stores expenses applicable to fuel.

**153 Residuals.**

This account shall include the book cost of any residuals produced in
the production or manufacturing processes.

**154 Plant Materials and Operating Supplies.**

A. This account shall include the cost of materials purchased primarily
for use in the utility business for construction, operation and
maintenance purposes. It shall also include the book cost of materials
recovered in connection with construction, maintenance, or the
retirement of property, such materials being credited to construction,
maintenance, or accumulated depreciation provision, respectively, and
included herein as follows:

1\. Reusable materials consisting of large individual items shall be
included in this account at original cost, estimated if not known. The
cost of repairing such items shall be charged to the maintenance account
appropriate for the previous use.

2\. Reusable materials consisting of relatively small items, the
identity of which (from the date of original installation to the final
abandonment or sale thereof) cannot be ascertained without undue
refinement in accounting, shall be included in this account at current
prices new for such items. The cost of repairing such items shall be
charged to the appropriate expense account as indicated by previous use.

3\. Scrap and nonusable materials included in this account shall be
carried at the estimated net amount realizable therefrom. The difference
between the amounts realized for scrap and nonusable materials sold and
the net amount at which the materials were carried in this account, as
far as practicable, shall be adjusted to the accounts credited when the
materials were charged to this account.

B. Materials and supplies issued shall be credited hereto and charged to
the appropriate construction, operating expense, or other account on the
basis of a unit price determined by the use of cumulative average,
first-in-first-out, or such other method of inventory accounting as
conforms with accepted accounting standards consistently applied.

[Items]{.underline}

1\. Invoice price of materials less cash or other discounts.

2\. Freight, switching, or other transportation charges when practicable
to include as part of the cost of particular materials to which 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 materials purchased cannot be
directly assigned to particular purchases, they shall be charged to
Account 163, Stores Expense Undistributed.

**155 Merchandise.**

This account shall include the book cost of materials and supplies and
appliances and equipment held primarily for merchandising, jobbing, and
contract work. The principles prescribed in accounting for utility
materials and supplies shall be observed with respect to items carried
in this account.

**156 Other Materials and Supplies.**

This account shall include the book cost of materials and supplies held
primarily for nonutility purposes. The principles prescribed in
accounting for utility materials and supplies shall be observed with
respect to items carried in this account.

**157 Nuclear Materials Held for Sale.**

This account shall include the net salvage value of uranium, plutonium,
and other nuclear materials held by the company for sale or other
disposition that are not to be reused by the company in its electric
utility operations. This account shall be debited and Account 120.5,
Accumulated Provision for Amortization of Nuclear Fuel Assemblies,
credited for such net salvage value. Any difference between the amount
recorded in this account and the actual amount realized from the sale of
materials shall be debited or credited, as appropriate, to Account 518,
Nuclear Fuel Expense, at the time of such sale.

**158.1 Allowance Inventory.**

A. This account shall include the cost of allowances owned by the
utility and not withheld by the Environmental Protection Agency. See §
1767.15 (u) and Account 158.2, Allowances Withheld.

B. This account shall be credited and Account 509, Allowances, shall be
debited concurrent with the monthly emission of sulfur dioxide.

C. Separate subdivisions of this account shall be maintained so as to
separately account for those allowances usable in the current year and
in each subsequent year. The underlying records of these subdivisions
shall be maintained in sufficient detail so as to identify each
allowance included; the origin of each allowance; and the acquisition
cost, if any, of the allowance.

**158.2 Allowances Withheld.**

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

B. The inventory cost of the allowances released by the Environmental
Protection Agency for use by the utility shall be transferred to Account
158.1, Allowance Inventory.

C. The underlying records of this account shall be maintained in
sufficient detail so as to identify each allowance included; the origin
of each allowance; and the acquisition cost, if any, of the allowances.

**163 Stores Expense Undistributed.**

A. This account shall include the cost of supervision, labor, and
expenses incurred in the operation of general storerooms, including
purchasing, storage, handling, and distribution of materials and
supplies.

B. This account shall be cleared by adding to the cost of materials and
supplies issued, a suitable loading charge which will distribute the
expense equitably over stores issues. The balance in the account at the
close of the year shall not exceed the amount of stores expenses
reasonably attributable to the inventory of materials and supplies,
exclusive of fuel, as any amount applicable to fuel costs should be
included in

Account 152, Fuel Stock Expenses Undistributed.

[Items]{.underline}

[Labor]{.underline}:

1\. Inspecting and testing materials and supplies when not assignable to
specific items.

2\. Unloading from shipping facility and placing in storage.

3\. Supervision of purchasing and stores department to extent assignable
to materials handled through stores.

4\. Getting materials from stock and in readiness to go out.

5\. Inventorying stock received or stock on hand by stores employees but
not including inventories by general department employees as part of
internal or general audits.

6\. Purchasing department activities in checking material needs,
investigating sources of supply, analyzing prices, preparing and placing
orders, and related activities to extent applicable to materials handled
through stores. (Optional: Purchasing department expenses may be
included in administrative and general expenses.)

7\. Maintaining stores equipment.

8\. Cleaning and tidying storerooms and stores offices.

9\. Keeping stock records, including the recording and posting of
material receipts and issues and maintaining inventory records of stock.

10\. Collecting and handling scrap materials in stores.

[Supplies and Expenses]{.underline}:

1\. Adjustments of inventories of materials and supplies but not
including large differences which can readily be assigned to important
classes of materials and equitably distributed among the accounts to
which such classes of materials have been charged since the previous
inventory.

2\. Cash and other discounts not practically assignable to specific
materials.

3\. Freight and express charges when not assignable to specific items.

4\. Heat, light, and power for storerooms and store offices.

5\. Brooms, brushes, sweeping compounds and other supplies used in
cleaning and tidying storerooms and stores offices.

6\. Injuries and damages.

7\. Insurance on materials and supplies and on stores equipment.

8\. Losses due to breakage, leakage, evaporation, fire or other causes,
less credits for amounts received from insurance, transportation
companies, or others in compensation of such losses.

9\. Postage, printing, stationery, and office supplies.

10\. Rent of storage space and facilities.

11\. Communication service.

12\. Excise and other similar taxes not assignable to specific
materials.

13\. Transportation expense on inward movement of stores and on transfer
between storerooms but not including charges on materials recovered from
retirements which shall be accounted for as part of the cost of removal.

Note: A physical inventory of each class of materials and supplies shall
be made at least every two years.

**165 Prepayments.**

A. This account shall include amounts representing prepayments of
insurance, rents, taxes, interest, and miscellaneous items, and shall be
kept or supported in such manner as to disclose the amount of each class
of prepayment.

B. Account 165 shall be subaccounted as follows:

165.1 Prepayments - Insurance

165.2 Other Prepayments

**171 Interest and Dividends Receivable.**

This account shall include the amount of interest on bonds, mortgages,
notes, commercial paper, loans, open accounts, and deposits, the payment
of which is reasonably assured, and the amount of dividends declared or
guaranteed on stocks owned.

Note A: Interest which is not subject to current settlement shall not be
included herein but in the account in which the associated principle is
recorded.

Note B: Interest and dividends receivable from associated companies
shall be included in Account 146, Accounts Receivable from Associated
Companies.

**172 Rents Receivable.**

This account shall include rents receivable or accrued on property
rented or leased by the utility to others.

Note: Rents receivable from associated companies shall be included in
Account 146, Accounts Receivable from Associated Companies.

**173 Accrued Utility Revenues.**

At the option of the utility, the estimated amount accrued for service
rendered, but not billed at the end of any accounting period, may be
included herein. If accruals are made for unbilled revenues, accruals
shall also be made for unbilled expenses, such as the purchase of
energy.

**174 Miscellaneous Current and Accrued Assets.**

This account shall include the book cost of all other current and
accrued assets, appropriately designated and supported so as to show the
nature of each asset included herein.

[Deferred Debits]{.underline}

**181 Unamortized Debt Expense.**

This account shall include expenses related to the issuance or
assumption of debt securities. Amounts recorded in this account shall be
amortized over the life of each respective issue under a plan which will
distribute the amount equitably over the life of the security. The
amortization shall be on a monthly basis, and the amounts thereof shall
be charged to Account 428, Amortization of Debt Discount and Expense.
Any unamortized amounts outstanding at the time that the related debt is
prematurely reacquired shall be accounted for as indicated in § 1767.15
(q).

**182.1 Extraordinary Property Losses.**

A. When authorized or directed by RUS, this account shall include
extraordinary losses which could not reasonably have been anticipated
and which are not covered by insurance or other provisions, such as
unforeseen damages to property.

B. Application to RUS for permission to use this account shall be
accompanied by a statement giving a complete explanation with respect to
the items which it is proposed to include herein, the period over which,
and the accounts to which it is proposed to write off the charges, and
other pertinent information.

**182.2 Unrecovered Plant and Regulatory Study Costs.**

A. This account shall include: (1) nonrecurring costs of studies and
analyses mandated by regulatory bodies related to plants in service,
transferred from Account 183, Preliminary Survey and Investigations
Charges, and not resulting in construction; and (2) when authorized by
RUS, significant unrecovered costs of plant facilities where
construction has been cancelled or which have been prematurely retired.

B. This account shall be credited and Account 407, Amortization of
Property Losses, Unrecovered Plant and Regulatory Study Costs, shall be
debited over the period specified by RUS.

C. Any additional costs incurred, relative to the cancellation or
premature retirement, may be included in this account and amortized over
the remaining period of the original amortization period. Should any
gains or recoveries be realized relative to the cancelled or prematurely
retired plant, such amounts shall be used to reduce the unamortized
amount of the costs recorded herein.

D. In the event that the recovery of costs included herein is disallowed
in the rate proceedings, the disallowed costs shall be charged to
Account 426.5, Other Deductions, in the year of such disallowance.

**182.3 Other Regulatory Assets.**

A. This account shall include the amounts of regulatory-created assets,
not includable in other accounts, resulting from the ratemaking actions
of regulatory agencies. (See the definition of regulatory assets and
liabilities.)

B. The amounts included in this account are to be established by those
charges which would have been included in net income determinations in
the current period under the general requirements of the Uniform System
of Accounts but for it being probable that such items will be included
in a different period(s) for purposes of developing the rates that the
utility is authorized to charge for its utility services. When specific
identification of the particular source of a regulatory asset cannot be
made, such as in plant phase-ins, rate moderation plans, or rate
levelization plans, Account 407.4, Regulatory Credits, shall be
credited. The amounts recorded in this account are generally to be
charged, concurrently with the recovery of the amounts in rates, to the
same account that would have been charged if included in income when
incurred, except all regulatory assets established through the use of
Account 407.4 shall be charged to Account 407.3, Regulatory Debits,
concurrent with the recovery of the amounts in rates.

C. If rate recovery of all or part of an amount included in this account
is disallowed, the disallowed amount shall be charged to Account 426.5,
Other Deductions, or Account 435, Extraordinary Deductions, in the year
of the disallowance.

D. The records supporting the entries to this account shall be kept so
that the utility can furnish full information as to the nature and
amount of each regulatory asset included in this account, including
justification for inclusion of such amounts in this account.

**183 Preliminary Survey and Investigation Charges.**

A. This account shall be charged with all expenditures for preliminary
surveys, plans, and investigations made for the purpose of determining
the feasibility of utility projects under contemplation. If construction
results, this account shall be credited and the appropriate utility
plant account charged. If the work is abandoned, the charge shall be
made to Account 426.5, Other Deductions, or to the appropriate operating
expense account.

B. This account shall also include costs of studies and analyses
mandated by regulatory bodies related to plant in service. If
construction results from such studies, this account shall be credited
and the appropriate utility plant account charged with an equitable
portion of such study costs directly attributable to new construction.
The portion of such study costs not attributable to new construction or
the entire cost if construction does not result shall be charged to
Account 182.2, Unrecovered Plant and Regulatory Study Costs, or the
appropriate operating expense account. The costs of such studies
relative to plant under construction shall be included directly in

Account 107, Construction Work in Progress - Electric.

C. The records supporting the entries to this account shall be so kept
that the utility can furnish complete information as to the nature and
the purpose of the survey, plans, or investigations, and the nature and
amounts of the several charges.

Note: The amount of preliminary survey and investigation charges
transferred to utility plant shall not exceed the expenditures which may
reasonably be determined to contribute directly and immediately and
without duplication to utility plant.

**184 Clearing Accounts.**

A. This caption shall include undistributed balances in clearing
accounts at the date of the balance sheet. Balances in clearing account
shall be substantially cleared not later than the end of the calendar
year unless items held therein relate to a future period.

B. Account 184 shall be subaccounted as follows:

184.1 Transportation Expense - Clearing

184.2 Clearing Accounts - Other

**185 Temporary Facilities.**

This account shall include amounts shown by work orders for plant
installed for temporary use in utility service for periods of less than
one year. Such work orders shall be charged with the cost of temporary
facilities and credited with payments received from customers and net
salvage realized on removal of the temporary facilities. Any net credit
or debit resulting shall be cleared to Account 451, Miscellaneous
Service Revenues.

**186 Miscellaneous Deferred Debits.**

This account shall include all debits not elsewhere provided for, such
as miscellaneous work in progress, and unusual or extraordinary
expenses, not included in other accounts, which are in process of
amortization and items the proper final disposition of which is
uncertain.

**187 Deferred Losses from Disposition of Utility Plant.**

This account shall include losses from the sale or other disposition of
property previously recorded in Account 105, Electric Plant Held for
Future Use, under the provisions of Paragraphs B, C, and D thereof,
where such losses are significant and are to be amortized over a period
of 5 years, unless otherwise authorized by RUS. The amortization of the
amounts in this account shall be made by debits to Account 411.7, Losses
from Disposition of Utility Plant. (See Account 105, Electric Plant Held
for Future Use.)

**188 Research, Development, and Demonstration Expenditures.**

A. This account shall be charged with the cost of all expenditures
coming within the meaning of Research, Development, and Demonstration
(RD&D) of this USoA (See § 1767.10 (a) (34)) except those expenditures
properly chargeable to Account 107, Construction Work in Progress -
Electric.

B. Costs that are minor or of a general or recurring nature shall be
transferred from this account to the appropriate operating expense
function or if such costs are common to the overall operations or cannot
be feasibly allocated to the various operating accounts, such costs
shall be recorded in

Account 930.2, Miscellaneous General Expenses.

C. In certain instances, a company may incur large and significant
research, development, and demonstration expenditures which are
nonrecurring and which would distort the annual research, development,
and demonstration charges for the period. In such a case, the portion of
such amounts that cause the distortion may be amortized to the
appropriate operating expense account over a period not to exceed 5
years unless otherwise authorized by RUS.

D. The entries in this account must be so maintained as to show
separately each project along with complete detail of the nature and
purpose of the research, development, and demonstration project together
with the related costs.

**189 Unamortized Loss on Reacquired Debt.**

This account shall include the losses on long-term debt reacquired or
redeemed. The amounts in this account shall be amortized in accordance
with § 1767.15 (q).

**190 Accumulated Deferred Income Taxes.**

A. This account shall be debited and Account 411.1, Provision for
Deferred Income Taxes - Credit, Utility Operating Income, or Account
411.2, Provision for Deferred Income Taxes - Credit, Other Income and
Deductions, as appropriate, shall be credited with an amount equal to
that by which income taxes payable for the year are higher because of
the inclusion of certain items in income for tax purposes, which items
for general accounting purposes will not be fully reflected in the
utility\'s determination of annual net income until subsequent years.

B. This account shall be credited and Account 410.1, Provision for
Deferred Income Taxes, Utility Operating Income, or Account 410.2,
Provision for Deferred Income Taxes, Other Income and Deductions, as
appropriate, shall be debited with an amount equal to that by which
income taxes payable for the year are lower because of prior payment of
taxes as provided by

Paragraph A above, because of difference in timing for tax purposes of
particular items of income or income deductions from that recognized by
the utility for general accounting purposes. Such credit to this account
and debit to Account 410.1 or

Account 410.2 shall, in general, represent the effect on taxes payable
in the current year of the smaller amount of book income recognized for
tax purposes as compared to the amount recognized in the utility\'s
current accounts with respect to the item or class of items for which
deferred tax accounting by the utility was authorized by RUS.

C. Vintage year records with respect to entries to this account, as
described above, and the account balance, shall be so maintained as to
show the factor of calculation with respect to each annual amount of the
item or class of items for which deferred tax accounting by the utility
is utilized.

D. The utility is restricted in its use of this account to the purpose
set forth above. It shall not make use of the balance in this account or
any portion thereof except as provided in the text of this account,
without prior approval of RUS. Any remaining deferred tax account
balance with respect to an amount for any prior year\'s tax deferral,
the amortization of which or other recognition in the utility\'s income
accounts has been completed, or other disposition made, shall be debited
to

Account 410.1, Provision for Deferred Income Taxes, Utility Operating
Income, or Account 410.2, Provision for Deferred Income Taxes, Other
Income and Deductions, as appropriate, or otherwise disposed of as RUS
may authorize or direct. (See § 1767.15 (t).)

**§ 1767.19 LIABILITIES AND OTHER CREDITS:**

The liabilities and other credit accounts identified in this section
shall be used by all RUS borrowers.

LIABILITIES AND OTHER CREDITS

[Margins and Equities]{.underline}

200 Memberships

200.1 Memberships Issued

200.2 Memberships Subscribed But Unissued

201 Patronage Capital

201.1 Patronage Capital Credits

201.2 Patronage Capital Assignable

202 \[Reserved\]

203 \[Reserved\]

204 \[Reserved\]

205 \[Reserved\]

206 \[Reserved\]

207 \[Reserved\]

208 Donated Capital

209 \[Reserved\]

210 \[Reserved\]

211 Consumers\' Contributions for Debt Service

212 \[Reserved\]

213 \[Reserved\]

214 \[Reserved\]

215 Appropriated Margins

215.1 Unrealized Gains and Losses - Debt and Equity

Securities

216 \[Reserved\]

216.1 Unappropriated Undistributed Subsidiary Earnings

217 Retired Capital Credits - Gain

218 Capital Gains and Losses

219 Other Margins and Equities

219.1 Operating Margins

219.2 Nonoperating Margins

219.3 Other Margins

219.4 Other Margins and Equities - Prior Periods

[Long-Term Debt]{.underline}

221 Bonds

222 Reacquired Bonds

223 Advances from Associated Companies

224 Other Long-Term Debt

224.1 Long-Term Debt - RUS Construction Loan Contract

224.2 RUS Loan Contract - Construction - Debit

224.3 Long-Term Debt - RUS Construction Notes Executed

224.4 RUS Notes Executed - Construction - Debit

224.5 Interest Accrued - Deferred - RUS Construction

224.6 Advance Payments Unapplied - RUS Long-Term Debt - Debit

224.7 Long-Term Debt - Installation Loan Contract

224.8 RUS Loan Contract - Installation - Debit

224.9 Long-Term Debt - Installation Notes Executed

224.10 RUS Notes Executed - Installation - Debit

224.11 Other Long-Term Debt - Subscriptions

224.12 Other Long-Term Debt - Supplemental Financing

224.13 Supplemental Financing Notes Executed - Debit

224.14 Other Long-Term Debt - Miscellaneous

224.15 Notes Executed - Other - Debit

224.16 Long-Term Debt - RUS Economic Development Notes

Executed

224.17 RUS Notes Executed - Economic Development - Debit

225 Unamortized Premium on Long-Term Debt

226 Unamortized Discount on Long-Term Debt - Debit

[Other Noncurrent Liabilities]{.underline}

227 Obligations Under Capital Leases - Noncurrent

228.1 Accumulated Provision for Property Insurance

228.2 Accumulated Provision for Injuries and Damages

228.3 Accumulated Provision for Pensions and Benefits

228.4 Accumulated Miscellaneous Operating Provisions

229 Accumulated Provision for Rate Refunds

[Current and Accrued Liabilities]{.underline}

231 Notes Payable

232 Accounts Payable

232.1 Accounts Payable - General

232.2 Accounts Payable - RUS Construction

232.3 Accounts Payable - Other

233 Notes Payable to Associated Companies

234 Accounts Payable to Associated Companies

235 Customer Deposits

236 Taxes Accrued

236.1 Accrued Property Taxes

236.2 Accrued U.S. Social Security Tax - Unemployment

236.3 Accrued U.S. Social Security Tax - F.I.C.A.

236.4 Accrued State Social Security Tax - Unemployment

236.5 Accrued State Sales Tax - Consumers

236.6 Accrued Gross Revenue or Gross Receipts Tax

236.7 Accrued Taxes - Other

237 Interest Accrued

238 Patronage Capital and Patronage Refunds Payable

238.1 Patronage Capital Payable

238.2 Patronage Refunds Payable

239 Matured Long-Term Debt

240 Matured Interest

241 Tax Collections Payable

242 Miscellaneous Current and Accrued Liabilities

242.1 Accrued Rentals

242.2 Accrued Payroll

242.3 Accrued Employees\' Vacations and Holidays

242.4 Accrued Insurance

242.5 Other Current and Accrued Liabilities

243 Obligations Under Capital Leases - Current

[Deferred Credits]{.underline}

251 \[Reserved\]

252 Customer Advances for Construction

253 Other Deferred Credits

253.1 Other Deferred Credits - Consumers\' Energy Prepayments

254 Other Regulatory Liabilities

255 Accumulated Deferred Investment Tax Credits

256 Deferred Gains from Disposition of Utility Plant

257 Unamortized Gain on Reacquired Debt

281 Accumulated Deferred Income Taxes - Accelerated

Amortization Property

282 Accumulated Deferred Income Taxes - Other Property

283 Accumulated Deferred Income Taxes - Other

LIABILITIES AND OTHER CREDITS

[Margins and Equities]{.underline}

**200 Memberships.**

A. This account shall include the total amount of memberships issued and
subscribed.

B. Account 200 shall be subaccounted as follows:

200.1 Memberships Issued

200.2 Memberships Subscribed But Unissued

**200.1 Memberships Issued.**

A. This account shall include the face value of membership certificates
outstanding. A detailed record shall be maintained to show for each
member, the name, address, date of payment, amount paid, and certificate
number.

B. If membership fees are applied against energy bills, this account
shall be debited for the full amount of the membership with the
offsetting credit to the appropriate accounts receivable, and to
accounts payable for any refundable amounts. Any balances that cannot be
refunded, due to inability to locate the member or because of bylaw
restrictions, shall be credited to Account 208, Donated Capital. If
determination of the ultimate disposition of the fees cannot be made
immediately, the amount involved should be transferred to Account 253,
Other Deferred Credits, until the determination is made.

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

**200.2 Memberships Subscribed But Unissued.**

This account shall include the face value of memberships subscribed for
but not issued. When certificates are issued, the amount of the
memberships shall be transferred to Account 200.1, Memberships Issued.

**201 Patronage Capital.**

A. This account shall include the total amount of patronage capital
assignable and assigned.

B. Account 201 shall be subaccounted as follows:

201.1 Patronage Capital Credits

201.2 Patronage Capital Assignable

**201.1 Patronage Capital Credits.**

A. This account shall include the amounts of patronage capital which
have been assigned to individual patrons. A subsidiary record,
\"patronage capital ledger,\" shall be maintained, containing an account
for each patron who has furnished capital under a capital credits plan.

B. When the return of patrons\' capital to individual patrons has been
authorized by the board of directors (or trustees), the amounts
authorized shall be transferred to

Account 238.1, Patronage Capital Payable. (See also Account 217, Retired
Capital Credits-Gain.)

**201.2 Patronage Capital Assignable.**

A. This account shall include all amounts transferred from
Account 219.1, Operating Margins; Account 219.2, Nonoperating Margins;
Account 219.3, Other Margins; and

Account 219.4, Other Margins and Equities - Prior Periods, which are
assignable to individual patrons\' capital accounts.

B. Entries to this account shall be made so as to clearly disclose the
nature and source of each transaction. Amounts so assigned shall be
transferred to Account 201.1, Patronage Capital Credits.

**202 \[Reserved\]**

**203 \[Reserved\]**

**204 \[Reserved\]**

**205 \[Reserved\]**

**206 \[Reserved\]**

**207 \[Reserved\]**

**208 Donated Capital.**

This account shall include credits arising from forfeiture of membership
fees and from donations of capital not otherwise provided for. Entries
to this account shall be made so as to clearly disclose the nature and
source of each transaction.

**209 \[Reserved\]**

**210 \[Reserved\]**

**211 Consumers\' Contributions for Debt Service.**

This account shall include the amounts billed to consumers as
\"amortization charges\" for the purpose of servicing long-term debt.

**212 \[Reserved\]**

**213 \[Reserved\]**

**214 \[Reserved\]**

**215 Appropriated Margins.**

This account shall include all amounts appropriated as reserves from
margins. The account shall be so maintained as to show the amount of
each separate reserve and the nature and amounts of the debits and
credits thereto.

**215.1 Unrealized Gains and Losses - Debt and Equity Securities.**

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

**216 \[Reserved\]**

**216.1 Unappropriated Undistributed Subsidiary Earnings.**

This account shall include the balances, either debit or credit, of
undistributed retained earnings of subsidiary companies since their
acquisition. When dividends are received from subsidiary companies
relating to amounts included in this account, this account shall be
debited and Account 219.2, Nonoperating Margins, credited.

**217 Retired Capital Credits - Gain.**

A. This account shall include credits resulting from the retirement of
patronage capital through settlement of individual patrons\' capital
credits at less than 100 percent of the capital assigned to the patron.
The portion of patronage capital not returned to the patrons, under such
settlements, shall be debited to Account 201.1, Patronage Capital
Credits, and credited to this account.

B. This account shall also include amounts representing patronage
capital authorized to be retired to patrons who cannot be located.
Returned checks issued for retirements of patronage capital, after an
appropriate waiting period, shall be credited to this account, and a
record maintained adequate to enable the cooperative to make payment to
the patron if and when a claim has been established by the consumer.

**218 Capital Gains and Losses.**

No entries shall be made to this account without the prior approval of
REA unless it is to distribute past capital gains and losses as capital
credits or to eliminate accumulated capital losses in conformance with
the bylaws of the cooperative.

**219 Other Margins and Equities.**

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

B. Account 219 shall be subaccounted as follows:

219.1 Operating Margins

219.2 Nonoperating Margins

219.3 Other Margins

219.4 Other Margins and Equities - Prior Periods

**219.1 Operating Margins.**

This account shall be debited or credited with the balances arising from
transactions, the details of which have been recorded in Accounts 400,
401, 402, 403, 404, 405, 406, 407, 408, 412, 413, 414, 423, 424, 425,
426, 427, 428, and 431. Accounts 400, 401, and 402 are control accounts
and, at the option of the borrower may or may not be used. If they are
not used, the detailed revenue and expense accounts shall be closed
directly to this account.

**219.2 Nonoperating Margins.**

This account shall be debited or credited with the balances arising from
transactions, the details of which have been recorded in Accounts 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 account unless it is to distribute or
eliminate prior balances in conformance with the bylaws of the
cooperative.

**219.4 Other Margins and Equities - Prior Periods.**

A. This account shall include significant nonrecurring transactions
relating to prior periods. To be significant, the transaction must be of
sufficient magnitude to justify redistribution of patronage capital
credits already allocated for such prior periods.

B. All entries to this account must receive REA prior approval.

C. These transactions are limited to items to (1) correct an error in
the financial statements of a prior year, and (2) make adjustments that
result from realization of income tax benefits of preacquisition
operating loss carryforwards. This account shall also include the
related income taxes (state and Federal) on items included herein.

D. Amounts in this account shall be transferred at the end of the year
to Account 219.1, Operating Margins, or

Account 219.2, Nonoperating Margins, as appropriate. Also, at the end of
the year, these amounts should be transferred from Account 219.1, or
Account 219.2 to Account 201.2, Patronage Capital Assignable, when
appropriate.

[Long-Term Debt]{.underline}

**221 Bonds.**

This account shall include, in a separate subdivision for each class and
series of bonds, the face value of the actually issued and unmatured
bonds which have not been retired or cancelled; also the face value of
such bonds issued by others, the payment of which has been assumed by
the utility.

**222 Reacquired Bonds.**

A. This account shall include the face value of bonds actually issued or
assumed by the utility and reacquired by it and not retired or
cancelled. The account for reacquired debt shall not include securities
which are held by trustees in sinking or other funds.

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

**223 Advances from Associated Companies.**

A. This account shall include the face value of notes payable to
associated companies and the amount of open book accounts representing
advances from associated companies. It does not include notes and open
accounts representing indebtedness subject to current settlement which
are includible in Account 233, Notes Payable to Associated Companies, or
Account 234, Accounts Payable to Associated Companies.

B. The records supporting the entries to this account shall be so kept
that the utility can furnish complete information concerning each note
and open account.

**224 Other Long-Term Debt.**

A. This account shall include, until maturity, all long-term debt not
otherwise provided for. This covers such items as receivers\'
certificates, real estate mortgages executed or assumed, assessments for
public improvements, notes and unsecured certificates of indebtedness
not owned by associated companies, receipts outstanding for long-term
debt, and other obligations maturing more than one year from the date of
issue or assumption.

B. Account 224 shall be subaccounted as follows:

224.1 Long-Term Debt - REA Construction Loan Contract

224.2 REA Loan Contract - Construction - Debit

224.3 Long-Term Debt - REA Construction Notes Executed

224.4 REA Notes Executed - Construction - Debit

224.5 Interest Accrued - Deferred - REA Construction

224.6 Advance Payments Unapplied - REA Long-Term Debt - Debit

224.7 Long-Term Debt - Installation Loan Contract

224.8 REA Loan Contract - Installation - Debit

224.9 Long-Term Debt - Installation Notes Executed

224.10 REA Notes Executed - Installation - Debit

224.11 Other Long-Term Debt - Subscriptions

224.12 Other Long-Term Debt - Supplemental Financing

224.13 Supplemental Lender Notes Executed - Debit

224.14 Other Long-Term Debt - Miscellaneous

224.15 Notes Executed - Other - Debit

224.16 Long-Term Debt - REA Economic Development Notes Executed

224.17 REA Notes Executed - Economic Development - Debit

**224.1 Long-Term Debt - REA Construction Loan Contract.**

A. This account shall include the contractual obligation to REA on
construction loans covered by loan contract but not by executed notes.

B. This account is to be used at the option of the borrower.

**224.2 REA Loan Contract - Construction - Debit.**

A. This account shall include the total loans (for construction
purposes) which are covered by loan contract but not by executed notes.

B. This account is to be used at the option of the borrower.

**224.3 Long-Term Debt - REA Construction Notes Executed.**

This account shall include the contractual liability to REA on
construction notes executed. Records shall be maintained to show
separately for each class of obligation all details as to the date of
obligation, date of maturity, interest date and rate, and securities for
the obligation.

**224.4 REA Notes Executed - Construction - Debit.**

This account shall include the total amount of the unadvanced REA loans
for construction purposes, which are covered by executed notes. When
advances are received from the REA for construction, this account shall
be credited and Account 131.2, Cash - Construction Fund - Trustee,
debited with the amount of cash advanced.

**224.5 Interest Accrued - Deferred - REA Construction.**

This account shall include interest on REA construction obligations
deferred by the terms of mortgage notes or extension agreements.

**224.6 Advance Payments Unapplied - REA Long-Term Debt - Debit.**

A. This account shall include principal payments on mortgage notes paid
in advance of the date due and not applied to a specific note. Also,
include in this account interest savings which are accrued and added to
the advance payment unapplied.

B. At such time as these payments are applied to a specific note or loan
balances, this account shall be credited and the long-term debt account
debited with the amount so applied.

**224.7 Long-Term Debt - Installation Loan Contract.**

A. This account shall include the contractual obligation to REA on
installation loans covered by loan contract but not covered by executed
notes.

B. This account is to be used at the option of the borrower.

**224.8 REA Loan Contract - Installation - Debit.**

A. This account shall include the total loans for installation purposes
which are covered by loan contract but not by executed notes.

B. This account is to be used at the option of the borrower.

**224.9 Long-Term Debt - Installation Notes Executed.**

This account shall include the contractual liability to REA on
installation notes executed.

**224.10 REA Notes Executed - Installation - Debit.**

This account shall include the total amount of unadvanced loans for
installation purposes, which are covered by executed note. When advances
are received from REA, this account shall be credited and Account 131.3,
Cash - Installation Loan and Collection Fund, debited with the amount of
cash advanced.

**224.11 Other Long-Term Debt - Subscriptions.**

This account shall include the contractual obligation to purchase CFC
Capital Term Certificates and any other similar obligation relating to
supplemental financing.

**224.12 Other Long-Term Debt - Supplemental Financing.**

This account shall include the contractual liability to CFC or other
supplemental lenders for that portion of funds borrowed which mature in
more than one year.

**224.13 Supplemental Financing Notes Executed - Debit.**

This account shall include the total amount of the unadvanced loans for
construction purposes, which are covered by executed notes to CFC or
other supplemental lender. This account shall be debited with the face
amount of notes executed. When advances are received from a supplemental
lender for construction, this account shall be credited and
Account 131.2, Cash - Construction Fund - Trustee, debited with the
amount of cash advanced.

**224.14 Other Long-Term Debt - Miscellaneous.**

This account shall include the amount of other long-term debt not
provided for elsewhere.

**224.15 Notes Executed - Other - Debit.**

This account shall include the total amount of the unadvanced loans for
construction purposes, which are covered by executed notes to others not
included in the foregoing accounts. When advances are received from such
supplemental lender, this account shall be credited and Account 131.2,
Cash - Construction Fund - Trustee, debited with the amount of cash so
advanced.

**224.16 Long-Term Debt - REA Economic Development Notes Executed.**

This account shall include the contractual liability to REA on rural
economic development notes executed. Records shall be maintained to show
separately for each class of obligation all details as to the date of
obligation, date of maturity, interest date and rate, and securities for
the obligation.

**224.17 REA Notes Executed - Economic Development - Debit.**

This account shall include the total amount of the unadvanced REA loans
for rural economic development purposes, which are covered by executed
notes. When advances are received from the REA for rural economic
development projects, this account shall be credited and Account 131.12,
Cash - General - Economic Development Funds, debited with the amount of
cash advanced.

**225 Unamortized Premium on Long-Term Debt.**

A. This account shall include the excess of the cash value of
consideration received over the face value upon the issuance or
assumption of long-term debt securities.

B. Amounts recorded in this account shall be amortized over the life of
each respective issue under a plan which will distribute the amount
equitably over the life of the security. The amortization shall be on a
monthly basis, with the amounts thereof to be credited to Account 429,
Amortization of Premium on Debt - Credit. (See § 1767.15 (q).)

**226 Unamortized Discount on Long-Term Debt - Debit.**

A. This account shall include the excess of the face value of long-term
debt securities over the cash value of consideration received therefor,
related to the issue or assumption of all types and classes of debt.

B. Amounts recorded in this account shall be amortized over the life of
the respective issues under a plan which will distribute the amount
equitably over the life of the securities. The amortization shall be on
a monthly basis, wit the amounts thereof charged to Account 428,
Amortization of Debt Discount and Expense. (See § 1767.15 (q).)

[Other Noncurrent Liabilities]{.underline}

**227 Obligations Under Capital Leases - Noncurrent.**

This account shall include the portion not due within one year, of the
obligations recorded for the amounts applicable to leased property
recorded as assets in Account 101.1, Property Under Capital Leases;
Account 120.6, Nuclear Fuel Under Capital Leases; or Account 121,
Nonutility Property.

SPECIAL INSTRUCTIONS

No amounts shall be credited to Accounts 228.1 through 228.4 unless
authorized by a regulatory authority or authorities to be collected in
the utility\'s rates.

**228.1 Accumulated Provision for Property Insurance.**

A. This account shall include amounts reserved by the utility for losses
through accident, fire, flood, or other hazards to its own property or
property leased from others, not covered by insurance. The amounts
charged to Account 924, Property Insurance, or other appropriate
accounts to cover such risks shall be credited to this account. A
schedule of risks covered shall be maintained, giving a description of
the property involved, the character of the risks covered and the rates
used.

B. Charges shall be made to this account for losses covered, not to
exceed the account balance. Details of these charges shall be maintained
according to the year the casualty occurred which gave rise to the loss.

**228.2 Accumulated Provision for Injuries and Damages.**

A. This account shall be credited with amounts charged to Account 925,
Injuries and Damages, or other appropriate accounts, to meet the
probable liability, not covered by insurance, for deaths or injuries to
employees and others and for damages to property neither owned nor held
under lease by the utility.

B. When liability for any injury or damage is admitted by the utility
either voluntarily or because of the decision of a court or other lawful
authority, such as a workmen\'s compensation board, the admitted
liability shall be charged to this account and credited to the
appropriate current liability account. Details of these charges shall be
maintained according to the year the casualty occurred which gave rise
to the loss.

Note: Recoveries or reimbursements for losses charged to this account
shall be credited hereto; the cost of repairs to property of others, if
provided for herein, shall be charged to this account.

**228.3 Accumulated Provision for Pensions and Benefits.**

A. This account shall include provisions made by the utility and amounts
contributed by employees for pensions, accident and death benefits,
savings, relief, hospital, and other provident purposes, where the funds
are included in the assets of the utility either in general or in
segregated fund accounts.

B. Amounts paid by the utility for the purpose for which this liability
is established shall be charged hereto.

C. A separate account shall be kept for each kind of provision included
herein.

Note: If employee pension or benefit plan funds are not included among
the assets of the utility but are held by outside trustees, payments
into such funds, or accruals therefor, shall not be included in this
account.

**228.4 Accumulated Miscellaneous Operating Provisions.**

A. This account shall include all operating provisions which are not
provided for elsewhere.

B. This account shall be maintained in such a manner as to show the
amount of each separate provision and the nature and amounts of the
debits and credits thereto.

Note: This account includes only provisions as may be created for
operating purposes and does not include any reservations of income, the
credits for which should be recorded in Account 215, Appropriated
Margins.

**229 Accumulated Provision for Rate Refunds.**

A. This account shall be credited with amounts charged to Account 449.1,
Provision for Rate Refunds, to provide for estimated refunds where the
utility is collecting amounts in rates subject to refund.

B. When a refund of any amount recorded in this account is ordered by a
regulatory authority, such amount shall be charged hereto and credited
to Account 242, Miscellaneous Current and Accrued Liabilities.

C. Records supporting the entries to this account shall be kept so as to
identify each amount recorded by the respective rate filing docket
number.

[Current and Accrued Liabilities]{.underline}

Current and accrued liabilities are those obligations which have either
matured or which become due within 1 year from the date thereof; except
however, bonds, receivers\' certificates, and similar obligations which
shall be classified as long-term debt until date of maturity; accrued
taxes, such as income taxes, which shall be classified as accrued
liabilities even though payable more than one year from date;
compensation awards, which shall be classified as current liabilities
regardless of date due; and minor amounts payable in installments which
may be classified as current liabilities. If a liability is due more
than 1 year from the date of issuance or assumption by the utility, it
shall be credited to a long-term debt account appropriate for the
transaction; except however, the current liabilities previously
mentioned.

**231 Notes Payable.**

This account shall include the face value of all notes, drafts,
acceptances, or other similar evidences of indebtedness, payable on
demand or within a time not exceeding 1 year from the date of issue, to
other than associated companies.

**232 Accounts Payable.**

A. This account shall include all amounts payable by the utility within
1 year, which are not provided for in other accounts.

B. Account 232 shall be subaccounted as follows:

232.1 Accounts Payable - General

232.2 Accounts Payable - REA Construction

232.3 Accounts Payable - Other

**233 Notes Payable to Associated Companies.**

This account shall include amounts owing to associated companies on
notes, drafts, acceptances, or other similar evidences of indebtedness
payable on demand or not more than 1 year from the date of issue or
creation.

Note: Notes which are includible in Account 223, Advances from
Associated Companies, shall be excluded from this account.

**234 Accounts Payable to Associated Companies.**

This account shall include amounts owing to associated companies on open
accounts payable on demand.

Note: Accounts which are includible in Account 223, Advances from
Associated Companies, shall be excluded from this account.

**235 Customer Deposits.**

This account shall include all amounts deposited with the utility by its
customers as security for the payment of bills.

**236 Taxes Accrued.**

A. This account shall be credited with the amount of taxes accrued
during the accounting period, corresponding debits being made to the
appropriate accounts for tax charges. Such credits may be based upon
estimates, but from time to time during the year as the facts become
known, the amount of the periodic credits shall be adjusted so as to
include, as nearly as can be determined in each year, the taxes
applicable thereto. Any amount representing a prepayment of taxes
applicable to the period subsequent to the date of the balance sheet,
shall be shown under Account 165, Prepayments.

B. If accruals for taxes are found to be insufficient or excessive,
correction therefor shall be made through current tax accruals.

C. Accruals for taxes shall be based upon the net amounts payable after
credit for any discounts, and shall not include any amounts for interest
on tax deficiencies or refunds. Interest received on refunds shall be
credited to Account 419, Interest and Dividend Income, and interest paid
on deficiencies shall be charged to Account 431, Other Interest Expense.

D. Account 236 shall be subaccounted as follows:

236.1 Accrued Property Taxes

236.2 Accrued U.S. Social Security Tax - Unemployment

236.3 Accrued U.S. Social Security Tax - F.I.C.A.

236.4 Accrued State Social Security Tax - Unemployment

236.5 Accrued State Sales Tax - Consumers

236.6 Accrued Gross Revenue or Gross Receipts Tax

236.7 Accrued Taxes - Other

**237 Interest Accrued.**

This account shall include the amount of interest accrued but not
matured on all liabilities of the utility not including, however,
interest which is added to the principal of the debt on which incurred.
Supporting records shall be maintained so as to show the amount of
interest accrued on each obligation.

**238 Patronage Capital and Patronage Refunds Payable.**

A. This account shall include the total amount of patronage capital
authorized to be returned and paid to patrons.

B. Account 238 shall be subaccounted as follows:

238.1 Patronage Capital Payable

238.2 Patronage Refunds Payable

**238.1 Patronage Capital Payable.**

This account shall include the amount of patronage capital which has
been authorized to be returned to the patron.

**238.2 Patronage Refunds Payable.**

This account shall include the amount of patronage refunds which have
been authorized to be paid to patrons.

**239 Matured Long-Term Debt.**

This account shall include the amount of long-term debt (including any
obligation for premiums) matured and unpaid, without specific agreement
for extension of the time of payment and bonds called for redemption but
not presented.

**240 Matured Interest.**

This account shall include the amount of matured interest on long-term
debt or other obligations of the utility at the date of the balance
sheet unless such interest is added to the principal of the debt on
which incurred.

**241 Tax Collections Payable.**

This account shall include the amount of taxes collected by the utility
through payroll deductions or otherwise, pending transmittal of such
taxes to the proper taxing authority.

Note: Do not include liabilities for taxes assessed directly against the
utility which are accounted for as part of the utility\'s own tax
expense.

**242 Miscellaneous Current and Accrued Liabilities.**

A. This account shall include the amount of all other current and
accrued liabilities not provided for elsewhere appropriately designated
and supported so as to show the nature of each liability.

B. Account 242 shall be subaccounted as follows:

242.1 Accrued Rentals

242.2 Accrued Payroll

242.3 Accrued Employees\' Vacations and Holidays

242.4 Accrued Insurance

242.5 Other Current and Accrued Liabilities

**242.1 Accrued Rentals.**

This account shall include unpaid joint use pole rentals and other
rentals. The records supporting the entries to this account shall be
maintained so as to show for each class of rental, the amount accrued,
the basis for the accrual, the accounts to which charged, and the amount
of rentals paid.

**242.2 Accrued Payroll.**

This account shall include the accrued liability for salaries and wages
at the end of an accounting period for which the appropriate expense or
other accounts have been charged. This account is to be used whether
salaries and wages are paid on a weekly, semimonthly, or monthly basis.

**242.3 Accrued Employees\' Vacations and Holidays.**

This account shall include the liability for accrued wages for
employees\' vacation, holidays, and sick leave.

**242.4 Accrued Insurance.**

A. This account shall most commonly be used in case of workmen\'s
compensation and public liability insurance for recording the excess
amounts of earned premium over the advance premiums. Earned premiums are
computed each month by applying the insurance rates to the actual
payrolls.

B. Until the amount of the advance premiums is exhausted, the earned
premium is credited to Account 165, Prepayments. Earned premiums in
excess of the advance premiums are credited to this account.

**242.5 Other Current and Accrued Liabilities.**

This account shall include current and accrued liabilities not provided
for elsewhere.

**243 Obligations Under Capital Leases - Current.**

This account shall include the portion, due within 1 year, of the
obligations recorded for the amounts applicable to leased property
recorded as assets in Account 101.1, Property Under Capital Leases;
Account 120.6, Nuclear Fuel Under Capital Leases; or Account 121,
Nonutility Property.

[Deferred Credits]{.underline}

**251 \[Reserved\]**

**252 Customer Advances for Construction.**

This account shall include consumer advances for construction which are
to be refunded either wholly or in part. When a customer is refunded the
entire amount to which he is entitled, according to the agreement or
rule under which the advance was made, the balance, if any, remaining in
this account shall be credited to the respective plant accounts.

**253 Other Deferred Credits.**

This account shall include advance billings and receipts and other
deferred credit items, not provided for elsewhere, including amounts
which cannot be entirely cleared or disposed of until additional
information has been received.

**253.1 Other Deferred Credits - Consumers\' Energy Prepayments.**

This account shall include the amount of advance payments made by
consumers in connection with electric service.

**254 Other Regulatory Liabilities.**

A. This account shall include the amounts of regulatory liabilities, not
includible in other accounts, imposed on the utility by the ratemaking
actions of regulatory agencies.

B. The amounts included in this account are to be established by those
credits which would have been included in net income determinations in
the current period under the general requirements of the Uniform System
of Accounts but for it being probable that: (1) such items will be
included in a different period(s) for purposes of developing the rates
that the utility is authorized to charge for its utility services; or
(2) refunds to customers, not provided for in other accounts, will be
required. When specific identification of the particular source of the
regulatory liability cannot be made or when the liability arises from
revenues collected pursuant to tariffs on file at a regulatory agency,
Account 407.3, Regulatory Debits, shall be debited. The amounts recorded
in this account generally are to be credited to the same account that
would have been credited if included in income when earned except: (1)
all regulatory liabilities established through the use of Account 407.3
shall be credited to Account 407.4, Regulatory Credits; and (2) in the
case of refunds, a cash account or other appropriate account should be
credited when the obligation is satisfied.

C. If it is later determined that the amounts recorded in this account
will not be returned to customers through rates or refunds, such amounts
shall be credited to Account 421, Miscellaneous Nonoperating Income, or
Account 434, Extraordinary Income, as appropriate, in the year such
determination is made.

D. The records supporting the entries to this account shall be kept in
such a manner that the utility can furnish full information as to the
nature and amount of each regulatory liability included in this account,
including justification for inclusion of such amounts in this account.

**255 Accumulated Deferred Investment Tax Credits.**

A. This account shall be credited with all investment tax credits
deferred by companies which have elected to follow deferral accounting,
partial or full, rather than recognizing, in the income statement, the
total benefits of the tax credit as realized. After such election, a
company may not transfer amounts from this account, except as authorized
herein and in Account 411.4, Investment Tax Credit Adjustments, Utility
Operations; Account 411.5, Investment Tax Credit Adjustments, Nonutility
Operations; and Account 420, Investment Tax Credits, or with approval of
REA.

B. Where the company\'s accounting provides that investment tax credits
are to be passed on to customers, this account shall be debited and
Account 411.4 credited with a proportionate amount determined in
relation to the average useful life of electric utility property to
which the tax credits relate or such lesser period of time as allowed by
a regulatory agency having rate jurisdiction. If, however, the deferral
procedure provides that investment tax credits are not to be passed on
to customers, the proportionate restorations to income shall be credited
to Account 420.

C. Subdivisions of this account, by department, shall be maintained for
deferred investment tax credits that are related to nonelectric utility
or other operations. Contra entries affecting such account subdivisions
shall be appropriately recorded in Account 413, Expenses of Electric
Plant Leased to Others; or Account 414, Other Utility Operating Income.
Use of deferral or nondeferral accounting procedures adopted for
nonelectric utility or other operations are to be followed on a
consistent basis.

D. Separate records for electric and nonelectric utility or other
operations shall be maintained identifying the properties giving rise to
the investment tax credits for each year with the weighted-average
service life of such properties and any unused balances of such credits.
Such records are not necessary unless the tax credits are deferred.

**256 Deferred Gains from Disposition of Utility Plant.**

This account shall include gains from the sale or other disposition of
property previously recorded in Account 105, Electric Plant Held for
Future Use, under the provisions of Paragraphs B, C, and D thereof,
where such gains are significant and are to be amortized over a period
of 5 years, unless otherwise authorized by RUS. The amortization of the
amounts in this account shall be made by credits to Account 411.6, Gains
from Disposition of Utility Plant. (See Account 105, Electric Plant Held
for Future Use.)

**257 Unamortized Gain on Reacquired Debt.**

This account shall include the amounts of discount realized upon
reacquisition or redemption of long-term debt. The amounts in this
account shall be amortized in accordance with § 1767.15 (q).

SPECIAL INSTRUCTIONS

[Accumulated Deferred Income Taxes]{.underline}

Before using the deferred tax accounts provided below, refer to

§ 1767.15 (r), Comprehensive Interperiod Income Tax Allocation.

The text of these accounts are designed primarily to cover deferrals of
Federal income taxes. However, they are also to be used when making
deferrals of state and local income taxes. Utilities and licensees
which, in addition to an electric utility department, have another
utility department, gas or water and nonutility property, and which have
deferred taxes on income with respect thereto shall separately classify
such deferrals in the accounts provided below so as to allow ready
identification of items relating to each utility deductions.

**281 Accumulated Deferred Income Taxes - Accelerated**

**Amortization Property.**

A. This account shall include tax deferrals resulting from adoption of
the principles of comprehensive interperiod tax allocation described in
§ 1767.15 (s) that relate to property for which the utility has availed
itself of the use of accelerated (5-year) amortization of (1) certified
defense facilities as permitted by Section 168 of the Internal Revenue
Code, and (2) certified pollution control facilities as permitted by
Section 169 of the Internal Revenue Code.

B. This account shall be credited and Account 410.1, Provision for
Deferred Income Taxes, Utility Operating Income, or Account 410.2,
Provision for Deferred Income Taxes, Other Income and Deductions, as
appropriate, shall be debited with tax effects related to property
described in Paragraph A above where taxable income is lower than pretax
accounting income due to differences between the periods in which
revenue and expense transactions affect taxable income and the periods
in which they enter into the determination of pretax accounting income.

C. This account shall be debited and Account 411.1, Provision for
Deferred Income Taxes - Credit, Utility Operating Income, or Account
411.2, Provision for Deferred Income Taxes-Credit, Other Income and
Deductions, as appropriate, shall be credited with taxes related to
property described in Paragraph A above where taxable income is higher
than pretax accounting income due to differences between the periods in
which revenue and expense transactions affect taxable income and the
periods in which they enter into the determination of pretax accounting
income.

D. The utility is restricted in its use of this account to the purposes
set forth above. It shall not transfer the balance in this account or
any portion thereof to retained earnings or make any use thereof except
as provided in the text of this account without prior approval of RUS.
Upon the disposition by sale, exchange, transfer, abandonment, or
premature retirement of plant on which there is a related balance
therein, this account shall be charged with an amount equal to the
related income tax expense, if any, arising from such disposition and
Account 411.1, Provision for Deferred Income Taxes - Credit, Utility
Operating Income, or Account 411.2, Provision for Deferred Income
Taxes - Credit, Other Income and Deductions, as appropriate, shall be
credited. When the remaining balance, after consideration of any related
income tax expense, is less than \$25,000, this account shall be charged
and Account 411.1 or Account 411.2, as appropriate, credited with such
balance. If after consideration of any related income tax expense, there
is a remaining amount of \$25,000 or more, RUS shall authorize or direct
how such amount shall be accounted for at the time approval for the
disposition of accounting is granted. When plant is disposed of by
transfer to a wholly owned subsidiary, the related balance in this
account shall also be transferred. When the disposition relates to
retirement of an item or items under a group method of depreciation
where there is no tax effect in the year of retirement, no entries are
required in this account if it can be determined that the related
balances would be necessary to be retained to offset future group item
tax deficiencies.

**282 Accumulated Deferred Income Taxes - Other Property.**

A. This account shall include the tax deferrals resulting from adoption
of the principle of comprehensive interperiod income tax allocation
described in § 1767.15 (r) which are related to all property other than
accelerated amortization property.

B. This account shall be credited and Account 410.1, Provision for
Deferred Income Taxes, Utility Operating Income, or Account 410.2,
Provision for Deferred Income Taxes, Other Income and Deductions, as
appropriate, shall be debited with tax effects related to property
described in Paragraph A above where taxable income is lower than pretax
accounting income due to differences between the periods in which
revenue and expense transactions affect taxable income and the periods
in which they enter into the determination of pretax accounting income.

C. This account shall be debited and Account 411.1, Provision for
Deferred Income Taxes - Credit, Utility Operating Income, or Account
411.2, Provision for Deferred Income Taxes - Credit, Other Income and
Deductions, as appropriate, shall be credited with tax effects related
to property described in Paragraph A above where taxable income is
higher than pretax accounting income due to differences between the
periods in which revenue and expense transactions affect taxable income
and the periods in which they enter into the determination of pretax
accounting income.

D. The utility is restricted in its use of this account to the purposes
set forth above. It shall not transfer the balance in this account or
any portion thereof to retained earnings or make any use thereof except
as provided in the text of this account without prior approval of RUS.
Upon the disposition by sale, exchange, transfer, abandonment, or
premature retirement of plant on which there is a related balance
herein, this account shall be charged with an amount equal to the
related income tax expense, if any, arising from such disposition and
Account 411.1, Provision for Deferred Income Taxes - Credit, Utility
Operating Income, or Account 411.2, Provision for Deferred Income
Taxes - Credit, Other Income and Deductions, shall be credited. When the
remaining balance after consideration of any related tax expenses, is
less than \$25,000, this account shall be charged and Account 411.1 or
Account 411.2, as appropriate, credited with such balance. If after
consideration any related income tax expense, there a remaining amount
of \$25,00 or more, RUS shall authorize or direct how such amount shall
be accounted for at the time approval for the disposition of accounting
is granted. When plant is disposed of by transfer to a wholly owned
subsidiary, the related balance in this account shall also be
transferred. When the disposition relates to retirement of an item or
items under a group method of depreciation where there is no tax effect
in the year of retirement, no entries are required in this account if it
can be determined that the related balance would be necessary to be
retained to offset future group item tax deficiencies.

**283 Accumulated Deferred Income Taxes - Other.**

A. This account shall include all credit tax deferrals resulting from
the adoption of the principles of comprehensive interperiod income tax
allocation described in § 1767.15 (r) other than those deferrals which
are includible in Account 281, Accumulated Deferred Income Taxes -
Accelerated Amortization Property, and Account 282, Accumulated Deferred
Income Taxes - Other Property.

B. This account shall be credited and Account 410.1, Provision for
Deferred Income Taxes, Utility Operating Income, or Account 410.2,
Provision for Deferred Income Taxes, Other Income and Deductions, as
appropriate, shall be debited with tax effects related to items
described in Paragraph A above where taxable income is lower than pretax
accounting income due to differences between the periods in which
revenue and expense transactions affect taxable income and the periods
in which they enter into the determination of pretax accounting income.

C. This account shall be debited and Account 411.1, Provision for
Deferred Income Taxes - Credit, Utility Operating Income or Account
411.2, Provision for Deferred Income Taxes - Credit, Other Income and
Deductions, as appropriate, shall be credited with tax effects related
to items described in

Paragraph A above where taxable income is higher than pretax accounting
income due to differences between the periods in which revenue and
expense transactions affect taxable income and the periods in which they
enter into the determination of pretax accounting income.

D. Records with respect to entries to this account, as described above,
and the account balance, shall be so maintained as to show the factors
of calculation with respect to each annual amount of the item or class
of items.

E. The utility is restricted in its use of this account to the purposes
set forth above. It shall not transfer the balance in the account or any
portion thereof to retained earnings or to any other account or make any
use thereof except as provided in the text of this account, without
prior approval of RUS. Upon the disposition by sale, exchange, transfer,
abandonment, or premature retirement of items on which there is a
related balance herein, this account shall be charged with an amount
equal to the related income tax effect, if any, arising from such
disposition and Account 411.1, Provision For Deferred Income Taxes -
Credit, Utility Operating Income, or

Account 411.2, Provision For Deferred Income Taxes-Credit, Other Income
and Deductions, as appropriate, shall be credited. When the remaining
balance, after consideration of any related tax expenses, is less than
\$25,000, this account shall be charged and Account 411.1 or
Account 411.2, as appropriate, credited with such balance. If after
consideration of any related income tax expense, there is a remaining
amount of \$25,000 or more, RUS shall authorize or direct how such
amount shall be accounted for at the time approval for the disposition
of accounting is granted.

When plant is disposed of by transfer to a wholly owned subsidiary, the
related balance in this account shall also be transferred. When the
disposition relates to retirement of an item or items under a group
method of depreciation where there is no tax effect in the year of
retirement, no entries are required in this account if it can be
determined that the related balance would be necessary to be retained to
offset future group item tax deficiencies.

**§ 1767.20 PLANT ACCOUNTS:**

The plant accounts identified in this section shall be used by all RUS
borrowers.

[Intangible Plant]{.underline}

301 Organization

302 Franchises and Consents

303 Miscellaneous Intangible Plant

[Steam Production Plant]{.underline}

310 Land and Land Rights

311 Structures and Improvements

312 Boiler Plant Equipment

313 Engines and Engine Driven Generators

314 Turbogenerator Units

315 Accessory Electric Equipment

316 Miscellaneous Power Plant Equipment

[Nuclear Production Plant]{.underline}

320 Land and Land Rights

321 Structures and Improvements

322 Reactor Plant Equipment

323 Turbogenerator Units

324 Accessory Electric Equipment

325 Miscellaneous Power Plant Equipment

[Hydraulic Production Plant]{.underline}

330 Land and Land Rights

331 Structures and Improvements

332 Reservoirs, Dams and Waterways

333 Water Wheels, Turbines and Generators

334 Accessory Electric Equipment

335 Miscellaneous Power Plant Equipment

336 Roads, Railroads and Bridges

[Other Production Plant]{.underline}

340 Land and Land Rights

341 Structures and Improvements

342 Fuel Holders, Producers and Accessories

343 Prime Movers

344 Generators

345 Accessory Electric Equipment

346 Miscellaneous Power Plant Equipment

[Transmission Plant]{.underline}

350 Land and Land Rights

351 \[Reserved\]

352 Structures and Improvements

353 Station Equipment

354 Tower and Fixtures

355 Poles and Fixtures

356 Overhead Conductors and Devices

357 Underground Conduit

358 Underground Conductors and Devices

359 Roads and Trails

[Distribution Plant]{.underline}

360 Land and Land Rights

361 Structures and Improvements

362 Station Equipment

363 Storage Battery Equipment

364 Poles, Towers and Fixtures

365 Overhead Conductors and Devices

366 Underground Conduit

367 Underground Conductors and Devices

368 Line Transformers

369 Services

370 Meters

371 Installations on Customers\' Premises

372 Leased Property on Customers\' Premises

373 Street Lighting and Signal Systems

[General Plant]{.underline}

389 Land and Land Rights

390 Structures and Improvements

391 Office Furniture and Equipment

392 Transportation Equipment

393 Stores Equipment

394 Tools, Shop and Garage Equipment

395 Laboratory Equipment

396 Power Operated Equipment

397 Communication Equipment

398 Miscellaneous Equipment

399 Other Tangible Property

[Intangible Plant]{.underline}

**301 Organization.**

This account shall include all fees paid to Federal or state governments
for the privilege of incorporation and expenditures incident to
organizing the corporation, partnership, or other enterprise and putting
it into readiness to do business.

[Items]{.underline}

1\. Cost of obtaining certificates authorizing an enterprise to engage
in the public-utility business.

2\. Fees and expenses for incorporation.

3\. Fees and expenses for mergers or consolidations.

4\. Office expenses incident to organizing the utility.

5\. Stock and minute books and corporate seal.

Note A: This account shall not include any discounts upon securities
issued or assumed; nor shall it include any costs incident to
negotiating loans, selling bonds or other evidences of debt or expenses
in connection with the authorization, issuance, or sale of capital
stock.

Note B: Exclude from this account and include in the appropriate expense
account the cost of preparing and filing papers in connection with the
extension of the term of incorporation unless the first organization
costs have been written off. When charges are made to this account for
expenses incurred in mergers, consolidations, or reorganizations,
amounts previously included herein or in similar accounts in the books
of the companies concerned shall be excluded from this account.

**302 Franchises and Consents.**

A. This account shall include amounts paid to the Federal Government, to
a state or to a political subdivision thereof in consideration for
franchises, consents, water power licenses, or certificates, running in
perpetuity or for a specified term of more than one year, together with
necessary and reasonable expenses incident to procuring such franchises,
consents, water power licenses, or certificates of permission and
approval, including expenses of organizing and merging separate
corporations, where statutes require, solely for the purpose of
acquiring franchises.

B. If a franchise, consent, water power license, or certificate is
acquired by assignment, the charge to this account in respect thereof
shall not exceed the amount paid therefor by the utility to the
assignor, nor shall it exceed the amount paid by the original grantee,
plus the expense of acquisition to such grantee. Any excess of the
amount actually paid by the utility over the amount above specified
shall be charged to

Account 426.5, Other Deductions.

C. When any franchise has expired, the book cost thereof shall be
credited hereto and charged to Account 426.5, Other Deductions, or to
Account 111, Accumulated Provision for Amortization of Electric Utility
Plant, as appropriate.

D. Records supporting this account shall be kept so as to show
separately the book cost of each franchise or consent.

Note: Annual or other periodic payments under franchises shall not be
included herein but in the appropriate operating expense account.

**303 Miscellaneous Intangible Plant.**

A. This account shall include the cost of patent rights, licenses,
privileges, and other intangible property necessary or valuable in the
conduct of utility operations and not specifically chargeable to any
other account.

B. When any item included in this account is retired or expires, the
book cost thereof shall be credited hereto and charged to Account 426.5,
Other Deductions, or Account 111, Accumulated Provision for Amortization
of Electric Utility Plant, as appropriate.

C. This account shall be maintained in such a manner that the utility
can furnish full information with respect to the amounts included
herein.

[Steam Production Plant]{.underline}

**310 Land and Land Rights.**

This account shall include the cost of land and land rights used in
connection with steam-power generation. (See § 1767.16 (g).)

**311 Structures and Improvements.**

This account shall include the cost, in place, of structures and
improvements used in connection with steam-power generation. (See §
1767.16 (h).)

Note: Include steam production roads and railroads in this account.

**312 Boiler Plant Equipment.**

This account shall include the cost installed of furnaces, boilers, coal
and ash handling and coal preparing equipment, steam and feed water
piping, boiler apparatus, and accessories used in the production of
steam, mercury, or other vapor, to be used primarily for generating
electricity.

[Items]{.underline}

1\. Ash handling equipment, including hoppers, gates, cars, conveyors,
hoists, sluicing equipment, including pumps and motors, sluicing water
pipe and fittings, sluicing trenches and accessories, except sluices
which are a part of a building.

2\. Boiler feed system, including feed water heaters, evaporator
condensers, heater drain pumps, heater drainers, deaerators, and vent
condensers, boiler feed pumps, surge tanks, feed water regulators, feed
water measuring equipment, and all associated drives.

3\. Boiler plant cranes and hoists and associated drives.

4\. Boilers and equipment, including boilers and baffles, economizers,
superheaters, soot blowers, foundations and settings, water walls,
arches, grates, insulation, blowdown system, drying out of new boilers,
also associated motors or other power equipment.

5\. Breeching and accessories, including breeching, dampers, soot
spouts, hoppers and gates, cinder eliminators, breeching insulation,
soot blowers and associated motors.

6\. Coal handling and storage equipment, including coal towers, coal
lorries, coal cars, locomotives and tracks when devoted principally to
the transportation of coal, hoppers, downtakes, unloading and hoisting
equipment, skip hoists and conveyors, weighing equipment, magnetic
separators, cable ways, and housings and supports for coal handling
equipment.

7\. Draft equipment, including air preheaters and accessories, induced
and forced draft fans, air ducts, combustion control mechanisms, and
associated motors or other power equipment.

8\. Gas-burning equipment, including holders, burner equipment and
piping, and control equipment.

9\. Instruments and devices, including all measuring, indicating, and
recording equipment for boiler plant service together with mountings and
supports.

10\. Lighting systems.

11\. Oil-burning equipment, including tanks, heaters, pumps with drive,
burner equipment and piping, and control equipment.

12\. Pulverized fuel equipment, including pulverizers, accessory motors,
primary air fans, cyclones and ducts, dryers, pulverized fuel bins,
pulverized fuel conveyors and equipment, burners, burner piping, priming
equipment, air compressors, and motors.

13\. Stacks, including foundations and supports, stack steel and
ladders, stack brickwork, stack concrete, stack lining, stack painting
(first), when set on separate foundations, independent of substructures
or superstructures of building.

14\. Station piping, including pipe, valves, fittings, separators,
traps, desuperheaters, hangers, excavation, and covering for station
piping system, including all steam, condensate, boiler feed and water
supply piping, but not condensing water, plumbing, building heating,
oil, gas, air piping or piping specifically provided for in Account 313.

15\. Stoker or equivalent feeding equipment, including stokers and
accessory motors, clinker grinders, fans and motors.

16\. Ventilating equipment.

17\. Water purification equipment, including softeners and accessories,
evaporators and 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 discharge pipes, and
tunnels not a part of a building.

19\. Wood fuel equipment, including hoppers, fuel hogs and accessories,
elevators and conveyors, bins and gates, spouts, measuring equipment and
associated drives.

Note: When the system for supplying boiler or condenser water is
elaborate, and when it includes a dam, reservoir, canal, pipe line,
cooling ponds, or where gas or oil is used as a fuel for producing steam
and is supplied through a pipe line system owned by the utility, the
cost of such special facilities shall be charged to a subdivision of
Account 311, Structures and Improvements.

**313 Engines and Engine Driven Generators.**

This account shall include the cost installed of steam engines,
reciprocating or rotary, and their associated auxiliaries; and
engine-driven main generators, except turbogenerator units.

[Items]{.underline}

1\. Air cleaning and cooling apparatus, including blowers, drive
equipment, air ducts, not a part of building, louvers, pumps, and hoods.

2\. Belting, shafting, pulleys, and reduction gearing.

3\. Circulating pumps, including connections between condensers and
intake and discharge tunnels.

4\. Cooling system, including towers, pumps, tank, and piping.

5\. Condensers, including condensate pumps, air and vacuum pumps,
ejector unloading valves and vacuum breakers, expansion devices, and
screens.

6\. Cranes and hoists, including items wholly 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 outlast the apparatus for which provided.

10\. Generators-Main, a.c. or d.c., including field rheostats and
connections for self-excited units, and excitation systems when
identified 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 testing equipment.

15\. Piping-main exhaust, including connections between generator and
condenser and between condenser and hotwell.

16\. Piping-main stream, including connections from main throttle valve
to turbine inlet.

17\. Platforms, railings, steps, and gratings appurtenant to apparatus
listed herein.

18\. Pressure oil system, including accumulators, pumps, piping, and
motors.

19\. Throttle and inlet valve.

20\. Tunnels, intake and discharge, for condenser system, when not a
part of a structure.

21\. Water screens and motors.

**314 Turbogenerator Units.**

This account shall include the cost installed of main turbine-driven
units and accessory equipment used in generating electricity by steam.

[Items]{.underline}

1\. Air leaning and cooling apparatus, including blowers, drive
equipment, air ducts not a part of building, louvers, pumps, and hoods.

2\. Circulating pumps, including connections between condensers and
intake and discharge tunnels.

3\. Condensers, including condensate pumps, air and vacuum pumps,
ejectors, unloading valves and vacuum breakers, expansion devices, and
screens.

4\. Generator hydrogen, gas piping, and detrainment equipment.

5\. Cooling system, including towers, pumps, tanks, and piping.

6\. Cranes and hoists, including items wholly identified with items
listed herein.

7\. Excitation system, when identified with main generating units.

8\. Fire-extinguishing systems.

9\. Foundations and settings, especially constructed for and not
expected to outlast the apparatus for which provided.

10\. Governors.

11\. Lighting systems.

12\. Lubricating systems, including gauges, filters, water separators,
tanks, pumps, piping, and motors.

13\. Mechanical meters, including gauges, recording instruments,
sampling and testing equipment.

14\. Piping-main exhaust, including connections between turbogenerator
and condenser and between condenser and hotwell.

15\. Piping-main steam, including connections from main throttle valve
to turbine inlet.

16\. Platforms, railings, steps, and gratings appurtenant to apparatus
listed herein.

17\. Pressure oil systems, including accumulators, pumps, and piping
motors.

18\. Steelwork, specially constructed for apparatus listed herein.

19\. Throttle and inlet valve.

20\. Tunnels, intake and discharge, for condenser system, when not a
part of structure, and water screens.

21\. Turbogenerators-main, including turbine and generator, field
rheostats and electric 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 installed of auxiliary generating
apparatus, conversion equipment, and equipment used primarily in
connection with the control and switching of electric energy produced by
steam power, and the protection of electric circuits and equipment,
except electric motors used to drive equipment included in other
accounts. Such motors shall be included in the account in which the
equipment with which they are associated is included.

[Items]{.underline}

1\. Auxiliary generators, including boards, compartments, switching
equipment, control equipment, and connections to auxiliary power bus.

2\. Excitation system, including motor, turbine and dual-drive exciter
sets and rheostats, storage batteries and charging equipment, circuit
breakers, panels and accessories, knife switches and accessories, surge
arresters,

instrument shunts, conductors and conduit, special supports for conduit,
generator field and exciter switch panels, exciter bus tie panels,
generator and exciter rheostats and special housing and protective
screens.

3\. Generator main connections, including oil circuit breakers and
accessories, disconnecting switches and accessories, operating
mechanisms and interlocks, current transformers, potential transformers,
protective relays, isolated panels and equipment, conductors and
conduit, special supports for generator main leads, grounding switch,
and special housings and protective screens.

4\. Station buses including main, auxiliary, transfer, synchronizing and
fault ground buses, including oil circuit breakers and accessories,
disconnecting switches and accessories, operating mechanisms and
interlocks, reactors and accessories, voltage regulators and
accessories, compensators, resistors, starting transformers, current
transformers, potential transformers, protective relays, storage
batteries and charging equipment, isolated panels and equipment,
conductors and conduit, special supports, special housings, concrete
pads, general station grounding system, special fire-extinguishing
system, and test equipment.

5\. Station control system, including station switchboards with panel
wiring, panels with instruments and control equipment only, panels with
switching equipment mounted or mechanically connected, truck-type boards
complete, cubicles, station supervisory control boards, generator and
exciter signal stands, temperature recording devices, frequency-control
equipment, master clocks, watt-hour meters and synchronoscope in the
turbine room, station totalizing wattmeter, boiler-room load indicator
equipment, storage batteries, panels and charging sets, instrument
transformers for supervisory metering, conductors and conduit, special
supports for conduit, switchboards, batteries, special housing for
batteries, protective screens, and doors.

Note A: Do not include in this account transformers and other equipment
used for changing the voltage or frequency of electricity for the
purposes of transmission or distribution.

Note B: When any item of equipment listed herein is used wholly to
furnish power to equipment included in another account, its cost shall
be included in such other account.

**316 Miscellaneous Power Plant Equipment.**

This account shall include the cost installed of miscellaneous equipment
in and about the steam generating plant devoted to general station use,
and which is not properly includible in any of the foregoing steam-power
production accounts.

[Items]{.underline}

1\. Compressed air and vacuum cleaning systems, including tanks,
compressors, exhausters, air filters, and piping.

2\. Cranes and hoisting equipment, including cranes, cars, crane rails,
monorails, and hoists with electric and mechanical connections.

3\. Fire-extinguishing equipment for general station use.

4\. Foundations and settings specially constructed for and not expected
to outlast the apparatus for which provided.

5\. Locomotive cranes not includible elsewhere.

6\. Locomotives not includible elsewhere.

7\. Marine equipment, including boats and barges.

8\. Miscellaneous belts, pulleys, and countershafts.

9\. Miscellaneous equipment, including atmospheric and weather
indicating devices, intrasite communication equipment, laboratory
equipment, signal systems, callophones, emergency whistles and sirens,
fire alarms, insect-control equipment, and other similar equipment.

10\. Railway cars not includible elsewhere.

11\. Refrigerating systems, including compressors, pumps, and cooling
coils.

12\. Station maintenance equipment, including lathes, shapers, planers,
drill presses, hydraulic presses, and grinders with motors, shafting,
hangers, and pulleys.

13\. Ventilating equipment, including items wholly identified with
apparatus listed herein.

Note: When any item of equipment listed herein is wholly used in
connection with equipment included in another account, its cost shall be
included in such other account.

[Nuclear Production Plant]{.underline}

**320 Land and Land Rights.**

This account shall include the cost of land and land rights used in
connection with nuclear power generation. (See § 1767.16 (g).)

**321 Structures and Improvements.**

This account shall include the cost, in place, of structures and
improvements used and useful in connection with nuclear power
generation. (See § 1767.16 (h).)

Note: Include vapor containers and nuclear production roads and
railroads in this account.

**322 Reactor Plant Equipment.**

This account shall include the installed cost of reactors, reactor fuel
handling and storage equipment, pressurizing equipment, coolant charging
equipment, purification and discharging equipment, radioactive waste
treatment and disposal equipment, boilers, steam and feed water piping,
reactor and boiler apparatus and accessories and other reactor plant
equipment used in the production of steam to be used primarily for
generating electricity, including auxiliary superheat boilers and
associated equipment in systems which change temperatures or pressure of
steam from the reactor system.

[Items]{.underline}

1\. Auxiliary superheat boilers and associated fuel storage handling
preparation and burning equipment. (See

Account 312, Boiler Plant Equipment, for items, but exclude water
supply, water flow lines, and steam lines, as well as other equipment
not strictly within the superheat function.)

2\. Boiler feed system, including feed water heaters, evaporator
condensers, heater drain pumps, heater drainers, deaerators, and vent
condensers, boiler feed pumps, surge tanks, feed water regulators, feed
water measuring equipment, and all associated drivers.

3\. Boilers and heat exchangers.

4\. Instruments and devices, including all measuring, indicating, and
recording equipment for reactor and boiler plant service together 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 disposal equipment, including tanks,
ion exchangers, incinerators, condensers, chimneys, and diluting fans
and pumps.

9\. Foundations and settings, especially constructed for and not
expected to outlast the apparatus for which provided.

10\. Reactor including shielding, control rods and mechanisms.

11\. Reactor fuel handling equipment, including manipulating and
extraction tools, underwater viewing equipment, seal cutting and welding
equipment, fuel transfer equipment, and fuel disassembly machinery.

12\. Reactor fuel element failure detection system.

13\. Reactor emergency poison container and injection system.

14\. Reactor pressuring and pressure relief equipment, including
pressurizing tanks and immersion heaters.

15\. Reactor coolant or moderator circulation charging, purification,
and discharging equipment, including tanks, pumps, heat exchangers,
demineralizers, and storage.

16\. Station piping, including pipes, valves, fittings, separators,
traps, desuperheaters, hangers, excavation, and covering for station
piping system, including all-reactor coolant, steam, condensate, boiler
feed and water supply piping, but not condensing water, plumbing,
building heating, oil, gas, or air piping.

17\. Ventilating equipment.

18\. Water purification equipment, including softeners, demineralizers
and accessories, evaporators and accessories, heat exchangers, filters,
tanks for filtered or softened water, pumps, and motors.

19\. Water supply systems, including pumps, motors, strainers, raw-water
storage tanks, boiler wash pumps, intake and discharge pipes and tunnels
not a part of a building.

20\. Reactor plant cranes and hoists, and associated drives.

Note: When the system for supplying boiler or condenser water is
elaborate, as when it includes a dam, reservoir, canal, pipe lines, or
cooling ponds, the cost of such special facilities shall be charged to a
subdivision of Account 321, Structures and Improvements.

**323 Turbogenerator Units.**

This account shall include the cost installed of main turbine-driven
units and accessory equipment used in generating electricity by steam.

[Items]{.underline}

1\. Air cleaning and cooling apparatus, including blowers, drive
equipment, air ducts, not a part of building, louvers, pumps, and hoods.

2\. Circulating pumps, including connections between condensers, and
intake and discharge tunnels.

3\. Condensers, including condensate pumps, air and vacuum pumps,
ejectors, unloading valves and vacuum breakers, expansion devices, and
screens.

4\. Generator hydrogen gas piping system and hydrogen detrainment
equipment, and bulk hydrogen gas storage equipment.

5\. Cooling system, including towers, pumps, tanks, and piping.

6\. Cranes and hoists, including items wholly identified with items
listed herein.

7\. Excitation system, when identified with main generating units.

8\. Fire extinguishing systems.

9\. Foundations and settings, especially constructed for and not
expected to outlast the apparatus for which provided.

10\. Governors.

11\. Lighting systems.

12\. Lubricating systems, including gauges, filters, water separators,
tanks, pumps, piping, and motors.

13\. Mechanical meters, including gauges, recording instruments,
sampling and testing equipment.

14\. Piping-main steam, including connections between turbogenerator and
condenser and between condenser and hotwell.

15\. Piping-main steam, including connections from main throttle valve
to turbine inlet.

16\. Platforms, railings, steps, and gratings appurtenant to apparatus
listed herein.

17\. Pressure oil systems, including accumulators, pumps, piping, and
motors.

18\. Steelwork, specially constructed for apparatus listed herein.

19\. Throttle and inlet valve.

20\. Tunnels, intake and discharge, for condenser system, when not a
part of structure, and water screens.

21\. Turbogenerators-main, including turbine and generator, field
rheostats and electric connections for self-excited units.

22\. Water screens and motors.

23\. Moisture separators for turbine steam.

24\. Turbine lubricating oil, initial charge.

**324 Accessory Electric Equipment.**

This account shall include the cost installed of auxiliary generating
apparatus, conversion equipment, and equipment used primarily in
connection with the control and switching of electric energy produced by
nuclear power, and the protection of electric circuits and equipment,
except electric motors used to drive equipment included in other
accounts. Such motors shall be included in the account in which the
equipment with which they are associated is included.

Note: Do not include in this account transformers and other equipment
used for changing the voltage or frequency of electric energy for the
purpose of transmission or distribution.

[Items]{.underline}

1\. Auxiliary generators, including boards, compartments, switching
equipment, control equipment, and connections to auxiliary power bus.

2\. Excitation system, including motor, turbine and dual-drive exciter
sets and rheostats, storage batteries, and charging equipment, circuit
breakers, panels and accessories, knife switches and accessories, surge
arresters, instrument shunts, conductors and conduit, special supports
for conduit, generator field and exciter switch panels, exciter bus tie
panels, generator and exciter rheostats and special housing and
protective screens.

3\. Generator main connections, including oil circuit breakers and
accessories, disconnecting switches and accessories, operating
mechanisms and interlocks, current transformers, potential transformers,
protective relays, isolated panels and equipment, conductors and
conduit, special supports for generator main leads, grounding switch,
special housings and protective screens.

4\. Station buses, including main, auxiliary, transfer, synchronizing
and fault ground buses, including oil circuit breakers and accessories,
operating mechanisms and interlocks, reactors and accessories, voltage
regulators and accessories, compensators, resistors, starting
transformers, current transformers, potential transformers, protective
relays, storage batteries and charging equipment, isolated panels and
equipment, conductors and conduit, special supports, special housings,
concrete pads, general station grounding system, fire-extinguishing
system, and test equipment.

5\. Station control system, including station switchboards with panel
wiring, panels with instruments and control equipment only, panels with
switching equipment mounted or mechanically connected, truck-type boards
complete, cubicles, station supervisory control boards, generator and
exciter signal stands, temperature recording devices, frequency-control
equipment, master clocks, watt-hour meters and synchronoscope in the
turbine room, station totalizing wattmeter, boiler-room load indicator
equipment, storage batteries, panels and charging sets, instrument
transformers for supervisory metering, conductors and conduit, special
supports for conduit, switchboards, batteries, special housing for
batteries, protective screens, and doors.

Note: When any item of equipment listed herein is used wholly to furnish
power to equipment included in another account, its cost shall be
included in such other account.

**325 Miscellaneous Power Plant Equipment.**

This account shall include the cost installed of miscellaneous equipment
in and about the nuclear generating plant devoted to general station
use, which is not properly includible in any of the foregoing
nuclear-power production accounts.

[Items]{.underline}

1\. Compressed air and vacuum cleaning systems, including tanks,
compressors, exhausters, air filters, and piping.

2\. Cranes and hoisting equipment, including cranes, cars, crane rails,
monorails, and hoists with electric and mechanical connections.

3\. Fire-extinguishing equipment for general station and site use.

4\. Foundations and settings specially constructed for and not expected
to outlast the apparatus for which provided.

5\. Locomotive cranes not includible elsewhere.

6\. Locomotives not included elsewhere.

7\. Marine equipment, including boats and barges.

8\. Miscellaneous belts, pulleys, and countershafts.

9\. Miscellaneous equipment, including atmospheric and weather recording
devices, intrasite communication equipment, laboratory equipment, signal
systems, callophones, emergency whistles and sirens, fire alarms,
insect-control equipment, and other similar equipment.

10\. Railway cars or special shipping containers not includible
elsewhere.

11\. Refrigerating systems, including compressors, pumps, and cooling
coils.

12\. Station maintenance equipment, including lathes, shapers, planers,
drill presses, hydraulic presses, and grinders with motors, shafting,
hangers, and pulleys.

13\. Ventilating equipment, including items wholly identified with
apparatus listed herein.

14\. Station and area radiation monitoring equipment.

Note: When any item of equipment listed herein is wholly used in
connection with equipment included in another account, its cost shall be
included in such other account.

[Hydraulic Production Plant]{.underline}

**330 Land and Land Rights.**

This account shall include the cost of land and land rights used in
connection with hydraulic power generation. (See

§ 1767.16 (g).) It shall also include the cost of land and land rights
used in connection with (1) the conservation of fish and wildlife, and
(2) recreation. Separate subaccounts shall be maintained for each of the
above.

**331 Structures and Improvements.**

This account shall include the cost, in place, of structures and
improvements used in connection with hydraulic power generation. (See §
1767.16 (h).) It shall also include the cost, in place, of structures
and improvements used in connection with (1) the conservation of fish
and wildlife, and (2) recreation. Separate subaccounts shall be
maintained for each of the above.

**332 Reservoirs, Dams, and Waterways.**

This account shall include the cost in place of facilities used for
impounding, collecting, storage, diversion, regulation, and delivery of
water used primarily for generating electricity. It shall also include
the cost in place of facilities used in connection with (1) the
conservation of fish and wildlife, and (2) recreation. Separate
subaccounts shall be maintained for each of the above. (See § 1767.16
(h)(3).)

[Items]{.underline}

1\. Bridges and culverts, when not a part of roads or railroads.

2\. Clearing and preparing land.

3\. Dams, including wasteways, spillways, flash boards, spillway gates
with operating and control mechanisms, tunnels, gate houses, and fish
ladders.

4\. Dikes and embankments.

5\. Electric system, including conductors, control system, transformers,
and lighting fixtures.

6\. Excavation, including shoring, bracing, bridging, refill, and
disposal of excess excavated material.

7\. Foundations and settings specially constructed for and not expected
to outlast the apparatus for which provided.

8\. Intakes, including trash racks, rack cleaners, control gates and
valves with operating mechanisms, and intake house when not a part of
station structure.

9\. Platforms, railings, steps, and gratings appurtenant to structures
listed herein.

10\. Power line wholly identified with items included herein.

11\. Retaining walls.

12\. Water conductors and accessories, including canals, tunnels,
flumes, penstocks, pipe conductors, forebays, tailraces, navigation
locks and operating mechanisms, water-hammer and surge tanks, and
supporting trestles and structures.

13\. Water storage reservoirs, including dams, flashboards, spillway
gates and operating mechanisms, inlet and outlet tunnels, regulating
valves and valve towers, silt and mud sluicing tunnels with valve or
gate towers, and all other structures wholly identified with any of the
foregoing items.

**333 Water Wheels, Turbines and Generators.**

This account shall include the cost installed of water wheels and
hydraulic turbines (from connection with penstock or flume to tailrace)
and generators driven thereby devoted to the production of electricity
by water power or for the production of power for industrial or other
purposes, if the equipment used for such purposes is a part of the
hydraulic power plant works.

[Items]{.underline}

1\. Exciter water wheels and turbines, including runners, gates,
governors, pressure regulators, oil pumps, operating mechanisms, scroll
cases, draft tubes, and draft-tube supports.

2\. Fire-extinguishing equipment.

3\. Foundations and settings, specially constructed for and not expected
to outlast the apparatus for which provided.

4\. Generator cooling system, including air cooling and washing
apparatus, air fans and accessories, and air ducts.

5\. Generators-main, a.c. or d.c., including field rheostats and
connections for self-excited units and excitation system when identified
with the generating unit.

6\. Lighting systems.

7\. Lubricating systems, including gauges, filters, tanks, pumps, and
piping.

8\. Main penstock valves and appurtenances, including main valves,
control equipment, bypass valves and fittings, and other accessories.

9\. Main turbines and water wheels, including runners, gates, governors,
pressure regulators, oil pumps, operating mechanisms, scroll cases,
draft tubes, and draft-tube supports.

10\. Mechanical meters and recording instruments.

11\. Miscellaneous water-wheel equipment, including gauges,
thermometers, meters, and other instruments.

12\. Platforms, railings, steps, and gratings appurtenant to apparatus
listed herein.

13\. Scroll case filling and drain system, including gates, pipe,
valves, and fittings.

14\. Water-actuated pressure-regulator system, including tanks and
housings, pipes, valves, fittings and insulators, piers and anchorage,
and excavation and backfill.

**334 Accessory Electric Equipment.**

This account shall include the cost installed of auxiliary generating
apparatus, conversion equipment, and equipment used primarily in
connection with the control and switching of electric energy produced by
hydraulic power and the protection of electric circuits and equipment,
except electric motors used to drive equipment included in other
accounts, such motors being included in the account in which the
equipment with which they are associated is included.

[Items]{.underline}

1\. Auxiliary generators, including boards, compartments, switching
equipment, control equipment, and connections to auxiliary power bus.

2\. Excitation system, including motor, turbine, and dual-drive exciter
sets and rheostats, storage batteries and charging equipment, circuit
breakers, panels and accessories, knife switches and accessories, surge
arresters, instrument shunts, conductors and conduit, special supports
for conduit, generator field and exciter switch panels, exciter bus tie
panels, generator and exciter rheostats and special housings and
protective screens.

3\. Generator main connections, including oil circuit breakers and
accessories, disconnecting switches and accessories, operating
mechanisms and interlocks, current transformers, potential transformers,
protective relays, isolated panels and equipment, conductors and
conduit, special supports for generator main leads, grounding switch,
and special housings and protective screens.

4\. Station buses, including main, auxiliary, transfer, synchronizing,
and fault ground buses, including oil circuit breakers and accessories,
disconnecting switches and accessories, operating mechanisms and
interlocks, reactors and accessories, voltage regulators and
accessories, compensators, resistors starting transformers, current
transformers, potential transformers, protective relays, storage
batteries, and charging equipment, isolated panels and equipment,
conductors and conduit, special supports, special fire-extinguishing
system, and test equipment.

5\. Station control system, including station switchboards with panel
wiring, panels with instruments and control equipment only, panels with
switching equipment mounted for mechanically connected, truck-type
boards complete, cubicles, station supervisory control devices,
frequency control equipment, master clocks, watt-hour meter, station
totalizing watt-meter, storage batteries, panels and charging sets,
instrument transformers for supervisory metering, conductors and
conduit, special supports for conduit, switchboards, batteries, special
housings for batteries, protective screens, and doors.

Note A: Do not include in this account transformers and other equipment
used for changing the voltage or frequency of electricity for the
purpose of transmission or distribution.

Note B: When any item of equipment listed herein is used wholly to
furnish power to equipment, it shall be included in such equipment
account.

**335 Miscellaneous Power Plant Equipment.**

This account shall include the cost installed of miscellaneous equipment
in and about the hydroelectric generating plant which is devoted to
general station use and is not properly includible in other hydraulic
production accounts. It shall also include the cost of equipment used in
connection with (1) the conservation of fish and wildlife, and (2)
recreation. Separate subaccounts shall be maintained for each of the
above.

[Items]{.underline}

1\. Compressed air and vacuum cleaning systems, including tanks,
compressors, exhausters, air filters, and piping.

2\. Cranes and hoisting equipment, including cranes, cars, crane rails,
monorails, and hoists with electric and mechanical connections.

3\. Fire-extinguishing equipment for general station use.

4\. Foundations and settings, specially constructed for and not expected
to outlast the apparatus for which provided.

5\. Locomotive cranes not includible elsewhere.

6\. Locomotives not includible elsewhere.

7\. Marine equipment, including boats and barges.

8\. Miscellaneous belts, pulleys, and countershafts.

9\. Miscellaneous equipment, including atmospheric and weather
indicating devices. Intrasite communication equipment, laboratory
equipment, insect control equipment, signal systems, callophones,
emergency whistles and sirens, fire alarms, and other similar equipment.

10\. Railway cars, not includible elsewhere.

11\. Refrigerating system, including compressors, pumps, and cooling
coils.

12\. Station maintenance equipment, including lathes, shapers, planers,
drill presses, hydraulic presses, and grinders with motors, shafting,
hangers, and pulleys.

13\. Ventilating equipment, including items wholly identified with
apparatus listed herein.

Note: When any item of equipment, listed herein, is used wholly in
connection with equipment included in another account, its cost shall be
included in such other account.

**336 Roads, Railroads, and Bridges.**

This account shall include the cost of roads, railroads, trails,
bridges, and trestles used primarily as production facilities. It also
includes those roads necessary to connect the plant with highway
transportation systems, except when such roads are dedicated to public
use and maintained by public authorities.

[Items]{.underline}

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 connecting employees\' houses with
the power plant, and roads used primarily in connection with fish and
wildlife, and recreation activities, shall not be included herein but in
Account 331, Structures and Improvements.

Note B: The cost of temporary roads and bridges necessary during the
period of construction but abandoned or dedicated to public use upon
completion of the plant, shall not be included herein but shall be
charged to the accounts appropriate for the construction.

[Other Production Plant]{.underline}

**340 Land and Land Rights.**

This account shall include the cost of land and land rights used in
connection with other power generation. (See § 1767.16 (g).)

**341 Structures and Improvements.**

This account shall include the cost in place of structures and
improvements used in connection with other power generation. (See §
1767.16 (h).)

**342 Fuel Holders, Producers, and Accessories.**

This account shall include the cost installed of fuel handling and
storage equipment used between the point of fuel delivery to the station
and the intake pipe through which fuel is directly drawn to the engine,
also the cost of gas producers and accessories devoted to the production
of gas for use in prime movers driving main electric generators.

[Items]{.underline}

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 installed of Diesel or other prime
movers devoted to the generation of electric energy, together with their
auxiliaries.

[Items]{.underline}

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 wholly identified with apparatus
listed herein.

5\. Engines, Diesel, gasoline, gas, or other internal combustion.

6\. Foundations and settings specially constructed for and not expected
to outlast the apparatus 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 testing equipment.

13\. Mufflers.

14\. Piping.

15\. Starting systems, compressed air, or other, including compressors
and drives, tanks, piping, motors, boards and connections, and storage
tanks.

16\. Steelwork, specially constructed for apparatus listed herein.

17\. Waste heat boilers and antifluctuators.

**344 Generators.**

This account shall include the cost installed of Diesel or other power
driven main generators.

[Items]{.underline}

1\. Cranes and hoists, including items wholly identified with such
apparatus.

2\. Fire-extinguishing equipment.

3\. Foundations and settings, specially constructed for and not expected
to outlast the apparatus for which provided.

4\. Generator cooling system, including air cooling and washing
apparatus, air fans and accessories, and air ducts.

5\. Generators-main, a.c. or d.c., including field rheostats and
connections for self-excited units and excitation system when identified
with the generating unit.

6\. Lighting systems.

7\. Lubricating system, including tanks, filters, strainers, pumps,
piping, and coolers.

8\. Mechanical meters and recording instruments.

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 classify them separately, the entire unit may be included
in Account 344, Generators.

**345 Accessory Electric Equipment.**

This account shall include the cost installed of auxiliary generating
apparatus, conversion equipment, and equipment used primarily in
connection with the control and switching of electric energy produced in
other power generating stations, and the protection of electric circuits
and equipment, except electric motors used to drive equipment included
in other accounts. Such motors shall be included in the account in which
the equipment with which it is associated is included.

[Items]{.underline}

1\. Auxiliary generators, including boards, compartments, switching
equipment, control equipment, and connections to auxiliary power bus.

2\. Excitation system, including motor, turbine and dual-drive exciter
sets and rheostats, storage batteries and charging equipment, circuit
breakers, panels and accessories, knife switches and accessories, surge
arresters, instrument shunts, conductors and conduit, special supports
for conduit, generator field and exciter switch panels, exciter bus tie
panels, generator and exciter rheostats and special housings and
protective screens.

3\. Generator main connections, including oil circuit breakers and
accessories, disconnecting switches and accessories, operating
mechanisms and interlocks, current transformers, potential transformers,
protective relays, isolated panels and equipment, conductors and
conduit, special supports for generator main leads, grounding switch,
and special housing and protective screens.

4\. Station control system, including station switchboards with panel
wiring, panels with instruments and control equipment only, panels with
switching equipment mounted or mechanically connected, trunk-type boards
complete, cubicles, station supervisory control boards, generator and
exciter signal stands, temperature-recording devices, frequency control
equipment, master clocks, watt-hour meter, station totalizing wattmeter,
storage batteries, panels and charging sets, instrument transformers for
supervisory metering, conductors and conduit, special supports for
conduit, switchboards, batteries, special housing for batteries,
protective screens, and doors.

5\. Station buses, including main, auxiliary, transfer, synchronizing
and fault ground buses, including oil circuit breakers and accessories,
disconnecting switches and accessories, operating mechanisms and
interlocks, reactors and accessories, voltage regulators and
accessories, compensators, resistors, starting transformers, current
transformers, potential transformers, protective relays, storage
batteries and charging equipment, isolated panels and equipment,
conductors and conduit, special supports, special housings, concrete
pads, general station ground system, special fire-extinguishing system,
and test equipment.

Note A: Do not include in this account transformers and other equipment
used for changing the voltage or frequency of electric energy for the
purpose of transmission or distribution.

Note B: When any item of equipment listed herein is used wholly to
furnish power to equipment included in another account, its cost shall
be included in such other account.

**346 Miscellaneous Power Plant Equipment.**

This account shall include the cost installed of miscellaneous equipment
in and about the other power generating plant, devoted to general
station use, and not properly includible in any of the foregoing other
power production accounts.

[Items]{.underline}

1\. Compressed air and vacuum cleaning systems, including tanks,
compressors, exhausters, air filters, and piping.

2\. Cranes and hoisting equipment, including cranes, cars, crane rails,
monorails, and hoists with electric and mechanical connections.

3\. Fire-extinguishing equipment for general station use.

4\. Foundations and settings, specially constructed for and not expected
to outlast the apparatus for which provided.

5\. Miscellaneous equipment, including atmospheric and weather
indicating devices, intrasite communication equipment, laboratory
equipment, signal systems, callophones, emergency whistles and sirens,
fire alarms, and other similar equipment.

6\. Miscellaneous belts, pulleys, and countershafts.

7\. Refrigerating systems including compressors, pumps, and cooling
coils.

8\. Station maintenance equipment, including lathes, shapers, planters,
drill presses, hydraulic presses, and grinders with motors, shafting,
hangers, or pulleys.

9\. Ventilating equipment, including items wholly identified with
apparatus listed herein.

Note: When any item of equipment, listed herein is used wholly in
connection with equipment included in another account, its cost shall be
included in such other account.

[Transmission Plant]{.underline}

**350 Land and Land Rights.**

This account shall include the cost of land and land rights used in
connection with transmission operations. (See

§ 1767.16 (g).)

**351 \[Reserved\]**

**352 Structures and Improvements.**

This account shall include the cost, in place, of structures and
improvements used in connection with transmission operations. (See §
1767.16 (h).)

**353 Station Equipment.**

This account shall include the cost installed of transforming,
conversion, and switching equipment used for the purpose of changing the
characteristics of electricity in connection with its transmission or
for controlling transmission circuits.

[Items]{.underline}

1\. Bus compartments, concrete, brick, and sectional steel, including
items permanently attached thereto.

2\. Conduit, including concrete and iron duct 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 transformers, indoor and outdoor,
frequency changers, motor generator sets, rectifiers, synchronous
converters, motors, cooling equipment, and associated connections.

5\. Fences.

6\. Fixed and synchronous condensers, including transformers, switching
equipment, blowers, motors and connections.

7\. Foundations and settings, specially constructed for and not expected
to outlast the apparatus for which provided.

8\. General station equipment, including air compressors, motors,
hoists, cranes, test equipment, and ventilating equipment.

9\. Platforms, railings, steps, and gratings appurtenant to apparatus
listed herein.

10\. Primary and secondary voltage connections, including bus runs and
supports, insulators, potheads, lightning arresters, cable and wire runs
from and to outdoor connections or to manholes and the associated
regulators, reactors, resistors, surge arresters, and accessory
equipment.

11\. Switchboards, including meters, relays, and control wiring.

12\. Switching equipment, indoor and outdoor, including oil circuit
breakers and operating mechanisms, truck switches, and disconnect
switches.

13\. Tools and appliances.

**354 Towers and Fixtures.**

This account shall include the cost installed of towers and appurtenant
fixtures used for supporting overhead transmission conductors.

[Items]{.underline}

1\. Anchors, guys, and braces.

2\. Brackets.

3\. Crossarms, including braces.

4\. Excavation, backfill, and disposal of excess 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 installed of transmission line
poles, wood, steel, concrete, or other material, together with
appurtenant fixtures used for supporting overhead transmission
conductors.

[Items]{.underline}

1\. Anchors, head arm and other guys, including guy guards, guy clamps,
strain insulators, and pole plates.

2\. Brackets.

3\. Crossarms and braces.

4\. Excavation and backfill, including disposal 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 installed of overhead conductors and
devices used for transmission purposes.

[Items]{.underline}

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 installed of underground conduit and
tunnels used for housing transmission cables or wires. (See § 1767.16
(n).)

[Items]{.underline}

1\. Conduit, concrete, brick or tile, including iron pipe, fiber pipe,
Murray duct, and standpipe on pole or tower.

2\. Excavation, including shoring, bracing, bridging, backfill, and
disposal of excess excavated material.

3\. Foundations and settings specially constructed for and not expected
to outlast the apparatus for which provided.

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 and sidewalks.

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.

**358 Underground Conductors and Devices.**

This account shall include the cost installed of underground conductors
and devices used for transmission purposes.

[Items]{.underline}

1\. Armored conductors, buried, including insulators, insulating
materials, splices, potheads, and trenching.

2\. Armored conductors, submarine, including insulators, insulating
materials, splices in terminal chambers, and potheads.

3\. Cables in standpipe, including pothead and connection from terminal
chamber of manhole 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, auxiliary air tanks, feeding tanks, terminals, potheads
and connections, and ventilating equipment.

7\. Lead and fabric covered conductors, including 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.

**359 Roads and Trails.**

This account shall include the cost of roads, trails, and bridges used
primarily as transmission facilities.

[Items]{.underline}

1\. Bridges, including foundation piers, girders, 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 construction but abandoned or dedicated to public use upon
completion of the plant, shall be charged to the accounts appropriate
for the construction.

[Distribution Plant]{.underline}

**360 Land and Land Rights.**

This account shall include the cost of land and land rights used in
connection with distribution operations. (See § 1767.16 (g).)

Note: Do not include the cost of permits to erect poles, or towers or to
trim trees in this account. (See Account 364, Poles, Towers and
Fixtures, and Account 365, Overhead Conductors and Devices.)

**361 Structures and Improvements.**

This account shall include the cost, in place, of structures and
improvements used in connection with distribution operations. (See §
1767.16 (h).)

**362 Station Equipment.**

This account shall include the cost installed of station equipment,
including transformer banks, which are used for the purpose of changing
the characteristics of electricity in connection with its distribution.

[Items]{.underline}

1\. Bus compartments, concrete, brick and sectional steel, including
items permanently attached thereto.

2\. Conduit, including concrete and iron duct runs not part of building.

3\. Control equipment, including batteries, battery charging equipment,
transformers, remote relay boards, and connections.

4\. Conversion equipment, indoor and outdoor, frequency changers, motor
generator sets, rectifiers, synchronous converters, motors, cooling
equipment, and associated connections.

5\. Fences.

6\. Fixed and synchronous condensers, including transformers, switching
equipment, blowers, motors, and connections.

7\. Foundations and settings, specially constructed for and not expected
to outlast the apparatus for which provided.

8\. General station equipment, including air compressors, motors,
hoists, cranes, test equipment, and ventilating equipment.

9\. Platforms, railings, steps, and gratings appurtenant to apparatus
listed herein.

10\. Primary and secondary voltage connections, including bus runs and
supports, insulators, potheads, lightning arresters, cable and wire runs
from and to outdoor connections or to manholes and the associated
regulators, reactors, resistors, surge arresters, and accessory
equipment.

11\. Switchboards, including meters, relays, and control wiring.

12\. Switching equipment, indoor and outdoor, including oil circuit
breakers and operating mechanisms, truck switches, disconnect switches.

Note: The cost of rectifiers, series transformers, and other special
station equipment devoted exclusively to street lighting service shall
not be included in this account, but in Account 373, Street Lighting and
Signal Systems.

**363 Storage Battery Equipment.**

This account shall include the cost installed of storage battery
equipment used for the purpose of supplying electricity to meet
emergency or peak demands.

[Items]{.underline}

1\. Batteries, including elements, tanks, and tank insulators.

2\. Battery room connections, including cable or bus runs and
connections.

3\. Battery room flooring, when specially laid for supporting batteries.

4\. Charging equipment, including motor generator sets and other
charging equipment and connections, and cable runs from generator or
station bus to battery room connections.

5\. Miscellaneous equipment, including instruments, and water stills.

6\. Switching equipment, including endcell switches and connections,
boards and panels, used exclusively for battery control, not part of
general station switchboard.

7\. Ventilating equipment, including fans and motors, louvers, and ducts
not part of building.

Note: Storage batteries used for control and general station purposes
shall not be included in this account but in the account appropriate for
their use.

**364 Poles, Towers and Fixtures.**

This account shall include the cost installed of poles, towers, and
appurtenant fixtures used for supporting overhead distribution
conductors and service wires.

[Items]{.underline}

1\. Anchors, head arm, and other guys, including guy guards, guy clamps,
strain insulators, and pole plates.

2\. Brackets.

3\. Crossarms and braces.

4\. Excavation and backfill, including disposal 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 installed of overhead conductors and
devices used for distribution purposes.

[Items]{.underline}

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 shall not be included in this account but in Account 373, Street
Lighting and Signal Systems.

**366 Underground Conduit.**

This account shall include the cost installed of underground conduit and
tunnels used for housing distribution cables or wires.

[Items]{.underline}

1\. Conduit, concrete, brick and tile, including iron pipe, fiber pipe,
Murray duct, and standpipe on pole or tower.

2\. Excavation, including shoring, bracing, bridging, backfill, and
disposal of excess excavated material.

3\. Foundations and settings specially constructed for and not expected
to outlast the apparatus for which constructed.

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, and sidewalks.

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.

Note: The cost of underground conduit used solely for street lighting or
signal systems shall be included in

Account 373, Street Lighting and Signal Systems.

**367 Underground Conductors and Devices.**

This account shall include the cost installed of underground conductors
and devices used for distribution purposes.

[Items]{.underline}

1\. Armored conductors, buried, including insulators, insulating
materials, splices, potheads, and trenching.

2\. Armored conductors, submarine, including insulators, insulating
materials, splices in terminal chamber, and potheads.

3\. Cables in standpipe, including pothead and connection from terminal
chamber or manhole 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, auxiliary air tanks, feeding tanks, terminals, potheads
and connections.

7\. Lead and fabric covered conductors, including 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 or signal systems shall be included in Account 373,
Street Lighting and Signal Systems.

**368 Line Transformers.**

A. This account shall include the cost installed of overhead and
underground distribution line transformers and pole-type and underground
voltage regulators owned by the utility, for use in transforming
electricity to the voltage at which it is to be used by the customer,
whether actually in service or held in reserve.

B. When a transformer is permanently retired from service, the original
installed cost thereof shall be credited to this account.

C. The records covering line transformers shall be so kept that the
utility can furnish the number of transformers of various capacities in
service and those in reserve, and the location and the use of each
transfer.

[Items]{.underline}

1\. Installation, labor of (first installation only).

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 to this account but to

Account 583, Overhead Line Expenses, or Account 584, Underground Line
Expenses, as appropriate. The cost of line transformers used solely for
street lighting or signal systems shall be included in Account 373,
Street Lighting and Signal Systems.

**369 Services.**

This account shall include the cost installed of overhead and
underground conductors leading from a point where wires leave the last
pole of the overhead system or the distribution box or manhole, or the
top of the pole of the distribution line, to the point of connection
with the customer\'s outlet or wiring. Conduit used for underground
service conductors shall be included herein.

[Items]{.underline}

1\. Brackets.

2\. Cables and wires.

3\. Conduit.

4\. Insulators.

5\. Municipal inspection.

6\. Overhead to underground, including conduit or standpipe and
conductor from last splice on pole to connection with customer\'s
wiring.

7\. Pavement disturbed, including cutting and replacing pavement,
pavement base, and sidewalks.

8\. Permits.

9\. Protection of street openings.

10\. Service switch.

11\. Suspension wire.

**370 Meters.**

A. This account shall include the cost installed of meters or devices
and appurtenances thereto, for use in measuring the electricity
delivered to its users, whether actually in service or held in reserve.

B. When a meter is permanently retired from service, the installed cost
included herein shall be credited to this account.

C. The records covering meters shall be so kept that the utility can
furnish information as to the number of meters of various capacities in
service and in reserve as well as the location of each meter owned.

[Items]{.underline}

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).

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 meters for recording output of a
generating station, or substation meters. It includes only those meters
used to record energy delivered to customers.

Note B: The cost of removing and resetting meters shall be charged to
Account 586, Meter Expenses.

**371 Installations on Customers\' Premises.**

This account shall include the cost installed of equipment on the
customer\'s side of a meter when the utility incurs such cost and when
the utility retains title to and assumes full responsibility for
maintenance and replacement of such property. This account shall not
include leased equipment. (See Account 372, Leased Property on
Customers\' Premises.)

[Items]{.underline}

1\. Cable vaults.

2\. Commercial lamp equipment.

3\. Foundations and settings specially provided 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 merchandising, jobbing, or contract work activities.

**372 Leased Property on Customers\' Premises.**

This account shall include the cost of electric motors, transformers,
and other equipment on customers\' premises (including municipal
corporations), leased or loaned to customers, but not including property
held for sale.

Note A: The cost of setting and connecting such appliances or equipment
on the premises of customers and the cost of resetting or removal shall
not be charged to this account but to operating expenses, Account 587,
Customer Installations Expenses.

Note B: Do not include in this account any costs incurred in connection
with merchandising, jobbing, or contract work activities.

**373 Street Lighting and Signal Systems.**

This account shall include the cost installed of equipment used wholly
for public street and highway lighting or traffic, fire alarm, police,
and other signal systems.

[Items]{.underline}

1\. Armored conductors, buried or submarine, including insulators,
insulating materials, splices, and trenching.

2\. Automatic control equipment.

3\. Conductors, overhead or underground, including lead or fabric
covered, parkway cables, including splices, and insulators.

4\. Lamps, arc, incandescent, or other types, including glassware,
suspension fixtures, and brackets.

5\. Municipal inspection.

6\. Ornamental lamp posts.

7\. Pavement disturbed, including cutting and replacing pavement,
pavement base, and sidewalks.

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]{.underline}

**389 Land and Land Rights.**

This account shall include the cost of land and land rights used for
utility purposes, the cost of which is not properly includible in other
land and land rights accounts. (See

§ 1767.16 (g).)

**390 Structures and Improvements.**

This account shall include the cost, in place, of structures and
improvements used for utility purposes, the cost of which is not
properly includible in other structures and improvements accounts. (See
§ 1767.16 (h).)

**391 Office Furniture and Equipment.**

This account shall include the cost of office furniture and equipment
owned by the utility and devoted to utility service, and not permanently
attached to buildings, except the cost of such furniture and equipment
which the utility elects to assign to other plant accounts on a
functional basis.

[Items]{.underline}

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 accounting machines, and
typewriters.

8\. Safes.

9\. Tables.

**392 Transportation Equipment.**

This account shall include the cost of transportation vehicles used for
utility purposes.

[Items]{.underline}

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 of equipment used for the receiving,
shipping, handling, and storage of materials and supplies.

[Items]{.underline}

1\. Chain falls.

2\. Counters.

3\. Cranes (portable).

4\. Elevating and stacking equipment (portable).

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 of tools, implements, and equipment
used in construction, repair work, general shops and garages and not
specifically provided for or includible in other accounts.

[Items]{.underline}

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 constructed for and not expected
to outlast the equipment 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 installed of laboratory equipment
used for general laboratory purposes and not specifically provided for
or includible in other departmental or functional plant accounts.

[Items]{.underline}

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 of power operated equipment used in
construction or repair work exclusive of equipment includible in other
accounts. Include, also, the tools and accessories acquired for use with
such equipment and the vehicle on which such equipment is mounted.

[Items]{.underline}

1\. Air compressors, including driving unit and vehicle.

2\. Back filling machines.

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 include only such large units as
are generally self-propelled or mounted on movable equipment.

**397 Communication Equipment.**

This account shall include the cost installed of telephone, telegraph,
and wireless equipment for general use in connection with utility
operations.

[Items]{.underline}

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 telephone 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 of equipment, and apparatus used in
the utility operations, which is not includible in other accounts.

[Items]{.underline}

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 nature indicated above wherever
practicable, shall be included in the utility plant accounts on a
functional basis.

**399 Other Tangible Property.**

This account shall include the cost of tangible utility plant not
provided for elsewhere.

**§ 1767.21 OPERATING INCOME:**

The operating income accounts identified in this section shall be used
by all RUS borrowers.

[Utility Operating Income]{.underline}

400 Operating Revenues

401 Operation Expense

402 Maintenance Expense

403 Depreciation Expense

403.1 Depreciation Expense - Steam Production Plant

403.2 Depreciation Expense - Nuclear Production Plant

403.3 Depreciation Expense - Hydraulic Production Plant

403.4 Depreciation Expense - Other Production Plant

403.5 Depreciation Expense - Transmission Plant

403.6 Depreciation Expense - Distribution Plant

403.7 Depreciation Expense - General Plant

404 Amortization of Limited-Term Electric Plant

405 Amortization of Other Electric Plant

406 Amortization of Electric Plant Acquisition Adjustments

407 Amortization of Property Losses, Unrecovered Plant and

Regulatory Study Costs

407.3 Regulatory Debits

407.4 Regulatory Credits

408 Taxes Other than Income Taxes

408.1 Taxes - Property

408.2 Taxes - U.S. Social Security - Unemployment

408.3 Taxes - U.S. Social Security - F.I.C.A.

408.4 Taxes - State Social Security - Unemployment

408.5 Taxes - State Sales - Consumers

408.6 Taxes - Gross Revenue or Gross Receipts Tax

408.7 Taxes - Other

409 \[Reserved\]

409.1 Income Taxes, Utility Operating Income

409.2 Income Taxes, Other Income and Deductions

409.3 Income Taxes, Extraordinary Items

410 \[Reserved\]

410.1 Provision for Deferred Income Taxes, Utility Operating

Income

410.2 Provision for Deferred Income Taxes, Other Income and

Deductions

411 \[Reserved\]

411.1 Provision for Deferred Income Taxes - Credit, Utility

Operating Income

411.2 Provision for Deferred Income Taxes - Credit, Other

Income and Deductions

411.3 \[Reserved\]

411.4 Investment Tax Credit Adjustments, Utility Operations

411.5 Investment Tax Credit Adjustments, Nonutility

Operations

411.6 Gains from Disposition of Utility Plant

411.7 Losses from Disposition of Utility Plant

411.8 Gains from Disposition of Allowances

411.9 Losses from Disposition of Allowances

412 Revenues from Electric Plant Leased to Others

413 Expenses of Electric Plant Leased to Others

414 Other Utility Operating Income

[Utility Operating Income]{.underline}

**400 Operating Revenues.**

There shall be shown under this caption the total amount included in the
electric operating revenue accounts provided herein.

**401 Operation Expense.**

There shall be shown under this caption the total amount included in the
electric operation expense accounts provided herein. (See note to §
1767.17 (c).)

**402 Maintenance Expense.**

There shall be shown under this caption the total amount included in the
electric maintenance expense accounts provided herein.

**403 Depreciation Expense.**

A. This account shall include the amount of depreciation expense for all
classes of depreciable electric plant in service except such
depreciation expense as is chargeable to clearing accounts or to Account
416, Costs and Expenses of Merchandising, Jobbing and Contract Work.

B. The utility shall keep such records of property and property
retirements as will reflect the service life of property which has been
retired and aid in estimating probable service life by mortality,
turnover, or other appropriate methods; and also such records as will
reflect the percentage of salvage and costs of removal for property
retired from each account, or subdivision thereof, for depreciable
electric plant.

Note A: Depreciation expense applicable to property included in
Account 104, Electric Plant Leased to Others, shall be charged to
Account 413, Expenses of Electric Plant Leased to Others.

Note B: Depreciation expenses applicable to transportation equipment,
shop equipment, tools, work equipment, power operated equipment, and
other general equipment may be charged to clearing accounts as necessary
in order to obtain a proper distribution of expenses between
construction and operation.

Note C: Depreciation expense applicable to transportation equipment used
for transportation of fuel from the point of acquisition to the
unloading point shall be charged to Account 151, Fuel Stock.

C. Account 403 shall be subaccounted as follows:

403.1 Depreciation Expense - Steam Production Plant

403.2 Depreciation Expense - Nuclear Production Plant

403.3 Depreciation Expense - Hydraulic Production Plant

403.4 Depreciation Expense - Other Production Plant

403.5 Depreciation Expense - Transmission Plant

403.6 Depreciation Expense - Distribution Plant

403.7 Depreciation Expense - General Plant

**404 Amortization of Limited-Term Electric Plant.**

This account shall include amortization charges applicable to amounts
included in the electric plant accounts for limited-term franchises,
licenses, patent rights, limited-term interests in land, and
expenditures on leased property where the service life of the
improvements is terminable by action of the lease. The charges to this
account shall be such as to distribute the book cost of each investment
as evenly as may be over the period of its benefit to the utility. (See
Account 111, Accumulated Provision for Amortization of Electric Utility
Plant.)

**405 Amortization of Other Electric Plant.**

A. When authorized by RUS, this account shall include charges for
amortization of intangible or other electric utility plant which does
not have a definite or terminable life and which is not subject to
charges for depreciation expense.

B. This account shall be supported in such detail as to show the
amortization applicable to each investment being amortized, together
with the book cost of the investment and the period over which it is
being written off.

**406 Amortization of Electric Plant Acquisition Adjustments.**

This account shall be debited or credited, as appropriate, with amounts
includible in operating expenses, pursuant to approval or order of RUS,
for the purpose of providing for the extinguishment of the amount in
Account 114, Electric Plant Acquisition Adjustments.

**407 Amortization of Property Losses, Unrecovered Plant and**

**Recovery Study Costs.**

This account shall be charged with amounts credited to

Account 182.1, Extraordinary Property Losses, when RUS has authorized
the amount in the latter account to be amortized by charges to electric
operations.

**407.3 Regulatory Debits.**

This account shall be debited, when appropriate, with the amounts
credited to Account 254, Other Regulatory Liabilities, to record
regulatory liabilities imposed on the utility by the ratemaking actions
of regulatory agencies. This account shall also be debited, when
appropriate, with the amounts credited to

Account 182.3, Other Regulatory Assets, concurrent with the recovery of
such amounts in rates.

**407.4 Regulatory Credits.**

This account shall be credited, when appropriate, with the amounts
debited to Account 182.3, Other Regulatory Assets, to establish
regulatory assets. This account shall also be credited, when
appropriate, with the amounts debited to

Account 254, Other Regulatory Liabilities, concurrent with the return of
such amounts to customers through rates.

**408 Taxes Other Than Income Taxes**

A. This account shall include the amounts of ad valorem, gross revenue,
or gross receipts taxes, state unemployment insurance, franchise taxes,
Federal excise taxes, social security taxes, and all other taxes
assessed by Federal, state, county, municipal, or other local
governmental authorities, except income taxes.

B. These accounts shall be charged in each accounting period with the
amounts of taxes which are applicable thereto, with concurrent credits
to Account 236, Taxes Accrued, or

Account 165, Prepayments, as appropriate. When it is not possible to
determine the exact amounts of taxes, the amounts shall be estimated and
adjustments made in current accruals as the actual tax levies become
known.

C. The charges to these accounts shall be made or supported so as to
show the amount of each tax and the basis upon which each charge is
made. In the case of a utility rendering more than one utility service,
taxes of the kind includible in these accounts shall be assigned
directly to the utility department the operation of which gave rise to
the tax, in so far as practicable. Where the tax is not attributable to
a specific utility department, it shall be distributed among the utility
departments or nonutility operations on an equitable basis after
appropriate study to determine such basis.

Note A: Special assessments for street and similar improvements shall be
included in the appropriate utility plant or nonutility property
account.

Note B: Taxes specifically applicable to construction and retirement
activities shall be included in the cost of construction or the
retirement.

Note C: Gasoline and other sales taxes shall be charged as far as
practicable to the same account as the materials on which the tax is
levied.

Note D: Social security and other forms of payroll taxes shall be
charged to nonutility operations, the specific functional operations,
maintenance, and administrative expense accounts, and to construction
and retirement activities on a basis related to payroll either directly
or by transfers from this account.

Note E: Property taxes applicable to the various utility functions shall
be charged to the specific functional operations and administrative
expense accounts either directly or by transfers from this account.

Note F: Interest on tax refunds or deficiencies shall not be included in
these accounts but in Account 419, Interest and Dividend Income, or
Account 431, Other Interest Expense, as appropriate.

D. Account 408 shall be subaccounted as follows:

408.1 Taxes - Property

408.2 Taxes - U.S. Social Security - Unemployment

408.3 Taxes - U.S. Social Security - F.I.C.A.

408.4 Taxes - State Social Security - Unemployment

408.5 Taxes - State Sales - Consumers

408.6 Taxes - Gross Revenue or Gross Receipts Tax

408.7 Taxes - Other

409 \[Reserved\]

SPECIAL INSTRUCTIONS

[Accounts 409.1, 409.2, and 409.3]{.underline}

A. These accounts shall include the amount of local, state, and Federal
income taxes on income properly accruable during the period covered by
the income statement to meet the actual liability for such taxes.
Concurrent credits for the tax accruals shall be made to Account 236,
Taxes Accrued, and as the exact amounts of taxes become known, the
current tax accruals shall be adjusted by charges or credits to these
accounts.

B. The accruals for income taxes shall be apportioned among utility
departments and to Other Income and Deductions so that, as nearly as
practicable, each tax shall be included in the expenses of the utility
department or Other Income and Deductions, the income from which gave
rise to the tax. The tax effects relating to interest charges shall be
allocated between utility and nonutility operations. The basis for this
allocation shall be the ratio of net investment in utility plant to net
investment in nonutility plant.

Note A: Taxes assumed by the utility on interest shall be charged to
Account 431, Other Interest Expense.

Note B: Interest on tax refunds or deficiencies shall not be included in
these accounts but in Account 419, Interest and Dividend Income, or
Account 431, Other Interest Expense, as appropriate.

**409.1 Income Taxes, Utility Operating Income.**

This account shall include the amount of those local, state, and Federal
income taxes which relate to utility operating income. This account
shall be maintained so as to allow ready identification of tax effects
(both positive and negative) relating to Utility Operating Income (by
department), Utility Plant Leased to Others, and Other Utility Operating
Income.

**409.2 Income Taxes, Other Income and Deductions.**

This account shall include the amount of those local, state, and Federal
income taxes (both positive and negative), which relate to Other Income
and Deductions.

**409.3 Income Taxes, Extraordinary Items.**

This account shall include the amount of those local, state, and Federal
income taxes (both positive and negative), which relate to Extraordinary
Items.

**410 \[Reserved\]**

SPECIAL INSTRUCTIONS

[Accounts 410.1, 410.2, 411.1, and 411.2]{.underline}

A. Accounts 410.1 and 410.2 shall be debited, and Accumulated Deferred
Income Taxes, shall be credited, with amounts equal to any current
deferrals of taxes on income or any allocations of deferred taxes
originating in prior periods, as provided by the texts of Accounts 190,
281, 282, and 283. There shall not be netted against entries required to
be made to these accounts any credit amounts appropriately includible in

Account 411.1 or Account 411.2.

B. Accounts 411.1 or 411.2 shall be credited, and Accumulated Deferred
Income Taxes, shall be debited, with amounts equal to any allocations of
deferred taxes originating in prior periods or any current deferrals of
taxes on income, as provided by the texts of Accounts 190, 281, 282, and
283. There shall not be netted against entries required to be made to
these accounts any debit amounts appropriately includible in Account
410.1 or Account 410.2.

**410.1 Provision for Deferred Income Taxes, Utility Operating**

**Income.**

This account shall include the amounts of those deferrals of taxes and
allocations of deferred taxes which relate to Utility Operating Income
(by department).

**410.2 Provision for Deferred Income Taxes, Other Income and**

**Deductions.**

This account shall include the amounts of those deferrals of taxes and
allocations of deferred taxes which relate to Other Income and
Deductions.

**411 \[Reserved\]**

**411.1 Provision for Deferred Income Taxes - Credit, Utility**

**Operating Income.**

This account shall include the amounts of those allocations of deferred
taxes and deferrals of taxes, credit, which relate to Utility Operating
Income (by department).

**411.2 Provision for Deferred Income Taxes - Credit, Other**

**Income and Deductions.**

This account shall include the amounts of those allocations of deferred
taxes and deferrals of taxes, credit, which relate to Other Income and
Deductions.

**411.3 \[Reserved\]**

SPECIAL INSTRUCTIONS

[Accounts 411.4 and 411.5]{.underline}

A. Account 411.4 shall be debited with the amounts of investment tax
credits related to electric utility property that are credited to
Account 255, Accumulated Deferred Investment Tax Credits, by companies
which do not apply the entire amount of the benefits of the investment
credit as a reduction of the overall income tax expense in the year in
which such credit is realized. (See Account 255).

B. Account 411.4 shall be credited with the amounts debited to
Account 255 for proportionate amounts of tax credit deferrals allocated
over the average useful life of electric utility property to which the
tax credits relate or such lesser period of time as may be adopted and
consistently followed by the company.

C. Account 411.5 shall be debited and credited as directed in paragraphs
A and B, for investment tax credits related to nonutility property.

**411.4 Investment Tax Credit Adjustments, Utility Operations.**

This account shall include the amount of those investment tax credit
adjustments related to property used in Utility Operations (by
department).

**411.5 Investment Tax Credit Adjustments, Nonutility**

**Operations.**

This account shall include the amount of those investment tax credit
adjustments related to property used in Nonutility Operations.

**411.6 Gains from Disposition of Utility Plant.**

This account shall include, as approved by RUS, amounts relating to
gains from the disposition of future use utility plant including amounts
which were previously recorded in and transferred from Account 105,
Electric Plant Held for Future Use, under the Provisions of Paragraphs
B, C, and D thereof. Income taxes relating to gains recorded in this
account shall be recorded in Account 409.1, Income Taxes, Utility
Operating Income.

**411.7 Losses from Disposition of Utility Plant.**

This account shall include, as approved by RUS, amounts relating to
losses from the disposition of future use utility plant including
amounts which were previously recorded in and transferred from Account
105, Electric Plant Held for Future Use, under the provisions of
Paragraphs B, C, and D thereof. Income taxes relating to losses recorded
in this account 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 the gain on the sale, exchange, or
other disposition of allowances in accordance with §1767.15 (u) (8).
Income taxes relating to gains recorded in this account shall be
recorded in Account 409.1, Income Taxes, Utility Operating Income.

**411.9 Losses from Disposition of Allowances.**

This account shall be debited with the loss on the sale, exchange, or
other disposition of allowances in accordance with §1767.15 (u) (8).
Income taxes relating to losses recorded in this account shall be
recorded in Account 409.1, Income Taxes, Utility Operating Income.

**412 Revenues from Electric Plant Leased to Others.**

This account shall include revenues from electric property constituting
a distinct operating unit or system leased by the utility to others, and
which property is properly includible in Account 104, Electric Plant
Leased to Others.

Note: Related taxes shall be recorded in Account 408, Taxes Other Than
Income Taxes, or Account 409.1, Income Taxes, Utility Operating Income,
as appropriate.

**413 Expenses of Electric Plant Leased to Others.**

A. This account shall include expenses from electric property
constituting a distinct operating unit or system leased by the utility
to others, and which property is properly includible in Account 104,
Electric Plant Leased to Others.

B. The detail of expenses shall be kept or supported so as to show
separately the following:

1\. Operation.

2\. Maintenance.

3\. Depreciation.

4\. Amortization.

Note: Related taxes shall be recorded in Account 408, Taxes Other Than
Income Taxes, or Account 409.1, Income Taxes, Utility Operating Income,
as appropriate.

**414 Other Utility Operating Income.**

A. This account shall include the revenues received and expenses
incurred in connection with the operations of utility plant, the book
cost of which is included in Account 118, Other Utility Plant.

B. The expenses shall include every element of cost incurred in such
operations, including depreciation, rents, and insurance.

Note: Related taxes shall be recorded in Account 408, Taxes Other Than
Income Taxes, or Account 409.1, Income Taxes, Utility Operating Income,
as appropriate.

**§ 1767.22 OTHER INCOME AND DEDUCTIONS:**

The other income and deductions accounts identified in this section
shall be used by all RUS borrowers.

[Other Income and Deductions]{.underline}

415 Revenues from Merchandising, Jobbing, and Contract Work

416 Costs and Expenses of Merchandising, Jobbing, and

Contract Work

417 Revenues from Nonutility Operations

417.1 Expenses of Nonutility Operations

418 Nonoperating Rental Income

418.1 Equity in Earnings of Subsidiary Companies

419 Interest and Dividend Income

419.1 Allowance for Funds Used During Construction

420 Investment Tax Credits

421 Miscellaneous Nonoperating Income

421.1 Gain on Disposition of Property

421.2 Loss on Disposition of Property

422 Nonoperating Taxes

423 Generation and Transmission Cooperative Capital Credits

424 Other Capital Credits and Patronage Capital Allocations

425 Miscellaneous Amortization

426 \[Reserved\]

426.1 Donations

426.2 Life Insurance

426.3 Penalties

426.4 Expenditures for Certain Civic, Political, and Related

Activities

426.5 Other Deductions

[Other Income and Deductions]{.underline}

**415 Revenues from Merchandising, Jobbing and Contract Work.**

A. This account shall include all revenues derived from the sale of
merchandise and jobbing or contract work, including any profit or
commission accruing to the utility on jobbing work performed by it as
agent under contracts whereby it does jobbing work for another for a
stipulated profit or commission. Interest related income from
installment sales shall be recorded in Account 419, Interest and
Dividend Income.

B. Records in support of this account shall be so kept as to permit
ready summarization of revenues by such major items as are feasible.

Note: The classification of revenues of merchandising, jobbing, and
contract work as nonoperating, and thus included in this account, is for
accounting purposes. It does not preclude consideration of justification
to the contrary for ratemaking or other purposes.

[Items]{.underline}

1\. Revenues from sale of merchandise and from jobbing and contract
work.

2\. Discounts and allowances made in settlement of bills for merchandise
and jobbing work.

**416 Costs and Expenses of Merchandising, Jobbing and Contract**

**Work.**

A. This account shall include all expenses derived from the sale of
merchandise and jobbing or contract work.

B. Records in support of this account shall be so kept as to permit
ready summarization of costs and expenses by such major items as are
feasible.

Note: The classification of costs and expenses of merchandising,
jobbing, and contract work as nonoperating, and thus included in this
account, is for accounting purposes. It does not preclude consideration
of justification to the contrary for ratemaking or other purposes.

[Items]{.underline}

[Labor]{.underline}:

1\. Canvassing and demonstrating appliances in homes and other places
for the purpose of selling appliances.

2\. Demonstrating and selling activities in sales rooms.

3\. Installing appliances on customer premises where such work is done
only for purchasers of appliances from the utility.

4\. Installing wire, piping, or other property work, on a jobbing or
contract basis.

5\. Preparing advertising materials for appliance sales purposes.

6\. Receiving and handling customer orders for 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 activities.

12\. Supervising merchandise and jobbing operations.

13\. Advertising in newspapers, periodicals, radio, and television.

14\. Cost of merchandise sold and of materials used in jobbing work.

15\. Stores expenses on merchandise and jobbing stocks.

16\. Fees and expenses of advertising and commercial artists\' agencies.

17\. Printing booklets, dodgers, and other advertising data.

18\. Premiums given as inducement to buy appliances.

19\. Light, heat, and power.

20\. Depreciation on equipment used primarily for merchandise and
jobbing operations.

21\. Rent of sales rooms or of equipment.

22\. Transportation expense in delivery and pick-up of appliances by
utility\'s facilities or by others.

23\. Stationery and office supplies and expenses.

24\. Losses from uncollectible merchandise and jobbing accounts.

**417 Revenues from Nonutility Operations.**

This account shall include revenues applicable to operations which are
nonutility in character but nevertheless constitute a distinct operating
activity of the enterprise as a whole, such as the operation of an ice
department where applicable statutes do not define such operation as a
utility, or the operation of a servicing organization for furnishing
supervision, management, engineering, and similar services to others.

Note: Related taxes shall be recorded in Account 408, Taxes Other Than
Income Taxes, or Account 409.2, Income Taxes, Other Income and
Deductions, as appropriate.

**417.1 Expenses of Nonutility Operations.**

A. This account shall include expenses applicable to operations which
are nonutility in character but nevertheless constitute a distinct
operating activity of the enterprise as a whole, such as the operation
of an ice department where applicable statutes do not define such
operation as a utility, or the operation of a servicing organization for
furnishing supervision, management, engineering, and similar services to
others.

B. The expenses shall include all elements of costs incurred in such
operations, and the accounts shall be maintained so as to permit ready
summarization as follows:

1\. Operation.

2\. Maintenance.

3\. Rents.

4\. Depreciation.

5\. Amortization.

Note: Related taxes shall be recorded in Account 408, Taxes Other Than
Income Taxes, or Account 409.2, Income Taxes, Other Income and
Deductions, as appropriate.

**418 Nonoperating Rental Income.**

A. This account shall include all rent revenues and related expenses of
land, buildings, or other property included in Account 121, Nonutility
Property, which is not used in operations covered by Account 417 or
Account 417.1.

B. The expenses shall include all elements of costs incurred in the
ownership and rental of property and the accounts shall be maintained so
as to permit ready summarization as follows:

1\. Operation.

2\. Maintenance.

3\. Rents.

4\. Depreciation.

5\. Amortization.

Note: Related taxes shall be recorded in Account 408, Taxes Other Than
Income Taxes, or Account 409.2, Income Taxes, Other Income and
Deductions, as appropriate.

**418.1 Equity in Earnings of Subsidiary Companies.**

This account shall include the utility\'s equity in the earnings or
losses of subsidiary companies for the year.

**419 Interest and Dividend Income.**

A. This account shall include interest revenues on securities, loans,
notes, advances, special deposits, tax refunds, and all other
interest-bearing assets, and dividends on stocks of other companies,
whether the securities on which the interest and dividends are received
are carried as investments or included in sinking or other special fund
accounts.

Note A: Related taxes shall be recorded in Account 408, Taxes Other Than
Income Taxes, or Account 409.2, Income Taxes, Other Income and
Deductions, as appropriate.

Note B: Interest accrued, the payment of which is not reasonably
assured, dividends receivable which have not been declared or
guaranteed, and interest or dividends upon reacquired securities issued
or assumed by the utility shall not be credited to this account.

**419.1 Allowance for Funds Used During Construction.**

This account shall include concurrent credits for allowance for funds
other than borrowed funds used for construction purposes 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 follows with investment tax credit
amounts not passed on to customers:

1\. By amounts equal to debits to Account 411.4, Investment Tax Credit
Adjustments, Utility Operations, and Account 411.5, Investment Tax
Credit Adjustments, Nonutility Operations, for investment tax credits
used in calculating income taxes for the year when the company\'s
accounting provides for non-deferral of all or a portion of such
credits.

2\. By amounts equal to debits to Account 255, Accumulated Deferred
Investment Tax Credits, for proportionate amounts of tax credit
deferrals allocated over the average useful life of the property to
which the tax credits relate, or such

lesser period of time as may be adopted and consistently used by the
company.

**421 Miscellaneous Nonoperating Income.**

This account shall include all revenue and expense items, except taxes
properly includible in the income account, not provided for elsewhere.
Related taxes shall be recorded in Account 408, Taxes Other Than Income
Taxes, or Account 409.2, Income Taxes, Other Income and Deductions, as
appropriate.

[Items]{.underline}

1\. Profit on sale of timber. (See

§ 1767.16 (g)(3).)

2\. Profits from operations of others realized by the utility under
contracts.

3\. Gains on disposition of investments. Also, gains on reacquisition
and resale or retirement of the utility\'s debt securities when the gain
is not amortized or used by a jurisdictional regulatory agency to reduce
embedded debt cost in establishing rates. (See § 1767.15 (q).)

**421.1 Gain on Disposition of Property.**

This account shall be credited with the gain on the sale, conveyance,
exchange, or transfer of utility or other property to another. Amounts
relating to gains on land and land rights held for future use recorded
in Account 105, Electric Plant Held for Future Use, will be accounted
for as prescribed in Paragraphs B, C, and D thereof. (See § 1767.16
(e)(6), (g)(5), and (j)(5).) Income taxes on gains recorded in this
account shall be recorded in Account 409.2, Income Taxes, Other Income
and Deductions.

**421.2 Loss on Disposition of Property.**

This account shall be charged with the loss on the sale, conveyance,
exchange, or transfer of utility or other property to another. Amounts
relating to losses on land and land rights held for future use recorded
in Account 105, Electric Plant Held for Future Use, will be accounted
for as prescribed in Paragraphs B, C, and D thereof. (See § 1767.16
(e)(6), (g)(5), and (j)(5).) The reduction in income taxes relating to
losses recorded in this account shall be recorded in Account 409.2,
Income Taxes, Other Income and Deductions.

**422 Nonoperating Taxes.**

This account shall be charged with taxes relating to nonoperating
income.

**423 Generation and Transmission Cooperative Capital Credits.**

This account shall be credited with the annual capital furnished the
power supply cooperative through payment of power bills. The amount of
capital furnished the power supply cooperative should be recorded in the
applicable year even though, in most cases, the power supplier\'s notice
of the allocation will not have been received until after the close of
the year to which it relates.

**424 Other Capital Credits and Patronage Capital Allocations.**

This account shall be credited with the capital furnished in connection
with patronage of cooperative or mutual-type service organization such
as CFC and other financing cooperatives, and insurance, oil product,
telephone, and data processing cooperatives. This account should be
credited in the year in which the notice of the capital credit or
patronage capital allocation is received.

**425 Miscellaneous Amortization.**

This account shall include amortization charges not includible in other
accounts which are properly deductible in determining the income of the
utility before interest charges. Charges includible herein, if
significant in amount, must be in accordance with an orderly and
systematic amortization program.

[Items]{.underline}

1\. Amortization of utility plant acquisition adjustments, or of
intangibles included in utility plant in service when not authorized to
be included in utility operating expenses by RUS.

2\. Other miscellaneous amortization charges allowed to be included in
this account by RUS.

**426 \[Reserved\]**

SPECIAL INSTRUCTIONS

[Accounts 426.1, 426.2, 426.3, 426.4, and 426.5]{.underline}

These accounts shall include miscellaneous expense items which are
nonoperating in nature but which are properly deductible before
determining total income before interest charges.

Note: The classification of expenses as nonoperating and their inclusion
in these accounts is for accounting purposes. It does not preclude RUS
consideration of proof to the contrary for ratemaking or other purposes.

**426.1 Donations.**

This account shall include all payments or donations for charitable,
social, or community welfare purposes.

**426.2 Life Insurance.**

This account shall include all payments for life insurance of officers
and employees where the company is the beneficiary (net premiums less
the increase in the cash surrender value of policies.)

**426.3 Penalties.**

This account shall include payments by the company for penalties or
fines for violation of any regulatory statutes by the company or its
officials.

**426.4 Expenditures for Certain Civic, Political, and Related**

**Activities.**

This account shall include expenditures for the purpose of influencing
public opinion with respect to the election or appointment of public
officials, referenda, legislation, or ordinances (either with respect to
the possible adoption of new referenda, legislation or ordinances or
repeal or modification of existing referenda, legislation or ordinances)
or approval, modification, or revocation of franchises; or for the
purpose of influencing the decisions of public officials, but shall not
include such expenditures which are directly related to appearances
before regulatory or other governmental bodies in connection with the
reporting utility\'s existing or proposed operations.

**426.5 Other Deductions.**

This account shall include other miscellaneous expenses which are
nonoperating in nature, but which are properly deductible before
determining total income before interest charges.

[Items]{.underline}

1\. Loss relating to investments in securities written-off or
written-down.

2\. Loss on sale of investments.

3\. Loss on reacquisition, resale, or retirement of the utility\'s debt
securities, when the loss is not amortized and used by a jurisdictional
regulatory agency to increase embedded debt cost in establishing rates.
(See § 1767.15 (q).)

4\. Preliminary survey and investigation expenses related to abandoned
projects, when not written-off to the appropriate operating expense
account.

5\. Costs of preliminary abandonment costs recorded in Account 182.1,
Extraordinary Property Losses, and

Account 182.2, Unrecovered Plant and Regulatory Study Costs, not allowed
to be amortized to Account 407, Amortization of Property Losses,
Unrecovered Plant and Regulatory Study Costs.

**§ 1767.23 INTEREST CHARGES:**

The interest charges accounts identified in this section shall be used
by all RUS borrowers.

[Interest Charges]{.underline}

427 Interest on Long-Term Debt

427.3 Interest Charged to Construction - Credit

428 Amortization of Debt Discount and Expense

428.1 Amortization of Loss on Reacquired Debt

429 Amortization of Premium on Debt - Credit

429.1 Amortization of Gain on Reacquired Debt - Credit

430 Interest on Debt to Associated Companies

431 Other Interest Expense

432 Allowance for Borrowed Funds Used During Construction -

Credit

[Interest Charges]{.underline}

**427 Interest on Long-Term Debt.**

A. This account shall include the amount of interest on outstanding
long-term debt issued or assumed by the utility, the liability for which
included in Account 221, Bonds, or

Account 224, Other Long-Term Debt.

B. This account shall be so kept or supported as to show the interest
accruals on each class and series of long-term debt.

Note: This account shall not include interest on nominally issued or
nominally outstanding long-term debt, including securities assumed.

**427.3 Interest Charged to Construction - Credit.**

This account shall include concurrent credits for interest charged to
construction based upon the net cost for the period of construction of
borrowed funds used for construction purposes.

**428 Amortization of Debt Discount and Expense.**

A. This account shall include the amortization of unamortized debt
discount and expense on outstanding long-term debt. Amounts charged to
this account shall be credited 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 supported as to show the debt
discount and expense on each class and series of long-term debt.

**428.1 Amortization of Loss on Reacquired Debt.**

A. This account shall include the amortization of the losses on
reacquisition of debt. Amounts charged to this account shall be credited
concurrently to Account 189, Unamortized Loss on Reacquired Debt.

B. This account shall be maintained so as to allow ready identification
of the loss amortized applicable to each class and series of long-term
debt reacquired. (See § 1767.15 (q).)

**429 Amortization of Premium on Debt - Credit.**

A. This account shall include the amortization of unamortized net
premium on outstanding long-term debt. Amounts credited to this account
shall be charged concurrently to

Account 225, Unamortized Premium on Long-Term Debt.

B. This account shall be so kept or supported as to show the premium on
each class and series of long-term debt.

**429.1 Amortization of Gain on Reacquired Debt - Credit.**

A. This account shall include the amortization of the gains realized
from reacquisition of debt. Amounts credited to this account shall be
charged concurrently to Account 257, Unamortized Gain on Reacquired
Debt.

B. This account shall be maintained so as to allow ready identification
of the amortized gains applicable to each class and series of long-term
debt reacquired. (See § 1767.15 (q).)

**430 Interest on Debt to Associated Companies.**

A. This account shall include the interest accrued on amounts included
in Account 223, Advances from Associated Companies, and on all other
obligations to associated companies.

B. The records supporting the entries to this account shall be so kept
as to show to whom the interest is to be paid, the period covered by the
accrual, the rate of interest, and the principal amount of the advances
or other obligations on which the interest is accrued.

**431 Other Interest Expense.**

This account shall include all interest charges not provided for
elsewhere.

[Items]{.underline}

1\. Interest on notes payable on demand or maturing one year or less
from date and on open accounts, except notes and accounts with
associated companies.

2\. Interest on customers\' deposits.

3\. Interest on claims and judgments, tax assessments, and assessments
for public improvements past due.

4\. Income and other taxes levied upon bondholders of the utility and
assumed by it.

**432 Allowance for Borrowed Funds Used During Construction -**

**Credit.**

This account shall include concurrent credits for allowance for borrowed
funds used during construction, not to exceed amounts computed in
accordance with the formula prescribed in § 1767.16 (c)(17).

**§ 1767.24 EXTRAORDINARY ITEMS:**

The extraordinary items accounts identified in this section shall be
used by all RUS borrowers.

[Extraordinary Items]{.underline}

434 Extraordinary Income

435 Extraordinary Deductions

435.1 Cumulative Effect on Prior Years of a Change in

Accounting Principle

[Extraordinary Items]{.underline}

**434 Extraordinary Income.**

This account shall be credited with nontypical, noncustomary,
infrequently recurring gains which would significantly distort the
current year\'s income computed before extraordinary items, if reported
other than as extraordinary items. Income tax relating to the amounts
recorded in this account shall be recorded in Account 409.3, Income
Taxes, Extraordinary Items. (See

§ 1767.15 (g).)

**435 Extraordinary Deductions.**

This account shall be debited with nontypical, noncustomary,
infrequently recurring losses which would significantly distort the
current year\'s income computed before extraordinary items, if reported
other than as extraordinary items. Income tax relating to the amounts
recorded in this account shall be recorded in Account 409.3, Income
Taxes, Extraordinary Items. (See

§ 1767.15 (f).)

**435.1 Cumulative Effect on Prior Years of a Change in**

**Accounting Principle.**

This account shall include the cumulative effect on margins of prior
periods as a result of a change in accounting principle from one that is
no longer generally accepted to one that is generally accepted.

**§ 1767.25 RETAINED EARNINGS:**

The retained earnings accounts identified in this section shall be used
by all RUS borrowers.

[Retained Earnings]{.underline}

433 \[Reserved\]

436 \[Reserved\]

437 \[Reserved\]

438 \[Reserved\]

439 \[Reserved\]

[Retained Earnings]{.underline}

**433 \[Reserved\]**

**436 \[Reserved\]**

**437 \[Reserved\]**

**438 \[Reserved\]**

**439 \[Reserved\]**

**§ 1767.26 OPERATING REVENUE:**

The operating revenue accounts identified in this section shall be used
by all RUS borrowers.

OPERATING REVENUE

[Sales of Electricity]{.underline}

440 Residential Sales

440.1 Residential Sales - Excluding Seasonal

440.2 Residential Sales - Seasonal

441 Irrigation Sales

442 Commercial and Industrial Sales

442.1 Commercial and Industrial Sales - 1000 kVA or Less

442.2 Commercial and Industrial Sales - Over 1000 kVA

444 Public Street and Highway Lighting

445 Other Sales to Public Authorities

446 Sales to Railroads and Railways

447 Sales for Resale

447.1 Sales for Resale - RUS Borrowers

447.2 Sales for Resale - Other

448 Interdepartmental Sales

449.1 Provision for Rate Refunds

[Other Operating Revenues]{.underline}

450 Forfeited Discounts

451 Miscellaneous Service Revenues

453 Sales of Water and Water Power

454 Rent from Electric Property

455 Interdepartmental Rents

456 Other Electric Revenues

OPERATING REVENUE

[Sales of Electricity]{.underline}

**440 Residential Sales.**

A. This account shall include the net billing for electricity supplied
for residential or domestic purposes.

Note: When electricity supplied through a single meter is used for both
residential and commercial purposes, the total revenue shall be included
in this account, or Account 442, Commercial and Industrial Sales,
according to the rate schedule that is applied. If the same rate
schedules apply to residential and commercial and industrial service,
classification shall be made according to principal use.

B. Account 440 shall be subaccounted as follows:

440.1 Residential Sales - Excluding Seasonal

440.2 Residential Sales - Seasonal

**440.1 Residential Sales - Excluding Seasonal.**

A. This account shall include the net billing for electricity supplied
for residential and domestic purposes.

B. This account shall also include net billings for single phase service
to schools, churches, lodges, and other public buildings.

C. Records shall be maintained so that the quantity of electricity sold
and the revenue received under each rate schedule shall be readily
available.

Note: Net billings for multiphase service to schools, churches, lodges,
and other public buildings shall be included in the appropriate
subaccount of Account 442, Commercial and Industrial Sales.

**440.2 Residential Sales - Seasonal.**

This account shall include the net billings for electricity supplied for
residential and domestic purposes to seasonal consumers.

**441 Irrigation Sales.**

This account shall include the net billings for electricity supplied for
irrigation pumping. It need not be used unless such service is provided
under a special irrigation rate.

**442 Commercial and Industrial Sales.**

A. This account shall include the net billing for electricity supplied
to customers for commercial and industrial purposes.

Note A: If the utility classifies large commercial and industrial
customers and related revenues on a lesser basis than 1000 kilowatts of
demand, or segregates industrial customers and related revenues
according to a recognized definition of an industrial customer, such
classifications are acceptable in lieu of those otherwise required by
the text of this account on the basis of 1000 kilowatts of demand.

Note B: When electricity supplied through a single meter is used for
both commercial and residential purposes, the total revenue shall be
included in this account, or Account 440, Residential Sales, according
to the rate schedule that is applied. If the same rate schedules apply
to residential and commercial and industrial service, classification
shall be made according to principal use.

B. Account 442 shall be subaccounted as follows:

442.1 Commercial and Industrial Sales - 1000 kVA or Less

442.2 Commercial and Industrial Sales - Over 1000 kVA

**442.1 Commercial and Industrial Sales - 1000 kVA or Less.**

A. This account shall include the net billing for electricity supplied
to consumers for commercial and industrial purposes requiring
transformer capacity of 1000 kVA or less.

B. Records shall be maintained so that the quantity of electricity sold
and the revenue received under each rate schedule shall be readily
available.

Note: When electricity supplied through a single meter is used for both
commercial and residential purposes, the total revenue shall be included
in this account or in Account 440, Residential Sales, based upon primary
use.

**442.2 Commercial and Industrial Sales - Over 1000 kVA.**

A. This account shall include the net billing for electricity supplied
to consumers for commercial and industrial purposes requiring
transformer capacity in excess of 1000 kVA.

B. Records shall be maintained so that the quantity of electricity sold
and the revenue received under each rate schedule shall be readily
available.

**444 Public Street and Highway Lighting.**

A. This account shall include the net billing for electricity supplied
and services rendered for the purposes of lighting streets, highways,
parks, and other public places or for traffic or signal system service,
for municipalities or other divisions or agencies of state of Federal
Governments.

B. Records shall be maintained so that the quantity of electricity sold
and the revenue received from each customer shall be readily available.
In addition, the records shall be maintained so as to show the revenues
from (1) contracts which include both electricity and services, and (2)
contracts which include sales of electricity only.

**445 Other Sales to Public Authorities.**

A. This account shall include the net billing for electricity supplied
to municipalities or divisions or agencies of Federal or state
governments, under special contracts or agreements or service
classifications applicable only to public authorities, except such
revenues as are includible in

Account 444 and Account 447.

B. Records shall be maintained so as to show the quantity of electricity
sold and the revenues received from each customer.

**446 Sales to Railroads and Railways.**

A. This account shall include the net billing for electricity supplied
to railroads and interurban and street railways, for general railroad
use, including the propulsion of cars or locomotives, where such
electricity is supplied under separate and distinct rate schedules.

B. Records shall be maintained so that the quantity of electricity sold
and the revenue received from each customer shall be readily available.

Note: Revenues from incidental use of electricity furnished under a
contract for propulsion of cars or locomotives shall be included herein.

**447 Sales for Resale.**

A. This account shall include the net billing for electricity supplied
to other electric utilities or to public authorities for resale
purposes.

Note: Revenues from electricity supplied to other utilities for use by
them and not for distribution, shall be included in Account 442,
Commercial and Industrial Sales, unless supplied under the same
contracts as and not readily separable from revenues includible in this
account.

B. Account 447 shall be subaccounted as follows:

447.1 Sales for Resale - RUS Borrowers

447.2 Sales for Resale - Other

**447.1 Sales for Resale - RUS Borrowers.**

A. This account shall include the net billing for electricity supplied
to RUS borrowers for resale.

B. Records shall be maintained so as to show the quantity of electricity
sold and the revenue received from each customer.

Note: Revenues from electricity supplied to other utilities for use by
them and not for distribution, shall be included in Account 442,
Commercial and Industrial Sales, unless supplied under the same contract
as and not readily separable from revenues includible in this account.

**447.2 Sales for Resale - Other.**

A. This account shall include the net billing for electricity supplied
for resale to utilities not financed by RUS.

B. Records shall be maintained so as to show the quantity of electricity
sold and the revenue received from each customer.

Note: Revenues from electricity supplied to other utilities for use by
them and not for distribution, shall be included in Account 442,
Commercial and Industrial Sales, unless supplied under the same contract
as and not readily separable from revenues includible in this account.

**448 Interdepartmental Sales.**

A. This account shall include amounts charged by the electric department
at tariff or other specified rates for electricity supplied by it to
other utility departments.

B. Records shall be maintained so that the quantity of electricity
supplied each other department and the charges therefor shall be readily
available.

**449.1 Provision for Rate Refunds.**

A. This account shall be charged with provisions for the estimated
pretax effects on net income of the portions of amounts being collected
subject to refund which are estimated to be required to be refunded.
Such provisions shall be credited to Account 229, Accumulated Provision
for Rate Refunds.

B. This account shall also be charged with amounts refunded when such
amounts had not been previously accrued.

C. Income tax effects relating to the amounts recorded in this account
shall be recorded in Account 410.1, Provision for Deferred Income Taxes,
Utility Operating Income, or

Account 411.1, Provision for Deferred Income Taxes - Credit, Utility
Operating Income, as appropriate.

[Other Operating Revenues]{.underline}

**450 Forfeited Discounts.**

This account shall include the amount of discounts forfeited or
additional charges imposed because of the failure of customers to pay
their electric bills on or before a specified date.

**451 Miscellaneous Service Revenues.**

This account shall include revenues for all miscellaneous services and
charges billed to customers which are not specifically provided for in
other accounts.

[Items]{.underline}

1\. Fees for changing, connecting, or disconnecting service.

2\. Profit on maintenance of appliances, wiring, piping, or other
installations on customers\' premises.

3\. Net credit or debit (cost less net salvage and less payment from
customers) on closing of work orders for plant installed for temporary
service of less than one year. (See Account 185, Temporary Facilities.)

4\. Recovery of expenses in connection with current diversion cases
(billing for the electricity consumed shall be included in the
appropriate electric revenue account).

**453 Sales of Water and Water Power.**

A. This account shall include revenues derived from the sale of water
for irrigation, domestic, industrial, or other uses or for the
development by others of water power or for headwater benefits; also,
revenues derived from furnishing water power for mechanical purposes
when the investment in the property used in supplying such water or
water power is carried as electric plant in service.

B. The records for this account shall be kept in such manner as to
permit an analysis of the rates charged and the purposes for which the
water was used.

**454 Rent from Electric Property.**

A. This account shall include rents received for the use by others of
land, buildings, and other property devoted to electric operations by
the utility.

B. When property owned by the utility is operated jointly with others
under a definite arrangement for apportioning the actual expenses among
the parties to the arrangement, any amount received by the utility for
interest or return or in reimbursement of taxes or depreciation on the
property shall be credited to this account.

Note: Do not include in this account rents from property constituting an
operating unit or system. (See Account 412, Revenues from Electric Plant
Leased to Others.)

**455 Interdepartmental Rents.**

This account shall include rents credited to the electric department on
account of rental charges made against other departments (gas, water,
etc.) of the utility. In the case of property operated under a definite
arrangement to allocate the costs among the departments using the
property, any reimbursement to the electric department for interest or
return and depreciation and taxes shall be credited to this account.

**456 Other Electric Revenues.**

This account shall include revenues derived from electric operations not
includible in any of the foregoing accounts. It shall also include, in a
separate subaccount, revenues received from operation of fish and
wildlife and recreation facilities whether operated by the company or by
contract concessionaires, such as revenues from leases or rentals of
land for cottages, homes, or campsites.

[Items]{.underline}

1\. Commission on sale or distribution of electricity of others when
sold under rates filed by such others.

2\. Compensation for minor or incidental services provided for others
such as customer billing, and engineering.

3\. Profit or loss on the sale of material and supplies not ordinarily
purchased for resale and not handled through merchandising and jobbing
accounts.

4\. Sale of steam, but not including sales made by a steamheating
department or transfers of steam under joint facility operations.

5\. Revenues from transmission of electricity of others over
transmission facilities of the utility.

6\. Include in a separate subaccount, revenues in payment for rights
and/or benefits received from others which are realized through
research, development, and demonstration ventures. In the event the
amounts received are so large as to distort revenues for the year in
which received (5 percent of net income before application of the
benefit), the amounts shall be credited to Account 253, Other Deferred
Credits, and amortized by credits to this account over a period not to
exceed 5 years.

**§ 1767.27 OPERATION AND MAINTENANCE EXPENSE:**

The operation and maintenance expense accounts identified in this
section shall be used by all RUS borrowers.

OPERATION AND MAINTENANCE EXPENSE ACCOUNTS

[Steam Power Generation Operations]{.underline}

500 Operation Supervision and Engineering

501 Fuel

502 Steam Expenses

503 Steam from Other Sources

504 Steam Transferred - Credit

505 Electric Expenses

506 Miscellaneous Steam Power Expenses

507 Rents

509 Allowances

[Steam Power Generation Maintenance]{.underline}

510 Maintenance Supervision and Engineering

511 Maintenance of Structures

512 Maintenance of Boiler Plant

513 Maintenance of Electric Plant

514 Maintenance of Miscellaneous Steam Plant

[Nuclear Power Generation Operations]{.underline}

517 Operation Supervision and Engineering

518 Nuclear Fuel Expense

519 Coolants and Water

520 Steam Expenses

521 Steam from Other Sources

522 Steam Transferred - Credit

523 Electric Expenses

524 Miscellaneous Nuclear Power Expenses

525 Rents

[Nuclear Power Generation Maintenance]{.underline}

528 Maintenance Supervision and Engineering

529 Maintenance of Structures

530 Maintenance of Reactor Plant Equipment

531 Maintenance of Electric Plant

532 Maintenance of Miscellaneous Nuclear Plant

[Hydraulic Power Generation Operations]{.underline}

535 Operation Supervision and Engineering

536 Water for Power

537 Hydraulic Expenses

538 Electric Expenses

539 Miscellaneous Hydraulic Power Generation Expenses

540 Rents

[Hydraulic Power Generation Maintenance]{.underline}

541 Maintenance Supervision and Engineering

542 Maintenance of Structures

543 Maintenance of Reservoirs, Dams, and Waterways

544 Maintenance of Electric Plant

545 Maintenance of Miscellaneous Hydraulic Plant

[Other Power Generation Operations]{.underline}

546 Operation Supervision and Engineering

547 Fuel

548 Generation Expenses

549 Miscellaneous Other Power Generation Expenses

550 Rents

[Other Power Generation Maintenance]{.underline}

551 Maintenance Supervision and Engineering

552 Maintenance of Structures

553 Maintenance of Generating and Electric Equipment

554 Maintenance of Miscellaneous Other Power Generation

Plant

[Other Power Supply Expenses]{.underline}

555 Purchased Power

556 System Control and Load Dispatching

557 Other Expenses

[Transmission Operation Expenses]{.underline}

560 Operation Supervision and Engineering

561 Load Dispatching

562 Station Expenses

563 Overhead Line Expenses

564 Underground Line Expenses

565 Transmission of Electricity by Others

566 Miscellaneous Transmission Expenses

567 Rents

[Transmission Maintenance Expenses]{.underline}

568 Maintenance Supervision and Engineering

569 Maintenance of Structures

570 Maintenance of Station Equipment

571 Maintenance of Overhead Lines

572 Maintenance of Underground Lines

573 Maintenance of Miscellaneous Transmission Plant

[Distribution Operations Expenses]{.underline}

580 Operation Supervision and Engineering

581 Load Dispatching

582 Station Expenses

583 Overhead Line Expenses

584 Underground Line Expenses

585 Street Lighting and Signal System Expenses

586 Meter Expenses

587 Customer Installations Expenses

588 Miscellaneous Distribution Expenses

589 Rents

[Distribution Maintenance Expenses]{.underline}

590 Maintenance Supervision and Engineering

591 Maintenance of Structures

592 Maintenance of Station Equipment

593 Maintenance of Overhead Lines

594 Maintenance of Underground Lines

595 Maintenance of Line Transformers

596 Maintenance of Street Lighting and Signal Systems

597 Maintenance of Meters

598 Maintenance of Miscellaneous Distribution Plant

OPERATION AND MAINTENANCE EXPENSE ACCOUNTS

[Steam Power Generation Operations]{.underline}

**500 Operation Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of the
operation of steam power generating stations. Direct supervision of
specific activities, such as fuel handling, boiler-room operations, and
generator operations shall be charged to the appropriate account. (See §
1767.17 (a).)

**501 Fuel.**

A. This account shall include the cost of fuel used in the production of
steam for the generation of electricity, including expenses in unloading
fuel from the shipping media and handling thereof up to the point where
the fuel enters the first boiler plant bunker, hopper, bucket, tank, or
holder of the boiler-house structure. Records shall be maintained to
show the quantity, B.t.u. content and cost of each type of fuel used.

B. The cost of fuel shall be charged initially to Account 151, Fuel
Stock, and cleared to this account on the basis of the fuel used. Fuel
handling expenses may be charged to this account as incurred or charged
initially to Account 152, Fuel Stock Expenses Undistributed. In the
latter event, they shall be cleared to this account on the basis of the
fuel used. Respective amounts of fuel stock and fuel stock expenses
shall be readily available.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervising, purchasing, 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 transferring fuel from one station to
another.

5\. Handling from storage or shipping facility to first bunker, hopper,
bucket, tank, or holder of boiler-house structure.

6\. Operation of mechanical equipment, such as locomotives, trucks,
cars, boats, barges, and cranes.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Operating, maintenance, and depreciation expenses and ad valorem
taxes on utility-owned transportation equipment used to transport fuel
from the point of acquisition to the unloading point.

2\. Lease or rental costs of transportation equipment used to transport
fuel from the point of acquisition to the unloading point.

3\. Cost of fuel including freight, switching, demurrage, and other
transportation charges.

4\. Excise taxes, insurance, purchasing commissions, and similar items.

5\. Stores expenses to extent applicable to fuel.

6\. Transportation and other expenses in moving fuel in storage.

7\. Tools, lubricants, and other supplies.

8\. Operating supplies for mechanical equipment.

9\. Residual disposal expenses less any proceeds from sale of residuals.

Note: Abnormal fuel handling expenses occasioned by emergency conditions
shall be charged to expense as incurred.

**502 Steam Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in production of steam for electric generation. This includes
all expenses of handling and preparing fuel beginning at the point where
the fuel enters the first boiler plant bunker, hopper, tank, or holder
of the boiler-house structure.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervising steam production.

2\. Operating fuel conveying, storage, weighing, and processing
equipment within boiler plant.

3\. Operating boiler and boiler auxiliary equipment.

4\. Operating boiler feed water purification and treatment equipment.

5\. Operating ash-collecting and disposal equipment located inside the
plant.

6\. Operating boiler plant electrical equipment.

7\. Keeping boiler plant log and records and preparing reports on boiler
plant operations.

8\. Testing boiler water.

9\. Testing, checking, and adjusting meters, gauges, and other
instruments and equipment in boiler plant.

10\. Cleaning boiler plant equipment when not incidental to maintenance
work.

11\. Repacking glands and replacing gauge glasses where the work
involved is of a minor nature and is performed by regular operating
crews. Where the work is of a major character, such as that performed on
high-pressure boilers, the item should be considered as maintenance.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

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 of steam purchased or transferred
from another department of the utility or from others under a joint
facility operating arrangement for use in prime movers devoted to the
production of electricity.

Note: The records shall be so kept as to show separately for each
company from which stem is purchased, the point of delivery, the
quantity, the price, and the total charge. When steam is transferred
from another department or from others under a joint operating
arrangement, the utility shall be prepared to show full details of the
cost of producing such steam, the basis of the charge to electric
generation, and the extent and manner of use by each department or party
involved.

**504 Steam Transferred - Credit.**

A. This account shall include credits for expenses of producing steam
which are charged to others or to other utility departments under a
joint operating arrangement. Include also credits for steam expenses
chargeable to other electric accounts outside of the steam generation
group. Full details of the basis of determination of the cost of steam
transferred shall be maintained.

B. If the charges to others or to other departments of the utility
include an amount for depreciation, taxes, and return on the joint steam
facilities, such portion of the charge shall be credited, in the case of
others, to Account 454, Rent from Electric Property, and in the case of
other departments of the utility, to Account 455, Interdepartmental
Rents.

**505 Electric Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, and materials used, and expenses
incurred in operating prime movers, generators, and their auxiliary
apparatus, switch gear, and other electric equipment to the points where
electricity leaves for conversion for transmission or distribution.

[Items]{.underline}

[Labor]{.underline}:

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 operations.

8\. Testing, checking, and adjusting meters, gauges, and other
instruments, relays, controls, and other equipment in the electric
plant.

9\. Cleaning electric plant equipment when not incidental to maintenance
work.

10\. Repacking glands and replacing gauge glasses.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

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 of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and materials used and expenses incurred which are not specifically
provided for or not readily assignable to other steam generation
operation expense accounts.

[Items]{.underline}

[Labor]{.underline}:

1\. General clerical an 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]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. General operating supplies, such as tools, gaskets, packing waste,
gauge glasses, hose, indicating 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\. Miscellaneous office supplies and expenses, printing, and
stationery.

7\. Transportation expenses.

8\. Meals, traveling, and incidental expenses.

9\. Research, development, and demonstration expenses.

**507 Rents.**

This account shall include all rents of property of others used,
occupied or operated in connection with steam power generation. (See §
1767.17 (c).)

**509 Allowances.**

This account shall include the cost of allowances expensed concurrent
with the monthly emission of sulfur dioxide. (See §1767.15 (u)).

[Steam Power Generation Maintenance]{.underline}

**510 Maintenance Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of
maintenance of steam generation facilities. Direct field supervision of
specific jobs shall be charged to the appropriate maintenance account.
(See § 1767.17 (a).)

**511 Maintenance of Structures.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and materials used and expenses incurred in the maintenance of steam
structures, the book cost of which is includible in Account 311,
Structures and Improvements. (See

§ 1767.17 (b).)

**512 Maintenance of Boiler Plant.**

A. This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and materials used and expenses incurred in the maintenance of steam
plant, the book cost of which is includible in Account 312, Boiler Plant
Equipment. (See § 1767.17 (b).)

B. For the purpose of making charges hereto and to Account 513,
Maintenance of Electric Plant, the point at which steam plant is
distinguished from electric plant is defined as follows:

1\. Inlet flange of throttle valve on prime mover.

2\. Flange of all steam extraction lines on prime mover.

3\. Hotwell pump outlet on condensate lines.

4\. Inlet flange of all turbine-room auxiliaries.

5\. Connection to line side of motor starter for all boiler-plant
equipment.

**513 Maintenance of Electric Plant.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and materials used and expenses incurred in the maintenance of electric
plant, the book of which is includible in Account 313, Engines and
Engine-Driven Generators; Account 314, Turbogenerator Units; and Account
315, Accessory Electric Equipment. (See § 1767.17 (b) and Paragraph B of
Account 512.)

**514 Maintenance of Miscellaneous Steam Plant.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and materials used and expenses incurred in maintenance of miscellaneous
steam generation plant, the book cost of which is includible in Account
316, Miscellaneous Power Plant Equipment. (See § 1767.17 (b).)

[Nuclear Power Generation Operations]{.underline}

**517 Operation Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of the
operation of nuclear power generating stations. Direct supervision of
specific activities, such as fuel handling, reactor operations, and
generator operations shall be charged to the appropriate account. (See §
1767.17 (a).)

**518 Nuclear Fuel Expense.**

A. This account shall be debited and Account 120.5, Accumulated
Provision for Amortization of Nuclear Fuel Assemblies, credited for the
amortization of the net cost of nuclear fuel assemblies used in the
production of energy. The net cost of nuclear fuel assemblies subject to
amortization shall be the cost of nuclear fuel assemblies plus or less
the expected net salvage of uranium, plutonium, and other byproducts and
unburned fuel. The utility shall adopt the necessary procedures to
assure that charges to this account are distributed according to the
thermal energy produced in such periods.

B. This account shall also include the costs involved when fuel is
leased.

C. This account shall also include the cost of other fuels, used for
ancillary steam facilities, including superheat.

D. This account shall be debited or credited as appropriate for
significant changes in the amounts estimated as the net salvage value of
uranium, plutonium, and other byproducts contained in Account 157,
Nuclear Materials Held for Sale, and the amount realized upon the final
disposition of the materials. Significant declines in the estimated
realizable value of items carried in Account 157 may be recognized at
the time of market price declines by charging this account and crediting

Account 157. When the declining change occurs while the fuel is recorded
in Account 120.3, Nuclear Fuel Assemblies in Reactor, the effect shall
be amortized over the remaining life of the fuel.

**519 Coolants and Water.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, and materials used and expenses
incurred for heat transfer materials and water used for steam and
cooling purposes.

[Items]{.underline}

[Labor]{.underline}:

1\. Operation of water supply facilities.

2\. Handling of coolants and heat transfer materials.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

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 water for general station use or
the initial charge for coolants, heat transfer, or moderator fluids,
chemicals, or other supplies capitalized.

**520 Steam Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, and materials used and expenses
incurred in production of steam through nuclear processes, and similar
expenses for operation of any auxiliary superheat facilities.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervising steam production.

2\. Fuel handling including removal, insertion, disassembly, and
preparation for cooling operations and shipment.

3\. Testing instruments and gauges.

4\. Health, safety, monitoring, and decontamination activities.

5\. Waste disposal.

6\. Operating steam boilers and auxiliary steam, superheat facilities.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Chemical supplies.

2\. Charts, and logs.

3\. Health, safety, monitoring, and decontamination supplies.

4\. Boiler inspection fees.

5\. Lubricants.

**521 Steam from Other Sources.**

This account shall include the cost of steam purchased or transferred
from another department of the utility or from others under a joint
facility operating arrangement for use in prime movers devoted to the
production of electricity.

Note: The records shall be so kept as to show separately for each
company from which steam is purchased, the point of delivery, the
quantity, the price, and the total charge. When steam is transferred
from another operating department, the utility shall be prepared to show
full details of the cost of producing such steam, the basis of the
charges to electric generation, and the extent and manner of use by each
department involved.

**522 Steam Transferred - Credit.**

A. This account shall include credits for expenses of producing steam
which are charged to others or to other utility departments under a
joint operating arrangement. Include also credits for steam expenses
chargeable to other electric accounts outside of the steam generation
group. Full details of the basis of determination of the cost of steam
transferred shall be maintained.

B. If the charges to others or to other departments of the utility
include an amount for depreciation, taxes, and return on the joint steam
facilities, such portion of the charge shall be credited in the case of
others, to Account 454, Rent from Electric Property, and in the case of
other departments of the utility, to Account 455, Interdepartmental
Rents.

**523 Electric Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in operating turbogenerators, steam turbines and their
auxiliary apparatus, switch gear, and other electric equipment to the
points where electricity leaves for conversion for transmission or
distribution.

[Items]{.underline}

[Labor]{.underline}:

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 preparing reports on electric
plant operations.

8\. Testing, checking and adjusting meters, gauges, and other
instruments, relays, controls, and other equipment in the electric
plant.

9\. Cleaning electric plant equipment when not incidental to
maintenance.

10\. Repacking glands and replacing gauge glasses.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

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 of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred which are not specifically
provided for or are not readily assignable to other nuclear generation
operation accounts.

[Items]{.underline}

[Labor]{.underline}:

1\. General clerical and stenographic work.

2\. Plant security.

3\. Building service.

4\. Care of grounds, including snow removal, and grass cutting

5\. Miscellaneous labor.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. General operating supplies, such as tools, 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 expenses, printing and stationery.

7\. Transportation expenses.

8\. Meals, traveling, and incidental expenses.

9\. Research, development, and demonstration expenses.

**525 Rents.**

This account shall include all rents of property of others used,
occupied, or operated in connection with nuclear generation. (See §
1767.17 (c).)

[Nuclear Power Generation Maintenance]{.underline}

**528 Maintenance Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of
maintenance of nuclear generation facilities. Direct field supervision
of specific jobs shall be charged to the appropriate maintenance
account. (See § 1767.17 (a).)

**529 Maintenance of Structures.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in the maintenance of structures,
the book cost of which is includible in Account 321, Structures and
Improvements. (See

§ 1767.17 (b).)

**530 Maintenance of Reactor Plant Equipment.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in the maintenance of reactor
plant, the book cost of which is includible in Account 322, Reactor
Plant Equipment. (See

§ 1767.17 (b).)

**531 Maintenance of Electric Plant.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in the maintenance of electric
plant, the book cost of which is includible in Account 323,
Turbogenerator Units, and Account 324, Accessory Electric Equipment.
(See § 1767.17 (b).)

**532 Maintenance of Miscellaneous Nuclear Plant.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of miscellaneous
nuclear generating plant, the book cost of which is includible in
Account 325, Miscellaneous Power Plant Equipment. (See § 1767.17 (b).)

[Hydraulic Power Generation Operations]{.underline}

**535 Operation Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of the
operation of hydraulic power generating stations. Direct supervision of
specific activities, such as hydraulic operation, and generator
operation shall be charged to the appropriate account. (See § 1767.17
(a).)

**536 Water for Power.**

This account shall include the cost of water used for hydraulic power
generation.

[Items]{.underline}

1\. Cost of water purchased from others, including water tolls paid
reservoir companies.

2\. Periodic payments for licenses or permits from any governmental
agency for water rights, or payments based on the use of the water.

3\. Periodic payments for riparian rights.

4\. Periodic payments for headwater benefits or for detriments to
others.

5\. Cloud seeding.

**537 Hydraulic Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in operating hydraulic works including reservoirs, dams, and
waterways, and in activities directly relating to the hydroelectric
development outside the generating station. It shall also include the
cost of labor, materials used, and other expenses incurred in connection
with the operation of (1) fish and wildlife, and (2) recreation
facilities. Separate subaccounts shall be maintained for each of the
above.

[Items]{.underline}

[Labor]{.underline}:

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 deicing 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]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Insect control materials.

2\. Lubricants, packing, and other supplies used in the operation of
hydraulic equipment.

3\. Transportation expense.

**538 Electric Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in operating prime movers, generators, and their auxiliary
apparatus, switchgear, and other electric equipment, to the point where
electricity leaves for conversion for transmission or distribution.

[Items]{.underline}

[Labor]{.underline}:

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 preparing reports on plant
operations.

7\. Testing, checking and adjusting meters, gauges, and other
instruments, relays, controls, and other equipment in the plant.

8\. Cleaning plant equipment when not incidental to maintenance work.

9\. Repacking glands.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Lubricants and control system oils.

2\. Motor and generator brushes.

**539 Miscellaneous Hydraulic Power Generation Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred which are not specifically
provided for or are not readily assignable to other hydraulic generation
operation expense accounts.

[Items]{.underline}

[Labor]{.underline}:

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.

6\. Miscellaneous labor.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. General operating supplies, such as tools, gaskets, packing, waste,
hose, indicating 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 expenses.

10\. Research, development, and demonstration expenses.

**540 Rents.**

This account shall include all rents of property of others used,
occupied, or operated in connection with hydraulic power generation,
including amounts payable to the United States for the occupancy of
public lands and reservations for reservoirs, dams, flumes, forebays,
penstocks, and power houses but not including transmission right-of-way.
(See § 1767.17 (c).)

[Hydraulic Power Generation Maintenance]{.underline}

**541 Maintenance Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of the
maintenance of hydraulic power generating stations. Direct field
supervision of specific jobs shall be charged to the appropriate
maintenance account. (See

§ 1767.17 (a).)

**542 Maintenance of Structures.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of hydraulic
structures, the book cost of which is includible in Account 331,
Structures and Improvements. (See § 1767.17 (b).) However, the cost of
labor, materials used, and expenses incurred in the maintenance of fish
and wildlife and recreation facilities, the book cost of which is
includible in Account 331, Structures and Improvements, shall be charged
to Account 545, Maintenance of Miscellaneous Hydraulic Plant.

**543 Maintenance of Reservoirs, Dams, and Waterways.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of plant includible
in Account 332, Reservoirs, Dams, and Waterways. (See § 1767.17 (b).)
However, the cost of labor, materials used, and expenses incurred in the
maintenance of fish and wildlife and recreation facilities, the book
cost of which is includible in Account 332, Reservoirs, Dams, and
Waterways, shall be charged to Account 545, Maintenance of Miscellaneous
Hydraulic Plant.

**544 Maintenance of Electric Plant.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of plant includible
in Account 333, Water Wheels, Turbines and Generators, and Account 334,
Accessory Electric Equipment, (See § 1767.17 (b).)

**545 Maintenance of Miscellaneous Hydraulic Plant.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of plant, the book
cost of which is includible in Account 335, Miscellaneous Power Plant
Equipment, and Account 336, Roads Railroads and Bridges. (See § 1767.17
(b).) It shall also include the cost of labor, materials used, and other
expenses incurred in the maintenance of (1) fish and wildlife, and (2)
recreation facilities. Separate subaccounts shall be maintained for each
of the above.

[Other Power Generation Operations]{.underline}

**546 Operation Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of the
operation of other power generating stations. Direct supervision of
specific activities, such as fuel handling and engine and generator
operation shall be charged to the appropriate account. (See § 1767.17
(a).)

**547 Fuel.**

This account shall include the cost delivered at the station (See
Account 151, Fuel Stock) of all fuel, such as gas, oil, kerosene, and
gasoline used in other power generation.

**548 Generation Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in operating prime movers, generators, and electric equipment
in other power generating stations, to the point where electricity
leaves for conversion for transmission or distribution.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervising other power generation operation.

2\. Operating prime movers, generators, and auxiliary apparatus and
switching and other electric equipment.

3\. Keeping plant log and records and preparing reports on plant
operations.

4\. Testing, checking, cleaning, oiling, and adjusting equipment.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Dynamo, motor, and generator brushes.

2\. Lubricants and control system oils.

3\. Water for cooling engines and generators.

**549 Miscellaneous Other Power Generation Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in the operation of other power
generating stations which are not specifically provided for or are not
readily assignable to other generation expense accounts.

[Items]{.underline}

[Labor]{.underline}:

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]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

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 expenses.

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 demonstration expenses.

**550 Rents.**

This account shall include all rents of property of others used,
occupied, or operated in connection with other power generation. (See §
1767.17 (c).)

[Other Power Generation Maintenance]{.underline}

**551 Maintenance Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of the
maintenance of other power generating stations. Direct field supervision
of specific jobs shall be charged to the appropriate maintenance
account. (See § 1767.17 (a).)

**552 Maintenance of Structures**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of facilities used
and expenses incurred in maintenance of facilities used in other power
generation, the book cost of which is includible in Account 341,
Structures and Improvements, and Account 342, Fuel Holders, Producers
and Accessories. (See

§ 1767.17 (b).)

**553 Maintenance of Generating and Electric Equipment.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of plant, the book
cost of which is includible in Account 343, Prime Movers; Account 344,
Generators; and Account 345, Accessory Electric Equipment. (See §
1767.17 (b).)

**554 Maintenance of Miscellaneous Other Power Generation**

**Plant.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of other power
generation plant, the book cost of which is includible in Account 346,
Miscellaneous Power Plant Equipment. (See § 1767.17 (b).)

[Other Power Supply Expenses]{.underline}

**555 Purchased Power.**

A. This account shall include the cost at point of receipt by the
utility of electricity purchased for resale. It shall also include, net
settlements for exchange of electricity or power, such as economy
energy, off-peak energy for on-peak energy, and spinning reserve
capacity. In addition, the account shall include the net settlements for
transactions under pooling or interconnection agreements wherein there
is a balancing of debits and credits for energy, or capacity. Distinct
purchases and sales shall not be recorded as exchanges and net amounts
only recorded merely because debit and credit amounts are combined in
the voucher settlement.

B. The records supporting this account shall show, by months, the
demands and demand charges, kilowatt-hours and prices thereof under each
purchase contract and the charges and credits under each exchange or
power pooling contract.

**556 System Control and Load Dispatching.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, and expenses incurred in load
dispatching activities for system control. Utilities having an
interconnected electric system or operating under a central authority
which controls the production and dispatching of electricity may
apportion these costs to this account and Account 561, Load Dispatching,
and Account 581, Load Dispatching.

[Items]{.underline}

[Labor]{.underline}:

1\. Allocating loads to plants and interconnections with others.

2\. Directing switching.

3\. Arranging and controlling clearances for construction, maintenance,
test, and emergency purposes.

4\. Controlling system voltages.

5\. Recording loadings, and water conditions.

6\. Preparing operating reports and data for billing and budget
purposes.

7\. Obtaining reports on the weather and special events.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Expenses]{.underline}:

1\. Communication service provided for system control purposes.

2\. System record and report forms.

3\. Meals, traveling, and incidental expenses.

4\. Obtaining weather and special events reports.

**557 Other Expenses.**

A. This account shall be charged with any production expenses including
expenses incurred directly in connection with the purchase of
electricity, which are not specifically provided for in other production
expense accounts. Charges to this account shall be supported so that a
description of each type of charge will be readily available.

B. Recoveries from insurance companies, under use and occupancy
provisions of policies, of amounts in reimbursement of excessive or
added productions costs for which the insurance company is liable under
the terms of the policy shall be credited to this account.

[Transmission Operation Expenses]{.underline}

**560 Operation Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of the
operation of the transmission system as a whole. Direct supervision of
specific activities, such as station operation and line operation shall
be charged to the appropriate account. (See § 1767.17 (a).)

**561 Load Dispatching.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in load dispatching operations pertaining to the transmission
of electricity.

[Items]{.underline}

[Labor]{.underline}:

1\. Direct switching.

2\. Arranging and controlling clearances for construction, maintenance,
test, and emergency purposes.

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]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Expenses]{.underline}:

1\. Communication service provided for system control purposes.

2\. System record and report forms.

3\. Meals, traveling, and incidental expenses.

4\. Obtaining weather and special events reports.

**562 Station Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in operating transmission substations and switching stations.
If transmission station equipment is located in or adjacent to a
generating station, the expenses applicable to transmission station
operations shall nevertheless be charged to this account.

[Items]{.underline}

[Labor]{.underline}:

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 or changing voltage of regulators,
changing station transformer taps.

3\. Inspecting, testing, and calibrating station equipment for the
purpose of checking its performance.

4\. Keeping station log and records and preparing records on station
operation.

5\. Operating switching and other station equipment.

6\. Standing watch, guarding, and patrolling station and station yard.

7\. Sweeping, mopping, and tidying station.

8\. Care of grounds, including snow removal, and grass cutting.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Building service expenses.

2\. Operating supplies, such as lubricants, commutator brushes, water,
and rubber goods.

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 expenses.

**563 Overhead Line Expenses.**

**564 Underground Line Expenses.**

A. These accounts shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in the operation of transmission lines.

B. If the expenses are not substantial for both overhead and underground
lines, these accounts may be combined.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervising line operation.

2\. Inspecting and testing lightning arresters, circuit breakers,
switches, and grounds.

3\. Load tests of circuits.

4\. Routine line patrolling.

5\. Routine voltage surveys made to determine the condition or
efficiency of transmission system.

6\. Transferring loads, switching and reconnecting circuits and
equipment for operating purposes. (Switching for construction or
maintenance purposes is not includible in this account.)

7\. Routine inspection and cleaning of manholes, conduit, network, and
transformer vaults.

8\. Electrolysis surveys.

9\. Inspecting and adjusting line-testing equipment, such as voltmeters,
ammeters, and wattmeters.

10\. Regulation and addition of oil or gas in high-voltage cable
systems.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Transportation expenses.

2\. Meals, traveling, and incidental expenses.

3\. Tool expenses.

4\. Operating supplies, such as instrument charts, and rubber goods.

**565 Transmission of Electricity by Others.**

This account shall include amounts payable to others for the
transmission of the utility\'s electricity over transmission facilities
owned by others.

**566 Miscellaneous Transmission Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damage,
materials used, and expenses incurred in transmission map and record
work, transmission office expenses, and other transmission expenses not
provided for elsewhere.

[Items]{.underline}

[Labor]{.underline}:

1\. General records of physical characteristics of lines and stations,
such as capacities.

2\. Ground resistance records.

3\. Janitor work at transmission office buildings, including care of
grounds, snow removal, 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]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Communication service.

2\. Building service supplies.

3\. Map and record supplies.

4\. Transmission office supplies and expenses, printing and stationery.

5\. First-aid supplies.

6\. Research, development, and demonstration expenses.

**567 Rents.**

This account shall include rents of property of others used, occupied,
or operated in connection with the transmission system, including
payments to the United States and others for use of public or private
lands and reservations for transmission line rights-of-way. (See §
1767.17 (c).)

[Transmission Maintenance Expenses]{.underline}

**568 Maintenance Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of
maintenance of the transmission system. Direct field supervision of
specific jobs shall be charged to the appropriate maintenance account.
(See § 1767.17 (a).)

**569 Maintenance of Structures.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in the maintenance of structures,
the book cost of which is includible in Account 352, Structures and
Improvements. (See

§ 1767.17 (b).)

**570 Maintenance of Station Equipment.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of station
equipment, the book cost of which is includible in Account 353, Station
Equipment. (See § 1767.17 (b).)

**571 Maintenance of Overhead Lines.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of transmission
plant, the book cost of which is includible in Accounts 354, Towers and
Fixtures; 355, Poles and Fixtures; 356, Overhead Conductors and Devices;
and 359, Roads and Trails. (See § 1767.17 (b).)

[Items]{.underline}

1\. Work of the following character on poles, towers, and fixtures:

a\. Installing or removing additional clamps or strain insulators on
guys in place.

b\. Moving line or guy pole in relocation of the same pole or section of
line.

c\. Painting poles, towers, crossarms, or pole extensions.

d\. Readjusting and changing position of guys 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 or crossarms in use or
salvaged for reuse.

l\. Stubbing poles already in service.

m\. Supporting fixtures and conductors and transferring them to new
poles during pole replacements.

n\. Maintenance of pole signs, stencils, and tags.

2\. Work of the following character on overhead 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 position or spacing of
conductors.

g\. Standing by phones, going to calls, cutting faulty lines clear, or
similar activities at times of emergencies.

h\. Sampling, testing, changing, purifying, and replenishing insulating
oil.

i\. Repairing line testing equipment.

j\. Transferring loads, switching and reconnecting circuits and
equipment for maintenance purposes.

k\. Trimming trees and clearing brush.

l\. Chemical treatment of right of way areas when occurring subsequent
to construction of line.

3\. Work of the following character on roads and 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 its expense.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of

employee pensions and benefits specifically identifiable with employees'
labor costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

**572 Maintenance of Underground Lines.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of transmission
plant, the book cost of which is includible in Accounts 357, Underground
Conduit, and Account 358, Underground Conductors and Devices. (See §
1767.17 (b).)

[Items]{.underline}

1\. Work of the following character on underground conduit:

a\. Cleaning ducts, manholes, and sewer connections.

b\. Minor alterations of handholes, manholes, or vaults.

c\. Refastening, repairing, or moving racks, ladders, hangers in
manholes, or vaults.

d\. Plugging and shelving or replugging ducts.

e\. Repairs to sewers and drains, walls and floors, rings and covers.

2\. Work of the following character on underground 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 from one duct to another.

d\. Repairing conductors and splices.

e\. Repairing or moving junction boxes and potheads.

f\. Refireproofing of cables and repairing supports.

g\. Repairing electrolysis preventive devices for cables.

h\. Repairing cable bonding systems.

i\. Sampling, testing, changing, purifying, and replenishing insulating
oil.

j\. Transferring loads, switching and reconnecting circuits, and
equipment for maintenance purposes.

k\. Repairing line testing equipment.

l\. Repairs to oil or gas equipment in high-voltage cable system and
replacement of oil or gas.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

**573 Maintenance of Miscellaneous Transmission Plant.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of owned or leased
plant which is assignable to transmission operations and is not provided
for elsewhere. (See

§ 1767.17 (b).)

[Distribution Operations Expenses]{.underline}

**580 Operation Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of the
operation of the distribution system. Direct supervision of specific
activities, such as station operation, line operation, and meter
department operation shall be charged to the appropriate account. (See §
1767.17 (a).)

**581 Load Dispatching.**

This account (the keeping of which is optional with the utility) shall
include the cost of labor, employee pensions and benefits, social
security and other payroll taxes, injuries and damages, property
insurance, property taxes, materials used, and expenses incurred in load
dispatching operations pertaining to the distribution of electricity.

[Items]{.underline}

[Labor]{.underline}:

1\. Direct switching.

2\. Arranging and controlling clearances for construction, maintenance,
test, and emergency purposes.

3\. Controlling system voltages.

4\. Preparing operating reports.

5\. Obtaining reports on the weather and special events.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Expenses]{.underline}:

1\. Communication service provided for system control purposes.

2\. System record and report forms.

3\. Meals, traveling, and incidental expenses.

**582 Station Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in the operation of distribution substations.

[Items]{.underline}

[Labor]{.underline}:

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
changing station transformer taps.

3\. Keeping station log and records and preparing reports on station
operation.

4\. Inspecting, testing, and calibrating station equipment for the
purpose of checking its performance.

5\. Operating switching and other station equipment.

6\. Standing watch, guarding, and patrolling station and station yard.

7\. Sweeping, mopping, and tidying station.

8\. Care of grounds, including snow removal, and grass cutting.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Building service expenses.

2\. Operating, supplies, such as lubricants, commutator brushes, water,
and rubber goods.

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 expenses.

Note: If the utility owns storage battery equipment used for supplying
electricity to customers in periods of emergency, the cost of operating
labor and of supplies, such as acid, gloves, hydrometers, thermometers,
soda, automatic cell fillers, and acid proof shoes shall be included in
this account. If significant in amount, a separate subdivision shall be
maintained for such expenses.

**583 Overhead Line Expenses.**

**584 Underground Line Expenses.**

These accounts shall include, respectively, the cost of labor, employee
pensions and benefits, social security and other payroll taxes, injuries
and damages, property insurance, property taxes, materials used, and
expenses incurred in the operation of overhead and underground
distribution lines.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervising line operation.

2\. Changing line transformer taps.

3\. Inspecting and testing lightning arresters, line circuit breakers,
switches, and grounds.

4\. Inspecting and testing line transformers for the purpose of
determining load, temperature, or operation performance.

5\. Patrolling lines.

6\. Load tests and voltage surveys of feeders, 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 capacity provided that the cost of first installation of these
items is included in

Account 368, Line Transformers.

9\. Voltage surveys, either routine or upon request of customers,
including voltage tests at customer\'s main switch.

10\. Transferring loads, switching and reconnecting circuits and
equipment for operation purposes.

11\. Electrolysis surveys.

12\. Inspecting and adjusting line testing equipment.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Tool expense.

2\. Transportation expense.

3\. Meals, traveling, and incidental expenses.

4\. Operating supplies, such as instrument charts, and rubber goods.

**585 Street Lighting and Signal System Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in: (1) The operation of street lighting and signal system
plant which is owned or leased by the utility; and (2) the operation and
maintenance of such plant owned by customers where such work is done
regularly as a part of the street lighting and signal system service.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervising street lighting and signal systems operation.

2\. Replacing lamps and incidental cleaning of glassware and fixtures in
connection therewith.

3\. Routine patrolling for lamp outages, extraneous nuisances, or
encroachments.

4\. Testing lines and equipment including voltage and current
measurement.

5\. Winding and inspection of time switch and other controls.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Street lamp renewals.

2\. Transportation and tool expense.

3\. Meals, traveling, and incidental expenses.

**586 Meter Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in the operation of customer meters and associated equipment.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervising meter operation.

2\. Clerical work on meter history and associated equipment record
cards, test cards, and reports.

3\. Disconnecting and reconnecting, removing and reinstalling, sealing
and unsealing meters and other metering equipment in connection with
initiating or terminating services including the cost of obtaining meter
readings, if incidental to such operation.

4\. Consolidating meter installations due to elimination of separate
meters for different rates of service.

5\. Changing or relocating meters, instrument transformers, time
switches, and other metering equipment.

6\. Resetting time controls, checking operation of demand meters and
other metering equipment, when done as an independent operation.

7\. Inspecting and adjusting meter testing equipment.

8\. Inspecting and testing meters, instrument transformers, time
switches, and other metering equipment on premises or in shops excluding
inspecting and testing incidental to maintenance.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Meter seals and miscellaneous meter supplies.

2\. Transportation expenses.

3\. Meals, traveling, and incidental expenses.

4\. Tool expenses.

Note: The cost of the first setting and testing of a meter is chargeable
to utility plant, Account 370, Meters.

**587 Customer Installations Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in work on customer installations in inspecting premises and in
rendering services to customers of the nature of those indicated by the
list of items hereunder.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervising customer installations work.

2\. Inspecting premises, including the check of wiring for code
compliance.

3\. Investigating, locating, and clearing grounds on customers\' wiring.

4\. Investigating service complaints, including load tests of motors and
lighting and power circuits on customers\' premises; field
investigations of complaints on bills or of voltage.

5\. Installing, removing, renewing, and changing lamps and fuses.

6\. Radio, television, and similar interference work including erection
of new aerials on customers\' premises and patrolling of lines, testing
of lightning arresters, inspection of pole hardware, and examination on
or off premises of customers\' appliances, wiring, or equipment to
locate cause of interference.

7\. Installing, connecting, reinstalling, or removing leased property on
customers\' premises.

8\. Testing, adjusting, and repairing customers\' fixtures and
appliances in the shop or on premises.

9\. Cost of changing customers\' equipment due to changes in service
characteristics.

10\. Investigation of current diversion including setting and removal of
check meters and securing special readings thereon; special calls by
employees in connection with discovery and settlement of current
diversion; changes in customer wiring; and any other labor cost
identifiable as caused by current diversion.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

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 pickup and delivery charges.

6\. Meals, traveling, and incidental expenses.

7\. Rewards paid for discovery of current diversion.

Note A: Amounts billed customers for any work, the cost of which is
charged to this account, shall be credited to this account. Any excess
over costs resulting therefrom, shall be transferred to Account 451,
Miscellaneous Service Revenues.

Note B: Do not include in this account expenses incurred in connection
with merchandising, jobbing, and contract work.

**588 Miscellaneous Distribution Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in distribution system operation
not provided for elsewhere.

[Items]{.underline}

[Labor]{.underline}:

1\. General records of physical characteristics of lines and
substations, such as capacities.

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, Meter Expenses.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Expenses]{.underline}:

1\. Operating records covering poles, transformers, manholes, cables,
and other distribution facilities. Exclude meter records chargeable to
Account 586, Meter Expenses, and station records chargeable to Account
582, Station Expenses, and stores records chargeable to Account 163,
Stores Expense Undistributed.

2\. Janitor work at distribution office buildings including snow removal
and grass cutting.

3\. Communication service.

4\. Building service expenses.

5\. Miscellaneous office supplies and expenses, printing and stationery,
maps and records, and first-aid supplies.

6\. Research, development, and demonstration expenses.

**589 Rents.**

This account shall include rents of property of others used, occupied,
or operated in connection with the distribution system, including
payments to the United States and others for the use and occupancy of
public lands and reservations for distribution line rights of way. (See
§ 1767.17 (c).)

[Distribution Maintenance Expenses]{.underline}

**590 Maintenance Supervision and Engineering.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general supervision and direction of
maintenance of the distribution system. Direct field supervision of
specific jobs shall be charged to the appropriate maintenance account.
(See § 1767.17 (a).)

**591 Maintenance of Structures.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of structures, the
book cost of which is includible in

Account 361, Structures and Improvements. (See § 1767.17 (b).)

**592 Maintenance of Station Equipment.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of plant, the book
cost of which is includible in Account 362, Station Equipment, and
Account 363, Storage Battery Equipment. (See § 1767.17 (b).)

**593 Maintenance of Overhead Lines.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in the maintenance of overhead
distribution line facilities, the book cost of which is includible in
Account 364, Poles, Towers and Fixtures; Account 365, Overhead
Conductors and Devices; and Account 369, Services. (See § 1767.17 (b).)

[Items]{.underline}

1\. Work of the following character on poles, towers, and fixtures:

a\. Installing additional clamps or removing clamps or strain insulators
on guys in place.

b\. Moving line or guy pole in relocation of pole or section of line.

c\. Painting poles, towers, crossarms, or pole extensions.

d\. Readjusting and changing position of guys or braces.

e\. Realigning and straightening poles, crossarms, braces, pins, racks,
brackets, and other 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 to new poles during pole replacements.

m\. Maintaining pole signs, stencils, and tags.

2\. Work of the following character on overhead conductors and devices:

a\. Overhauling and repairing line cutouts, line switches, line
breakers, and capacitor installations.

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 position or spacing of
conductors.

g\. Standing by phones, going to calls, cutting faulty lines clear, or
similar activities at times of emergency.

h\. Sampling, testing, changing, purifying, and replenishing insulating
oil.

i\. Transferring loads, switching, and reconnecting circuits and
equipment for maintenance purposes.

j\. Repairing line testing equipment.

k\. Trimming trees and clearing brush.

l\. Chemical treatment of right-of-way area when occurring subsequent to
construction of line.

3\. Work of the following character on overhead services:

a\. Moving position of service either on pole or on customers\'
premises.

b\. Pulling slack in service wire.

c\. Retying service wire.

d\. Refastening or tightening service bracket.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

**594 Maintenance of Underground Lines.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in the maintenance of underground
distribution line facilities, the book cost of which is includible in
Account 366, Underground Conduit; Account 367, Underground Conductors
and Devices; and Account 369, Services. (See § 1767.17 (b).)

[Items]{.underline}

1\. Work of the following character on underground conduit:

a\. Cleaning ducts, manholes, and sewer connections.

b\. Moving or changing position of conduit or pipe.

c\. Minor alterations of handholes, manholes, 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 underground conductors and
devices:

a\. Repairing circuit breakers, switches, cutouts, network protectors,
and associated relays and control wiring.

b\. Repairing grounds.

c\. Retraining and reconnecting cables in manholes including transfer of
cables from one duct to another.

d\. Repairing conductors and splices.

e\. Repairing or moving junction boxes and potheads.

f\. Refireproofing cables and repairing supports.

g\. Repairing electrolysis preventive devices for cables.

h\. Repairing cable bonding systems.

i\. Sampling, testing, changing, purifying, and replenishing insulating
oil.

j\. Transferring loads, switching and reconnecting circuits and
equipment for maintenance purposes.

k\. Repairing line testing equipment.

l\. Repairing oil or gas equipment in high voltage cable systems and
replacement of oil or gas.

3\. Work of the following character on underground services:

a\. Cleaning ducts.

b\. Repairing any underground service plant.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

**595 Maintenance of Line Transformers.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of distribution
line transformers, the book cost of which is includible in Account 368,
Line Transformers.

(See § 1767.17 (b).)

**596 Maintenance of Street Lighting and Signal Systems.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of plant, the book
cost 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 of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in the maintenance of meters and
meter testing equipment, the book cost of which is includible in Account
370, Meters, and Account 395, Laboratory Equipment, respectively. (See §
1767.17 (b).)

**598 Maintenance of Miscellaneous Distribution Plant.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in maintenance of plant, the book
cost of which is includible in Accounts 371, Installations on
Customers\' Premises, and Account 372, Leased Property on Customers\'
Premises, and any other plant the maintenance of which is assignable to
the distribution function and is not provided for elsewhere. (See §
1767.17 (b).)

[Items]{.underline}

1\. Work of similar nature to that listed in other distribution
maintenance accounts.

2\. Maintenance of office furniture and equipment used by distribution
system department.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

**§ 1767.28 CUSTOMER ACCOUNTS EXPENSES:**

The customer accounts expense accounts identified in this section shall
be used by all RUS borrowers.

[Customer Accounts Operations Expenses]{.underline}

901 Supervision

902 Meter Reading Expenses

903 Customer Records and Collection Expenses

904 Uncollectible Accounts

905 Miscellaneous Customer Accounts Expenses

[Customer Accounts Operations Expenses]{.underline}

**901 Supervision.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general direction and supervision of
customer accounting and collecting activities. Direct supervision of a
specific activity shall be charged to

Account 902, Meter Reading Expenses, or Account 903, Customer Records
and Collection Expenses, as appropriate. (See

§ 1767.17 (a).)

**902 Meter Reading Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in reading customer meters, and
determining consumption when performed by employees engaged in reading
meters.

[Items]{.underline}

[Labor]{.underline}:

1\. Addressing forms for obtaining meter readings by mail.

2\. Changing and collecting meter charts used for billing purposes.

3\. Inspecting time clocks and checking seals when performed by meter
readers and the work represents a minor activity incidental to regular
meter reading routine.

4\. Reading meters, including demand meters, and obtaining load
information for billing purposes. Exclude and charge to Account 586,
Meter Expenses, or to Account 903, Customer Records and Collection
Expenses, as applicable, the cost of obtaining meter readings, first and
final, if incidental to the operation of removing or resetting, sealing
or locking, and disconnecting or reconnecting meters.

5\. Computing consumption from meter reader\'s book or from reports by
mail when done by employees engaged in reading meters.

6\. Collecting from prepayment meters when incidental to meter reading.

7\. Maintaining record of customers\' keys.

8\. Computing estimated or average consumption when performed by
employees engaged in reading meters.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Badges, lamps, and uniforms.

2\. Demand charts, meter books and binders and forms for recording
readings, but not the cost of preparation.

3\. Postage and supplies used in obtaining meter readings by mail.

4\. Transportation, meals, and incidental expenses.

**903 Customer Records and Collection Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in work on customer applications,
contracts, orders, credit investigations, billing and accounting,
collections and complaints.

[Items]{.underline}

[Labor]{.underline}:

1\. Receiving, preparing, recording, and handling routine orders for
service, disconnections, transfers or meter tests initiated by the
customer, excluding the cost of carrying out such orders, which is
chargeable to the account appropriate for the work called for by such
orders.

2\. Investigations of customers\' credit and keeping of records
pertaining thereto, including records of uncollectible accounts written
off.

3\. Receiving, refunding, or applying customer deposits and maintaining
customer deposit, line extension, and other miscellaneous records.

4\. Checking consumption shown by meter readers\' reports where
incidental to preparation of billing date.

5\. Preparing address plates and addressing bills and delinquent
notices.

6\. Preparing billing data.

7\. Operating billing and bookkeeping machines.

8\. Verifying billing records with contracts or rate schedules.

9\. Preparing bills for delivery and mailing or delivering bills.

10\. Collecting revenues, including collection from prepayment meters,
unless incidental to meter-reading operations.

11\. Balancing collections, preparing collections for deposit, and
preparing cash reports.

12\. Posting collections and other credits or charges to customer
accounts and extending unpaid balances.

13\. Balancing customer accounts and controls.

14\. Preparing, mailing, or delivering delinquent notices and preparing
reports of delinquent accounts.

15\. Final meter reading of delinquent accounts when done by collectors
incidental to regular activities.

16\. Disconnecting and reconnecting service because of nonpayment bills.

17\. Receiving, recording, and handling of inquiries, complaints, and
requests for investigations from customers, including preparation of
necessary orders, but excluding the cost of carrying out such orders,
which is chargeable to the account appropriate for the work called for
by such orders.

18\. Statistical and tabulating work on customer accounts and revenues,
but not including special analyses for sales department, rate
department, or other general purposes, unless incidental to regular
customer accounting routines.

19\. Preparing and periodically rewriting meter reading sheets.

20\. Determining consumption and computing estimated or average
consumption when performed by employees other than those engaged in
reading meters.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Address plates and supplies.

2\. Cash overages and shortages.

3\. Commissions or fees to others for collecting.

4\. Payments to credit organizations for investigations and reports.

5\. Postage.

6\. Transportation expenses, including transportation of customer bills
and meter books under centralized billing procedures.

7\. Transportation, meals, and incidental expenses.

8\. Bank charges, exchange, and other fees for 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 history and meter location records is
chargeable to Account 586, Meter Expenses.

**904 Uncollectible Accounts.**

This amount shall be charged with amounts sufficient to provide for
losses from uncollectible utility revenues. Concurrent credits shall be
made to Account 144, Accumulated Provision for Uncollectible Accounts -
Credit. Losses from uncollectible accounts shall be charged to Account
144.

**905 Miscellaneous Customer Accounts Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred not provided for in other accounts.

[Items]{.underline}

[Labor]{.underline}:

1\. General clerical and stenographic work.

2\. Miscellaneous labor.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Communication service.

2\. Miscellaneous office supplies and expenses and stationery and
printing other than those specifically provided for in Account 902 and
Account 903.

**§ 1767.29 CUSTOMER SERVICE AND INFORMATIONAL EXPENSES:**

The customer service and informational expense accounts identified in
this section shall be used by all RUS borrowers.

[Customer Service and Informational Expenses]{.underline}

907 Supervision

908 Customer Assistance Expenses

909 Informational and Instructional Advertising Expenses

910 Miscellaneous Customer Service and Informational

Expenses

[Customer Service and Informational Expenses]{.underline}

**907 Supervision.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general direction and supervision of
customer service activities, the object of which is to encourage safe,
efficient, and economical use of the utility\'s service. Direct
supervision of a specific activity within customer service and
informational expense classification shall be charged to the account
wherein the costs of such activity are included. (See § 1767.17 (a).)

**908 Customer Assistance Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in providing instructions or
assistance to customers, the object of which is to encourage safe,
efficient, and economical use of the utility\'s service.

[Items]{.underline}

[Labor]{.underline}:

1\. Direct supervision of department.

2\. Processing customer inquiries relating to the proper use of electric
equipment, the replacement of such equipment, and information related to
such equipment.

3\. Advice directed to customers as to how they may achieve the most
efficient and safest use of electric equipment.

4\. Demonstrations, exhibits, lectures, and other programs designed to
instruct customers in the safe, economical, or efficient use of electric
service, and/or oriented toward conservation of energy.

5\. Engineering and technical advice to customers, the object of which
is to promote safe, efficient, and economical use of the utility\'s
service.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Supplies and expenses pertaining to demonstrations, exhibits,
lectures, and other programs.

2\. Loss in value on equipment and appliances used for customer
assistance programs.

3\. Office supplies and expenses.

4\. Transportation, meals, and incidental expenses.

Note: Do not include in this account expenses that are provided for
elsewhere, such as Accounts 416, Costs and Expenses of Merchandising,
Jobbing, and Contract Work; 587, Customer Installations Expenses; and
912, Demonstrating and Selling Expenses.

**909 Informational and Instructional Advertising Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in activities which primarily
convey information as to what the utility urges or suggests customers
should do in utilizing electric service to protect health and safety, to
encourage environmental protection, to utilize their electric equipment
safely and economically, or to conserve electric energy.

[Items]{.underline}

[Labor]{.underline}:

1\. Direct supervision of information activities.

2\. Preparing informational materials for newspapers, periodicals, and
billboards and preparing and conducting informational motion pictures,
radio and television programs.

3\. Preparing informational booklets and bulletins used in direct
mailings.

4\. Preparing informational window and other displays.

5\. Employing agencies, selecting media, and conducting negotiations in
connection with the placement and subject matter of information
programs.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Use of newspapers, periodicals, billboards, 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 informational materials by the
utility.

5\. Office supplies and expenses.

Note A: Exclude from this account and charge to

Account 930.2, Miscellaneous General Expenses, the cost of publication
of stockholder reports, dividend notices, bond redemption notices,
financial statements, and other notices of a general corporate
character. Also exclude all expenses of a promotional, institutional,
goodwill, or political nature, which are includible in such accounts as
913, Advertising Expenses; 930.1, General Advertising Expenses; and
426.4, Expenditures for Certain Civic, Political and Related Activities.

Note B: Entries relating to informational advertising included in this
account shall contain or refer to supporting documents which identify
the specific advertising message. If references are used, copies of the
advertising message shall be readily available.

**910 Miscellaneous Customer Service and Informational**

**Expenses**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in connection with customer service and informational
activities which are not includible in other customer information
expense accounts.

[Items]{.underline}

[Labor]{.underline}:

1\. General clerical and stenographic work not assigned to specific
customer service and informational programs.

2\. Miscellaneous labor.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Communication service.

2\. Printing, postage, and office supplies expenses.

**§ 1767.30 SALES EXPENSES:**

The sales expense accounts identified in this section shall be used by
all RUS borrowers.

[Sales Expenses]{.underline}

911 Supervision

912 Demonstrating and Selling Expenses

913 Advertising Expenses

916 Miscellaneous Sales Expenses

[Sales Expenses]{.underline}

**911 Supervision.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
and expenses incurred in the general direction and supervision of sales
activities, except merchandising. Direct supervision of a specific
activity, such as demonstrating, selling, or advertising shall be
charged to the account wherein the costs of such activity are included.
(See § 1767.17 (a).)

**912 Demonstrating and Selling Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in promotional, demonstrating, and
selling activities, except by merchandising, the object of which is to
promote or retain the use of utility services by present and prospective
customers.

[Items]{.underline}

[Labor]{.underline}:

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 utility services.

4\. Experimental and development work in connection with new and
improved appliances and equipment, prior to general public acceptance.

5\. Solicitation of new customers or of additional business from old
customers, including commissions paid employees.

6\. Engineering and technical advice to present or prospective customers
in connection with promoting or retaining the use of utility services.

7\. Special customer canvasses when their primary purpose is the
retention of business or the promotion of new business.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Supplies and expenses pertaining to demonstration, experimental, and
development activities.

2\. Booth and temporary space rental.

3\. Loss in value on equipment and appliances used for demonstration
purposes.

4\. Transportation, meals, and incidental expenses.

**913 Advertising Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in advertising designed to promote
or retain the use of utility service, except advertising the sale of
merchandise by the utility.

[Items]{.underline}

[Labor]{.underline}:

1\. Direct supervision of department.

2\. Preparing advertising material for newspapers, periodicals, and
billboards, and preparing and conducting motion pictures, radio, and
television programs.

3\. Preparing booklets and bulletins used in direct mail advertising.

4\. Preparing window and other displays.

5\. Clerical and stenographic work.

6\. Investigating advertising agencies and media and conducting
negotiations in connection with the placement and subject matter of
sales advertising.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Advertising in newspapers, periodicals, billboards, and radio for
sales promotion purposes, but not including institutional or goodwill
advertising includible in Account 930.1, General Advertising Expenses.

2\. Materials and services given as prizes or otherwise in connection
with civic lighting contests, canning, or cooking contests, and bazaars
in order to publicize and promote the use of utility services.

3\. Fees and expenses of advertising agencies 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 inducement to purchase appliances.

7\. Printing booklets, dodgers, and bulletins.

8\. Supplies and expenses in preparing advertising material.

9\. Office supplies and expenses.

Note A: The cost of advertisements which set forth the value or
advantages of utility service without reference to specific appliances,
or, if reference is made to appliances, invites the reader to purchase
appliances from his dealer or refer to appliances not carried for sale
by the utility, shall be considered sales promotion advertising and
charged to this account. However, advertisements which are limited to
specific makes of appliances sold by the utility and price and terms,
thereof, without referring to the value or advantages of utility
service, shall be considered as merchandise advertising and the cost
shall be charged to Costs and Expenses of Merchandising, Jobbing and
Contract Work, Account 416.

Note B: Advertisements which substantially mention or refer to the value
or advantages of utility service, together with specific reference to
makes of appliance sold by the utility and the price, and terms,
thereof, and designed for the joint purpose of increasing the use of
utility service and the sales of appliances, shall be considered as a
combination advertisement and the costs shall be distributed between
this account and Account 416 on the basis of space, time, or other
proportional factors.

Note C: Exclude from this account and charge to

Account 930.2, Miscellaneous General Expenses, the cost of publication
of stockholder reports, dividend notices, bond redemption notices,
financial statements, and other notices of a general corporate
character. Also exclude all institutional or goodwill advertising. (See
Account 930.1, General Advertising Expenses.)

**916 Miscellaneous Sales Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, materials used, and expenses
incurred in connection with sales activities, except merchandising,
which are not includible in other sales expense accounts.

[Items]{.underline}

[Labor]{.underline}:

1\. General clerical and stenographic work not assigned to specific
functions.

2\. Special analysis of customer accounts and other statistical work for
sales purposes not a part of the regular customer accounting and billing
routine.

3\. Miscellaneous labor.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Communication service.

2\. Printing, postage, office supplies, and expenses applicable to sales
activities, except those chargeable to Account 913, Advertising
Expenses.

**§ 1767.31 ADMINISTRATIVE AND GENERAL EXPENSES:**

The administrative and general expense accounts identified in this
section shall be used by all RUS borrowers.

[Administrative and General Operations Expenses]{.underline}

920 Administrative and General Salaries

921 Office Supplies and Expenses

922 Administrative Expenses Transferred - Credit

923 Outside Services Employed

924 Property Insurance

925 Injuries and Damages

926 Employee Pensions and Benefits

927 Franchise Requirements

928 Regulatory Commission Expenses

929 Duplicate Charges - Credit

930.1 General Advertising Expenses

930.2 Miscellaneous General Expenses

931 Rents

[Administrative and General Maintenance Expenses]{.underline}

935 Maintenance of General Plant

[Administrative and Operations General]{.underline}

**920 Administrative and General Salaries.**

A. This account shall include the compensation (salaries, bonuses,
employee pensions and benefits, social security and other payroll taxes,
injuries and damages, and other consideration for services, but not
including directors\' fees) of officers, executives, and other employees
of the utility properly chargeable to utility operations and not
chargeable directly to a particular operating function.

B. This account may be subdivided in accordance with a classification
appropriate to the departmental or other functional organization of the
utility.

**921 Office Supplies and Expenses.**

A. This account shall include office supplies and expenses incurred in
connection with the general administration of the utility\'s operations
which are assignable to specific administrative or general departments
and are not specifically provided for in other accounts. This includes
the expenses of the various administrative and general departments, the
salaries and wages of which are includible in Account 920.

B. This account may be subdivided in accordance with a classification
appropriate to the departmental or other functional organization of the
utility.

Note: Office expenses which are clearly applicable to any category of
operating expenses other than the administrative and general category
shall be included in the appropriate account in such category. Further,
general expenses which apply to the utility as a whole rather than to a
particular administrative function, shall be included in Account 930.2,
Miscellaneous General Expenses.

[Items]{.underline}

1\. Automobile service, including charges through clearing account.

2\. Bank messenger and service charges.

3\. Books, periodicals, bulletins, and subscriptions to newspapers,
newsletters, and tax services.

4\. Building service expenses for customer accounts, sales, and
administrative and general purposes.

5\. Communication service expenses.

6\. Cost of individual items of office equipment used by general
departments which are of small value or short life.

7\. Membership fees and dues in trade, technical, and professional
associations paid by a utility for employees. (Company memberships 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 expenses.

**922 Administrative Expenses Transferred - Credit.**

This account shall be credited with administrative expenses recorded in
Account 920 and Account 921 which are transferred to construction costs
or to nonutility accounts. (See

§ 1767.16 (d).)

**923 Outside Services Employed.**

A. This account shall include the fees and expenses of professional
consultants and others for general services which are not applicable to
a particular operating function or other accounts. It shall include also
the pay and expenses of persons engaged for a special or temporary
administrative or general purpose in circumstances where the person so
engaged is not considered as an employee of the utility.

B. This account shall be so maintained as to permit ready summarization
according to the nature of service and the person furnishing the same.

[Items]{.underline}

1\. Fees, pay, and expenses of accountants and auditors, actuaries,
appraisers, attorneys, engineering consultants, management consultants,
negotiators, public relations counsel, and tax consultants.

2\. Supervision fees and expenses paid under contracts for general
management services.

Note: Do not include inspection and brokerage fees and commissions
chargeable to other accounts or fees and expenses in connection with
security issues which are includible in the expenses of issuing
securities.

**924 Property Insurance.**

A. This account shall include the cost of insurance or reserve accruals
to protect the utility against losses and damages to owned or leased
property used in its utility operations. It shall also include the cost
of labor, employee pensions and benefits, social security and other
payroll taxes, injuries and damages, and the related supplies and
expenses incurred in property insurance activities.

B. Recoveries from insurance companies or others for property damages
shall be credited to the account charged with the cost of the damage. If
the damaged property has been retired, the credit shall be to the
appropriate account for accumulated provision for depreciation.

C. Records shall be kept so as to show the amount of coverage for each
class of insurance carried, the property covered, and the applicable
premiums. Any dividends distributed by mutual insurance companies shall
be credited to the accounts to which the insurance premiums were
charged.

[Items]{.underline}

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

Note A: The cost of insurance or reserve accruals capitalized, shall be
charged to construction and retirement either directly or by transfers
to construction and retirement work orders from this account.

Note B: The cost of insurance or reserve accruals for the following
classes of property shall be charged as indicated:

1\. Materials, supplies, and stores equipment to Account 163, Stores
Expense Undistributed, or appropriate materials account.

2\. Transportation and other general equipment to appropriate clearing
accounts that may be maintained.

3\. Electric plant leased to others to Account 413, Expenses of Electric
Plant Leased to Others.

4\. Nonutility property to the appropriate nonutility income account.

5\. Merchandise and jobbing property to Account 416, Costs and Expenses
of Merchandising, Jobbing and Contract Work.

Note C: The cost of labor, employee pensions and benefits, social
security and other payroll taxes, and the related supplies and expenses
of administrative and general employees who are only incidentally
engaged in property insurance work may be included in Account 920 and
Account 921, as appropriate.

Note D: The cost of insurance or reserve accruals applicable to the
various utility functions shall be charged to the specific functional
operations and the appropropriate miscellaneous administrative expense
accounts either directly or by transfers from this account.

**925 Injuries and Damages.**

A. This account shall include the cost of insurance or reserve accruals
to protect the utility against injuries and damages claims of employees
or others, losses of such character not covered by insurance, and
expenses incurred in settlement of injuries and damages claims. It shall
also include the cost of labor, employee pensions and benefits, social
security and other payroll taxes, injuries and damages, related
supplies, and expenses incurred in injuries and damages activities.

B. Reimbursements from insurance companies or others for expenses
charged hereto on account of injuries, damages, and insurance dividends
or refunds shall be credited to this account.

[Items]{.underline}

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

Note A: Payments to or in behalf of employees for accident or death
benefits, hospital expenses, medical expenses, or for salaries while
incapacitated for service or on leave of absence beyond periods normally
allowed, when not the result of occupational injuries, shall be charged
to Account 926, Employee Pensions and Benefits. (See also Note B of
Account 926.)

Note B: The cost of injuries and damages or reserve accruals capitalized
shall be charged to construction and retirement activities either
directly or by transfers from this account to the applicable
construction and retirement work orders.

Note C: The cost of insurance or reserve accruals applicable to the
various utility functions shall be charged to the specific functional
operations and the appropropriate miscellaneous administrative expense
accounts either directly or by transfers from this account.

Note D: Exclude herefrom the time and expenses of employees (except
those engaged in injuries and damages activities) spent in attendance at
safety and accident prevention educational meetings, if occurring during
the regular work period.

Note E: The cost of labor, employee pensions and benefits, social
security and other payroll taxes, and the related supplies and expenses
of administrative and general employees who are only incidentally
engaged in injuries and damages activities, may be included in Account
920 and

Account 921, as appropriate.

**926 Employee Pensions and Benefits.**

A. This account shall include pensions paid to or on behalf of retired
employees or accruals to provide for pensions or payments for the
purchase of annuities for this purpose, when the utility has definitely,
by contract, committed itself to a pension plan under which the pension
funds are irrevocably devoted to pension purposes and payments for
employee accident, sickness, hospital, and death benefits, or insurance
therefor. Include, also, expenses incurred in medical, educational, or
recreational activities for the benefit of employees and administrative
expenses in connection with employee pensions and benefits.

B. The utility shall maintain a complete record of accruals or payments
for pensions and be prepared to furnish full information to RUS of the
plan under which it has created or proposes to create a pension fund and
a copy of the declaration of trust or resolution under which the pension
plan is established.

C. There shall be credited to this account, the portion of pensions and
benefits expenses which is applicable to nonutility operations, the
specific functional operations, maintenance, and administrative expense
accounts, and to construction and retirement activities unless such
amounts are distributed directly to the accounts involved and are not
included herein in the first instance.

D. Records in support of this account shall be so kept that the total
pensions expense, the total benefits expense, the administrative
expenses included herein, and the amounts of pensions and benefits
expenses transferred to the operations, maintenance, administrative,
construction or retirement accounts will be readily available.

[Items]{.underline}

1\. Payment of pensions to retirees on a nonaccrual basis.

2\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

3\. Group and life insurance premiums (credit dividends received).

4\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

5\. Payments for accident, sickness, hospital, and death benefits or
insurance.

6\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

7\. Expenses in connection with educational and recreational activities
for the benefit of employees.

Note A: The cost of labor, employee pensions and benefits, social
security and other payroll taxes, injuries and damages, and the related
supplies and expenses of administrative and general employees who are
only incidentally engaged in employee pension and benefit activities may
be included in

Account 920 and Account 921, as appropriate.

Note B: Salaries paid to employees during periods of nonoccupational
sickness may be charged to the appropriate labor account rather than to
employee benefits.

**927 Franchise Requirements.**

A. This account shall include payments to municipal or other
governmental authorities and the cost of materials, supplies, and
services furnished such authorities without reimbursement in compliance
with franchise, ordinance, or similar requirements; provided, however,
that the utility may charge to this account at regular tariff rates,
instead of cost, utility service furnished without charge under
provisions of franchises.

B. When no direct outlay is involved, concurrent credit for such charges
shall be made to Account 929, Duplicate

Charges - Credit.

C. The account shall be maintained so as to readily reflect the amounts
of cash outlays, utility service supplied without charge, and other
items furnished without charge.

Note A: Franchise taxes shall not be charged to this account, but to
Account 408.1, Taxes Other Than Income Taxes, Utility Operating Income.

Note B: Any amount paid as initial consideration for a franchise running
for more than one 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 incidentally engaged in such work) properly includible in
utility operating expenses, incurred by the utility in connection with
formal cases before regulatory commissions or other regulatory bodies or
cases in which such a body is a party, including payments made to a
regulatory commission for fees assessed against the utility for pay and
expenses of such commission, its officers, agents, and employees, and
also including payments made to the United States for the administration
of the Federal Power Act.

B. Amounts of regulatory commission expenses which, by approval or
direction of RUS, are to be spread over future periods shall be charged
to Account 182.3, Other Regulatory Assets, and amortized by charges to
this account.

C. The utility shall be prepared to show the cost of each formal case.

[Items]{.underline}

1\. Salaries, fees, retainers, and expenses of counsel, solicitors,
attorneys, accountants, engineers, clerks, attendants, witnesses, and
others engaged in the prosecution of or defence against petitions or
complaints presented to regulatory bodies or in the valuation of
property owned or used by the utility in connection with such cases.

2\. Office supplies and expenses, payments to public service or other
regulatory commissions, stationery and printing, traveling expenses, and
other expenses incurred directly in connection with formal cases before
regulatory commissions.

Note A: Exclude from this account and include in other appropriate
operating expense accounts, expenses incurred in the improvement of
service, additional inspection, or rendering reports which are made
necessary by the rules and regulations, or orders, of regulatory bodies.

Note B: Do not include in this account amounts includible in
Account 302, Franchises and Consents; Account 181, Unamortized Debt
Expense; or Account 214, Capital Stock Expense.

**929 Duplicate Charges - Credit.**

This account shall include concurrent credits for charges which may be
made to operating expenses or to other accounts for the use of utility
service from its own supply. Include, also, offsetting credits for any
other charges made to operating expenses for which there is no direct
money outlay.

**930.1 General Advertising Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
materials used, and expenses incurred in advertising and related
activities, the cost of which by their content and purpose are not
provided for elsewhere.

[Items]{.underline}

[Labor]{.underline}:

1\. Supervision.

2\. Preparing advertising material for newspapers, periodicals, and
billboards and preparing or conducting motion pictures, radio, and
television programs.

3\. Preparing booklets and bulletins used in direct mail advertising.

4\. Preparing window and other displays.

5\. Clerical and stenographic work.

6\. Investigating and employing advertising agencies, selecting media,
and conducting negotiations in connection with the placement and subject
matter of advertising.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

2\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to the property of
others.

3\. Fees and expenses of claim investigators.

4\. Payment of awards to claimants for court costs and attorneys\'
services.

5\. Medical and hospital service and expenses for employees as the
result of occupational injuries or resulting from claims of others.

6\. Compensation payments under workmen\'s compensation laws.

7\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

8\. Cost of safety, accident prevention, and similar educational
activities.

[Materials and Expenses]{.underline}:

1\. Advertising in newspapers, periodicals, billboards, and radios.

2\. Advertising matter such as posters, bulletins, booklets, and related
items.

3\. Fees and expenses of advertising agencies and commercial artists.

4\. Postage and direct mail advertising.

5\. Printing of booklets, dodgers, and bulletins.

6\. Supplies and expenses in preparing advertising materials.

7\. Office supplies and expenses.

Note A: Properly includible in this account is the cost of advertising
activities on a local or national basis of a goodwill or institutional
nature, which is primarily designed to improve the image of the utility
or the industry, including advertisements which inform the public
concerning matters affecting the company\'s operations, such as, the
cost of providing service, the company\'s efforts to improve the quality
of service, and the company\'s efforts to improve and protect the
environment. Entries relating to advertising included in this account
shall contain or refer to supporting documents which identify the
specific advertising message. If references are used, copies of the
advertising message shall be readily available.

Note B: Exclude from this account and include in

Account 426.4, Expenditures for Certain Civic, Political and Related
Activities, expenses for advertising activities, which are designed to
solicit public support or the support of public officials in matters of
a political nature.

**930.2 Miscellaneous General Expenses.**

This account shall include the cost of labor, employee pensions and
benefits, social security and other payroll taxes, injuries and damages,
property insurance, property taxes, and expenses incurred in connection
with the general management of the utility not provided for elsewhere.

[Items]{.underline}

[Labor]{.underline}:

1\. Miscellaneous labor not elsewhere provided for.

[Taxes]{.underline}:

1\. Federal and state unemployment.

2\. F.I.C.A.

3\. Property.

[Employee Pensions and Benefits]{.underline}: The portion of employee
pensions and benefits specifically identifiable with employees' labor
costs charged herein or, in the absence of specific employee
identification, the portion of employee pensions and benefits, allocated
on the more equitable basis of either direct labor dollars or direct
labor hours, applicable to the labor items detailed above, including:

1\. Accruals for or payments to pension funds or to insurance companies
for pension purposes.

2\. Group and life insurance premiums (credit dividends received).

3\. Payments for medical and hospital services and expenses of employees
when not the result of occupational injuries.

4\. Payments for accident, sickness, hospital, and death benefits or
insurance.

5\. Payments to employees incapacitated for service or on leave of
absence beyond periods normally allowed when not the result of
occupational injuries or in excess of statutory awards.

6\. Expenses in connection with educational and recreational activities
for the benefit of employees.

[Insurance]{.underline}:

1\. Premiums payable to insurance companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot, and similar insurance.

2\. Amounts credited to Account 228.1, Accumulated Provision for
Property Insurance, for similar protection.

3\. Special costs incurred in procuring insurance.

4\. Insurance inspection service.

5\. Insurance counsel, brokerage fees, and expenses.

6\. Premiums payable to insurance companies for protection against
claims from injuries and damages by employees or others, such as public
liability, property damages, casualty, employee liability, etc., and
amounts credited to Account 228.2, Accumulated Provision for Injuries
and Damage, for similar protection.

7\. Losses not covered by insurance or reserve accruals on account of
injuries or deaths to employees or others and damages to 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 expenses for employees as the
result of occupational injuries or resulting from claims of others.

11\. Compensation payments under workmen\'s compensation laws.

12\. Compensation paid while incapacitated as the result of occupational
injuries. (See Account 924, Note A.)

13\. Cost of safety, accident prevention, and similar educational
activities.

[Expenses]{.underline}:

1\. Industry association dues for company memberships.

2\. Contributions for conventions and meetings of the industry.

3\. Research, development, and demonstration expenses not charged to
other operation and maintenance expense accounts on a functional basis.

4\. Communication service not chargeable to other accounts.

5\. Trustee, registrar, and transfer agent fees 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 reports to stockholders.

11\. Public notices of financial, operating, and other data required by
regulatory statutes, not including, however, notices required in
connection with security issues or acquisitions of property.

**931 Rents.**

This account shall include rents properly includible in utility
operating expenses for the property of others used, occupied, or
operated in connection with the customer accounts, customer service and
informational, sales, general, and administrative functions of the
utility. (See § 1767.17 (c).)

[Administrative and General Maintenance Expenses]{.underline}

**935 Maintenance of General Plant.**

A. This account shall include the cost assignable to customer accounts,
sales, administrative, and general functions of labor, employee pensions
and benefits, social security and other payroll taxes, injuries and
damages, materials used, and expenses incurred in the maintenance of
property, the book cost of which is includible in Account 390,
Structures and Improvements; Account 391, Office Furniture and
Equipment; Account 397, Communication Equipment; and Account 398,
Miscellaneous Equipment. (See § 1767.17 (b).)

B. Maintenance expenses on office furniture and equipment used elsewhere
than in general, commercial, and sales offices shall be 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 clearing account, if used.

Note: Maintenance of plant included in other general equipment accounts
shall be included herein unless charged to clearing accounts or to the
particular functional maintenance expense account indicated by the use
of the equipment.

**§ 1767.32 - 1767.40 \[Reserved\]**

**§ 1767.41 ACCOUNTING METHODS AND PROCEDURES REQUIRED OF ALL**

**RUS BORROWERS:**

All RUS borrowers shall maintain and keep their books of accounts and
all other books and records which support the entries in such books of
accounts in accordance with the accounting principles prescribed in this
section. Interpretations Nos. 133, 134, 137, 403, 404, 602, 606, 618,
627, 628, and 629 adopt and implement the provisions of standards issued
by the Financial Accounting Standards Board (FASB). Each interpretation
includes a synopsis of the requirements of the standard as well as
specific accounting requirements and interpretations required by RUS.
The synopsis provides general information to assist borrowers in
determining whether the standard applies to an individual cooperative's
operations. The synopsis is not intended to change the requirements of
the FASB standards unless it is set forth in the section entitled RUS
Accounting Requirements in each interpretation. If a particular borrower
believes a conflict exists between the FASB standard and an RUS
interpretation, the borrower shall contact the Director, PASD, to seek
resolution of the issue.

[Numerical Index]{.underline}

[Number]{.underline} [Title]{.underline}

101 Work Order Procedures

102 Line Conversion

103 Sacrificial Anodes and the Replacement of a Neutral

104 Terminal Facilities

105 Pole Top Disconnect Switch

106 Steel Pole Reinforcers

107 Mobile Substations

108 Security Lights

109 Joint Use

110 First Clearing and Grading of Land and Rights of Way

111 Engineering Contracts for System Planning

112 Determination of Availability of Service

113 Temporary Facilities (Services)

114 Construction Work in Progress Damaged or Destroyed by

Storm

115 Liquidated Damages

[Number]{.underline} [Title]{.underline}

116 Nonrefundable Payments for Construction

117 Refunds of Overpayments for Materials and Equipment

118 Load Control Equipment

119 Special Equipment

120 Meter Sockets and Meters

121 Minimum - Maximum Voltmeters

122 Retrofitting Demand Meters

123 Transformer Conversions

124 Transclosures

125 Retirement Units

126 Establishment of Continuing Property Records

127 Continuing Property Records for Buildings

128 Sale of Property

129 Gain or Loss on the Sale of an Office Building

130 Salvage and Obsolete Material

131 Plant Acquisition Adjustments

132 General Plant

133 Plant Abandonments and Disallowances of Plant Costs

134 Utility Plant Phase-in Plans

135 Accounting for Removal or Relocation of Electric

Facilities Resulting from the Action of Others

136 Storm Damage

137 Impairment of Long-Lived Assets

138 Automatic Meter Reading Systems-Turtles

139 Global Positioning Systems

140 Radio-Based Automatic Meter Reading Systems

201 Supplemental Financing

301 Forfeited Customers\' Deposits

401 Computer Software Costs

402 Legal Expenses

403 Leases

404 Consolidated Financial Statements

501 Patronage Capital Assignments

502 Patronage Capital Retirements

503 Operating and Nonoperating Margins

504 Patronage Capital from G&T Cooperatives

505 Patronage Capital Furnished by Other Cooperative

Service Organizations

506 Forfeited Membership Fees

601 Employee Benefits

602 Compensated Absences

603 Employee Retirement and Group Insurance

604 Deferred Compensation

605 Life Insurance Premium on Life of a Borrower Employee

606 Pension Costs

607 Unproductive Time

608 Training Costs, Attendance at Meetings, etc.

609 Maintenance and Operations

610 Financial Forecast

611 Advertising Expense

612 Special Power Cost Study

[Number]{.underline} [Title]{.underline}

613 Mapping Costs

614 Member Relations Costs

615 Statewide Fees

616 Power Supply/Distribution Cooperative Borrowings

617 Rate Discount Allowed by the Power Cooperative to

Distribution Cooperative Owning Connecting

Transmission Lines

618 Theft Losses not Covered by Insurance

619 Self Billing

620 Purchase Rebates

621 Integrity Fund

622 In-Substance Defeasance

623 Satellite or Cable Television Services

624 Pollution Control Bonds

625 Prepayment of Debt

626 Rural Economic Development Loan and Grant Program

627 Postretirement Benefits

628 Postemployment Benefits

629 Investments in Debt and Equity Securities

630 Split Dollar Life Insurance

631 Special Early Retirement Plan

[Subject Matter Index]{.underline} [Number]{.underline}

A

Abandonments - Plant 133

Acquisition Adjustments - Plant 131

Advertising Expenses 611

Assignments - Patronage Capital 501

Attendance at Meetings 608

Automatic Meter Reading Systems-Radio-Based 140

Automatic Meter Reading Systems-Turtle 138

Availability of Service - Determination of 112

B

Benefits - Employee 601

Bonds - Pollution Control 624

Borrowing - Power Supply Cooperative/

Distribution Cooperative 616

Buildings - Continuing Property Records 127

Buildings, Office - Gain or Loss on Sale of 129

C

Cable Television Services 623

Capital Credits - Assignment 501

Capital Credits - G&T Cooperative 504

Capital Credits - Other Service Cooperatives 505

Capital Credits - Retirement 502

Compensated Absences 602

Computer Software Costs 401

Consolidated Financial Statements 404

Construction Work in Progress Damaged or

Destroyed by Storm 114

[Number]{.underline}

C

Continuing Property Records - Buildings 127

Continuing Property Records - Establishment of 126

Contributions - Nonrefundable 116

Conversion - Line 102

Conversion - Transformer 123

Customers\' Deposits - Forfeited 301

D

Damaged or Destroyed Construction Work in

Progress 114

Damages - Liquidated 115

Debt - Prepayment of 625

Debt Securities - Investments in 629

Deferred Compensation 604

Demand Meters - Retrofitting 122

Determination of Availability of Service 113

Disallowances of Plant Costs 133

Disconnect Switch - Pole Top 105

Discounts Allowed by Power Cooperative to

Distribution Cooperative Owning Transmission

Lines 617

Distribution Cooperative/Power Supply

Cooperative Borrowing 616

E

Early Retirement Plan 631

Employee Benefits 601

Equity Securities - Investments in 629

F

Fees - Statewide 615

Financial Forecast 610

Financial Statements - Consolidated 404

Financing - Supplemental 201

First Clearing and Grading of Land and

Rights of Way 110

Forfeited Customer Deposits 301

Forfeited Membership Fees 506

G

Gain or Loss on Sale of Office Building 129

General Plant 132

Generation and Transmission (G&T) Capital

Credits 504

Global Positioning Systems 139

I

Impairment of Long-Lived Assets 137

In-substance Defeasance 622

Insurance - Employee Retirement and Group 603

Insurance - Premium on Life of a Borrower

Employee 605

Insurance - Split Dollar 630

Integrity Fund 621

Investments in Debt and Equity Securities 629

[Number]{.underline}

J

Joint Use 109

L

Land - First Clearing and Grading 110

Leases 403

Legal Expenses 402

Life Insurance Premiums on Life of a Borrower

Employee 605

Life Insurance - Split Dollar 630

Line Relocations 135

Liquidated Damages 115

Load Control Equipment 118

Long-Lived Assets-Impairment 137

M

Maintenance and Operations 609

Mapping Costs 613

Margins - Operating and Nonoperating 503

Material - Salvage and Obsolete 130

Materials and Supplies - Refund for

Overpayments 117

Member Relation Costs 614

Membership Fees - Forfeited 506

Meter Reading Systems - Radio-Based 140

Meter Reading Systems - Turtles 138

Meter Sockets and Meters 120

Minimum - Maximum Voltmeters 121

Mobile Substations 107

N

Neutral - Replacement of 103

Nonoperating Margins 503

Nonrefundable Payments for Construction 116

O

Obsolete Material 130

Operating and Nonoperating Margins 503

Operations Costs 609

P

Patronage Capital Assignments 501

Patronage Capital Furnished by Other Cooperative

Service Organizations 505

Patronage Capital from G&T Cooperatives 504

Patronage Capital Retirements 502

Payments for Construction - Nonrefundable 116

Pension Costs 606

Phase-in Plans 134

Plant Abandonments 133

Plant Acquisition Adjustments 131

Plant Costs - Disallowances 133

Plant - General 132

Pole Reinforcers - Steel 106

Pole Top Disconnect Switch 105

Pollution Control Bonds 624

[Number]{.underline}

P

Postemployment Benefits 628

Postretirement Benefits 627

Power Cost Study 612

Power Supply/Distribution Cooperative Borrowing 616

Prepayment of Debt 625

Property - Sale of 128

Purchase Rebates 620

R

Radio-Based Automatic Meter Reading Systems 140

Rate Discount Allowed by Power Cooperative to a

Distribution Cooperative Owning Transmission

Lines 617

Rebates - Purchase 620

Refunds for Overpayments for Materials and

Supplies 117

Reimbursement for Line Relocations 135

Relocations of Lines 135

Replacement of a Neutral 103

Retirement Units 125

Retirements - Patronage Capital 502

Retrofitting Demand Meters 122

Rights of Way - First Clearing and Grading 110

Rural Economic Development Loan and Grant

Program 626

S

Sacrificial Anodes and the Replacement of a

Neutral 103

Sale of an Office Building 129

Sale of Property 128

Salvage and Obsolete Material 130

Satellite Television Services 623

Security Lights 108

Securities - Investments in Debt and Equity 629

Self Billing 619

Software Costs 401

Special Early Retirement Plan 631

Special Equipment 119

Special Power Cost Study 612

Split Dollar Life Insurance 630

Statewide Fees 615

Steel Pole Reinforcers 106

Storm Damage 136

Substation - Mobile 107

Supplemental Financing 201

System Planning - Engineering Contracts 111

T

Temporary Facilities (Services) 113

Terminal Facilities 104

Theft Losses not Covered by Insurance 618

Training Costs, Attendance at Meetings, etc. 608

Transclosures 124

[Number]{.underline}

T

Transformer Conversions 123

Turtles - Automatic Meter Reading Systems 138

U

Unproductive Time 607

V

Voltmeters - Minimum/Maximum 121

W

Work Order Procedures 101

**101 Work Order Procedures.**

When a minor item of property is removed from service and not replaced,
a retirement work order is not required except in the case of a
conductor. The cost of the minor item shall remain in the appropriate
plant account until the retirement unit, of which it is a part, is
retired. However, as conductor is recorded in feet and is not part of
any specific retirement unit, conductor shall be retired even though the
amount taken down and not replaced is less than a retirement unit (two
spans).

When minor items of plant are removed and not replaced, material
salvaged shall be recorded on a material salvage ticket. Items of
material recorded on this ticket shall be charged to the materials and
supplies account and credited in the miscellaneous columns of the
Materials Register to the Accumulated Provision for Depreciation. In
this example, it is assumed that the cost of removal is nil. If,
however, costs are incurred during the removal of minor items of plant,
these costs shall reduce the credit to the Accumulated Provision for
Depreciation.

When a staking sheet supporting a single work order reflects a
combination of new construction and replacements, or system
improvements, the predominant cost shall be the governing factor in
determining the amount of cost RUS will finance. To illustrate, assume
that a service is to be run to a new home near the end of an existing
line. On inspection, the pole from which the service is to be run is
found to be in very poor physical condition and must be replaced. In
addition, a single span of wire and a service are presently connected to
this pole which serve no purpose. The home originally served has been
demolished and the existing span, pole, and service were retired. In
other words, what started out to be simply the installation of a new
service now includes the retirement of a span of wire, a pole, and a
service; the replacement of a pole; and the running of a new service.
Assuming the replacement of the pole is the costliest part of this
project, the construction and retirement activity shall be classified as
an ordinary replacement even though the work includes new construction
and retirements without replacement.

**102 Line Conversion.**

If it is necessary to move a conductor from one location to another on a
pole assembly during the conversion of a line from one phase to another
phase, the cost of moving the conductor is capitalizable as a system
improvement.

**103 Sacrificial Anodes and the Replacement of a Neutral.**

Many utilities conduct studies to determine whether sacrificial anodes
are needed to protect underground cable against corrosion. The following
procedures shall be followed to account for sacrificial anodes and the
replacement of a neutral:

1\. If the study results in the installation of sacrificial anodes, the
cost of the study shall be capitalized to

Account 367, Underground Conductors and Devices. If the study does not
result in the installation of anodes, the cost shall be charged to
Account 594, Maintenance of Underground Lines.

2\. Costs incurred in the first installation are capitalizable even
though anodes are considered minor items of property. However, only the
first costs of installation shall be capitalized. All subsequent
replacements of anodes shall be expensed.

3\. Sacrificial anodes do not constitute a record unit; therefore, the
cost of anodes shall be added to the cost of the underground cable unit.

4\. Because a neutral is part of an underground cable record unit, and
is not, in and of itself, a record unit, the cost to replace a corroded
neutral shall be charged to

Account 594, Maintenance of Underground Lines.

**104 Terminal Facilities.**

Borrowers are sometimes required to construct terminal facilities in the
transmission line of another utility in order to receive power from
their power supplier. The document executed between the borrower and the
utility is normally referred to as a \"License Agreement\". The license
agreement may stipulate that certain items of the terminal facilities
are to be transferred to, and become the property of, the other utility
upon completion of the construction. The accounting for this type of
transaction shall be as follows:

1\. All construction costs incurred shall be charged to a work order.
Upon completion of the construction and accumulation of all costs, the
cost of the facilities that become the property of another utility shall
be transferred from construction work in progress to Account 303,
Miscellaneous Intangible Plant. The cost of the plant for which the
borrower retains title shall be charged to the appropriate plant
accounts.

2\. The cost of the facilities recorded in Account 303 shall be
amortized to Account 405, Amortization of Other Electric Plant, over the
contract term or the estimated useful service life of the plant,
whichever is shorter. If the related contract or contracts for this
power supply are terminated, the unamortized balance shall be expensed,
in the current period, in Account 557.

**105 Pole Top Disconnect Switch.**

The installation of pole top service disconnect switches, where title is
retained by the utility, shall be capitalized in

Account 371, Installations on Customers\' Premises. If a switch cabinet
is purchased with a current transformer included as an integral part of
the cabinet, the entire cost of the switch shall be charged to Account
371. If the current transformer is installed outside of the switch
cabinet, the transformer, meter, and meter base, together with the first
installation costs, shall be capitalized, upon purchase, in Account 370,
Meters.

Payments received from the customer toward construction costs shall be
credited to Account 371, Installations on Customers\' Premises. Such
payments, together with any amount not financed by RUS, shall be entered
in column 9 of the RUS Form 219, Inventory of Work Orders. The
associated maintenance costs shall be charged to Account 587, Customer
Installations Expenses, or to Account 597, Maintenance of Meters, as
appropriate.

When pole top disconnect switches are installed and title is held by the
customer, the cost of the material shall be charged to Account 456,
Other Electric Revenues and the receipts from the sale of line material
shall be credited to Account 456. The portion of the receipts for resale
material as well as that for installation shall be credited to
Account 415, Revenues from Merchandising, Jobbing, and Contract Work.
The cost of resale material sold and the cost of installation shall be
charged to Account 416, Costs and Expenses of Merchandising, Jobbing and
Contract Work.

Future maintenance costs incurred by the cooperative that are not billed
to the customer shall be charged to Account 587, Customer Installations
Expenses.

**106 Steel Pole Reinforcers.**

The cost associated with the purchase and installation of steel pole
reinforcers shall be charged to Account 593, Maintenance of Overhead
Lines.

**107 Mobile Substations.**

Mobile substations shall be accounted for in a manner similar to that
for a spare and are, therefore, included as part of transmission or
distribution station equipment, depending upon the use of the mobile
substation. The mobile substation, together with the trailer on which it
is permanently mounted, shall be capitalized upon purchase. A general
purpose truck or tractor used to relocate a mobile substation and
trailer shall be classified as transportation equipment.

The composite depreciation rate used for transmission plant or
distribution plant, as appropriate, shall be applied to the mobile
substation.

**108 Security Lights.**

Where a pole supports both a secondary wire and a security light, the
cost of the pole shall be charged to Account 364, Poles, Towers, and
Fixtures, even though the plant investment in security lights is
recorded in Account 371, Installations on Customers\' Premises.

**109 Joint Use.**

There are many cases in which an electric utility and a communications
utility enter into an agreement that provides for joint use of poles.
Under the terms of these agreements, either utility may occupy the poles
of the other upon payment of a stipulated annual rental. If such joint
occupancy necessitates the use of a higher than standard pole, the new
pole shall be provided at the expense of the utility having the need for
the higher pole.

When an electric utility replaces, at its own expense, a standard pole
belonging to the communications utility with a higher pole, the cost of
the higher pole, less net salvage (if any) of the pole replaced, shall
be charged to the account in which the pole rental is included.

Contributions made to an electric utility by a communications utility
for the costs incurred in stubbing joint use electric poles shall be
credited to Account 593, Maintenance of Overhead Lines. The cost of pole
stubbing on electric plant distribution facilities shall be charged to
Account 593.

An investment in outside plant that is held in joint ownership shall be
recorded in the appropriate plant accounts at its cost to the utility.
For continuing property record purposes, jointly owned property units
shall be priced at their cost to the utility and shall be appropriately
segregated in the CPRs to indicate joint ownership.

**110 First Clearing and Grading of Land and Rights of Way.**

Utility accounting practice requires the costs associated with the first
clearing and grading of land and rights of way and any resulting damage
thereto, to be included in the accounts for structures and improvements
or equipment to which such costs relate. Since the first clearing, as
well as clearing which is \"directly occasioned by the building of a
structure,\" is done, not for the purpose of enhancing the value of the
land or the rights of way, but for the purpose of constructing plant,
these costs are more directly related to the construction of plant than
to the purchase of land or rights of way. The accounts shall be charged
as follows:

1\. For overhead transmission pole lines, Account 356, Overhead
Conductors and Devices;

2\. For overhead distribution lines, Account 365, Overhead Conductors
and Devices; and

3\. For underground distribution lines, Account 366, Underground
Conduit, for a conduit installation; or

Account 367, Underground Conductors and Devices, for a direct burial
installation.

**111 Engineering Contracts for System Planning.**

Engineering costs for long-range system plans shall be charged to
Account 183, Preliminary Survey and Investigation Charges, as incurred.
The cost of engineering services incurred in preparing a long-range
system plan represents a legitimate component of the total cost of
construction of all system improvements detailed in the plan. The amount
of engineering costs to be associated with any specific system
improvement is the annual costs incurred up to the time of the
allocation (not previously allocated), plus that portion of the initial
cost which relates to the particular construction in question. If any
major system improvement included in the engineering plan is not
constructed, or if the study is superseded by another complete study,
the cost of that portion of the original study not resulting in
construction shall be charged to Account 182.2, Unrecovered Plant and
Regulatory Study Costs, if the costs are to be recovered through future
rates. Costs recorded in Account 182.2 shall be amortized to Account
407, Amortization of Property Losses, Unrecovered Plant and Regulatory
Study Costs, as the costs are recovered through the rates. Any costs
included in Account 182.2 that are disallowed for rate-making purposes
shall be charged to

Account 426.5, Other Deductions.

The allocation of engineering services to the various construction
projects requires the exercise of judgment. In some cases, system
improvements are continuous over a period of months or years, thus
permitting the engineering cost to be spread monthly as overhead in
relation to the direct costs incurred in construction. (If a substantial
amount of retirement work is performed in connection with system
improvements, a proportionate share of the engineering cost shall be
allocated on the basis of direct retirement labor.) If the system
improvements detailed in the plan are not performed in a continuous
manner, the engineering cost shall be allocated on the basis of the
estimated costs of the various larger system improvement projects which
result from the long-range plan.

If construction is performed by contract, the engineering cost
applicable thereto shall be transferred from Account 183 to Account 107,
Construction Work in Progress - Electric, and thereby spread to the
appropriate plant accounts on the basis of contract costs.

In the case of system improvement construction performed on the basis of
work orders, engineering costs shall be transferred to Account 107,
Construction Work in Progress - Electric, and included in total work
order costs as either overhead or special services. If engineering
services are not readily identifiable with individual work orders, they
shall be capitalized as overhead. If engineering costs for each work
order are readily separable from the engineering costs for all other
work orders, they shall be capitalized as special services.

In summarizing system improvement work orders on the RUS Form 219,
Inventory of Work Orders, the amount of engineering costs previously
approved for advance on the long range plan, if any, shall be deducted
to determine the balance of loan funds subject to advance by RUS.

**112 Determination of Availability of Service.**

Costs relating to the determination of availability of service, rates,
and similar items for individual applicants shall be charged to Account
912, Demonstrating and Selling Expenses. If it is expected that
construction will result, the costs incurred to provide service,
including staking, shall be charged to Account 107, Construction Work in
Progress - Electric. If construction does not result, Account 107 shall
be credited and Account 426.5, Other Deductions, shall be charged.

**113 Temporary Facilities (Services).**

Plant installed for temporary use, a period of less than 1 year, shall
be recorded in Account 185, Temporary Facilities, net of any payments
received from customers. Upon retirement, this net cost plus cost of
removal, less any salvage value, shall be cleared to Account 451,
Miscellaneous Service Revenues.

When a temporary service is installed at the site of a building under
construction, the location of the permanent service entrance and the
load and its characteristics are usually known. The temporary service is
of the proper capacity and is so located or has sufficient slack, that
it can be relocated to serve the new building as a permanent service.
Under these conditions, the service shall be charged to Account 369,
Services, when first installed. The cost of moving and attaching the
service to the permanent service entrance shall be charged to Account
593, Maintenance of Overhead Lines or Account 594, Maintenance of
Underground Lines, as appropriate.

**114 Construction Work in Progress Damaged or Destroyed by**

**Storm.**

When installed plant, not yet completed or completed but not yet placed
in service, has been damaged or destroyed by storm, the cost of the
repair and restoration shall be added to the cost of construction and
capitalized if the plant was constructed under force account or work
order construction, and the utility paid for the cost of the repairs. If
the plant was constructed under contract, the contractor is required to
deliver the plant in new condition. Therefore, any repairs required
prior to the completion of construction and acceptance by the utility,
are ordinarily borne by the contractor.

**115 Liquidated Damages.**

Liquidated damages are amounts paid by or assessed against contractors
for the completion of construction after an agreed upon date. Liquidated
damages shall be credited to Account 107, Construction Work in
Progress - Electric. Since these damages accrue during the construction
period, they become one of the components of construction cost. Even
though a portion of these damages may compensate the utility for costs
which are not \"identifiable,\" no portion of the damages shall be
credited to revenue or expense.

When a contractor has been paid in full from loan funds or from funds to
be reimbursed by loan funds without a deduction for liquidated damages,
the amount of liquidated damages received shall be deposited in the
Construction Fund. This amount shall be reflected by a decrease in
column 5, \"Total Expenditures to Date,\" of the RUS Form 595, Financial
Requirement and Expenditure Statement, and as an increase in column 6,
\"Cash Balance.\" If liquidated damages are obtained by withholding an
equivalent amount from the contractor\'s payment, the net result will be
the same.

**116 Nonrefundable Payments for Construction.**

Nonrefundable payments (contributions) from customers and developers for
underground construction shall first be credited to Account 107.2,
Construction Work in Progress - Force Account. When the constructed
plant is unitized and distributed to the individual plant accounts, the
contributions shall be credited to those plant accounts which gave rise
to the contribution.

When a customer or developer furnishes a trench or other service in
connection with buried plant, the cooperative shall debit Account 107.2
with the actual or estimated cost of the service performed, and account
for the credit as set forth above.

**117 Refunds of Overpayments for Materials and Equipment.**

Refunds of overpayments for materials and equipment previously purchased
are occasionally received as the result of legal action brought against
electrical suppliers for price fixing in violation of antitrust laws.
Such refunds shall be accounted for as follows:

1\. The refund shall first be applied to any litigation costs that were
incurred.

2\. Refunds for special equipment items shall be accounted for, in
detail, on the Summary of Special Equipment Costs and credited against
the appropriate plant accounts.

3\. Other material or equipment items that were installed through work
orders or a materials furnished contract shall be adjusted on an amended
work order. The amended work order shall include full details of the
refund.

4\. Continuing property records shall be adjusted to reflect the above
transactions.

5\. Amounts approved for advance on the RUS Form 595, Financial
Requirement and Expenditure Statement, and on the loan budget records,
shall be adjusted. For special equipment items, the adjustment shall be
requested in a letter to RUS. For materials installed by work order or
contract, the adjustments shall be made through credits shown on the RUS
Form 219, Inventory of Work Orders.

6\. Refunds for material currently in stock shall be credited to
Account 154, Plant Materials and Operating Supplies.

7\. If the material was used in maintenance activities or operations,
the refund shall be credited to the appropriate maintenance or
operations expense account.

8\. Refunds for materials or equipment financed from loan funds shall be
deposited in the Construction Fund - Trustee Account or remitted to RUS
as a special payment on a note. Other refunds shall be deposited in the
general funds.

**118 Load Control Equipment.**

The primary purpose of a Load Management System is to optimize load
dispatch and to reduce or minimize system peaks in order to reduce
purchases of power or to delay or eliminate the need for construction of
new plant. A Load Management System may be used on integrated systems,
or on generation, transmission, or distribution systems separately. The
telemetry equipment used for data acquisition and interpretation may be
included at various points on a system, such as generation,
transmission, or distribution substation, switchyards or on consumers\'
premises.

An effective load control program should be coordinated with the G&T and
requires full participation of all member distribution systems. The G&T
monitors the power load of the total member distribution system to
predict the time of the system\'s peak load. An optimal load control
strategy is developed by the G&T and is passed on from the G&T computer
system to the load control computer systems of the member distribution
cooperatives.

The equipment at the member distribution system level is the type
actually being used by an integrated power system to operate a load
control program. The equipment used may vary from one integrated power
system to another. The selection of equipment used is determined by the
information needs of the integrated power system, and the method
selected to operate the load control system.

Some equipment performs only SCADA-type functions. This equipment is
included with the equipment that performs only load control functions
because SCADA-type equipment is an integral part of a load control
program. An effective load control strategy requires current information
on loads so that member distribution systems can determine the actual
loads to be shed and the duration of the load control.

The function and location of the load control equipment are the primary
factors in determining the account in which the equipment shall be
recorded. The following example depicts a common load control system and
the associated accounting. Equipment type may vary, thereby
necessitating the use of accounts not prescribed below. In all
instances, however, the function and location of the equipment shall
dictate the appropriate account classification.

[G&T Borrower]{.underline}

1\. [Coordinating System Equipment]{.underline}. Coordinating System
Equipment is the data acquisition, processing and control hardware and
software used to coordinate the load control efforts of the member
distribution system. Generally, this equipment is dedicated to load
control use and is not shared with other electric utility activities.

The purpose of the G&T load control computer system is to reduce or
minimize the peak power requirements of the entire member distribution
system. This involves load dispatching to control transmission circuits
and breakers. The computer system for load control shall, therefore, be
recorded in Account 353, Station Equipment, with the associated
operating expenses recorded in Account 561, Load Dispatching, and
maintenance expenses recorded in Account 570, Maintenance of Station
Equipment.

2\. [Coordinating System Communications Link]{.underline}. The G&T load
control computer system is usually linked to the load control computer
system for each member distribution system by a radio or telephone link
that is dedicated to that purpose and is not shared with other
communication activities. Under such circumstances, communications
equipment shall be classified in Account 353, Station Equipment. If the
communications equipment is shared with general use or voice
communications equipment, however, the equipment shall be classified in
Account 397, Communication Equipment.

3\. [Depreciation]{.underline}. Load control equipment shall be recorded
in separate subaccounts of the primary plant accounts detailed above and
shall be depreciated based upon the owner\'s estimate of the
equipment\'s useful service life.

[Distribution Borrower]{.underline}

1\. [Member System Equipment]{.underline}. Member system equipment is
the data acquisition, processing and control hardware and software used
as a subset to the overall load control efforts by the integrated power
system.

The member system computer for each distribution member system accepts
the control strategy from the G&T coordinating system and develops the
tables that determine the control loads that are to be shed and the
duration of the load control. The member system computer for each
distribution system monitors the usage at each of its delivery points.
This usage data is then transmitted to the G&T coordinating system for
use in developing load projects and evaluating control strategies for
the integrated power system. The member system computer is generally
dedicated to load control use and is not shared with other electric
utility operations.

The member computer system shall be recorded in

Account 362, Station Equipment. The associated operating expenses shall
be recorded in Account 581, Load Dispatching, and maintenance expenses
shall be recorded in Account 592, Maintenance of Station Equipment.

2\. [Substation Remote Controllers]{.underline}. Substation Remote
Controllers are located at the distribution substation. They accept
control signals from the member system computer and couple the signal to
the portion of the distribution system to which it is connected.
Substation Remote Controllers also serve as a receiver of inbound
signals from transponders located in the distribution system. They also
send data back to the member system computer.

Substation Remote Controllers shall be recorded in Account 362, Station
Equipment. The associated operating expenses shall be recorded in
Account 582, Station Expenses, and maintenance expenses shall be
recorded in Account 592, Maintenance of Station Equipment.

3\. [Substation Injection Units]{.underline}. Substation Injection Units
are used only in power line based systems and are located in
distribution substations. A major function of the Substation Injection
Unit is to receive load control signals from the member system computer
and inject them into the power line based system to be transmitted to
the Load Control Receivers. Substation Injection Units can also perform
control and SCADA functions similar to those performed by Substation
Remote Controllers.

Substation Injection Units shall be recorded in Account 362, Station
Equipment. The associated operating expenses shall be recorded in
Account 582, Station Expenses, and maintenance expenses shall be
recorded in Account 592, Maintenance of Station Equipment.

4\. [Remote Terminal Units]{.underline}. Remote Terminal Units perform
electric utility SCADA functions in a distribution substation or
delivery point. These functions include monitoring equipment for
abnormal operating conditions, monitoring analog quantities such as
conductor voltage or substation load, and controlling of certain
equipment within the substation.

Remote Terminal Units shall be recorded in

Account 362, Station Equipment. The associated operating expenses shall
be recorded in Account 582, Station Expenses, and maintenance expenses
shall be recorded in Account 592, Maintenance of Station Equipment.

5\. [Line Device Transponder]{.underline}. A Line Device Transponder
directly controls a piece of distribution apparatus, such as a voltage
regulator or a power factor correction capacitor, located on a
distribution feeder and not accessible to a Remote Terminal Unit. The
Line Device Transponder actuates the control functions and reports back
to the member system computer upon completion of the requested action.
This transponder is located at the site of the distribution apparatus
being controlled.

Line Device Transponders shall be recorded in

Account 368, Line Transformers. The associated operating expense shall
be recorded in Account 583, Overhead Line Expenses, or Account 584,
Underground Line Expenses, as appropriate, and maintenance expenses
shall be recorded in Account 595, Maintenance of Line Transformers.

6\. [Communications Verification Transponders]{.underline}.
Communication Verification Transponders are used to respond to inquiries
from Substation Remote Controllers. In power line based systems, these
transponders are used to verify the performance of the communications
system. They are also used during adverse system operations to isolate
sections of the distribution system that are experiencing an outage.

Communication Verification Transponders shall be recorded in
Account 362, Station Equipment. The associated operating expenses shall
be recorded in Account 582, Station Expenses, and maintenance expenses
shall be recorded in

Account 592, Maintenance of Station Equipment.

7\. [Load Control Receivers]{.underline}. The Load Control Receiver,
also known as a load control switch, is located at the site of the
consumer\'s load. These receivers directly control the electric supply
to an end-use appliance, such as an electric water heater, central air
conditioning compressor, or irrigation pump. The amount of time that an
appliance will be turned off by the load control receiver is preset.
When the member system computer determines that load shedding is
necessary, it sends a signal to the communication link which then sends
signals directly to the Load Control Receivers. In a power line based
system, the signal from the communications link is sent by radio or
telephone line to the Substation Injection Units, which then signals the
Load Control Receivers to shut down the appliances for the present time.
In nonpower line based systems, the signal from the communications link
is sent by radio directly to the Load Control Receivers.

Load Control Receivers are located on the consumer\'s side of the meter.
When the member distribution system retains title to the Load Control
Receivers and assumes full responsibility for maintenance and
replacement of the equipment, it shall be classified in Account 371,
Installations on Customer\'s Premises. Load Control Receivers that are
donated or given to consumers shall be charged to Account 908, Customer
Assistance Expenses.

Operating and maintenance expenses applicable to Load Control Receivers
recorded in Account 371 shall be charged to Account 587, Customer
Installations Expenses, and Account 598, Maintenance of Miscellaneous
Distribution Plant, respectively. Expenses applicable to Load Control
Receivers donated or given to consumers shall be recorded in Account
908, Customer Assistance Expenses.

Load Control Receivers may be moved on a continual basis from one
customer location to another and are, therefore, considered to be
special equipment items. When ownership is maintained by the member
distribution cooperative, Load Control Receivers shall be accounted for
in accordance with the special equipment procedures outlined in
Accounting Interpretation

No. 119 of this section.

8\. [Communication Links]{.underline}. The communication link in the
member distribution systems between the Member System Computer, the
Substation Remote Controllers or Substation Injection Units, Remote
Terminal Units, Line Device Transponders, Communication Verification
Transponders, and Load Control Receivers is usually accomplished by
radio, telephone line, or power line based system. The communication
links are normally dedicated to the SCADA and load control functions
being served. Under such circumstances, communications equipment shall
be recorded in Account 362, Station Equipment. If, however, the
communication equipment used is shared with general use or voice
communications equipment, the equipment shall be charged to Account 397,
Communication Equipment.

9\. [Depreciation]{.underline}. Load control equipment shall be recorded
in separate subaccounts of the primary plant accounts detailed above and
shall be depreciated based upon the manufacturer\'s estimate of the
equipment\'s useful service life.

**119 Special Equipment.**

Special Equipment items are classified as such because they are
continually being moved from one location to another due to load changes
and maintenance practices. The USoA provides accounting that differs
from that used for other types of materials. The cost, new, of special
equipment items shall be capitalized at the time of purchase; it shall
not be charged to Account 154 as is the case with other materials. The
first installation cost, as well as all incidental costs necessary to
prepare the equipment for use, shall be capitalized with the material
upon purchase. All subsequent costs of removing, resetting, changing,
renewing oil, and repairing constitute operations and maintenance
expenses. The capitalized cost of special equipment items, including the
first installation, shall be removed from the electric plant accounts
only when the items are abandoned or retired from the system.

Meters, line-type transformers, oil circuit reclosers, sectionalizers,
current and potential transformers, meter sockets, and other metering
equipment listed in Account 370, Meters, as well as pole-type and
underground voltage regulators in Account 368, Line Transformers, are
considered to be special equipment items. Similarly, load control
receivers (load control switches) recorded in Account 371, Installations
on Customers\' Premises, are considered to be items of special
equipment. (See Interpretation No. 118.) Transformers, voltage
regulators, metering equipment, and current and potential transformers
for substations are not.

Special equipment items which are classified as nonusable shall be
segregated in the warehouse and retired from service. The Summary of
Special Equipment Costs shall be retitled Summary of Special Equipment
Costs Retired and used for this purpose. A journal entry reflecting this
information shall be prepared and posted to the books. Since loan funds
for special equipment, including first installation costs, are approved
for advance by RUS upon receipt of the borrower\'s written estimate of
funds required, and not on the basis of an Inventory of Work Orders, it
is improper to take a credit for any salvage involved in the retirement
of special equipment on the Inventory of Work Orders.

**120 Meter Sockets and Meters.**

When a utility furnishes meter sockets, ownership by the utility of the
meter socket or base, as well as the meter itself, is established by
virtue of them being furnished without cost to the consumer by the
cooperative. While no agreement as to ownership between the cooperative
and the property owner exists, cooperative ownership is implied by long
standing practice and tradition in the electric utility industry.

**121 Minimum - Maximum Voltmeters.**

A minimum - maximum voltmeter is used to record the minimum and maximum
voltages at a specific line location over a period of time. It is
normally installed on a pole in connection with a

1 1/2 kVA transformer, a meter base and connecting wires, and other
small items of materials. Meter bases are ordinarily set for these
voltmeters throughout the system, and a lesser number of voltmeters are
rotated among them periodically to obtain voltage readings. An average
system may have one voltmeter to two installations, with a maximum of 20
or 25 voltmeters for the whole system.

Minimum - maximum voltmeters shall be recorded, through work orders, in
Account 370, Meters, when installed. The cost of the transformers shall
remain in Account 368, Line Transformers, with the cost of the meter
bases remaining in Account 370, Meters. The miscellaneous material used
in installing the transformer and the meter base shall be charged to
Account 370, Meters.

Maintenance expense shall be charged to either Account 595, Maintenance
of Line Transformers, or Account 597, Maintenance of Meters, as
appropriate. Costs associated with reading the voltmeters shall be
charged to Account 583, Overhead Line Expenses, and the cost of
relocating or changing the complete installation or any part thereof,
other than retirement of the meter base, shall be charged to Account
583, Overhead Line Expenses, or Account 586, Meter Expenses.

**122 Retrofitting Demand Meters.**

A demand meter measures the amount of electricity used over a period of
time in kilowatt-hours (kWh) and indicates the maximum kilowatts (kW)
required at any one time by means of a pointer.

Electronic or solid state demand meters have a direct readout which
reads kilowatt demand to two decimal places. The use of a direct readout
demand meter may result in increased revenues as pointer readings tend
to register lower than actual usages.

The process of retrofitting a demand meter replaces the pointer with a
direct readout. The cost of such a replacement is usually expensed as a
minor item of property; however, since the use of a direct readout
results in a substantial betterment, the excess cost of the replacement
over the estimated cost, at current prices, of replacing the pointer
without the betterment is capitalized.

**123 Transformer Conversions.**

The conversion of an overhead transformer to an underground transformer
constitutes a betterment and shall, therefore, be capitalized.

**124 Transclosures.**

Transclosures are enclosures or cabinets in which line transformers are
mounted. The cost of transclosures that are purchased separately from
the transformer shall be charged to Account 154, Plant Materials and
Operating Supplies, when received, and capitalized, upon installation,
to Account 368, Line Transformers, as a separate unit of property. If
the case and the transformer are inseparable, the unit is considered a
transformer and shall be capitalized upon purchase.

**125 Retirement Units.**

[Services]{.underline}

A retirement unit shall consist of a complete service rather than the
individual wires comprising that service. If each separate wire of a
service were treated as a retirement unit, the retirement unit would
represent a comparatively small cost. Such a small unit of property
would substantially increase the number of retirement work orders. The
complete service shall, therefore, be considered a retirement unit.

[Minor Items]{.underline}

When minor items of property are added separately from complete
retirement units, the costs of these items shall be included in work
orders, and by unitizing all costs of completed construction for a
month, these minor items shall be spread to the retirement units of
which they normally form a part. For example, to convert a two-phase
line to a three-phase line requires the addition of a conductor, an
insulator and a pole-top pin. A pole-top pin is typically capitalized as
a component of the cost of the pole to which it is attached. Assuming
this is the only work order for the month, the cost of this pin shall be
charged to the conductor, so that its cost is included in the total cost
of the project. In actual practice, however, this does not happen as it
is normal to have a number of work orders for a given month, which
include the setting of poles. In allocating the cost of all construction
projects for the month, part of the cost of pole-top pins shall be
allocated to poles even though the work orders on which they were
capitalized did not include poles.

The retirement and replacement of isolated single retirement units
cannot be charged to maintenance; a retirement and construction work
order shall be used.

**126 Establishment of Continuing Property Records.**

The costs of installing a system of continuing property records shall be
charged to Account 930.2, Miscellaneous General Expenses, and may
include:

1\. Labor and expenses incurred in developing an inventory of property;

2\. Labor and material costs incurred in connection with developing pole
records including map preparation and pole cards; and

3\. Labor and material costs (ledger sheets, etc.) incurred in
connection with the installation of the record system.

**127 Continuing Property Records for Buildings.**

When establishing continuing property records for a building where there
is no detailed breakdown of contract costs, it is necessary to estimate
the cost of the each component part. It should be noted that the
establishment of continuing property records is not required for
buildings; however, if CPRs are not maintained, all repairs including
the replacement of major component parts shall be expensed in the period
incurred.

**128 Sale of Property.**

All proceeds deposited in the Construction Fund account from the sale of
property, regardless of materiality, shall be reflected on the RUS Form
595, Financial Requirement and Expenditure Statement. Proceeds from the
sale of property shall be reported on the Form 595, by budget purpose,
as a reduction in total expenditures to date, column 5; and an increase
in the cash balance, column 6.

Proceeds from the sale of property shall not be used to maintain an
\"Employee Fund.\" A utility may, pursuant to board policy, use general
funds for employee welfare equivalent in amount to proceeds received
from the sale of scrap property. If general funds, in an amount
equivalent to proceeds received from the sale of scrap property, are
used for employee welfare, Account 926, Employee Pensions and Benefits,
shall be charged.

**129 Gain or Loss on the Sale of an Office Building.**

A gain on the sale of an office building 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. If the gain or
loss will materially distort current year\'s net margins, such gain or
loss is reportable as an extraordinary item in Account 434,
Extraordinary Income, or Account 435, Extraordinary Deductions.

**130 Salvage and Obsolete Material.**

The value of material salvaged from the retirement of units of property
reduces the loss on the retirement and shall be so applied. The value
assigned to salvage shall be credited to Account 108.8, Retirement Work
in Progress, which results in reducing net charges to the provision for
depreciation when the work order is completed and cleared.

If salvage is sold, any difference between the realized value and the
estimated value of the salvaged material shall be charged or credited to
the appropriate provision for depreciation.

Salvage resulting from maintenance where no retirement units are
involved shall be debited to the materials and supplies account, and
credited to the appropriate maintenance account.

Occasionally a utility will have a loss due to obsolescence of materials
on hand. If the loss is due to obsolescence of new material, the loss
shall be charged to Account 426.5, Other Deductions. If the loss is due
to obsolescence of used material, the loss shall be charged to the
appropriate subaccount of Account 108, Accumulated Provision for
Depreciation.

**131 Plant Acquisition Adjustments.**

Plant acquisition adjustments shall be amortized to the operating
expense accounts. These adjustments are recorded in Account 114,
Electric Plant Acquisition Adjustments, and amortized to

Account 406, Amortization of Electric Plant Acquisition Adjustments, or
Account 425, Miscellaneous Amortization, as required by the regulatory
commission having jurisdiction. Accounts 406 and 425 shall be closed to
operating margins.

**132 General Plant.**

When the unit method of depreciation is used for general plant items,
gains and losses on sales, trades or disposals of equipment shall be
recorded as such. If the composite method of depreciation is used, gains
or losses on the disposal of general plant items shall be recorded in
the appropriate depreciation reserve account.

A truck which is used only for transporting power operated equipment
mounted thereon shall be charged, together with the installed equipment,
to Account 396, Power Operated Equipment. If the same type of truck is
used for transporting materials and supplies, tools and work equipment,
personnel, or other items, the cost of the truck shall be charged to
Account 392, Transportation Equipment.

Depreciation and other expenses relating to power operated equipment
shall be accumulated in a subaccount of Account 184, Clearing Accounts,
and distributed monthly on an equitable basis to the accounts properly
chargeable.

Depreciation expense on vehicles and other work equipment, furniture and
office equipment, and other such plant used in the construction of
utility plant, is a proper component of construction cost. To avoid a
duplicate advance of funds, however, the amount of depreciation on such
items that has previously been financed from loan funds shall be
deducted from Inventories of Work Orders submitted to RUS. This amount
shall be specifically identified, and shown either monthly or annually
as a single item in column 9 on the RUS Form 219, Inventory of Work
Orders.

**133 Plant Abandonments and Disallowances of Plant Costs.**

In December 1986, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 90, Regulated
Enterprises - Accounting for Abandonments (Statement No. 90) and
Disallowances of Plant Costs. This section provides an overview of the
requirements outlined in Statement No. 90 together with the specific
accounts that shall be used to record a plant abandonment or a
disallowance of plant costs.

[Plant Abandonments]{.underline}

When an abandonment becomes probable, the cost of the abandoned asset
shall be removed from Construction Work in Progress or Plant-in-Service,
as applicable. Before making this transfer, however, a determination
must be made as to whether recovery of the allowed cost is likely to be
provided with a full return on the investment during the period from the
time the abandonment becomes probable, to the time when recovery is
completed, or with a partial or no return on the investment. This
determination shall be made based upon the facts and circumstances of
the specific abandonment, and past practices and current policies of
regulatory jurisdiction.

If a full return on the investment is likely to be provided, any
disallowance of all or part of the cost of abandoned plant that is both
probable and reasonably estimated shall be recognized as a loss in the
current year with the carrying basis of the asset reduced by an equal
amount. The remaining cost of abandoned plant shall be recorded as a
separate new asset.

If partial or no return on the investment is likely to be provided, any
disallowance of abandoned plant costs that is both probable and
reasonably estimated shall be recognized as a loss. The present value of
the future revenues expected to be provided to recover the allowable
cost of the abandoned plant and return on the investment, if any, shall
be reported as a separate new asset. The discount rate used to compute
the present value shall be the borrower\'s incremental borrowing rate,
which is the rate that the borrower would have to pay to borrow an
equivalent amount for a period equal to the expected recovery period. In
determining the value of expected future revenues, the borrower shall
consider the probable time period before the recovery is expected to
begin and the probable time period over which recovery is expected to be
provided.

The amount of the new asset shall be adjusted from time to time, as
necessary, if new information indicates that the estimates used to
record the new asset have changed. The carrying value of the new asset,
however, shall not be adjusted for changes in the incremental borrowing
rate. The amount of any adjustments shall be recorded as a gain or loss.

During the period between the date on which a new asset is recognized
and the date on which recovery begins, the carrying amount shall be
increased by accruing a carrying charge. The rate used to accrue the
carrying charge shall be:

1\. If a full return on the investment is likely, a rate equal to the
allowed overall cost of capital in the jurisdiction in which recovery is
expected to be provided shall be used.

2\. If partial or no return is likely, the asset shall be amortized in a
manner that will produce a constant return on the unamortized investment
in the new asset equal to the rate at which the expected revenues were
discounted.

Due to the nonprofit environment in which electric cooperatives operate,
full recovery of interest expense on plant related long-term debt
equates to full recovery of the rate of return for an investor-owned
utility. Therefore, if a cooperative is permitted full recovery of the
interest expense incurred on the long-term debt borrowed to finance
construction of an abandoned plant, no discounting of the asset is
required nor is accrual of the carrying charge permitted.

If, at the time the provisions of Statement No. 90 are first applied,
the borrower elects to restate the financial statements, the financial
statements for all periods presented shall be restated and the financial
statements shall disclose the nature of the restatement and its effect
on margins before extraordinary items, net margins, and patronage
capital at the beginning of the earliest period presented. If the
borrower elects not to restate the financial statements, the effect of
applying Statement No. 90 shall be reported as a change in accounting
principle and the financial statements shall disclose the nature of the
change and the effect of applying Statement No. 90 on margins before
extraordinary items and net margins.

The specific accounts that shall be used to record transactions
involving plant abandonments are as follows:

1\. In the year of the abandonment, the unrecoverable portion of the
cost of abandoned plant included in construction work in progress shall
be recognized as a loss by a charge to Account 426.5, Other Deductions,
and a credit to Account 107, Construction Work in Progress.

2\. The balance of the cost remaining in the construction work in
progress account shall be credited to Account 107 and charged to Account
182.2, Unrecovered Plant and Regulatory Study Costs.

3\. The difference between the charge to Account 182.2 and the present
value of expected future revenues for recovery of the new asset, shall
be recorded as a credit to Account 182.2 and a debit to Account 426.5.
The credit to Account 182.2 shall be segregated from the amount charged
to Account 182.2 by the use of a separate subaccount. Statement No. 90
does not require this segregation; however, it is necessary under the
USoA to provide for the appropriate segregation of operating and
nonoperating income.

4\. During the waiting period for recovery of the new asset to begin,
carrying charges shall be accrued by a debit to

Account 182.2 with a concurrent credit to Account 421, Miscellaneous
Nonoperating Income. Debits to Account 182.2 shall be treated as
reductions to the credit subaccount of

Account 182.2.

5\. The borrower shall amortize the amount debited to Account 182.2 by
charges to operating income, consistent with the way the amortized
amounts are recovered through rates. These charges to income shall be
recorded in Account 407, Amortization of Property Losses, Unrecovered
Plant and Regulatory Study Costs.

6\. As the recoverable amount recorded in Account 182.2 is recovered
through rates, the borrower shall accrue income by charges to Account
182.2 and credits to Account 421, Miscellaneous Nonoperating Income.
Accruals shall be computed by applying the same rate used to derive the
present value of the asset established in Account 182.2, to the
unamortized balance in that account. Accrued amounts charged to Account
182.2 shall be treated as reductions to the credit subaccount within

Account 182.2.

Prior to implementing the accounting prescribed above, the borrower
shall submit the details of each plant abandonment to RUS for approval.

[Disallowances of Costs of Recently Completed Plant]{.underline}

When it becomes probable that a portion of the cost of recently
completed plant will be disallowed for rate making purposes and a
reasonable estimate of the amount of the disallowance can be made, the
estimated amount of the probable disallowance shall be deducted from the
reported cost of the plant and recognized as a loss. If a portion of the
costs is explicitly, but indirectly disallowed, the equivalent amount of
the cost shall be deducted from the reported cost of the plant and
recognized as a loss.

The specific accounts that shall be used to record transactions
involving the disallowance of plant costs are as follows:

1\. Estimated disallowed plant costs which the borrower records as a
credit to Account 101, Electric Plant-in-Service, shall be charged to
Account 426.5, Other Deductions.

2\. If the loss qualifies as an extraordinary item under the criteria
set forth in General Instruction No. 7 of the USoA, the borrower shall
record the loss in Account 435, Extraordinary Deductions. To be
considered extraordinary, an item shall be more than five percent of
income computed before extraordinary items. If a borrower believes that
a loss of less than five percent should be treated as an extraordinary
item; the borrower shall, with commission approval, record the loss in
Account 435 and report the loss as an extraordinary item. If the
borrower is not subject to state commission jurisdiction, RUS approval
is required.

**134 Utility Plant Phase-in Plans.**

In August 1987, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 92, Regulated
Enterprises - Accounting for Phase-in Plans (Statement No. 92). This
section provides an overview of the requirements outlined in Statement
No. 92.

The term phase-in plan is used to refer to any method of recognition of
allowable costs in rates that meets all of the following criteria:

1\. The method was adopted by the regulator in connection with a major,
newly completed plant of the regulated enterprise or one of its
suppliers or a major plant scheduled for completion in the near future.

2\. The method defers the rates intended to recover allowable costs
beyond the period in which those allowable costs would be charged to
expense under generally accepted accounting principles applicable to
enterprises in general.

3\. The method defers the rates intended to recover allowable costs
beyond the period in which those rates would have been ordered under the
rate-making methods routinely used prior to 1982 by that regulator for
similar allowable costs of that regulated enterprise.

If a phase-in plan is ordered by a regulator in connection with a plant
on which no substantial physical construction had been performed before
January 1, 1988, none of the allowable costs that are deferred for
future recovery by the regulator under the plan for rate-making
purposes, shall be capitalized for general-purpose financial reporting
purposes (financial reporting).

If a phase-in plan is ordered by a regulator in connection with a plant
completed before January 1, 1988, or a plant on which substantial
physical construction had been performed before January 1, 1988, the
criteria specified below shall be applied to that plan. If the phase-in
plan meets all of those criteria, all allowable costs that are deferred
for future recovery by the regulator under the plan shall be capitalized
for financial reporting purposes as a separate asset (a deferred
charge). If any one of those criteria is not met, none of the allowable
costs that are deferred for future recovery by the regulator under the
plan shall be capitalized for financial reporting. The criteria for
determining whether capitalization is appropriate are:

1\. The allowable costs in question are deferred pursuant to a formal
plan that has been agreed to by the regulator;

2\. The plan specifies the timing of recovery of all allowable costs
that will be deferred under the plan;

3\. All allowable costs deferred under the plan are scheduled for
recovery within 10 years of the date when the deferral began; and

4\. The percentage increase in rates scheduled under the plan for each
future year is no greater than the percentage increase in rates
scheduled under the plan for each immediately preceding year. That is,
the scheduled percentage increase in year two is no greater than the
percentage increase granted in year one, the scheduled percentage
increase in year three is no greater than the percentage increase in
year two, etc.

By definition, a phase-in plan approved prior to 1982 that contains
provisions contrary to those detailed above is not subject to the
provisions of Statement No. 92. This exemption, however, only relates to
a specific utility and a specific regulator. For example, a utility
cannot use a phase-in plan approved by its regulator for a different
utility as justification for its phase-in plan exceeding the 10-year
limit imposed by Statement No. 92.

A phase-in plan is a method of rate making intended to moderate a sudden
increase in rates while providing the regulated enterprise with recovery
of its investment and a return on that investment during the recovery
period. A disallowance is a rate-making action that prevents the
regulated enterprise from recovering either some amount of its
investment or some amount of return on its investment. Statement No. 90
specifies the accounting for disallowances of plant costs (see item 133
of this regulation). If a method of rate making that meets the criteria
for a phase-in plan includes an indirect disallowance of plant costs,
that disallowance shall be accounted for in accordance with Statement
No. 90. Cumulative amounts capitalized under phase-in plans shall be
reported as a separate asset in the balance sheet. The net amount
capitalized in each period or the net amount of previously capitalized
allowable costs recovered during each period shall be reported as a
separate item of other income or expense in the income statement.
Allowable costs capitalized shall not be reported as reductions of other
expenses.

The terms of any phase-in plan in effect during the year or ordered for
future years shall be disclosed in the financial statements. Statement
No. 92 does not permit capitalization for financial reporting of
allowable costs deferred for future recovery by the regulator pursuant
to a phase-in plan that does not meet the criteria or a phase-in plan
related to plant on which substantial physical construction was not
completed before January 1, 1988. Nevertheless, the financial statements
shall include disclosures of the net amount deferred at the balance
sheet date for rate-making purposes, and the net change in deferrals for
rate-making purposes during the year for those plans.

If the provisions of Statement No. 92 are applied retroactively, the
financial statements of all periods presented shall be restated. In
addition, the restated financial statements shall, in the year that
Statement No. 92 is first applied, disclose the nature of any
restatement and its effect on margins before extraordinary items, net
margins, and on patronage capital at the beginning of the earliest
period presented. If the financial statements for prior years are not
restated, the effects of applying Statement No. 92 to existing phase-in
plans shall be reported as a change in accounting principle and the
financial statements shall disclose the effect of adopting Statement No.
92 on margins before extraordinary items and net margins.

The application of Statement No. 92 to an existing phase-in plan shall
be delayed if both of the following conditions are met:

1\. The enterprise has filed a rate application to have the plan amended
to meet the criteria of Statement No. 92 or intends to do so as soon as
practicable; and

2\. It is reasonably possible that the regulator will change the terms
of the phase-in plan so that it will meet the criteria of Statement No.
92.

If the above conditions are met, the provisions of Statement

No. 92 shall be applied to the existing phase-in plan on the earlier of
the date when one of the conditions ceases to be met or the date when
the final rate order is received, amending or refusing to amend the
phase-in plan. However, if the enterprise delays filing its application
for the amendment or the regulator does not process the application in
the normal period of time, the application of Statement No. 92 shall not
be further delayed.

In applying the criteria of Statement No. 92 to a plan that was in
existence prior to the first fiscal year beginning after December 15,
1987, and that was revised to meet that criteria, the 10-year criterion
and the requirement concerning the percentage increase shall be measured
from the date of the amendment rather than from the date of the first
scheduled deferrals under the original plan. All phase-in plans must
receive RUS approval prior to implementation.

**135 Accounting for Removal or Relocation of Electric Facilities**

**Resulting from the Action of Others.**

Under arrangements with another party, a borrower agrees, or is obliged,
to remove, relocate, rearrange, or otherwise make changes in utility
property, other than for the purpose of rendering utility service to the
other party, for which the utility is reimbursed for all or a portion of
the costs incurred.

[Plant Accounting]{.underline}

The relocation of the line shall be accounted for as follows:

1\. If all of the assemblies in the line are retired or completely
removed and later reinstalled or if the line is constructed in a new
location before the old line is removed, construction and retirement
work orders shall be prepared except for the costs relating to special
equipment items (transformers, oil circuit reclosers, etc.) which shall
be charged to operations expense.

2\. If a line is moved in its entirety to a new location except for
isolated retirement units (such as at the end of the line) or poles not
suitable for resetting, the cost of moving the portion of line that is
moved intact shall be charged to maintenance expense while the cost
related to the change in isolated retirement units or the replacement of
poles not suitable for resetting shall be accounted for through use of
construction and retirement work orders.

3\. If a line is moved intact without any change in assemblies, the cost
shall be charged to maintenance expense.

[Reimbursement]{.underline}

If the borrower receives reimbursement for the costs related to the
relocation of the line, the reimbursement shall be accounted for by
crediting operation and maintenance expenses to the extent of actual
expenses occasioned by the plant changes and crediting the remainder to
the accumulated provision for depreciation, unless contractual terms
definitely characterize residual or specific amounts as applicable to
the cost of replacement. In the latter event, appropriate credits shall
be entered in the plant accounts.

Reimbursement received from a telephone company for adding a pole or
replacing a present pole with a taller pole under joint use contracts
falls within this latter category. In this instance, appropriate credits
are charged against the plant accounts.

[Financing]{.underline}

The total reimbursement, less any portion for operations and maintenance
costs, shall be entered in the \"Contributions in Aid of Construction\"
section at the bottom of the Construction Work Order. When the Inventory
of Work Orders (RUS Form 219) is prepared, enter only enough of the
contribution in column 9 to reduce to zero the amount in column 10,
\"Loan Funds Subject to Advance by RUS.\" This entry is made although
none of the reimbursement received is recorded in the accounting records
as a contribution in aid of construction.

**136 Storm Damage.**

As a result of recent hurricane, flood, and ice storm damage, the Rural
Utilities Service (RUS) has received several inquiries concerning the
proper accounting for storm damage costs and the associated funds
received from the Federal Emergency Management Administration (FEMA).

Storm damage costs should be accounted for under the work order
procedure. Units of property destroyed or otherwise removed from service
must be reflected on retirement work orders and units of property
installed must be shown on construction work orders. To ensure that the
accounting for construction and retirement costs is as accurate as
possible, an effort should be made to accurately accumulate material,
labor, and overhead costs. Even when extreme care has been exercised,
however, it may still be necessary to use estimates to develop the
appropriate cost figures.

When a storm occurs, a utility typically incurs a large retirement loss,
all or a part of which should be charged to the accumulated provision
for depreciation. Storm damage costs over and above construction and
retirement costs represent maintenance expense. Maintenance costs
include the costs of resagging lines, straightening poles, and replacing
minor items of property. When extensive damage has occurred, the need to
restore the property to an operating condition without delay usually
results in excessive costs being incurred. Standard property unit costs
may be used as a guide in determining the amount to be capitalized. It
should be noted, however, that when standard property unit costs are
used, all excess costs are charged to maintenance expense.

Because of the storm\'s destruction, property is retired prematurely and
as a result, extraordinary retirement losses occur. When such
extraordinary losses occur, they should be recorded in the year in which
the losses are incurred. If the recording of such losses will materially
distort the income statement, such losses may be charged to Account 435,
Extraordinary Deductions. These costs may be deferred and amortized to
future periods only if the provisions of Statement of Financial
Accounting Standards No. 71, Accounting for the Effects of Certain Types
of Regulation (Statement No. 71), are applied. Under the provisions of
Statement No. 71, a utility may defer certain costs, provided such costs
are included in the utility\'s rate base and recovered through future
rates. If an RUS borrower elects to apply the provisions of Statement
No. 71, RUS approval is required. To obtain RUS approval, a borrower
must submit:

a\. A detailed description of the plan including the nature of the
expense item, the amount of the deferral, the specific time period for
rate recovery, and justifying support for the time period selected;

b\. The accounting journal entries being used by the cooperative to
record the expense deferral and amortization of the deferred costs;

c\. A copy of the state Commission order authorizing recovery of the
deferred costs through future rates, or in the absence of commission
jurisdiction, a resolution from the cooperative\'s board of directors
authorizing such recovery; and

d\. A statement from the borrower\'s certified public accountant (CPA)
or CPA firm indicating that the deferral and amortization of these costs
is in accordance with generally accepted accounting principles.

To assist in the restoration of the damaged facilities, the Federal
government often provides assistance through FEMA. Under current FEMA
procedures, FEMA provides funds for the restoration of facilities based
upon the cost estimates submitted by the entity requesting assistance.
If the FEMA grant is for less than 100 percent of the cost estimates,
FEMA does not specify which costs are to be reimbursed. When the funds
are received, therefore, they should be accounted for by crediting
construction, retirement, maintenance expense, and administrative
expense in direct proportion to the total costs incurred. For example,
if total storm damage costs are \$1,000,000 with \$450,000 incurred for
maintenance, \$300,000 for retirement, \$200,000 for construction, and
\$50,000 for administrative costs, the FEMA reimbursement should be
accounted for by applying 45 percent of the funds received as a credit
to maintenance expense, 30 percent as a credit to retirement costs, 20
percent as a credit to construction, and 5 percent as a credit to
administrative and general costs.

[Accounting Journal Entries]{.underline}

Dr. 108.8X, Retirement Work in Progress -

Storm Damage \$ 1,015.17

Cr. 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 Account 108.8X.

Dr. 107.4, Construction Work in Progress -

Storm Damage \$ 4,141.55

Cr. 108.8X, Retirement Work in Progress -

Storm Damage \$ 4,141.55

To remove material salvaged in the rebuild from

Account 107.4. The original entry debited Account 154, Plant Materials
and Operating Supplies, and credited Account 107.4. (See Column 12 of
Retirement Work Order #4401X.)

Dr. 108.8X, Retirement Work in Progress -

Storm Damage \$ 312,230.41

Cr. 364, Poles Towers & Fixtures \$ 133,377.55

Cr. 365, Overhead Conductors & Devices 59,683.08

Cr. 368, Lines Transformers 19,704.60

Cr. 369, Services 97,651.23

Cr. 373, Street Lighting & Signal Systems 1,813.95

To remove the original cost of property destroyed and retired from the
classified plant accounts. This retirement is recorded, in detail, on
Retirement Work Order #4401X. It is understood that this retirement
covers all distribution property retired or destroyed in the area
exclusive of substations and special equipment items (meters, meter
sockets, current and potential transformers, transformers, voltage
regulators, oil circuit reclosers (OCR), and sectionalizers).

Dr. 108.6, Accumulated Provision for

Depreciation of

Distribution Plant \$ 309,104.03

Cr. 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 area. (See Retirement Work Order #4401X.)

Dr. 364, Poles, Towers & Fixtures \$ 99,075.40

Dr. 365, Overhead Conductors & Devices 104,142.22

Dr. 368, Line Transformers 25,036.07

Dr. 369, Services 28,865.08

Dr. 373, Street Lighting & Signal Systems 2,101.60

Cr. 107.4, Construction Work in Progress -

Storm Damage \$ 259,220.37

To record, in the proper classified plant accounts, Construction Work
Order #4401 covering the rebuild.

This entry includes:

Material Issued \$ 150,336.49

Less: Materials Returned [15,631.39]{.underline}

Net Material Used 134,705.10

Labor and overhead estimated

by using standard record

unit costs [124,515.27]{.underline}

Total \$ 259,220.37

Dr. 108.8X, Retirement Work in Progress -

Storm Damage \$ 2,384.00

Cr. 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 Retirement Work Order
#4400X).

Dr. 107.4, Construction Work in Progress -

Storm Damage \$ 1,939.74

Cr. 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 \$ 162,172.06

Cr. 355, Poles & Fixtures \$ 47,738.45

Cr. 356, Overhead Conductors & Devices 80,304.11

Cr. 362, Station Equipment 34,129.50

To remove the original cost of transmission lines and substations
destroyed and retired from the classified plant accounts. (See
Retirement Work Order #4400X.) (New substations were built and
separately accounted for on Work Order #4406.)

Dr. 108.5, Accumulated Provision for

Depreciation of

Transmission Plant \$ 128,462.82

Dr. 108.6, Accumulated Provision for

Depreciation of

Distribution Plant 34,153.50

Cr. 108.8X, Retirement Work in Progress -

Storm Damage \$ 162,616.32

To record the net loss due to the retirement of transmission lines
(\$128,462.82) and substations (\$34,153.50). (See Retirement Work Order
#4400X):

[Substations]{.underline} [Transmission Plant]{.underline}

Original Cost \$ 34,129.50 \$ 128,042.56

Add: Cost of Removal [418.00]{.underline} [1,966.00]{.underline}

34,547.50 130,008.56

Less: Material Salvaged [394.00]{.underline} [1,545.74]{.underline}

Total \$ 34,153.50 \$ 128,462.82

Dr. 355, Poles & Fixtures \$ 161,784.05

Dr. 356, Overhead Conductors & Devices 124,704.77

Cr. 107.4, Construction Work in Progress -

Storm Damage \$ 286,488.82

To record, in the proper classified plant accounts, the costs of a 69 kV
transmission line ( ) as detailed in Work

Order #4400. This work order includes construction costs as follows:

Material Used (Net) \$ 171,665.62

Labor and overhead estimated

by using standard record

unit costs [114,823.20]{.underline}

Total \$ 286,488.82

Dr. 107.4, Construction Work in Progress -

Storm Damage \$ 329.40

Cr. 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 transformers. The original entry credited Account 107.4 at
the time of receipt.

Transformers \$ 318.00

Meters [11.40]{.underline}

Net Materials Used \$ 329.40

Dr. 108.8X, Retirement Work in Progress -

Storm Damage \$ 137,671.22

Cr. 365, Overhead Conductors & Devices \$ 4,557.00

Cr. 368, Line Transformers 112,815.22

Cr. 370, Meters 20,299.00

To remove the cost of meters, transformers, and OCRs lost or destroyed
from the primary plant accounts. (See Retirement Work Order #4402X.)

737 Transformers \$ 112,815.22

31 OCRs 4,557.00

1,532 Meters [20,299.00]{.underline}

Total \$ 137,671.22

Dr. 108.6, Accumulated Provision for

Depreciation of

Distribution Plant \$ 137,341.82

Cr. 108.8X, Retirement Work in Progress \$ 137,341.82

To record the net loss due to the retirement of meters, transformers,
and OCRs. (See Retirement Work Order #4402X.)

Original Cost \$ 137,671.22

Salvaged Realized [329.40]{.underline}

Total \$ 137,341.82

Dr. 186, Miscellaneous Deferred Debits \$ 1,319.85

Cr. 107.4, Construction Work in Progress -

Storm Damage \$ 1,319.85

To record the engineering costs associated with future construction work
in the area.

Dr. 593, Maintenance of Overhead Lines \$ 607.24

Dr. 595, Maintenance of Line Transformers 19,365.86

Dr. 597, Maintenance of Meters 6,595.56

Cr. 107.4, Construction Work in Progress -

Storm Damage \$ 26,568.66

To charge the costs of repairing damaged meters, transformers, voltage
regulators, and OCRs to the appropriate expense accounts. Repair costs
were originally charged to Account 107.4.

[593]{.underline} [595]{.underline} [597]{.underline}

Meters \$ 6,595.56

Transformers \$ 18,869.95

Voltage Regulators 495.91

Oil Circuit Reclosers [\$ 607.24]{.underline}

Total \$ 607.24 \$ 19,365.86 \$ 6,595.56

Dr. 920, Administrative and General

Salaries \$ 32,000.00

Dr. 921, Office Supplies and Expenses 4,421.69

Cr. 107.4, Construction Work in Progress -

Storm Damage \$ 36,421.69

To 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 \$ 32,000.00

Office Supplies [4,421.69]{.underline}

Total \$ 36,421.69

Dr. 571, Maintenance of Overhead Lines \$ 3,675.60

Dr. 593, Maintenance of Overhead Lines 33,080.40

Cr. 107.4, Construction Work in Progress -

Storm Damage \$ 36,756.00

To 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 \$ 275,000.00

Dr. 435, Extraordinary Deductions

Dr. 182.1, Extraordinary Property Losses

Cr. 108.5, Accumulated Provision for

Depreciation of

Transmission Plant \$ 35,000.00

Cr. 108.6, Accumulated Provision for

Depreciation of

Distribution Plant 240,000.00

To 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 loss will 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 Property Losses, as the costs are recovered through
rates.

Dr. 131.1, Cash - General \$ 1,000,000.00

Cr. 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 \$ 1,000,000.00

Cr. 108.5, Accumulated Provision for

Depreciation of

Transmission Plant \$ 74,205.00

Cr. 108.6, Accumulated Provision for

Depreciation of

Distribution Plant 191,575.00

Cr. 186, Miscellaneous Deferred Debits 872.00

Cr. 355, Poles & Fixtures 129,056.00

Cr. 356, Overhead Conductors & Devices 99,408.00

Cr. 364, Poles, Towers & Fixtures 78,916.00

Cr. 365, Overhead Conductors & Devices 82,840.00

Cr. 368, Line Transformers 20,056.00

Cr. 369, Services 23,108.00

Cr. 373, Street Lighting & Signal Systems 1,744.00

Cr. 426.5, Other Deductions 219,220.00

Cr. 571, Maintenance of Overhead Lines 2,900.00

Cr. 593, Maintenance of Overhead Lines 26,600.00

Cr. 595, Maintenance of Line Transformers 15,300.00

Cr. 597, Maintenance of Meters 5,200.00

Cr. 920, Administrative and General Salaries 25,491.00

Cr. 921, Office Supplies and Expenses 3,509.00

To allocate FEMA funds to the proper accounts.

[Summary of Costs]{.underline}

Maintenance:

Account 571, Maintenance of Overhead Lines \$ 3,675.60

Account 593, Maintenance of Overhead Lines 33,687.24

Account 595, Maintenance of Line Transformers 19,365.86

Account 597, Maintenance of Meters [6,595.56]{.underline}

Total Maintenance Costs \$ 63,324.26

Retirement Loss:

Account 108.5, Accumulated Provision for

Depreciation of

Transmission Plant \$ 93,462.82

Account 108.6, Accumulated Provision for

Depreciation of

Distribution Plant 240,599.35

Account 426.5, Other Deductions [275,000.00]{.underline}

Total Retirement Loss \$ 609,062.17

Construction:

Account 186, Miscellaneous Deferred Debits \$ 1,319.85

Account 355, Poles & Fixtures 161,784.05

Account 356, Overhead Conductors & Devices 124,704.77

Account 364, Poles, Towers & Fixtures 99,075.40

Account 365, Overhead Conductor & Devices 104,142.22

Account 368, Line Transformers 25,036.07

Account 369, Services 28,865.08

Account 373, Street Lighting & Signal Systems [2,101.60]{.underline}

Total Construction Cost \$ 547,029.04

Administrative:

Account 920, Administrative and General

Salaries \$ 32,000.00

Account 921, Office Supplies and Expenses [4,421.69]{.underline}

Total Administrative Cost \$ 36,421.69

Maintenance \$ 63,324.26

Retirement Loss 609,062.17

Construction 547,029.04

Administrative [36,421.69]{.underline}

Total Costs \$ 1,255,837.16

[Distribution of FEMA Funds]{.underline}

Maintenance: [63,324.26]{.underline} = .0504 = 5.0%

1,255,837.16

Retirement: [609,062.17]{.underline} = .4850 = 48.5%

1,255,837.16

Construction: [547,029.04]{.underline} = .4356 = 43.6%

1,255,837.16

Administrative: [36,421.69]{.underline} = .0290 = 2.9%

1,255,837.16

Maintenance: \$ 1,000,000.00 X 5.0% = \$ 50,000.00

Retirement: \$ 1,000,000.00 X 48.5% = 485,000.00

Construction: \$ 1,000,000.00 X 43.6% = 436,000.00

Administrative: \$ 1,000,000.00 X 2.9% = [29,000.00]{.underline}

Total \$ 1,000,000.00

[Distribution of FEMA Funds - Maintenance]{.underline}

Account 571: [3,675.60]{.underline} = .0580 = 5.8%

63,324.26

Account 593: [33,687.24]{.underline} = .5320 = 53.2%

63,324.26

Account 595: [19,365.86]{.underline} = .3058 = 30.6%

63,324.26

Account 597: [6,595.56]{.underline} = .1041 = 10.4%

63,324.26

Account 571: \$ 50,000.00 X 5.8% = \$ 2,900.00

Account 593: \$ 50,000.00 X 53.2% = 26,600.00

Account 595: \$ 50,000.00 X 30.6% = 15,300.00

Account 597: \$ 50,000.00 X 10.4% = [5,200.00]{.underline}

Total \$ 50,000.00

[Distribution of FEMA Funds - Retirement Loss]{.underline}

Account 108.5: [93,462.82]{.underline} = .1535 = 15.3%

609,062.17

Account 108.6: [240,599.35]{.underline} = .3950 = 39.5%

609,062.17

Account 426.5: [275,000.00]{.underline} = .4515 = 45.2%

609,062.17

Account 108.5: \$ 485,000.00 X 15.3% = \$ 74,205.00

Account 108.6: \$ 485,000.00 X 39.5% = 191,575.00

Account 426.5: \$ 485,000.00 X 45.2% = [219,220.00]{.underline}

Total \$ 485,000.00

[Distribution of FEMA Funds - Construction]{.underline}

Account 186: [1,319.85]{.underline} = .0024 = .2%

547,029.04

Account 355: [161,784.05]{.underline} = .2958 = 29.6%

547,029.04

Account 356: [124,704.77]{.underline} = .2280 = 22.8%

547,029.04

Account 364: [99,075.40]{.underline} = .1811 = 18.1%

547,029.04

Account 365: [104,142.22]{.underline} = .1904 = 19.0%

547,029.04

Account 368: [25,036.07]{.underline} = .0457 = 4.6%

547,029.04

Account 369: [28,865.08]{.underline} = .0528 = 5.3%

547,029.04

Account 373: [2,101.67]{.underline} = .0038 = .4%

547,029.04

Account 186: \$ 436,000.00 X .2% = \$ 872.00

Account 355: \$ 436,000.00 X 29.6% = 129,056.00

Account 356: \$ 436,000.00 X 22.8% = 99,408.00

Account 364: \$ 436,000.00 X 18.1% = 78,916.00

Account 365: \$ 436,000.00 X 19.0% = 82,840.00

Account 368: \$ 436,000.00 X 4.6% = 20,056.00

Account 369: \$ 436,000.00 X 5.3% = 23,108.00

Account 373: \$ 436,000.00 X .4% = [1,744.00]{.underline}

Total \$ 436,000.00

[Distribution of FEMA Funds - Administrative]{.underline}

Account 920: [32,000.00]{.underline} = .8786 = 87.9%

36,421.69

Account 921: [4,421.69]{.underline} = .1213 = 12.1%

36,421.69

Account 920: \$ 29,000.00 X 87.9% = \$ 25,491.00

Account 921: \$ 29,000.00 X 12.1% = [3,509.00]{.underline}

Total \$ 29,000.00

**137 Impairment of Long-Lived Assets**

Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of (Statement No. 121), requires reporting entities to review all
long-lived assets and certain identifiable intangibles that are to be
held, used, or disposed of by that entity for impairment whenever events
and changes in circumstances indicate that the carrying amount of the
asset may not be recoverable. If the sum of the expected future cash
flows (undiscounted and without interest charges) is less than the
carrying value of the asset, the entity must recognize an impairment
loss. The impairment loss is measured as the amount by which the
carrying amount of the asset exceeds the fair value of the asset. The
impairment loss is reported as a component of income from continuing
operations before income taxes for entities presenting an income
statement and in the statement of activities of not-for-profit
organizations. Statement No. 121 does not apply to assets included in
the scope of Statement of Financial Accounting Standards No. 90,
Regulated Enterprises - Accounting for Abandonments and Disallowances of
Plant Costs.

[Assets to be Held or Used]{.underline}

Entities are required to review long-lived assets and certain
identifiable intangibles whenever events or changes in circumstances
indicate that the carrying value of the asset may not be recoverable.
For example:

1\. A significant decrease in the market value of an asset;

2\. A significant change in the extent or manner in which an asset is
used;

3\. A significant physical change in an asset;

4\. A significant adverse change in legal factors or in the business
climate that could affect the value of an asset;

5\. An adverse action or assessment by a regulator;

6\. An accumulation of costs significantly in excess of the amount
originally expected to acquire or construct an asset; and

7\. A current period operating or cash flow loss combined with a history
of operating or cash flow losses or a projection or forecast that
demonstrates continued losses associated with an asset used for the
purpose of producing revenue.

The impairment of the asset is measured by estimating the future cash
flows expected to result from the use of the asset and its disposition.
Assets are grouped at the lowest level for which there are identifiable
cash flows that are largely independent of the cash flows of other
groups of assets. Future cash flows are those cash inflows that are
expected to be generated by the asset less the cash outflows expected to
be necessary to maintain those inflows. If the future cash flows
(undiscounted and without interest charges) are less than the carrying
value of the asset, an impairment loss must be recognized. If the
expected future cash flows are greater than the carrying value of the
asset, no impairment loss exists.

The impairment loss is the amount by which the carrying amount
(acquisition cost less accumulated depreciation) of the asset exceeds
the fair value of the asset. The fair value of the asset is the amount
for which the asset could be bought or sold in an arms-length
transaction between willing parties. A quoted market price is the best
evidence of fair value. If this information is not available, the fair
value should be based upon the best information available. Consideration
should be given to the price of similar assets and valuation techniques
such as the present value of the expected future cash flows discounted
at a rate representative of the risk involved, option-pricing models,
matrix pricing, option-adjusted spread models, and fundamental analysis.
All available information should be considered when using the above
pricing techniques.

If an impairment is recognized, the carrying value of the asset is
reduced to the lower of its fair value or its carrying value and, if
depreciable, depreciated over the remaining useful life. Previously
recognized impairment losses cannot be restored. If the asset was
acquired in a business combination and there is goodwill resulting from
the transaction, the goodwill is included in the asset grouping and
reduced or eliminated before any adjustment is made to the carrying
value of the asset.

The following financial statement disclosures are required in the period
in which the impairment is recognized:

1\. A description of the impaired assets and the facts and circumstances
surrounding the impairment;

2\. The amount of the impairment and how fair value was determined;

3\. The caption in the income statement or the statement of activities
in which the impairment loss is aggregated if that loss has not been
presented as a separate caption or reported parenthetically on the face
of the statement; and

4\. If applicable, the business segment(s) affected.

[Assets to be Disposed]{.underline}

Statement No. 121 also applies to all long-lived assets and certain
identifiable intangibles for which management, having the authority to
approve the action, has committed to a plan of disposal except those
assets covered by APB No. 30, Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and
Transactions. An asset to be disposed of is carried at the lower of its
carrying amount (acquisition cost less accumulated depreciation) or its
fair value less cost to sell.

The fair value of the asset to be disposed of is computed in the same
manner as that for an asset to be held or used by the entity. Selling
costs include the incremental direct cost to transact the sale - broker
commissions, legal fees, title transfer, and other closing costs that
must be incurred before legal title can be transferred. Costs such as
insurance, security service, and utilities are generally excluded unless
these costs are part of a contractual agreement that obligates the
entity to incur such costs in the future. If the asset\'s fair value is
based upon current market price or the current selling price for a
similar asset, the fair value is considered a current amount and is not
discounted. If, however, the fair value is based upon discounted
expected future cash flows and if the sale is to occur beyond one year,
the cost to sell must also be discounted. Assets covered by this
statement are not depreciated (amortized) while being held for disposal.

Subsequent revisions in estimates of fair value less cost to sell are
reported as adjustments to the carrying amount of the asset to be
disposed of as long as the carrying amount of the asset does not exceed
the original carrying amount.

The following financial statement disclosures are required in the period
in which the impairment is recognized:

1\. A description of the assets to be disposed of including the facts
and circumstances leading to the expected disposal, the expected
disposal date, and the carrying amount of those assets;

2\. If applicable, the business segment(s) in which the assets to be
disposed of are held;

3\. The amount, if any, of the impairment loss resulting from the
adoption of this statement;

4\. The gain or loss, if any, resulting from subsequent revisions in the
estimates of fair value less cost to sell;

5\. The caption in the income statement or statement of activities in
which the gains or losses are aggregated if those gains or losses have
not been presented as a separate caption or reported parenthetically on
the face of the statement; and

6\. The results of operations for assets to be disposed of to the extent
that those results are included in the entity\'s results of operations
for the period and can be identified.

[Accounting Requirements]{.underline}

All borrowers must adopt the accounting prescribed by Statement No. 121.

[Effective Date and Implementation]{.underline}

Statement No. 121 is effective for financial statements for fiscal years
beginning after December 15, 1995. Impairment losses resulting from the
application of this statement to assets that are held or used by the
entity must be reported in the period in which the recognition criteria
are first applied and met. Impairment losses attributable to assets to
be disposed of must be reported as the cumulative effect of a change in
accounting principle as prescribed in Accounting Principles Board
Opinion No. 20, Accounting Changes.

[Accounting Journal Entries - Implementation Date]{.underline}

If a borrower has impaired assets that are held or used at the
implementation date, the following entry should be recorded:

Dr. 426.5, Other Deductions

Cr. 300 Series of Accounts, Plant Accounts

To record the adoption of Statement No. 121 for the

impairment of assets that are held or used.

If a borrower has impaired assets to be disposed of at the
implementation date, the following entry should be recorded:

Dr. 435.1, Cumulative Effect on Prior Years of a Change

in Accounting Principle

Cr. 300 Series - Plant Accounts

To record the adoption of Statement No. 121 for assets

that are to be disposed.

[Accounting Journal Entries - Subsequent to Implementation
Date]{.underline}

If an asset that is either held, used or to be disposed of becomes
impaired, the following entry should be recorded:

Dr. 426.5, Other Deductions

Cr. 300 Series - Plant Accounts

To record the impairment of a plant asset.

If a borrower makes a subsequent revision in the estimate of the fair
value less the cost to sell of an asset to be disposed of, the following
entry should be recorded:

Dr. 300 Series - Plant Accounts

Cr. 421, Miscellaneous Nonoperating Income

To revise the fair value of an asset to be disposed.

**138 Automatic Meter Reading Systems - Turtles.**

Automatic meter reading systems were developed from technology called
power line carrier communication systems. One such system, developed by
Hunt Technologies, Inc., is called by its brand name, the Turtle system.
In addition to its function as an automated reading device, the Turtle
can provide outage detection, power failure counts, and other potential
applications. The current Turtle system does not have the capability for
applications such as collection of load survey or interval data. A
Turtle system consists of:

1\. A meter reader mounted (retrofitted) inside the meter;

2\. A receiver located in each substation; and

3\. Monitoring and programming equipment (software and personal
computer) usually located in the headquarters building.

The system transmits continuous information one way from the meter to a
receiver located in the substation. The receiver constantly monitors
every Turtle meter served by the substation. The substation receiver can
be sized to monitor up to 3,000 Turtle meter readers at the same time.
The data is then transmitted to the headquarters monitoring equipment
via telephone line or an equivalent communication system.

The technical literature and other information provided by the
manufacturer indicates that this system can only be used for remote
meter reading, outage detection, power failure counts, and phase
identification. At this time, there is no indication that the system
supports other functions such as home security. Therefore, the
accounting prescribed for the Turtle meter reading devices and support
equipment relates only to electric utility operations.

[Accounting Requirements]{.underline}

The function of the equipment is the primary factor in determining the
account in which the equipment shall be recorded. The components of the
Turtle automatic meter reading system shall be shall be recorded in
Account 370, Meters. The cost of the meter reader encoding device and
retrofitting the meter with the meter reader unit shall be capitalized
to the cost of the existing meter. Any associated operating expenses
shall be charged to Account 586, Meter Expenses, with maintenance
expenses charged to Account 597, Maintenance of Meters.

Separate continuing property records shall be established for the
meters, either fitted or retrofitted with the device; the receiver; the
personal computer; and the system software. The meters, receivers, and
personal computer shall be depreciated over the manufacturer's estimated
useful service life. The system software shall be depreciated over the
estimated useful service life of the program not to exceed 5 years.

**139 Global Positioning Systems.**

The Global Positioning System (GPS) is a worldwide radio-navigation
system formed from a network of 24 satellites and their ground stations.
Utilities are using this advanced technology geographic data collection
system to update and modernize their system maps. GPS uses a system of
satellites orbiting the earth to establish plant locations with pinpoint
accuracy. By triangulating from three satellites and using radio signals
to measure distances and locate items, system-wide maps can be created
of the utility's service area. A field inventory is then taken of the
utility's plant and plotted onto the map. The GPS consists of base
station equipment, remote station equipment, the GPS program, and
mapping conversion software.

All equipment associated with GPS is dedicated to the mapping effort.
The base station is installed at a fixed location and ties satellite
measurements into a solid local reference. The remote station is a
portable receiver that is taken into the field to determine locations
and is moved from site to site. The GPS program is the application
software that operates the station equipment and is used by layout
technicians to gather information of existing and new facilities in the
field. The conversion software is used for converting the GPS and
inventory information gathered in the field into a form usable by the
mapping program.

[Accounting Requirements]{.underline}

The function and location of the equipment are the primary factors in
determining the account in which the equipment shall be recorded. The
components of the GPS shall be accounted for as follows:

1\. [Remote and Base Station Equipment]{.underline} The cost of the
equipment, both remote and fixed, shall be capitalized in a subaccount
of Account 391, Office Furniture and Equipment.

2\. [GPS Program and Conversion Software for Mapping]{.underline} The
cost of GPS program and conversion software shall be capitalized in a
subaccount of Account 391, Office Furniture and Equipment.

3\. [GPS/GIS Field Inventory of System]{.underline} The cost of
performing a GPS/GIS survey and field inventory of the existing system
by either a consultant or the utility's own forces, shall be charged to
Account 588, Miscellaneous Distribution Expenses.

**140 Radio-Based Automatic Meter Reading Systems.**

Radio-based automatic meter reading technology allows meters equipped
with a low-power radio device called an ERT (Encoder, Receiver,
Transmitter) to be read from a remote location. The ERT device can
either be retrofitted to an existing meter or purchased installed in a
new meter. The ERT device "encodes" energy consumption and transmits
this information to a radio transceiver equipped handheld computer. The
data collected and stored in the handheld computer is then uploaded to a
billing computer using specialized software for that purpose.

[Accounting Requirements]{.underline}

The function of the equipment is the primary factor in determining the
account in which the equipment shall be recorded. The components of the
radio-based automatic meter reading system shall be shall be recorded in
Account 370, Meters. The cost of the meter reader encoding device and
retrofitting the meter with the meter reader unit shall be capitalized
to the cost of the existing meter. Any associated operating expenses
shall be charged to Account 586, Meter Expenses, with maintenance
expenses charged to Account 597, Maintenance of Meters.

Separate continuing property records shall be established for the
meters, either fitted or retrofitted with the device; the handheld
computer; and the upload software. The meters and handheld computer
shall be depreciated over the manufacturer's estimated useful service
life. The upload software shall be depreciated over the estimated useful
service life of the program not to exceed 5 years.

**201 Supplemental Financing.**

Many borrowers secure additional financing from sources other than RUS.
CFC was established to provide a source of supplemental financing.
Although the accounting provided in this section refers to CFC, it is
applicable to other sources of supplemental financing as well.

1\. [Membership Fees]{.underline}. When a membership fee is paid to CFC,
the payment shall be recorded as a debit to Account 123.23, Other
Investments in Associated Organizations.

2\. [Subscriptions]{.underline}. The subscription agreement to purchase
Capital Term Certificates (CTCs) is a binding obligation to pay an
initial subscription in equal annual payments over the first three years
and an additional annual subscription payable in the fourth through
fifteenth years.

The annual subscriptions to CFC for the fourth through fifteenth years
is 2.0 percent of total operating revenues after deducting the cost of
power. Using the best data available, each borrower shall estimate the
amount of CTCs that are required to be purchased. Estimates are not
expected to be precise and adjustments shall be made when future
projections indicate a change is needed. When the agreement to purchase
CTCs is made, an entry shall be recorded debiting Account 123.21,
Subscriptions to Capital Term Certificates - Supplemental Financing, and
crediting Account 224.11, Other Long-Term Debit - Subscriptions. When
the CTCs are actually purchased, the following entries shall be
recorded:

Dr. 224.11, Other Long-Term Debt - Subscriptions

Cr. 131.1, Cash - General

Dr. 123.22, Investments in Capital Term

Certificates - Supplemental Financing

Cr. 123.21, Subscriptions to Capital Term

Certificates - Supplemental Financing

3\. [Interest Receipts]{.underline}. Interest accrues monthly to the
holder of CTCs at a rate in accordance with the terms of the CFC
Invitation to Subscribe. The accrual of interest and the receipt of
interest proceeds shall be recorded as follows:

Dr. 171, Interest and Dividends Receivable

Cr. 419, Interest and Dividend Income

To record the monthly accrual of interest.

Dr. 131.1, Cash - General

Cr. 171, Interest and Dividends Receivable

> To record the receipt of interest proceeds from the investment in
> CTCs.

Note: Any amounts received in excess of the previous accruals shall be
credited to Account 419.

Interest penalties may be charged by CFC for late payments on any
subscription from the date that the payment was due to the date that the
payment was actually received. Such charges shall be expensed to
Account 431, Other Interest Expense.

4\. [Notes]{.underline}. If a note is due more than one year after the
date of the note, the appropriate subaccount of Account 224, Other
Long-Term Debt, shall be credited. If the note is due less than one year
from the date of the note, Account 231, Notes Payable, shall be
credited.

When a loan from CFC has been consummated and a note is executed,
Account 224.13, Supplemental Financing Notes Executed - Debit, shall be
debited; and Account 224.12, Other Long-Term Debt - Supplemental
Financing, credited. When a loan from another source has been
consummated, Account 224.15, Notes Executed - Other - Debit, shall be
debited; and Account 224.14, Other Long-Term Debt - Miscellaneous,
credited.

5\. [Loan Proceeds]{.underline}. Cash proceeds from unsecured short-term
loans shall be deposited into the General Fund Account. Cash proceeds
from all secured loans shall be deposited into the Construction Fund
Trustee Account.

From two to seven percent, depending upon the class of borrower and its
debt-equity ratio, of each CFC loan is applied to the purchase of
Capital Term Certificates. At the time of a borrower\'s first
requisition under the CFC loan, the following entry shall be recorded:

Dr. 131.2, Cash - Construction Fund - Trustee

Dr. 123.22, Investments in Capital Term Certificates -

Supplemental Financing

Cr. 224.13, Supplemental Financing Notes Executed -

Debit

To record the requisition of funds from CFC.

6\. [Capital Credits]{.underline}. As a result of borrowing from CFC or
other lenders organized on a cooperative basis, a borrower may receive
capital credit allocations. These allocations are usually based upon the
borrower\'s participation in the lending program with participation
measured by the amount of interest expense and conversion costs
incurred.

To account for patronage capital allocations from cooperative lenders,
the following journal entries shall be recorded:

Dr. 123.1, Patronage Capital from Associated

Cooperatives

Cr. 424, Other Capital Credits and Patronage

Capital Allocations

> To record the allocation of capital credits from a cooperative lender.

Note: If any portion of the interest expense was capitalized as a
component of construction cost, a similar portion of the capital credit
allocation shall be credited to construction rather than to Account 424.
The portion credited to construction shall be determined by applying the
percentage of interest expense charged to construction for that
particular lender to the interest expense incurred for that lender.

Dr. 131.1, Cash - General

Cr. 123.1, Patronage Capital from Associated

Cooperatives

> To record the cash receipt of patronage capital credits from
> cooperative lenders.

**301 Forfeited Customers\' Deposits.**

Customers may be required to make deposits to guarantee payment of
amounts billed for electric service. When a customer discontinues
service, the customer\'s deposit shall first be applied to unpaid energy
bills, with the balance remitted by check to the customer. If the check
is returned, it shall be voided and the original entry that was made
when the check was issued shall be reversed.

Unclaimed balances of customer deposits shall remain in

Account 235, Customer Deposits, until the legal liability of the
cooperative to make such a refund has elapsed. When there is no further
legal liability to refund the deposit and if it does not escheat to the
state, it shall be transferred to Account 144, Accumulated Provision for
Uncollectible Customer Accounts - Credit, retaining full information of
all particulars.

**401 Computer Software Costs.**

Computer software consists of programs and routines (sets of computer
instructions) which direct the operation of the computer. Software may
refer to generalized routines useful in computer operations or to
programs for specific applications such as payroll.

The distinction between generalized software and application software is
important. Generalized software provides operating support for
individual applications. This would include programs for such tasks as
making printouts of machine-readable records, sorting records,
organizing and maintaining files, translating programs written in a
symbolic language into machine-language instructions, and scheduling
jobs through the computer. These programs are generally furnished by the
manufacturer.

Application software consists of a set of instructions for performing a
particular data processing task. Application programs are generally
written by the user installation, but are frequently obtained as
prewritten packages from software vendors. Application software includes
programs such as payroll, billing, general ledger, as well as
engineering or managerial applications.

Costs incurred with the purchase or development of computer software
shall be accounted for as follows:

1\. Capitalize in a subaccount of Account 391, Office Furniture and
Equipment, all costs for generalized software. Depreciate the cost over
the service life (or remaining life) of the main hardware (i.e.,
containing central processor). If the purchase invoice does not break
out or assign a cost to the \"generalized software,\" it is appropriate
to include the full amount in hardware costs. Capitalize in a separate
subaccount of Account 391, all costs for applications software
determined to have a service life of over one year. Depreciate the cost
over the estimated useful service life of the program. This depreciation
period shall not exceed five (5) years. RUS realizes, however, that
there may be circumstances that justify a useful life longer than 5
years. When this is the case and it is management\'s intent to utilize
these programs over an extended period, written justification shall be
submitted to RUS for approval.

2\. Expense in Account 921, Office Supplies and Expenses, in the period
incurred, all costs associated with the maintenance, updating, and
conversion of files or revision of all software, and all costs for
software with a useful life of less than 1 year. Also expense in Account
921, the unamortized cost of all software determined, during the year,
to be no longer used by or useful to the cooperative. Such costs that
are clearly applicable to any category of operating expenses other than
the administrative and general category, however, shall be included in
the appropriate account in such category. In accordance with the USoA,
no portion of such costs shall be capitalized to construction or
retirement activities.

In determining the total cost of purchased or internally developed
software, the following items shall be included:

a\. Costs incurred for feasibility studies if they result in the
purchase or development of software;

b\. All costs related to the actual purchase or development of the
software. These costs must be specifically identifiable with the
software and properly supported by time cards, invoices, or other
documents; and

c\. All costs incurred in \"testing and debugging\" the software.

Computer software costs are properly chargeable to

Account 107, Construction Work in Progress, provided that the following
criteria are met:

1\. The computer program is specifically dedicated to performing a
construction related activity, and

2\. The cost of the software is itemized separate and apart from other
hardware and software costs.

The cost of software programs meeting the above requirements and having
an estimated useful service life in excess of 1 year shall be recorded
in Account 186, Miscellaneous Deferred Debits, and amortized to Account
107, Construction Work in Progress, over the estimated service life of
the program not to exceed 5 years.

All costs related to training personnel in the use of software shall be
expensed as incurred.

The accounting in this section is not intended to apply to immaterial
amounts. When it is deemed that the costs of the recordkeeping necessary
to amortize these costs outweigh the benefits to the patrons, software
costs shall be expensed in the year incurred.

For computer costs relating to load control equipment, refer to Item 118
of this section.

**402 Legal Expenses.**

Utilities may incur legal expenses which pertain to construction
activities, loan activities, or general services. The proper accounting
treatment for legal expenses is as follows:

1\. Legal fees incurred in connection with a construction project,
including the court costs directly related thereto, which can be
identified and supported as such, shall be capitalized in Account 107,
Construction Work in Progress, as a cost of construction.

2\. Legal fees specifically identified and properly supported as
resulting from activities designed to obtain long-term debt, shall be
deferred in Account 181, Unamortized Debt Expense.

3\. Legal fees for all other services and fees which cannot be properly
identified will require expensing to either

Account 417.1, Expenses of Nonutility Operations, or Account 923,
Outside Services Employed, as appropriate.

To properly support the capitalization or deferral of legal fees, the
attorney shall provide an itemization of services performed and the
corresponding costs. Only those costs specifically identified by the
attorney as being related to construction or loan activities shall be
capitalized or deferred as described above.

**403 Leases.**

Lease transactions shall be accounted for as either a capital lease or
an operating lease depending upon whether or not the lease meets the
criteria for classification as a capital lease. The definitions for
capital and operating leases and the criteria used to determine which
method shall be used are as follows:

[Definitions]{.underline}

1\. [Capital Lease]{.underline}: A lease that transfers substantially
all of the benefits and risks inherent in the ownership of the property
to the lessee, who accounts for the lease as an acquisition of an asset
and the incurrence of a liability.

2\. [Operating Lease]{.underline}: An operating lease is a simple rental
agreement which does not meet the criteria for a capital lease. Under
the terms of an operating lease, the lessee records the rental payments
due over the term of the lease as rent expense.

[Criteria]{.underline}

A lease agreement shall be classified as a capital lease if one or more
of the following criteria is met:

1\. Ownership of the property is transferred to the lessee by the end of
the lease term;

2\. The lease contains a bargain purchase option;

3\. The lease term is equal to 75 percent or more of the estimated
useful life of the leased property; or

4\. The present value of the lease payments at the inception of the
lease equals or exceeds 90 percent of the fair market value of the
leased property.

A lease agreement qualifying as a capital lease shall be recorded in
either Account 101.1, Property Under Capital Leases;

Account 120.6, Nuclear Fuel Under Capital Leases; or Account 121,
Nonutility Property, as appropriate, at the present value (at the
beginning of the lease term) of the minimum lease payments. If, however,
this amount exceeds the fair value of the leased property at the
inception of the lease, the asset shall be recorded at its fair market
value. An offsetting credit shall be recorded in Account 227,
Obligations Under Capital Leases - Noncurrent, with the current portion
recorded in Account 243, Obligations Under Capital Leases - Current.
Assets recorded in Account 101.1 shall be classified separately
according to the detailed accounts (301-399) provided for electric plant
in service.

Monthly payments made under the lease obligation shall be charged to
rent expense, fuel expense, or construction work in progress as they
become payable. Similarly, the leased asset and the associated
obligation shall be reduced by the current amount due.

The following journal entries shall be used by the lessee to record
capital lease transactions:

Dr. 101.1, Property Under Capital Leases

Cr. 243, Obligations Under Capital Leases - Current

Cr. 227, Obligations Under Capital Leases - Noncurrent

To record the capital lease agreement.

Dr. 550, Rents

Cr. 232, Accounts Payable

Dr. 243, Obligations Under Capital Leases - Current

Cr. 101.1, Property Under Capital Leases

To record the monthly rental payment due.

Dr. 232, Accounts Payable

Cr. 131.1, Cash - General

To record the monthly lease payment.

Operating leases which are simple rental agreements do not require the
recording of an asset or a liability. The entries that are required to
record an operating lease by the lessee are as follows:

Dr. 550, Rents

Cr. 232, Accounts Payable

To record the monthly rental payment due.

Dr. 232, Accounts Payable

Cr. 131.1, Cash - General

To record the monthly lease payment.

For purposes of illustration, the journal entries presented in this
interpretation debit Account 550, Rents. However,

Account 507, Rents (steam power generation); Account 525, Rents (nuclear
power generation); Account 540, Rents (hydraulic power generation);
Account 550, Rents (other power production);

Account 567, Rents (transmission expense); Account 589, Rents
(distribution expense); and Account 931, Rents (general and
administrative), should be charged, as appropriate, depending upon the
function of the equipment being leased.

**404 Consolidated Financial Statements.**

In October 1987, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 94, Consolidation of All
Majority-Owned Subsidiaries (Statement No. 94). For purposes of
reporting to RUS, Statement No. 94 shall be applied as follows:

1\. An RUS borrower that is a subsidiary of another entity shall prepare
and submit to RUS separate financial statements even though this
financial information is presented in the parent\'s consolidated
statements.

2\. In those cases in which an RUS borrower has a majority-ownership in
a subsidiary, the borrower must prepare consolidated financial
statements in accordance with the requirements of Statement No. 94.
These consolidated statements must also include supplementary schedules
presenting a Balance Sheet and Income Statement for each majority-owned
subsidiary included in the consolidated statements.

Although Statement No. 94 requires the consolidation of majority-owned
subsidiaries, RUS Forms 7 and 12 must be prepared on an unconsolidated
basis.

**501 Patronage Capital Assignments.**

Accounting for patronage capital and margins may vary depending upon the
individual cooperative\'s bylaws. The comments contained in this section
relate to the application of the standard bylaw provisions.

The entries required, at year\'s end, to record patronage capital
transactions where there is no major merchandising program are as
follows:

Dr. 219.1, Operating Margins

Dr. 219.2, Nonoperating margins

Cr. 201.2, Patronage Capital Assignable

To record the amount of patronage capital assignable.

Dr. 201.2, Patronage Capital Assignable

Cr. 201.1, Patronage Capital Credits

> To record the allocation of patronage capital to the patrons\'
> accounts.

The procedure for determining the amount of patronage capital assignable
to the individual patron on a total dollar basis is as follows:

1\. Determine the total amount to be assigned for the year
(Account 201.2).

2\. Determine patronage from electric service, the total of consumers\'
billings (Accounts 440-447).

3\. Determine the percentage factor to be used in calculating patronage
capital to be credited to each consumer account. Divide \"1\" by \"2\".

4\. Determine the amount of capital to be credited to each consumer.
Multiply the individual consumer\'s billings for the year by the
percentage factor obtained in \"3\" above.

The procedure for determining the amount of patronage capital assignable
to the individual patron on a dollar basis, less the cost of power, is
as follows:

1\. Determine the total amount to be assigned for the year.

2\. Determine the total amount of revenue received from each
classification of customers.

3\. Determine the total cost of power for each classification of
customers. (For example, use cost per kWh sold).

4\. For each classification of customers subtract the amount obtained in
\"3\" from the amount obtained in \"2,\" to obtain the total amount
received, less cost of power, by classification 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
classification of customers (amounts obtained in \"4\"), by the total
amount received, less cost of power for all customers (amount obtained
in \"5\") to obtain the prorata percentage for each classification of
customers.

7\. Multiply the total amount to be allocated (amount obtained in \"1\")
by the prorata percentage for each classification of customers (obtained
in \"6\") to obtain the amount to be assigned each classification of
customers.

8\. Divide the amount to be assigned each classification of customers
(amount obtained in \"7\") by the total amount received from the
classification of customers (amount obtain in \"2\") to obtain the
percentage factor for each classification of customers.

9\. Determine the total amount received from each individual customer.

10\. Multiply the total amount received from each individual customer
(amount obtained in \"9\") by the percentage factor for his
classification (amount obtained in \"8\") to obtain the amount of
capital to be assigned each individual customer.

After calculating the patronage capital to be credited to each customer,
there is usually a small balance remaining. This small balance shall
remain in Account 201.2, Patronage Capital Assignable, and shall be
added to the amount to be assigned in the following year.

Proper records shall be maintained to support all capital credit
transactions. As a minimum, these records shall show, for each patron,
the amount of capital credited for each year as well as the amount and
date retired for each year.

The process of transferring capital credits from the Patronage Capital
Assignable accounts to the Patrons\' Capital Credits Assigned accounts
or to the Patrons\' Capital Credits accounts and the making of entries
to individual patron\'s records constitutes an assignment of capital
credits. This holds true for recordkeeping purposes as well as from a
legal point of view. This assignment shall be followed by formal
notification to patrons within a reasonable period of time.

In the event that a distribution cooperative incurs a net loss, that
loss shall not be allocated to its members (patrons). The loss shall be
accumulated and offset by future nonoperating margins.

**502 Patronage Capital Retirements.**

As the board of directors has the responsibility for determining whether
the financial condition of the cooperative will permit retirement of
capital credits and whether the proposed retirement complies with
mortgage and bylaw provisions, the authorization for the retirement
shall be set forth in the board minutes. The entries to record the
general retirement of capital credits shall be as follows:

Dr. 201.1, Patronage Capital Credits

Cr. 238.1, Patronage Capital Payable

> To record the board of directors\' authorization to make payments of
> capital credits.

Dr. 238.1, Patronage Capital Payable

Cr. 131.1, Cash - General.

To record actual cash payments of capital credits.

> Note: To provide better control over the payment of patronage capital
> credits, a special checking account should be established in an amount
> equal to the authorized general retirement. Special prenumbered checks
> shall be used for each general retirement of patronage capital.

To strengthen internal control and to facilitate the settlement of
estates, the board should adopt a policy specifying exactly how payments
of capital credits shall be made to the estates of deceased patrons.
Payments made to estates shall be recorded as follows:

Dr. 201.1, Patronage Capital Credits

Cr. 131.1, Cash - General

> To record the payment of capital credits when an estate is settled by
> refunding 100 cents on the dollar.

Dr. 201.1, Patronage Capital Credits

Cr. 131.1, Cash - General

Cr. 217, Retired Capital Credits - Gain

> To record the payment of capital credits when an estate is settled for
> less than the full amount of capital credited to the deceased
> customer\'s account.

Dr. 217, Retired Capital Credits - Gain

Cr. 201.2, Patronage Capital Assignable

> To record the reallocation to current patrons of the amount of the
> discount, if provided for in the bylaws.

If a capital credit check is returned due to an inability to locate the
patron, it shall be held pending a recheck of available records to
ascertain the correct address of the patron. If it is determined that
the patron cannot be located, the check shall be cancelled and the
amount of the check debited to

Account 131.1, Cash - General, and credited to Account 217, Retired
Capital Credits - Gain. If the state, however, has unclaimed property
laws to which the amount is subject, the amount shall be credited to
Account 253, Other Deferred Credits, until final disposition has been
made. A notation shall be made in the records of the former patron to
facilitate payment if his or her whereabouts is subsequently determined.

If the records show that a number of former patrons have moved and left
no forwarding address, it is not necessary to prepare a capital credit
retirement check for these patrons when a general retirement of capital
credits is made. When setting funds aside to make a general retirement,
however, appropriate amounts shall be included to cover payments due
these patrons. The cooperative shall then make a reasonable effort to
locate these patrons through publication of their names in the
newsletter or local newspaper. If the patrons are not located, the
amounts set aside and the credits to their accounts shall be handled in
a manner similar to those for whom payment checks are returned.

Under the standard bylaw provisions recommended by RUS, it is not proper
to use capital credits that were assigned to former patrons to liquidate
their delinquent bills. When the standard bylaws are in effect and
collection efforts have failed, the balance of an uncollectible bill,
after application of customers deposits and membership fees, shall be
charged against the accumulated provision for uncollectible accounts. If
the patron has capital credits assigned to him or her, these remain
untouched except for a notation to indicate the amount of the unpaid
bill. When a general retirement of capital credits is made at some
future date, amounts which would otherwise be due the patron may be
applied to satisfy the unpaid bill with the balance refunded to him or
her.

**503 Operating and Nonoperating Margins.**

Occasionally questions arise concerning the accounting for the balances
in Accounts 218, Capital Gains and Losses; 219.3, Other Margins; 219.4,
Other Margins and Equities-Prior Periods; 434, Extraordinary Income; and
435, Extraordinary Deductions. The balance in these accounts shall be
accounted for as follows:

1\. The balance in Account 219.4, Other Margins and Equities - Prior
Periods, shall be transferred, at year\'s end, to

Account 219.1 or 219.2, as appropriate. Accounts 219.1 and 219.2 are
then closed to Account 201.2, Patronage Capital Assignable, unless
otherwise provided for in the bylaws.

2\. The balances in Account 434, Extraordinary Income, and Account 435,
Extraordinary Deductions, shall be cleared to Account 219.2 at year\'s
end.

3\. The balances in Account 219.3, Other Margins, and

Account 218, Capital Gains and Losses, shall remain in these accounts
unless they are allocated to patrons or used to absorb future losses as
provided for in the bylaws of the cooperative.

When a cooperative is engaged in a major merchandising activity, all
costs properly chargeable to the merchandising activity shall be
allocated as such to offset the associated revenue. Nonoperating margins
generated from this source shall be prorated annually on a patronage
basis and credited to those patrons accounts from whom such amounts were
obtained. Merchandising activities of this nature may require a bylaw
provision allowing for the allocation of margins generated by a major
merchandising activity separate from other operating or nonoperating
margins.

If, at the time of the adoption of the bylaw provisions for the
allocation of nonoperating margins, there are prior years\' losses
resulting in debit balances in Accounts 218, Capital Gains and Losses;
219.1, Operating Margins; 219.2, Nonoperating Margins; or 219.3, Other
Margins; the credit balances in Accounts 218, 219.2, or 219.3 resulting
from prior years\' operations shall be transferred, to the extent
necessary, to offset such deficits. If the board determines that amounts
shall be allocated to prior years\' patrons, the credit balances
remaining in these accounts shall be transferred to Account 201.2,
Patronage Capital Assignable.

If there are current year\'s losses resulting in debit balances in
either Account 219.1 or 219.2, credit balances in Accounts 219.2, 219.3,
and 218 shall be transferred, to the extent necessary, to offset such
deficits. Remaining credit balances allocable to patrons shall be
transferred to Account 201.2.

**504 Patronage Capital from G&T Cooperatives.**

When a cooperative receives capital credits from a G&T cooperative, the
transaction shall be recorded by a debit to Account 123.1, Patronage
Capital from Associated Cooperatives, and a credit to Account 423,
Generation and Transmission Cooperative Capital Credits. This entry
shall be made prior

to the closing of the cooperative\'s books even though, in most cases,
the notice of the G&T allocation is not received until after the close
of the year to which it relates. If precise information cannot be
obtained from the G&T within a reasonable time, capital credits shall be
recorded on an estimated basis. The difference between the estimated
amount and the actual shall be recognized in the following year unless
the difference is material.

A distribution cooperative shall not recognize its proportionate share
of losses incurred by the G&T. G&T losses shall be accumulated and
offset as provided for in the bylaws. Unlike distribution cooperatives,
a G&T has the option to offset accumulated losses with future operating
and/or nonoperating margins.

**505 Patronage Capital Furnished by Other Cooperative Service**

**Organizations.**

Utilities may obtain long-term and short-term loans, telephone or data
processing services, or may purchase oil, gasoline, materials,
insurance, and various items from cooperative or mutual enterprises.
These enterprises often make patronage refunds or provide evidence that
an amount equal to such a refund has been credited to the utility as an
investment of capital. The refund may be in the form of cash in the year
following the purchase or it may be deducted from the next invoice. The
notice of patronage credited to the borrower\'s account may indicate
that such capital may be retired at some future date upon certain
conditions having been met. The following provides the accounting
journal entries for these types of transactions:

1\. Insurance policy refunds from mutual companies, in cash or as
credits against subsequent purchases, shall be credited to the
appropriate expense account. If sufficient information is not available
to credit the refunds to the appropriate expense accounts, they shall be
credited to Account 165, Prepayments, and reduce premiums for the
current year.

2\. Patronage capital allocations from cooperatives, other than mutual
insurance companies, shall be credited, in the year that the allocation
notice is received, to Account 424, Other Capital Credits and Patronage
Allocations, or to construction work in progress, as appropriate. The
allocation of patronage capital credits between Account 424 and
construction work in progress shall be made on an equitable basis. For
example, patronage capital allocations received from a cooperative money
lender are allocated between Account 424 and construction work in
progress based upon the ratio of interest charged to construction for
that particular lender to total interest expense incurred for that
lender. Patronage capital allocations received from a material supplier
are allocated based upon the ratio of materials charged to construction
to total materials purchased.

3\. The face amount of patronage capital certificates received by the
cooperative from the purchase of goods or services from cooperative
money lenders (CFC), oil dealers, material suppliers, pole treating
plants, communications services, and others shall be charged to either
Account 123.1, Patronage Capital from Associated Cooperatives, or
Account 124, Other Investments, as appropriate. Account 123.1 shall
include investments in only those cooperatives, or enterprises, that are
directly related to the electric utility industry and controlled by the
electric cooperatives. These include statewide cooperatives, power
cooperatives, and NRECA. Other investments in oil cooperatives and
insurance companies shall be charged to Account 124.

**506 Forfeited Membership Fees.**

The bylaws of each cooperative prescribe certain rules and regulations
concerning membership in the cooperative. Among these are provisions for
forfeiture of membership fees. Some bylaws provide for application of
membership fees against any unpaid accounts at the time of termination
of service. Any remaining balance may be refunded to the member.
Balances that cannot be refunded to the member due to an inability to
locate the member or due to bylaw restriction, shall be credited to
Account 208, Donated Capital, provided they do not escheat to the state.
If disposition of the fees cannot be determined immediately, the amount
involved shall be transferred to Account 253, Other Deferred Credits,
until the determination is made.

**601 Employee Benefits.**

The costs of employees\' fringe benefits (hospitalization, retirement,
holiday, sick and vacation pay, etc.) shall be accumulated in an
appropriate clearing account and allocated monthly on the basis of
payroll. Vacation costs shall be accrued monthly by appropriate credits
to an accrual account. These monthly accruals shall be allocated on the
basis of direct payroll costs to construction, retirement, and the
applicable operations, maintenance, and administrative expense accounts.

Sick leave costs are not normally accrued unless the employee is
entitled to be paid for accumulated sick leave at the termination of
employment. Salary payments and the associated employee pensions and
benefits and social security and other payroll taxes for an employee who
is actually sick shall be charged to the same account or accounts to
which his or her salary is normally charged.

**602 Compensated Absences.**

Statement of Financial Accounting Standards No. 43, Accounting for
Compensated Absences (Statement No. 43), requires employers to accrue a
liability as an employee earns the right to be paid for future absences.
Four criteria were established for this accrual:

1\. The employer\'s obligation for payment for future absences is
attributable to employees\' services already performed.

2\. The obligation relates to employee rights which vest or accumulate.
Vested rights are considered those for which the employer is obligated
to make payment even if the employee terminates. Rights which accumulate
are those earned, but unused rights to compensated absences which may be
carried forward to one or more periods subsequent to the period in which
they are earned.

3\. Payment of the compensation is probable.

4\. The amount can be reasonably estimated.

A company\'s liability shall be estimated based upon payments it expects
to make as a result of employees\' work already performed. If a
reasonable estimate cannot be made, the company shall disclose that fact
in the financial statements.

Statement No. 43 does not apply to severance or termination pay,
postretirement benefits, deferred compensation, stock or stock options,
group insurance, or other long-term fringe benefits.

The entries required to account for the accrual of compensated absences
are as follows:

Dr. 435.1, Cumulative Effect on Prior Years of a Change

in Accounting Principle

Cr. 242.3, Accrued Employees\' Vacation and Holidays

> To record the liability for benefits earned in prior
>
> years.

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Cr. 242.3, Accrued Employees Vacation and Holidays

> To record the liability for benefits earned in the
>
> current period.

**603 Employee Retirement and Group Insurance.**

Some borrowers have group insurance or retirement plans or both for
their employees. As a general rule the cost of these programs is borne
partially by the cooperative and partially by its employees. The
cooperative may pay the full cost in advance and recover the employee\'s
share through payroll deductions. The accounting for these transactions
is as follows:

1\. The cooperative\'s advanced payment of premiums on insurance and
retirement agreements shall be charged to

Account 165, Prepayments, for the employer's portion, and

Account 143, Other Accounts Receivable, for the employee\'s portion.

2\. The cost of the employer\'s portion of a retirement and group
insurance program shall be charged to construction and retirement
activities and the applicable operations, maintenance, and
administrative expense accounts based upon a specific identification
with employees' labor costs charged therein or, in the absence of
specific employee identification, based upon direct labor dollars or
direct labor hours depending upon which allocation technique provides
the most equitable distribution of costs.

**604 Deferred Compensation.**

Many utilities participate in the NRECA Deferred Compensation Program.
Based upon the provisions of the program, the following accounting
entries shall be made:

Dr. 186.XX, Miscellaneous Deferred Debits - Deferred

Compensation

Cr. 228.3, Accumulated Provision for Pensions and

Benefits

> To increase the deferred compensation provision by the
>
> amount of the annual deposit to NRECA\'s Deferred
>
> Compensation Fund.

Dr. 128, Other Special Funds - Deferred Compensation

Cr. 131.1, Cash - General

> To record the annual deposit to NRECA\'s Deferred
>
> Compensation Fund.

Dr. Construction Work in Progress, Retirement

Work in Progress, or the Various Operations,

Maintenance, and Administrative Expense Accounts,

as appropriate.

Cr. 186.XX, Miscellaneous Deferred Debits - Deferred

Compensation

To record monthly accrual of deferred compensation.

> Note: If an employee joins the deferred compensation program during
> the year, use entry #1 to record the
>
> additional deposit to the NRECA Deferred Compensation
>
> Fund and increase the monthly accrual in entry #2 to
>
> reflect this deposit.

NRECA provides borrowers that participate in the deferred compensation
program with an annual account statement disclosing the activity for
each Homestead Fund investment including the number of shares owned,
interest income, dividend income, capital gains/losses, and the value of
the shares owned at statement date. Funds may be invested in the
Short-term Bond Fund, the Value Fund, the Short-term Government
Securities Fund, and the Daily Income Fund. Depending upon the Homestead
Fund selected, invested funds may earn interest and dividend income and
may experience unrealized holding gains or losses. Based upon the
information provided on the annual statement, the following journal
entries shall be recorded to recognize the increase or decrease in the
fund assets:

Dr. 128, Other Special Funds - Deferred Compensation

Cr. 419, Interest and Dividend Income

Cr. 421, Miscellaneous Nonoperating Income

> To record an increase in the fund value as of
>
> December 31, 19xx, resulting from interest and dividend income and
> from unrecognized holding gains on trading securities.

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Cr. 228.3, Accumulated Provision for Pensions and

Benefits

> To record an increase in the liability to the employee resulting from
> an increase in the investment account.

Dr. 426.5, Other Deductions

Cr. 128, Other Special Funds - Deferred Compensation

> To record a decrease in fund value as of December 31, 19xx, resulting
> from unrecognized holding losses on trading securities.

Dr. 228.3, Accumulated Provision for Pensions and

Benefits

Cr. Various Operations, Maintenance, and

Administrative Expense Accounts

> To record a decrease in the liability to the employee resulting from a
> decrease in the investment account.

Payments made to participating employees because of retirement or
separation for other reasons shall be recorded using the following
entries:

Dr. 131.1, Cash - General

Cr. 128, Other Special Funds - Deferred Compensation

To record the receipt of funds from NRECA.

and

Dr. 228.3, Accumulated Provision for Pensions and

Benefits

Cr. 131.1, Cash - General

> To record payment to employee for deferred compensation.

If the borrower has elected to bear the market risk of the funds which
guarantee that the amount of money an employee receives will not be less
than the amount of salary deferred, the following entry shall be
recorded if total payment(s) from NRECA are less than the amount of
salary deferred:

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Cr. 131.1, Cash - General

> To record payment to employee for deferred compensation. Payment was
> made because amount returned did not equal salary deferred.

Appropriate disclosure of the terms of the program shall be made in the
notes to the financial statements.

**605 Life Insurance Premium on Life of a Borrower Employee.**

Some borrowers insure the life of the manager and/or key employees with
the borrower being named as the beneficiary. Such arrangements shall be
accounted for as follows:

1\. Charge Account 426.2, Life Insurance, for the net amount of the
premium paid each year on the insurance policy.

2\. At the anniversary date of the policy each year, charge Account 124,
Other Investments, and credit Account 426.2, Life Insurance, with the
amount of the annual increase in the cash surrender value of the policy;
provided such increase is less than the net premium paid for that year.
If the annual increase in the surrender value exceeds the net premium
paid for the same year, only that portion of the surrender value
increase equal to the net premium paid shall be credited to Account
426.2. The remainder is to be credited to Account 419, Interest and
Dividend Income.

3\. Upon retirement of the insured employee and surrender of the
insurance policy, charge Account 131.1, Cash - General, and credit
Account 124, Other Investments, for the amount received from the
insurance company. If it is decided to grant to the retiring insured
employee all, or any portion, of the cash received upon surrender of the
policy, Account 926, Employee Pensions and Benefits, shall be charged
and Account 131.1 credited for the amount paid to the retiring employee.

4\. If the insured employee dies within his term of service, charge
Account 131.1, Cash - General, for the face amount of the policy paid by
the insurance company. Credit Account 124, Other Investments, for the
cash surrender value previously charged thereto, and credit the
remainder to Account 421, Miscellaneous Nonoperating Income.

**606 Pension Costs.**

With the issuance of Statement of Financial Accounting Standards No. 87,
Employers\' Accounting for Pensions (Statement No. 87), there have been
significant changes in the accounting and reporting requirements
relating to pension costs. This section will highlight the accounting
and reporting requirements for the major types of pension plans. It
should be noted, however, that the definitions and accounting procedures
outlined in this section relate to financial accounting and they may
differ from those used for tax accounting.

[Defined Benefit Pension Plans]{.underline}

A defined benefit pension plan is a plan that defines an amount of
pension benefit to be provided, usually as a function of one or more
factors such as age, years of service, or compensation. In a defined
benefit plan, the employer promises to provide, in addition to current
wages, retirement income payments in future years after the employee
retires or terminates service. Generally, the amount of benefit to be
paid depends upon a number of future events that are incorporated into
the plan\'s benefit formula, after including how long the employee and
any survivors live, how many years of service the employee renders, and
the employee\'s compensation in the years immediately before retirement
or termination.

Under a defined benefit plan, the determination of pension costs,
assets, liabilities, and the disclosures in the financial statements
require many calculations and assumptions to be made. This section
provides a general overview of the accounting and reporting requirements
associated with a defined benefit pension plan. Consult Statement No. 87
for guidance in making the necessary calculations and assumption.

The accounting and reporting requirements related to a defined benefit
pension plan are as follows:

1\. The following components shall be included in the periodic
recognition of net pension cost by an employer sponsoring a defined
benefit pension plan:

a\. The service cost component recognized in a period shall be
determined as the actuarial present value of benefits attributed by the
pension plan formula to employee service during that period. The
measurement of the service cost component requires use of an attribution
method and assumptions.

b\. The interest cost component recognized in a period shall be
determined as the increase in the projected benefit obligation due to
the passage of time. Measuring the projected benefit obligation as a
present value requires accrual of an interest cost at rates equal to the
assumed discount rates.

c\. For a funded plan, the actual return on plan assets, if any, shall
be determined based upon the fair value of plan assets at the beginning
and the end of the period, adjusted for contributions and benefit
payments.

d\. Plan amendments (including initiation of a plan) often include
provisions that grant increased benefits based upon services rendered in
prior period. Because plan amendments are granted with the expectation
that the employer will realize economic benefits in future period,
Statement No. 87 does not require the cost of providing such retroactive
benefits (prior service cost) to be included in net periodic pension
cost entirely in the year of the amendment but provides for recognition
during the future service periods of those employees active at the date
of the amendment who are expected to receive benefits under the plan.

The cost of retroactive benefits (including benefits that are granted to
retirees) is the increase in the projected benefit obligation at the
date of the amendment. Except as noted below, prior service cost shall
be amortized by assigning an equal amount to each future period of
service of each employee active at the date of the amendments who is
expected to receive benefits under the plan. If all or almost all of the
plan\'s participants are inactive, the cost of retroactive plan
amendments affecting benefits of inactive participants shall be
amortized based upon the remaining life expectancy of those participants
rather than the remaining service period.

To reduce the complexity and detail of the computations required,
consistent use of an alternative amortization approach that more rapidly
reduces the unrecognized cost of retroactive amendments is acceptable.
For example, a straight-line amortization of the cost over the average
remaining service period of employees expected to receive benefits under
the plan is acceptable. The alternative method used shall be disclosed.

In some situations, a history of regular plan amendments and other
evidence may indicate that the period during which the employee expects
to realize economic benefits from an amendment granting retroactive
benefits is shorter than the entire remaining service period of the
active employees. Identification of such situations requires an
assessment of the individual circumstances and the substance of the
particular plan situation. In those circumstances, the amortization of
prior service cost shall be accelerated to reflect the more rapid
expiration of the employer\'s economic benefits and to recognize the
cost in the periods benefited.

A plan amendment can reduce rather than increase the projected benefit
obligation. Such a reduction shall be used to reduce an existing
unrecognized prior service cost, and the excess, if any, shall be
amortized on the same basis as the cost of benefit increases.

e\. Gains and losses are changes in the amount of either the projected
benefit obligation or plan assets resulting from experience different
from that assumed and changes in assumptions. Gains and losses include
amounts that have been realized. Because gains and losses may reflect
refinements in estimates as well as real changes in economic values and
because some gains in one period may be offset by losses in another or
vice versa, the recognition of gains and losses as components of net
pension cost of the period in which they arise, is not required.

The expected return on plan assets shall be determined based upon the
expected long-term rate of return on plan assets and the market-related
value of plan assets. The market-related value of plan assets shall be
either fair value or a calculated value that recognizes changes in fair
value in a systematic and rational manner over not more than 5 years.
Different ways of calculating market-related value may be used for
different classes of assets but the manner of determining market-related
value shall be applied consistently from year to year for each asset
class.

Asset gains and losses are the differences between the actual return on
assets during a period and the expected return on assets for that
period. Assets gains and losses include both changes reflected in the
market-related value of assets and changes not yet reflected in the
market-related value (that is, the difference between the fair value of
assets and the market-related value). Asset gains and losses not yet
reflected in market-related values are not required to be amortized.

As a minimum, amortization of an unrecognized gain or loss (excluding
asset gains and losses not yet reflected in market-related value) shall
be included as a component of net pension cost for a year if, as of the
beginning of the year, that unrecognized net gain or loss exceeds 10
percent of the greater of the projected benefit obligation or the
market-related value of plan assets. If amortization is required, the
minimum amortization shall be that excess divided by the average
remaining service period of active employees expected to receive
benefits under the plan. If all or almost all of a plan\'s participants
are inactive, the average remaining life expectancy of the inactive
participants shall be used instead of average remaining service life.

Any systematic method of amortization of gains and losses may be used in
lieu of the minimum specified in the previous paragraph provided that
the minimum is used in any period in which the minimum is greater
(reduces the net balance by more), the method is applied consistently,
the method is applied similarly to both gains and losses, and the method
is disclosed.

The gain or loss component of net periodic pension cost shall consist of
the difference between the actual return on plan assets and the expected
return on plan assets and amortization of the unrecognized net gain or
loss from previous periods.

2\. A liability (unfunded accrued pension cost) shall be recognized if
net periodic pension cost recognized pursuant to Statement No. 87
exceeds amounts the employer has contributed to the plan. An asset
(prepaid pension cost) shall be recognized if net periodic pension cost
is less than amounts the employer has contributed to the plan.

If the accumulated benefit obligation exceeds the fair value of plan
assets, the employer shall recognize a liability (including unfunded
accrued pension cost) that is at least equal to the unfunded accumulated
benefit obligation. Recognition of an additional minimum liability is
required if an unfunded accumulated benefit obligation exists and an
asset has been recognized as a prepaid pension cost, the liability
already recognized as unfunded accrued pension cost is less than the
unfunded accumulated benefit obligation, or no accrued or prepaid
pension cost has been recognized.

If an additional minimum liability is recognized, an equal amount shall
be recognized as an intangible asset, provided that the asset does not
exceed the amount of unrecognized prior service cost. If an additional
liability required to be recognized exceeds unrecognized prior service
cost, the excess (which represents a net loss not yet recognized as a
net periodic pension cost) shall be reported as a separate component
(reduction) of equity.

When a new determination of the amount of additional liability is made
to prepare a balance sheet, the related intangible asset and separate
component of equity shall be eliminated or adjusted, as necessary.

3\. An employer sponsoring a defined benefit pension plan shall disclose
the following information:

a\. A description of the plan including employee groups covered, type of
benefit formula, funding policy, types of assets held and significant
nonbenefit liabilities, if any, and the nature and effect of significant
matters affecting comparability of information for all period presented.

b\. The amount of net periodic pension cost for the period showing
separately the service cost component, the interest cost component, the
actual return on assets for the period, and the net total of other
components.

c\. A schedule reconciling the funded status of the plan with amounts
reported in the employer\'s balance sheet, showing separately, the fair
value of plan assets, the projected benefit obligation identifying the
accumulated benefit obligation and the vested benefit obligation, the
amount of unrecognized prior service cost, the amount of unrecognized
net gain or loss including asset gains and losses not yet reflected in
market-related value), the amount of any remaining unrecognized net
obligation or net asset existing at the date of initial application of
Statement No. 87, the amount of any additional liability recognized, and
the amount of net pension asset or liability recognized in the balance
sheet (which is the net result of combining the previous six items).

d\. The weighted-average assumed discount rate and rate of compensation
increase (if applicable) used to measure the projected benefit
obligation and the weighted-average expected long-term rate of return on
plan assets.

e\. If applicable, the amount and type of securities of the employer and
related parties included in plan assets, and the approximate amount of
annual benefits of employees and retirees covered by annuity contracts
issued by the employer and related parties. Also, if applicable, the
alternative amortization periods used.

f\. An employer that sponsors two or more separate defined benefit
pension plans shall determine net periodic pension cost, liabilities,
and assets by separately applying the provisions of Statement No. 87 to
each plan. In particular, unless an employer clearly has a right to use
the assets of one plan to pay benefits of another, a liability required
to be recognized for one plan shall not be reduced or eliminated because
another plan has assets in excess of its accumulated benefit obligation
or because the employer has prepaid pension cost related to another
plan.

The required disclosures may be aggregated for all of an employer\'s
single-employer defined benefit plans, or plans may be disaggregated
into groups so as to provide the most useful information. Plans with
assets in excess of the accumulated benefit obligation, however, shall
not be aggregated with plans that have accumulated benefit obligations
that exceed plan assets.

[Annuity Contracts]{.underline}

An annuity contract is a contract in which an insurance company
unconditionally undertakes a legal obligation to provide specified
benefits to specific individuals in return for a fixed consideration or
premium. An annuity contract is irrevocable and involves the transfer of
significant risk from the employer to the insurance company. Some
annuity contracts (participating annuity contracts) provide that the
purchaser (either the plan or the employer) may participate in the
experience of the insurance company. Under these contracts, the
insurance company ordinarily pays dividends to the purchaser. If the
substance of a participating contract is such that the employer remains
subject to all or most of the risks and rewards associated with the
benefit obligation covered and the assets transferred to the insurance
company, that contract is not an annuity contract for purposes of
Statement No. 87.

To the extent that benefits currently earned are covered by annuity
contracts, the cost of these benefits shall be the cost of purchasing
the contracts, except as noted below. That is, if all benefits
attributed by the plan\'s benefits formula to service in the current
period are covered by nonparticipating annuity contracts, the cost of
the contracts determines the service cost component of net pension cost
for that period.

Benefits provided by the pension benefit formula beyond benefits
provided by annuity contracts (for example, benefits related to future
compensation levels) shall be accounted for according to the provisions
applicable to plans not involving insurance contracts.

Benefits covered by annuity contracts shall be excluded from the
projected benefit obligation and the accumulated benefit obligation.
Except as noted below, annuity contracts shall be excluded from plan
assets.

Some annuity contracts provide that the purchaser (either the plan or
the employer) may participate in the experience of the insurance
company. Under these contracts, the insurance company ordinarily pays
dividends to the purchaser, the effect of which is to reduce the cost of
the plan. The purchase price of a participating annuity contract
ordinarily is higher than the price of an equivalent contract without
participation rights. The cost of the participation right shall be
recognized, at the date of purchase, as an asset. In subsequent periods,
the participation right shall be measured at its fair value if the
contract is such that the fair value is reasonably estimable. Otherwise,
the participation right shall be measured at its amortized cost (not in
excess of its net realizable value), and the cost shall be amortized
systematically over the expected dividend period under the contract.

[Other Contracts with Insurance Companies]{.underline}

Insurance contracts that are, in substance, equivalent to the purchase
of annuities shall be accounted for as such. Other contracts with
insurance companies shall be accounted for as investments and measured
at fair value. For some contracts, the best available evidence of fair
value may be contract value. If a contract has a determinable cash
surrender value or conversion value, that is presumed to be its fair
value.

[Defined Contribution Plans]{.underline}

A defined contribution pension plan is a plan that provides pension
benefits in return for services rendered, provides an individual account
for each participant, and has terms that specify how contributions to
the individual\'s accounts are to be determined rather than the amount
of pension benefits the individual is to receive. Under a defined
contribution plan, the pension benefits a participant will receive
depend only upon the amount contributed to the participant\'s account,
the returns earned on investments of those contributions, and
forfeitures of other participants\' benefits that may be allocated to
the participant\'s account.

To the extent that a plan\'s defined contributions to an individual\'s
account are to be made for periods in which that individual renders
services, the net pension cost for a period shall be the contribution
called for in that period. If a plan calls for contributions for periods
after an individual retires or terminates, the estimated cost shall be
accrued during the employee\'s service period.

An employer that sponsors one or more defined contribution plans shall
disclose the following separately from its defined benefit plan
disclosures:

1\. A description of the plan(s) including employee groups covered, the
basis for determining contributions, and the nature and effect of
significant matters affecting comparability of information for all
periods presented.

2\. The amount of cost recognized during the period.

A pension plan having characteristics of both a defined benefit plan and
a defined contribution plan requires careful analysis. If the substance
of the plan is to provide a defined benefit, as may be the case with
some \"target benefit\" plans, the accounting and disclosure
requirements shall be determined in accordance with the provisions
applicable to a defined benefit plan.

[Multiemployer Plans]{.underline}

A multiemployer plan is a pension plan to which two or more unrelated
employers contribute, usually pursuant to one or more
collective-bargaining agreements. A characteristic of multiemployer
plans is that assets contributed by one participating employer may be
used to provide benefits to employees of other participating employers
since assets contributed by an employer are not segregated in a separate
account or restricted to provide benefits only to employees of that
employer.

An employer participating in a multiemployer plan shall recognize as net
pension cost, the required contribution for the period and shall
recognize as a liability, any contributions due and unpaid. The required
contribution includes both current costs and prior service costs. If an
employer elects to fund prior service cost in full at the inception of
the plan, the total payment becomes the employer\'s required
contribution, and accordingly, its pension cost for the period.

The following provisions are applicable to RUS borrowers participating
in a multiemployer pension plan:

1\. An electric utility participating in a multiemployer plan may defer
current period pension expenses if the provisions of Statement of
Financial Accounting Standards No. 71 (Statement

No. 71), Accounting for the Effects of Certain Types of Regulation, are
applied.

Under the provisions of Statement No. 71, pension costs may be deferred
provided such costs are recovered through future rates.

2\. An electric utility instituting an amendment to the NRECA Retirement
and Security plan enters into a contractual agreement to pay the costs
incurred (prior service pension costs) for the amendment. In such cases,
the agreement is noncancelable and payable regardless of continued
participation in the plan.

Since the utility is unconditionally committed to making these payments
and such payments are not contingent upon the utility\'s continued
participation in the plan, the recognition of that liability is
appropriate. The costs associated with this liability shall be expensed,
in their entirety, when the liability is recognized.

The accounting journal entries required to record the transactions
associated with a multiemployer pension plan are as follows:

[SAMPLE 1 - CURRENT PENSION EXPENSE]{.underline}

The journal entry required to record the normal costs associated with
the NRECA Retirement and Security Program is as follows:

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 131.1, Cash - General

To record the payment of pension costs to NRECA.

> Note: This entry shall not be recorded during the moratorium.

[SAMPLE 2 - PRIOR SERVICE PENSION EXPENSE]{.underline}

The journal entries required to record the prior service costs
associated with the NRECA Retirement and Security Program are as
follows:

1\. If the RUS borrower elects to pay the prior service pension costs in
full, and there is no deferral of costs under the provision of Statement
No. 71, the following entry shall be recorded:

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 131.1, Cash - General

> To record the payment of prior service pension costs to
>
> NRECA.

2\. If the RUS borrower elects to finance prior service pension costs
over a period of years and there is no deferral of costs under the
provisions of Statement No. 71, the following entries shall be recorded:

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 224, Other Long-Term Debt

> To record the liability to NRECA for prior service
>
> pension costs.

Dr. 224, Other Long-Term Debt

Dr. 427, Interest on Long-Term Debt

Cr. 131.1, Cash - General

> To record the annual payment to NRECA for prior service
>
> pension costs.

3\. If the RUS borrower elects to finance prior service pension costs
over a period of years and such costs are being deferred and amortized
in accordance with the provisions of Statement No. 71, the following
entries shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 224, Other Long-Term Debt

> To record the liability to NRECA for prior service
>
> pension costs.

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 182.3, Other Regulatory Assets

> To record the amortization of deferred prior service pension costs.

Dr. 224, Other Long-Term Debt

Dr. 427, Interest on Long-Term Debt

Cr. 131.1, Cash - General

> To record the annual payment to NRECA for prior service pension costs.

4\. If the RUS borrower elects to pay the prior service pension costs in
full and such costs are being deferred and amortized in accordance with
the provisions of Statement No. 71, the following entries shall be
recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 131.1, Cash - General

> To record the payment to NRECA for prior service pension costs.

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 182.3, Other Regulatory Assets

> To record the amortization of deferred prior service pension costs.

It should be noted that although the above entries relate specifically
to the NRECA Retirement and Security Program, they are applicable to all
multiemployer pension plans.

An employer that participates in one or more multiemployer plans shall
disclose the following separately from disclosures for a single-employer
plan:

1\. A description of the multiemployer plan(s) including the employee
groups covered, the type of benefits provided (defined benefit or
defined contribution), and the nature and effect of significant matters
affecting comparability of information for all periods presented.

2\. The amount of cost recognized during the period.

[Multiple-Employer Plans]{.underline}

A multiple-employer plan is, in substance, aggregations of
single-employer plans combined to pool their assets for investment
purposes to reduce the cost of plan administration. Under a
multiple-employer plan, assets are segregated and specifically
identified to an employer. In addition, such plans may have features
that allow participating employers to have different benefit formulas.
Such plans shall be considered single-employer plans for financial
accounting purposes and each employer\'s accounting shall be based upon
its respective interest in the plan.

**607 Unproductive Time.**

Lost time relating to construction, operations and maintenance shall be
allocated on the basis of direct payroll costs to the appropriate
construction, operations or maintenance accounts in the month incurred.
Lost time is defined as time on duty during which productive work is not
performed due to inclement weather conditions, material shortages,
machine repairs, or other reasons.

If lost time attributable to construction has a material effect on the
construction accounts in any one month, these costs shall be deferred
and distributed over a reasonable period of time by means of a
predetermined percentage based upon direct labor.

**608 Training Costs, Attendance at Meetings, etc.**

Utilities engage in many types of training programs. Seminars are
conducted for directors, managers, office managers, attorneys,
engineers, and others. Bookkeepers and office managers attend
accountants\' meetings. Safety engineers attend safety schools and
subsequently conduct regular safety meetings at the cooperative. Costs
incurred for the various types of training activities shall be accounted
for as follows:

1\. Managers\' and directors\' expenses to attend the NRECA national and
state conventions shall be charged to Account 930.2, Miscellaneous
General Expenses.

2\. Management or engineering seminar fees, salary time attending such
seminars including the associated pensions and benefits expense and
payroll taxes, and the related per diem and expenses shall be charged to
the functional expense accounts. Salaries paid to employees shall also
be charged to the appropriate functional expense account. Fees and
expenses for directors\' attendance shall be charged to Account 930.2,
Miscellaneous General Expenses.

3\. When the office manager, bookkeeper, or work order clerk attends a
state or regional accounting meeting, their salary time and the
associated employee pensions and benefits and social security and other
payroll taxes shall be charged to the account to which the employees\'
time is ordinarily charged.

4\. Employees\' salary time employee and the associated pensions and
benefits and social security and other payroll taxes spent attending
regular safety meetings conducted by the cooperative shall be charged to
the account to which the employees\' time is ordinarily charged.

5\. A safety engineer\'s salary time and the associated employee
pensions and benefits and social security and other payroll taxes spent
attending a statewide safety school shall be charged to Account 925,
Injuries and Damages.

6\. The salary time and the associated employee pensions and benefits
and social security and other payroll taxes spent by a manager or line
foreman conducting weekly safety meetings shall be charged to the
appropriate functional expense accounts including Account 590,
Maintenance, Supervision and Engineering, and Account 920,
Administrative and General Services.

**609 Maintenance and Operations.**

\"Operations\" is the general term used to describe activities involved
in the delivery of electric service, by means of a distribution system,
to the end user. It pertains to the use of the utility\'s electric plant
facilities and does not include activities intended to prevent or remedy
an impending or actual breakdown of those facilities. These activities
are classified as maintenance.

\"Maintenance\" is the general term used to describe the activities
involved in the upkeep and repair, but not the enlargement or
improvement, of property owned or leased and operated by the company. It
does not include the replacement of retirement units.

**610 Financial Forecast.**

Costs incurred and salaries paid to perform a 10-year financial forecast
shall be charged to Account 920, Administrative and General Salaries.
Related office supplies and expenses shall be charged to Account 921,
Office Supplies and Expenses. When a forecast is performed by an outside
consultant, the cost shall be charged to Account 923, Outside Services
Employed.

**611 Advertising Expense.**

The cost of advertising and the cost of informing the public about the
electric cooperative\'s activities shall be charged to Account 930.2,
Miscellaneous General Expenses.

Most of a cooperative\'s advertising is instructional in nature and
relates the cooperative\'s history and current activities. This type of
advertising activity should not be confused with that directed towards
the enactment of a specific law or laws directed toward obtaining a
specific decision from a regulatory body. Political advertising of the
type defined above shall be charged to Account 426.4, Expenditures for
Certain Civic, Political, and Related Activities.

**612 Special Power Cost Study.**

A special power cost study is defined as a study to determine whether
sufficient power will be available in the future. If additional power or
power sources are needed, the study determines whether generation or
purchase will supply the lesser cost. The study also indicates when
additional power will be needed. As costs are incurred, they shall be
charged to a subaccount of Account 186, Miscellaneous Deferred Debits.
Upon completion of the study, the costs shall be charged to

Account 557, Other Expenses, or amortized to Account 557 over a period
of time not to exceed 5 years.

**613 Mapping Costs.**

The purpose of posting completed work orders to system maps is to
improve the operation of the system. These costs shall, therefore, be
charged to Account 588, Miscellaneous Distribution Expenses. However,
the cost of system mapping in the planning stage of construction is an
acceptable overhead cost of the resulting construction.

**614 Member Relations Costs.**

Many electric cooperatives hire employees whose duties concern a mixture
of power use and member relations activities. The salaries for these
employees shall be charged to Account 930.2, Miscellaneous General
Expenses, except as provided below:

1\. Account 912, Demonstrating and Selling Expenses, shall be charged
with all labor, material, advertising, and other expenses incurred in
promotional, demonstrating, and selling activities; the objective of
which is to promote or retain the use of utility services by present or
prospective customers.

2\. Account 930.1, General Advertising Expenses, shall be charged with
labor, material, and other expenses incurred in advertising and related
activities, the cost of which by their content and purpose, are not
provided for elsewhere.

3\. Account 416, Costs and Expenses of Merchandising, Jobbing, and
Contract Work, shall be charged with all costs specifically related to
merchandising activities when the utility is engaged in a major
merchandising program.

4\. Account 426.4, Expenditures for Certain Civic, Political, and
Related Activities, shall be charged with expenditures for the purpose
of influencing public opinion with respect to the election or
appointment of public officials, referenda, legislation, or ordinances
(either with respect to the possible adoption of new referenda,
legislation or ordinances or repeal or modification of existing
referenda, legislation or ordinances); or approval, modification, or
revocation of franchises; or for the purpose of influencing the
decisions of public officials. Account 426.4 shall not include
expenditures which are directly related to appearances before regulatory
or other governmental bodies in connection with the borrower\'s existing
or proposed operations.

**615 Statewide Fees.**

Additional fees collected by a statewide association from its members
for construction of a statewide building shall be charged to Account
930.2, Miscellaneous General Expenses. Any amounts that are to be repaid
by the state association shall be charged to Account 143, Other Accounts
Receivable, or Account 123.23, Other Investments in Associated
Organizations, depending upon the terms of the repayment.

**616 Power Supply/Distribution Cooperative Borrowings.**

When a power supply cooperative borrows money from a distribution
cooperative as the result of a long-term loan agreement, the money shall
be recorded on the books of the power supply cooperative as general
funds unless restricted to a specific purpose. If restricted, the funds
shall be recorded in Account 128, Other Special Funds. The resulting
liability shall be recorded in Account 224, Other Long-Term Debt.

The transaction shall be charged to Account 123.23, Other Investments in
Associated Organizations, on the books of the distribution cooperative.

**617 Rate Discount Allowed by the Power Cooperative to**

**Distribution Cooperatives Owning Connecting**

**Transmission Lines.**

A distribution cooperative purchases power from a power cooperative. The
distribution cooperative owns and operates the transmission line between
the power cooperative\'s facilities and the distribution facilities.
Because of this, power is sold at the standard rate at which the power
cooperative sells to other distribution cooperatives who do not own
their transmission lines, less a discount. The discount or reduction in
rate is based upon the distribution cooperative\'s expense in operating
and maintaining its transmission facilities. The contract between the
power cooperative and the distribution cooperative must specifically
state that the member shall receive a reduced rate or discount from the
seller\'s rate to other member cooperatives.

Under this type of arrangement, the distribution cooperative shall
record the cost of purchased power by charging the net amount to Account
555, Purchased Power.

**618 Theft Losses not Covered by Insurance.**

Utilities may suffer losses as a result of thefts of cash, materials and
supplies, equipment, or electric plant-in-service that is not covered by
insurance. The charges for nominal uninsured losses shall be recorded in
the following accounts:

1\. Cash - Account 924, Property Insurance, shall be charged.

2\. Plant materials and operating supplies - Account 163, Stores Expense
Undistributed, shall be charged.

3\. Equipment - Account 163, Stores Expense Undistributed, shall be
charged for stores equipment; and Account 184, Transportation Expense -
Clearing, for transportation and garage equipment. The appropriate
miscellaneous operations or administrative expense account (Account 506,
524, 539, 549, 566, 588, 905, 910, 916, or 930.2, as appropriate) shall
be charged for all other equipment.

4\. Electric Plant-in-Service - A retirement work order shall be
prepared for electric plant constituting a unit of property. The loss
due to retirement shall be charged to

Account 108.6, Accumulated Provision for Depreciation of Distribution
Plant. If the plant does not constitute a retirement unit, the loss
shall be charged to the appropriate maintenance expense account.

**619 Self Billing.**

To maintain the books of accounts on an accrual basis, bills for
customers who self bill and have not sent in a reading or remittance,
shall be estimated. A journal entry shall be made to record the
estimated revenue and kWh sold by debiting accounts receivable and
crediting the appropriate revenue accounts. The estimated bill shall be
posted to the customer\'s account and identified by an appropriate
symbol indicating that it is an estimate. Reconciliation with the
general ledger control is made in the usual manner.

**620 Purchase Rebates.**

Some vendors from which electric cooperatives purchase plant materials
and supplies and merchandise for resale are making purchase rebates
based upon the quantity or dollar volume of purchases. These \"quantity
discounts\" may be in the form of cash or credit memoranda, in the form
of prepaid package travel arrangements, or a combination of such
methods. The rebate shall be accounted for as a reduction in the cost of
the material or appliances upon which it was based.

In some instances, the rebate may be for material or appliances that are
no longer in stock or cannot be identified. If the rebate is based upon
the purchase of plant materials and operating supplies that are normally
charged to Account 154, Plant Materials and Operating Supplies, a credit
shall be made to Account 163, Stores Expense Undistributed. If the
rebate is based upon appliances and equipment held for merchandising or
contract work, the credit shall be spread over the items in Account 155,
Merchandise. To avoid materially distorting the cost of the remaining
appliances, if a portion of the items upon which the rebate was based
are no longer in stock, a portion of the credit shall be prorated to
Account 416, Cost and Expenses of Merchandising, Jobbing, and Contract
Work, on the basis of the number of items sold to the quantity remaining
in stock.

If the rebate is in the form of a travel package or travel arrangements,
the value of the rebate shall be estimated and recorded as a reduction
of the cost of the material or appliances upon which it was based in a
manner similar to that of the cash rebates discussed above. The
beneficiary of the travel or travel allowance shall be designated by or
in accordance with policy established by the board of directors. The
contra charge to the reduction in cost shall be to an appropriate
account depending upon the relationship of the recipient to the
cooperative. For employees, this shall be Account 926, Employee Pensions
and Benefits; for directors or patrons, Account 930.2, Miscellaneous
General Expenses.

**621 Integrity Fund.**

The CFC Integrity Fund was established to assist borrowers in their
attempts to stop takeover bids by investor-owned utilities. A borrower
makes a contribution to the Integrity Fund in the form of cash or
patronage capital refunds. CFC retains the contribution for a 5-year
period during which time the borrower earns interest on the balance in
its account. Each year, the borrower receives a statement indicating
(both for the total fund and the individual borrower\'s share) the
amount contributed, interest earned, disbursements made, and the ending
balance. The disbursements from the fund are allocated to each
contributing borrower\'s account based upon their individual account
balances. At the end of the 5-year period, the balance in the account,
if any, is refunded to the contributing borrower.

Since the contributing borrower will receive a refund only if its funds
are not totally disbursed, the contribution shall be charged to expense
in Account 426.1, Donations. If any part of the contribution is returned
at the end of the 5-year period, the refund shall be credited to Account
421, Miscellaneous Nonoperating Income.

**622 In-Substance Defeasance.**

An in-substance defeasance has been defined as the process whereby a
debtor irrevocably places cash or other assets in a trust to be used
solely for the purpose of satisfying scheduled payments of both
principal and interest related to a specific debt obligation. Under the
structural arrangements of an in-substance defeasance, the probability
that the debtor will be required to make additional future debt payments
is remote. In these specific circumstances, debt has been determined to
be extinguished even though the debtor has not been legally released
from his obligations under the debt instrument.

The trust established in a defeasance transaction is restricted as to
the nature of the assets held. The trust must be funded with monetary
assets that are essentially risk free as to the amount, timing, and
collection of interest and principal. For debt denominated in United
States dollars, \"risk free\" assets are limited to:

1\. Direct obligations of the United States government;

2\. Obligations guaranteed by the United States government; and

3\. Securities that are backed by United States government obligations
as collateral under an arrangement by which the interest and principal
payments on the collateral, flow immediately through to the holder of
the security.

The monetary assets of the trust must provide cash flows sufficient to
coincide with the scheduled interest and principal payments on the
defeased debt. If the trust is expected to pay the costs associated with
the defeasance, such as trustee fees, these costs must be considered in
determining the amount of funds required by the trust.

The principles of in-substance defeasance apply only to debt with
specific maturities and fixed payment schedules and, as such, do not
apply to debt with variable terms in which advance determination of debt
service requirements is not possible.

Generally accepted accounting principles (GAAP) address the
extinguishment of debt in Accounting Principles Board Opinion

No. 26, and Statement of Financial Accounting Standard No. 76,
Extinguishment of Debt. In accordance with these two statements, debt
which has been defeased remains recorded in the regulated books of
account as do the assets placed in the irrevocable trust. They are not,
however, recognized as an asset and liability for financial reporting
purposes. The transaction, including the total amount of debt
outstanding and the total amount of debt that is considered extinguished
at the end of the period, must be disclosed in the footnotes to the
financial statements as long as the debt remains outstanding.

Debt is frequently extinguished before its scheduled maturity. Debt may
be extinguished by the use of the borrower\'s general funds, or by the
reacquisition of another debt issue at a different interest rate or
varying terms. As these assets are expected to be revenue producing
during those years, both the assets and the revenue they generate may be
utilized to meet maturing debt payments. Therefore, in most instances,
the dollar value of the assets initially placed in the trust do not
equal the dollar value of the outstanding principal balance. The
difference represents an \"economic\" gain or loss to the borrower.

To provide consistency in reporting among all RUS borrowers, any gain or
loss that is recognized for financial statement purposes should be
reported in accordance with the provisions of General Instruction No. 17
of this part. Therefore, the gain or loss should be amortized (for
reporting purposes) in equal monthly amounts over the remaining life of
the original debt issue or the remaining life of the new issue. The gain
or loss may be reported in the current period only in those instances in
which it is immaterial to the financial statements.

The RUS Form 7, Financial and Statistical Report, and the RUS Form 12,
Operating Report - Financial, must, however, reflect the actual amounts
recorded in the books and records of the borrower.

**623 Satellite or Cable Television Services.**

Many electric borrowers have become involved in either providing
satellite or cable television services or obtaining satellite or cable
television services for their own use. This section outlines the
accounting to be followed when recording transactions involving
satellite or cable television services.

1\. [Separate Subsidiary]{.underline}. If a borrower provides satellite
or cable television services through a separate subsidiary, the
investment in the subsidiary shall be recorded in Account 123.11,
Investment in Subsidiary Companies. The net income or loss of the
subsidiary shall be debited or credited to Account 123.11, as
appropriate, with an offsetting entry to Account 418.1, Equity in
Earnings of Subsidiary Companies.

2\. [Segment of Current Operations]{.underline}. If a borrower provides
satellite or cable television services as part of its normal operations,
the investment in satellite or cable television equipment shall be
recorded in Account 121, Nonutility Property. All income associated with
these services shall be recorded in Account 417, Revenues from
Nonutility Operations, and the associated expenses shall be charged to
Account 417.1, Expenses of Nonutility Operations.

3\. [Sale and Installation of Satellite or Cable Television]{.underline}

[Equipment]{.underline}. If a borrower sells or installs satellite or
cable television equipment, the equipment purchased for resale shall be
recorded in Account 156, Other Materials and Supplies, until sold. The
revenues generated from such sales or installations shall be recorded in
Account 415, Revenues from Merchandising, Jobbing, and Contract Work,
and the associated expenses shall be charged to Account 416, Costs and
Expenses of Merchandising, Jobbing, and Contract Work.

4\. [Equipment Purchased for Own Use]{.underline}. If a borrower
purchases satellite or cable television equipment for its own use, the
investment in the equipment shall be recorded in

Account 397, Communication Equipment.

**624 Pollution Control Bonds.**

The construction and installation of pollution control facilities are
often financed by issuing tax exempt municipal securities. The funds
generated from the sale of these securities are deposited into an
account that is controlled by a designated trustee. The funds under the
control of the trustee are usually invested, earning interest, until
they are needed.

Interest expense accrued on the pollution control bonds during the
construction period shall be capitalized in Account 107, Construction
Work in Progress. After construction is complete, all subsequent
accruals of interest expense shall be charged to Account 427, Interest
on Long-Term Debt.

Interest income earned during the construction period shall be recorded
as a debit to Account 171, Interest and Dividends Receivable, and a
credit to Account 107, Construction Work in Progress. Upon notification
of receipt of the interest in the trustee account, Account 221.XX,
Long-Term Debt - Pollution Control Bonds, shall be debited and
Account 171, Interest and Dividends Receivable shall be credited. Upon
completion of construction, Account 419, Interest and Dividend Income,
shall be credited for the amount of interest income earned during the
period.

The entries required to account for the transactions associated with the
issuance of pollution control bonds are as follows:

Dr. 221.XX, Long-Term Debt - Pollution Control Bonds -

Trustee

Cr. Account 221.X1, Long-Term Debt - Pollution Control

Bonds

> To record the sale of pollution control bonds.

Dr. 107, Construction Work in Progress

Cr. 232, Accounts Payable

> To record costs incurred in construction of pollution control
> facilities.

Dr. 131.1, Cash - General Funds

Cr. 221.XX, Long-Term Debt - Pollution Control Bonds -

Trustee

> To record the transfer of funds from the trustee.

Dr. 107, Construction Work in Progress

Cr. 221.XX, Long-Term Debt - Pollution Control Bonds -

Trustee

> To record interest expense on pollution control bonds.

Dr. 171, Interest and Dividends Receivable

Cr. 107, Construction Work in Progress

> To record earnings from investments made by the trustee.

Dr. 221.XX, Long-Term Debt - Pollution Control Bonds -

Trustee

Cr. 171, Interest and Dividends Receivable

> To 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 the primary plant accounts.

**625 Prepayment of Debt.**

Many RUS borrowers have decided to redeem (prepay) their issues of
long-term debt. As a result of this redemption, the borrower may incur a
gain (discount) or a loss (penalty) on the early extinguishment of debt.
The accounting for this gain or loss is highlighted in this section.

If debt is redeemed without refunding (paid with general funds), the
gain or loss incurred shall be recorded in Account 189, Unamortized Loss
on Reacquired Debt, or Account 257, Unamortized Gain on Reacquired Debt,
as appropriate. The borrower shall amortize the recorded deferral on a
monthly basis over the remaining life of the old debt issue. Amounts so
amortized shall be charged to Account 428.1, Amortization of Loss on
Reacquired Debt, or credited to Account 429.1, Amortization of Gain on
Reacquired Debt - Credit, as appropriate.

If the debt is redeemed with refunding (refinanced), the gain or loss
incurred shall be recorded in Account 189 or

Account 257, as appropriate. The borrower may elect to account for the
deferrals as follows:

1\. Write them off immediately when the amounts are insignificant;

2\. Amortize them by equal monthly amounts over the remaining life of
the old debt issue; or

3\. Amortize them by equal monthly amounts over the life of the new debt
issue.

Once an election has been made, it shall be applied on a consistent
basis. Regardless of the option selected, the amortization shall be
charged to either Account 428.1 or 429.1, as appropriate.

Where a regulatory authority having jurisdiction over the borrower
specifically disallows the rate principle of amortizing gains or losses
on the redemption of long-term debt without refunding, and does not
apply the gain or loss to interest charges in computing the borrower\'s
rates, the alternative method may be used to account for gains or losses
relating to the redemption of long-term debt with or without refunding.
The alternative method requires that gains or losses be recorded in
Account 421, Miscellaneous Nonoperating Income, or Account 426.5, Other
Deductions, as incurred. When the alternative method is used, the
borrower shall include a footnote to the financial statements stating
the reason for using this method and its treatment for rate making
purposes.

**626 Rural Economic Development Loan and Grant Program.**

On December 21, 1987, Section 313, Cushion of Credits Payments Program,
was added to the Rural Electrification Act. Section 313 establishes a
Rural Economic Development Subaccount and authorizes the Administrator
of the Rural Utilities Service to provide zero interest loans or grants
to RE Act borrowers for the purpose of promoting rural economic
development and job creation projects.

Subpart B, Rural Economic Development Loan and Grant Program,

7 CFR Part 1703, sets forth the policies and procedures relating to the
zero interest loan program and for approving and administering grants.

The accounting journal entries required to record the transactions
associated with a rural economic development loan are as follows:

Dr. 224.17, RUS Notes Executed - Economic

Development - Debit

Cr. 224.16, Long-Term Debt - RUS Economic

Development Notes Executed

> To record the contractual obligation to RUS for the Economic
> Development Notes.

Dr. 131.12, Cash - General - Economic Development Funds

Cr. 224.17, RUS Notes Executed - Economic

Development - Debit

> To record the receipt of the economic development loan funds.

Dr. 123, Investment in Associated Organizations

or

Dr. 124, Other Investments

Cr. 131.12, Cash - General - Economic Development

Funds

> To record the disbursement of economic development loan funds to the
> project.

Dr. 131.1, Cash - General Funds

Cr. 421, Miscellaneous Nonoperating Income

> To record payment received from the project for loan servicing
> charges.

Dr. 171, Interest and Dividends Receivable

Cr. 419, Interest and Dividend Income

> To record the interest earned on the investment of rural economic
> development loan funds.

Dr. 426.1, Donations

or

Dr. 426.5, Other Deductions

Cr. 131.1, Cash - General Funds

> To record the payment of interest earned in excess of \$500.00 on the
> investment of rural economic development loan funds.
>
> Note: Interest earned in excess of \$500.00 must be used for the rural
> economic development project for which the loan funds were received or
> returned to RUS.

Dr. 131.12, Cash - General - Economic Development Funds

Cr. 123, Investment in Associated Organizations

or

Cr. 124, Other Investments

> To record receipt of the repayment, by the project, of economic
> development loan funds.

Dr. 224.16, Long-Term Debt - RUS Economic Development

Notes Executed

Cr. 131.12, Cash - General - Economic Development

Funds

> To record the repayment, to RUS, of the economic development loan
> funds.

The accounting journal entries required to record the transactions
associated with a rural economic development grant are as follows:

Dr. 131.13, Cash - General - Economic Development Grant

Funds

Cr. 224.18, Other Long-Term Debt - Grant Funds;

Cr. 208, Donated Capital; or

Cr. 421, Miscellaneous Nonoperating Income

To record grant funds disbursed by RUS. If the grant

agreement requires repayment of the funds upon

termination of the revolving loan program,

Account 224.18 should be credited. If the grant

agreement states that there is absolutely no obligation

for repayment upon termination of the revolving loan

program, the funds should be accounted for as a

permanent infusion of capital by crediting Account 208.

If, however, the grant agreement is silent as to the

final disposition of the grant funds, Account 421 should

be credited.

Dr. 123.3, Investment in Associated Organizations -

Federal Economic Development Loans

Cr. 131.13, Cash - General - Economic Development

Grant Funds

To record advances of Federal funds to associated

organizations for authorized rural economic development

projects.

Dr. 124.1, Other Investments - Federal Economic

Development Loans

Cr. 131.13, Cash - General - Economic Development

Grant Funds

To record advances of Federal funds to nonassociated

organizations for authorized rural economic development

projects.

Dr. 171, Interest and Dividends Receivable

Cr. 419, Interest and Dividend Income

To record the accrual of interest on loans made to

associated and nonassociated organizations with Federal

funds for authorized rural economic development

projects.

Dr. 131.14, Cash - General - Economic Development Non-

Federal Revolving Funds

Cr. 123.3, Investment in Associated Organizations -

Federal Economic Development Loans

or

Cr. 124.1, Other Investments - Federal Economic

Development Loans

To record repayment of loans made with Federal funds.

Dr. 123.4, Investment in Associated Organizations - Non-

Federal Economic Development Loans

Cr. 131.14, Cash - General - Economic Development Non-

Federal Revolving Funds

To record advances of non-Federal funds to associated

organizations for authorized rural economic development

projects.

Dr. 124.2, Other Investments - Non-Federal Economic

Development Loans

Cr. 131.14, Cash - General - Economic Development

Non-Federal Revolving Funds

To record advances of non-Federal funds to nonassociated

organizations for authorized rural economic development

projects.

Dr. 171, Interest and Dividends Receivable

Cr. 419, Interest and Dividend Income

To record the accrual of interest on loans made to

associated and nonassociated organizations with non-

Federal funds for authorized rural economic development

projects.

Dr. 131.14, Cash - General - Economic Development Non-

Federal Revolving Funds

Cr. 123.4, Investment in Associated Organizations -

Non-Federal Economic Development Loans

or

Cr. 124.2, Other Investments - Non-Federal

Economic Development Loans

To record repayment of loans made with non-Federal

funds.

**627 Postretirement Benefits.**

Statement of Financial Accounting Standards No. 106, Employers\'
Accounting for Postretirement Benefits Other than Pensions (Statement
No. 106), requires reporting entities to accrue the expected cost of
postretirement benefits during the years the employee provides service
to the entity. For purposes of applying the provisions of Statement No.
106, members of the board of directors are considered to be employees of
the cooperative. Prior to the issuance of Statement No. 106, most
reporting entities accounted for postretirement benefit costs on a
\"pay-as-you-go\" basis; that is, costs were recognized when paid, not
when the employee provided service to the entity in exchange for the
benefits.

As defined in Statement No. 106, a postretirement benefit plan is a
deferred compensation arrangement in which an employer promises to
exchange future benefits for an employee\'s current services.
Postretirement benefit plans may be funded or unfunded. Postretirement
benefits include, but are not limited to, health care, life insurance,
tuition assistance, day care, legal services, and housing subsidies
provided outside of a pension plan.

This statement applies to both written plans and to plans whose
existence is implied from a practice of paying postretirement benefits.
An employer\'s practice of providing postretirement benefits to selected
employees under individual contracts with specified terms determined on
an employee-by-employee basis does not, however, constitute a
postretirement benefit plan under the provisions of this statement.

Postretirement benefit plans generally fall into three categories:
single-employer defined benefit plans, multi-employer plans, and
multiple-employer plans.

The accounting requirements set forth in this interpretation focus on
single- and multiple-employer plans. The accounting requirements set
forth in Statement No. 106 for multiemployer plans or defined
contribution plans shall be adopted for borrowers electing those types
of plans.

Under the provisions of Statement No. 106, there are two components of
the postretirement benefit cost: the current period cost and the
transition obligation. The transition obligation is a one-time accrual
of the costs resulting from services already provided. Statement No. 106
allows the transition obligation to be deferred and amortized on a
straight-line basis over the average remaining service period of the
active employees. If the average remaining service life of the employees
is less than 20 years, a 20-year amortization period may be used.

[Accounting Requirements]{.underline}

All RUS borrowers must adopt the accrual accounting provisions and
reporting requirements set forth in Statement No. 106. The transition
obligation and accrual of the current period cost must be based upon an
actuarial study. This study must be updated to allow the borrower to
comply with the measurement date requirements of Statement No. 106;
however, the study must, at a minimum, be updated every five years. RUS
will not allow electric borrowers to account for postretirement benefits
on a \"pay-as-you-go\" basis.

The deferral and amortization of the transition obligation does not
require RUS approval provided that it complies with the provisions of
Statement No. 106. If, however, a borrower elects to expense the
transition obligation in the current period and subsequently defer this
expense in accordance with Statement of Financial Accounting Standards
No. 71, Accounting for the Effects of Certain Types of Regulation, the
deferral must be approved by RUS. In those states in which the
commission will not allow the recovery of the transition obligation
through future rates, the transition obligation must be expensed, in its
entirety, in the year in which Statement No. 106 is adopted. A portion
of the transition obligation may be charged to construction and
retirement activities provided such charges are properly supported.

[Effective Date and Implementation]{.underline}

For plans outside the United States and for defined benefit plans of
employers that (a) are nonpublic enterprises and (b) sponsor defined
benefit postretirement plans with no more than 500 plan participants in
the aggregate, Statement No. 106 is effective for fiscal years beginning
after December 15, 1994. For all other plans, Statement No. 106 is
effective for fiscal years beginning after December 15, 1992.

RUS borrowers must comply with the implementation dates set forth in
Statement No. 106. At the time of the adoption of Statement No. 106,
rates must be in place sufficient to recover the current period expense
and any amortization of the transition obligation. A copy of a board
resolution or commission order, as appropriate, indicating that the
transition obligation and current period expense have been included in
the borrower\'s rates must be submitted to RUS.

[Accounting Journal Entries - Transition Obligation]{.underline}

The journal entries required to record the transition obligation are as
follows:

1\. If the borrower elects to expense the transition obligation in the
current period and there is no deferral of costs, the following entry
shall be recorded:

Dr. 435.1, Cumulative Effect on Prior Years of a Change

in Accounting Principle

or

Dr. 926, Employee Pensions and Benefits

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 228.3, Accumulated Provision for Pensions and

Benefits

To record the current period recognition of the

transition obligation for postretirement benefits.

Note: A portion of the transition obligation may be

charged to construction and retirement activities

provided such charges are properly supported.

2\. If the borrower elects to defer and amortize the transition
obligation in accordance with the provisions of Statement No. 71, the
following entry shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 228.3, Accumulated Provision for Pensions and

Benefits

To record the deferral of the transition obligation

under the provisions of Statement No. 71.

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of postretirement benefits expenses as they
are recovered through rates in accordance with Statement No. 71.

3\. The deferral and amortization of the transition obligation under the
provisions of Statement No. 106 is considered to be an off balance sheet
item. If, therefore, the borrower elects to defer and amortize the
transition obligation on a straight-line basis over the average
remaining service period of the active employees or 20 years in
accordance with Statement No. 106, no entry is required. Instead, the
transition obligation is recognized as a component of postretirement
benefit cost as it is amortized. It should be noted, however, that the
amount of the unamortized transition obligation must be disclosed in the
notes to the financial statements.

[Accounting Journal Entries - Current Period Expense]{.underline}

The current period postretirement expense should be recorded by the
following entry:

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 228.3, Accumulated Provision for Pensions and

Benefits

To record current period postretirement benefit expense.

Dr. 228.3X, Accumulated Provision for Pensions and

Benefits - Funded

Cr. 131.1, Cash - General

To record cash payments on a \"pay-as-you-go\" basis for

postretirement benefits.

[Accounting Journal Entry - Funding]{.underline}

If a borrower elects to voluntarily fund its postretirement benefits
obligation in an external, irrevocable trust, the following entry shall
be recorded:

Dr. 228.3X, Accumulated Provision for Pensions and

Benefits - Funded

Cr. 131.1, Cash - General

To record the funding of postretirement benefits

expense into an external, irrevocable trust.

If a borrower elects to voluntarily fund its postretirement benefits
obligation in an investment vehicle other than an external, irrevocable
trust, the following entry shall be recorded:

Dr. 128, Other Special Funds

Cr. 131.1, Cash - General

To record the funding of postretirement benefits

expense into an investment vehicle other than an

external, irrevocable trust.

**628 Postemployment Benefits.**

Statement of Financial Accounting Standards No. 112, Employers\'
Accounting for Postemployment Benefits (Statement

No. 112) establishes the standards of financial accounting and reporting
for employers who provide benefits to former or inactive employees after
employment but before retirement. Inactive employees are those who are
not currently rendering service to the employer but who have not been
terminated, including employees who are on disability leave, regardless
of whether they are expected to return to active service. For purposes
of applying the provisions of Statement No. 112, former members of the
board of directors are considered to be employees of the cooperative.

Postemployment benefits include benefits provided to former or inactive
employees, their beneficiaries, and covered dependents. They include,
but are not limited to, salary continuation, supplemental benefits
(including workmen\'s compensation), health care, job training and
counseling, and life insurance coverage. Benefits may be provided in
cash or in kind and may be paid upon cessation of active employment or
over a specified period of time.

The cost of providing postemployment benefits is considered to be a part
of the compensation provided to an employee in exchange for current
service and should, therefore, be accrued as the employee earns the
right to be paid for future postemployment benefits. Applying the
criteria set forth in Statement of Financial Accounting Standards No.
43, Accounting for Compensated Absences, a postemployment benefit
obligation is accrued when all of the following conditions are met:

1\. The employer\'s obligation for payment for future absences is
attributable to employees\' services already performed;

2\. The obligation relates to employee rights that vest or accumulate.
Vested rights are considered those rights for which the employer is
obligated to make payment even if the employee terminates. Rights that
accumulate are those earned, but unused rights to compensated absences
that may be carried forward to one or more periods subsequent to the
period in which they are earned;

3\. Payment of the compensation is probable; and

4\. The amount can be reasonably estimated.

If all of these conditions are not met, the employer must account for
its postemployment benefit obligation in accordance with Statement of
Financial Accounting Standards No. 5, Accounting for Contingencies
(Statement No. 5) when it becomes probable that a liability has been
incurred and the amount of that liability can be reasonably estimated.

If an obligation for postemployment benefits is not accrued in
accordance with the provisions of Statement No. 5 or

Statement No. 43 only because the amount cannot be reasonable estimated,
the financial statements should disclose that fact.

[Accounting Requirements]{.underline}

All RUS borrowers must adopt the accrual accounting provisions and
reporting requirements set forth in Statement No. 112 as of the
statement\'s implementation date. A portion of the cumulative effect may
be charged to construction and retirement activities provided such
charges are properly supported. If a borrower elects to defer the
cumulative effect of implementing Statement No. 112 in accordance with
the provisions of Statement of Financial Accounting Standards No. 71,
Accounting for the Effects of Certain Types of Regulation, the deferral
must be approved by RUS.

[Effective Date and Implementation]{.underline}

Statement No. 112 is effective for fiscal years beginning after December
15, 1993. Previously issued financial statements should not be restated.

RUS borrowers must comply with the implementation date set forth in
Statement No. 112. At the time of the adoption of Statement No. 112,
rates must be in place sufficient to recover the current period expense.

[Accounting Journal Entries]{.underline}

The journal entries required to account for postemployment benefits are
as follows:

Dr. 435.1, Cumulative Effect on Prior Years of a Change

in Accounting Principle

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 228.3, Accumulated Provision for Pensions and

Benefits

To record the cumulative effect of implementing

Statement No. 112.

NOTE: A portion of the cumulative effect may be charged

to construction and retirement activities provided such

charges are properly supported. Account 435.1 is closed

to Account 219.2, Nonoperating Margins.

If the borrower elects to defer and amortize the cumulative effect in
accordance with the provisions of Statement No. 71, the following entry
shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 228.3, Accumulated Provision for Pensions and

Benefits

To record the deferral of the cumulative effect of

implementing Statement No. 112 in accordance with the

provisions of Statement No. 71.

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of the cumulative effect of

implementing Statement No. 112 as it is recovered

through rates in accordance with Statement No. 71.

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 228.3, Accumulated Provision for Pensions and

Benefits

To record current period postemployment benefit expense.

NOTE: If postemployment benefits are accrued under the

criteria set forth in Statement No. 43, this journal

entry is made on a monthly basis. If, however, the

accrual is based upon the provisions of Statement No. 5,

this is a one-time entry unless the liability is

reevaluated and subsequently adjusted.

**629 Investments in Debt and Equity Securities.**

Statement of Financial Accounting Standards No. 115, Accounting for
Certain Investments in Debt and Equity Securities (Statement No. 115),
establishes the standards of financial accounting and reporting for
investments in debt securities and for investments in equity securities
that have readily determinable fair values. Statement No. 115 does not
apply to investments in equity securities accounted for under the equity
method nor to investments in consolidated subsidiaries.

At the time of acquisition, an entity must classify debt and equity
securities into one of three categories: held-to-maturity,
available-for-sale, or trading. At the balance sheet date, the
appropriateness of the classifications must be reassessed.

Investments in debt securities are classified as held-to-maturity and
are measured at amortized cost in the balance sheet only if the
reporting entity has the positive intent and ability to hold these
securities to maturity. Debt securities are not classified as
held-to-maturity if the entity has the intent to hold the security only
for an indefinite period; for example, if the security would become
available for sale in response to changes in market interest rates and
related changes in the security\'s prepayment risk, needs for liquidity,
changes in the availability of and the yield on alternative investments,
changes in funding sources and terms, and changes in foreign currency
risk.

Investments in debt securities that are not classified as
held-to-maturity and equity securities that have readily determinable
fair values are classified as either trading securities or
available-for-sale securities and are measured at fair value in the
balance sheet. Trading securities are those securities that are bought
and held principally for the purpose of selling them in the near future.
Trading generally reflects active and frequent buying and selling and
trading securities are generally used with the objective of generating
profits on short-term differences in prices. Available-for-sale
securities are those investments not classified as either trading
securities or held-to-maturity securities.

Statement No. 115 requires unrealized holding gains and losses for
trading securities to be included in earnings in the current period.
Unrealized holding gains and losses for available-for-sale securities
are excluded from earnings; however, they are reported as a net amount
in a separate component of shareholders\' equity until realized.

For individual securities classified as either available-for sale or
held-to-maturity, an entity must determine whether a decline in the
security\'s fair value below the amortized cost is other than temporary.
If the decline in fair value is determined to be permanent, that is, it
is probable that the entity will not be able to collect all amounts due
under the contractual terms of the security, the realized loss is
accounted for in earnings of the current period. The new cost basis is
not adjusted upward for subsequent recoveries in the fair value.
Subsequent increases in the fair value of available-for-sale securities
are included in the separate component of equity. Subsequent decreases
are also included in the separate component of equity.

All trading securities are reported as current assets in the balance
sheet and individual held-to-maturity and available-for-sale securities
are classified as either current or noncurrent, as appropriate. Cash
flows from the purchase, sale, or maturity of available-for-sale
securities and held-to-maturity securities are classified in the
statement of cash flows as cash flows from investing activities and
reported gross for each security classification.

[Accounting Requirements]{.underline}

All RUS borrowers must adopt the accounting, reporting, and disclosure
requirements set forth in Statement No. 115 as of the statement\'s
implementation date. Unrealized holding gains or losses for trading
securities shall be recorded in either

Account 421, Miscellaneous Nonoperating Income, or Account 426.5, Other
Deductions, as appropriate. Unrealized holding gains or losses for
available-for-sale securities held by the corporate entity are
recognized as a component of stockholder\'s equity in Account 215.1,
Unrealized Gains and Losses - Debt and Equity Securities. A contra
account of the investment account shall be debited or credited
accordingly. Unrealized gains and losses for available-for-sale
securities held in a decommissioning fund shall increase or decrease, as
appropriate, the reported value of the fund.

[Effective Date and Implementation]{.underline}

Statement No. 115 is effective for fiscal years beginning after December
15, 1993. At the beginning of the entity\'s fiscal year, the entity must
classify its debt and equity securities on the basis of the entity\'s
current intent. This statement may not be applied retroactively to prior
years\' financial statements. For fiscal years beginning prior to
December 16, 1993, reporting entities are permitted to apply Statement
No. 115 as of the end of a fiscal year for which annual financial
statements have not previously been issued.

**630 Split Dollar Life Insurance.**

The National Rural Electric Cooperative Association Split Dollar Life
Insurance provides life insurance benefits to cooperative employees. The
benefits provided under this policy consist of two components, the face
value of the insurance policy and the accumulated cash surrender value.
While the employee is the owner of the policy, the employee must sign a
collateral assignment giving the cooperative absolute right to the cash
surrender value of the policy. Under the terms of this collateral
assignment, the employee must reimburse the cooperative for the premiums
paid upon the employee\'s termination of employment or attainment of the
age of 62 if the employee wishes to maintain the insurance coverage. If
death occurs prior to either of these events, the premiums paid to date
by the cooperative are deducted from the death benefits payable to the
policy beneficiary.

[Accounting Requirements]{.underline}

Financial Accounting Standards Board Technical Bulletin 85-4, Accounting
for Purchase of Life Insurance (Bulletin 85-4), states that the amount
that could be realized under an insurance contract as of the date of the
financial statements should be reported as an asset. The change in the
cash surrender or contract value of that asset during the period should
be reported as an adjustment to the premiums paid in determining the
expense or income to be recognized for the period. The cooperative
shall, therefore, record the cash surrender value of the policy as an
asset because of its absolute right to receive that value based upon the
employee\'s collateral assignment. Any receivable that may occur as a
result of the employee reimbursement for the premiums paid is contingent
upon the employee electing to maintain the insurance coverage after
termination of employment or reaching the age of 62 and is not recorded
as an asset on the cooperative\'s records.

[Accounting Journal Entries]{.underline}

The journal entries required to account for the NRECA Split Dollar Life
Insurance Program are as follows:

Dr. 124, Other Investments

Cr. Various Operations, Maintenance, and

Administrative Expense Accounts

To record an increase in the cash surrender value of the

insurance contract.

or

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Cr. 124, Other Investments

To record a decrease in the cash surrender value of the

insurance contract.

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 131.1, Cash - General

To record the premium cost of the insurance contract.

**631 Special Early Retirement Plan.**

The Special Early Retirement Plan (SERP) being offered through the
National Rural Electric Cooperative Association (NRECA) constitutes an
amendment to its Retirement and Security (R&S) program. The SERP is
often chosen as a vehicle through which the cooperative may reduce the
size of its workforce or replace more highly paid employees with lower
paid entry level employees. If an employee covered by an NRECA
retirement plan chose to retire before his/her normal retirement date,
that employee would receive an actuarially reduced benefit. However,
when a cooperative elects to offer a SERP, no such reduction is
required. The cooperative selects the criteria under which an employee
will be eligible to participate such as age, years of service, or a
combination of age and benefit service requirements. As with other
amendments to the R&S program, NRECA calculates the cost of the plan
based upon the criteria selected by the cooperative and allows the
cooperative to pay the cost immediately or on an installment basis.

Under this plan, the employee receives full retirement benefits in the
form of either an immediate lump-sum settlement or annuity payments. It
is not unusual for the cooperative to add an incentive to encourage
participation such as medical or life insurance, either in whole or in
part, until age 65. The actuarial analysis provided by NRECA includes
the cost of the SERP and the estimated reduction and/or increase in
costs associated with Statement of Financial Accounting Standards

No. 106, Employer's Accounting for Postretirement Benefits Other Than
Pensions (Statement No. 106).

[Statement of Financial Accounting Standards No. 87, Employer's
Accounting for Pensions (Statement No. 87)]{.underline}

In accordance with the provisions of Statement No. 87, the costs
associated with an amendment to a multiemployer plan are recognized when
they become due and payable. Since NRECA calculates the amount due and
payable at the time of the amendment, the entire amount due, whether
paid immediately or financed through NRECA or any other institution,
must be recognized as an expense at that time. This cost may, however,
be deferred in accordance with the provisions of Statement of Financial
Accounting Standards No. 71, Accounting for the Effects of Certain Types
of Regulation (Statement No. 71).

[Accounting Journal Entries]{.underline}

The journal entry required to record the additional pension costs
associated with the SERP is as follows:

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 131.1, Cash - General

or

Cr. 224, Other Long-Term Debt

To record the prior service pension costs incurred as a

result of adopting the SERP.

If the borrower elects to defer and amortize the cost in accordance with
Statement No. 71, the following entries shall be recorded:

Dr. 182.3 Other Regulatory Assets

Cr. 131.1, Cash - General

or

Cr. 224, Other Long-Term Debt

To record, under the provisions of Statement No. 71, the

deferral of the prior service pension costs incurred as

a result of adopting the SERP.

Dr. Various Operations, Maintenance, and Administrative

Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of deferred prior service

pension costs as they are recovered through rates in

accordance with Statement No. 71.

[Statement No. 106]{.underline}

In the event that net reductions in postretirement benefits result from
this plan amendment, the reductions are recognized as follows:

1\. The amount of the reduction shall first reduce any

existing unrecognized prior service cost;

2\. Any remaining reductions shall next reduce any unrecognized
transition obligation; and

3\. Any remaining reduction shall be recognized in a manner consistent
with the accounting for prior service postretirement benefit costs.

In accordance with Statement No. 106, prior service postretirement
benefit costs are recognized in equal amounts in each remaining year of
service for active plan participants. Because it is an off-balance sheet
item, only a memorandum entry is required to reduce the amount of
unrecognized prior service cost.

At adoption, Statement No. 106 permitted the recognition of the
transition obligation in one of two ways. The transition obligation was
recognized over the longer of the average remaining service period of
current plan participants or 20 years, or it may have been recognized
immediately. If the delayed recognition option was chosen under
Statement No. 106, this, too, was an off-balance sheet item that
requires only a memorandum entry to reduce the amount of unrecognized
transition obligation. However, if the immediate recognition option was
chosen, the cooperative either recorded the expense in that year or,
with RUS approval, deferred the expense under the provisions of
Statement No. 71. If the expense were recorded, in total, in the year of
adoption, no unrecognized transition obligation remains to reduce. If,
however, the transition obligation was deferred in accordance with
Statement No. 71, the journal entry required to effect the reduction in
Statement No. 106 expense is as follows:

Dr. 228.3, Accumulated Provision for Pensions and

Benefits

Cr. 182.3, Other Regulatory Assets

To record a reduction in the deferred Statement No. 106

transition obligation resulting from the adoption of the

SERP.

[Note]{.underline}: The dollar value of this entry must not exceed

the deferral shown on the balance sheet.

If, after the two previous reductions have been made, any net credit
remains, it shall be recognized in a manner consistent with prior
service costs; that is, as an off balance sheet item that is amortized
over the remaining service lives (to full eligibility) of the active
plan participants. The annual amortization reduces amounts normally
charged to the various operations, maintenance, and administrative
expense accounts and Account 228.3 as postretirement benefit expenses.