Title 18—Conservation of Power and Water Resources--Volume 1
PART 367—UNIFORM SYSTEM OF ACCOUNTS FOR CENTRALIZED SERVICE COMPANIES SUBJECT TO THE PROVISIONS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 2005, FEDERAL POWER ACT AND NATURAL GAS ACT
§ 367.1   Definitions.
(a) When used in this system of accounts:
(1) Accounts mean the accounts prescribed by this Uniform System of Accounts.
(2) Actually issued, as applied to securities issued or assumed by the service companies, means 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.
(3) Actually outstanding, as applied to securities issued or assumed by the service company, means those which have been actually issued and are neither retired nor held by or for the service company; provided, however, that securities held by trustees must be considered as actually outstanding.
(4) Amortization means 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.
(5) Associate company means any company in the same holding company system with such company.
(6) Book cost means the amount at which property is recorded in these accounts without deduction of related provisions for accrued depreciation, amortization, or for other purposes.
(7) Centralized service company means a service company that provides services such as administrative, managerial, financial, accounting, recordkeeping, legal or engineering services, which are sold, furnished, or otherwise provided (typically for a charge) to other companies in the same holding company system. Centralized service companies are different from other service companies that only provide a discrete good or service.
(8) Commission means the Federal Energy Regulatory Commission.
(9) Company, when not otherwise indicated in the context, means a service company.
(10) Construction, when used in the context of a service provided to other companies, means any construction, extension, improvement, maintenance, or repair of the facilities or any part thereof of a company, which is performed for a charge.
(11) Cost means 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, the value of such consideration must be determined on a cash basis.
(12) Cost accumulation system means a system for the accumulation of service company costs on a job, project, or functional basis. It includes schedules and worksheets used to account for charges billed to single and groups of associate and non-associate companies. It can be a variety of systems, including but not limited to, a work order system or an activity-based accounting software system.
(13) Cost of removal means the cost of demolishing, dismantling, tearing down or otherwise removing service property, including the cost of transportation and handling incidental thereto. It does not include the cost of removal activities associated with asset retirement obligations that are capitalized as part of the tangible long-lived assets that give rise to the obligation ( See General Instructions in § 367.22).
(14) Debt expense means all expenses in connection with the issuance and initial sale of evidences of debt, such as fees for drafting mortgages and trust deeds; fees and taxes for issuing or recording evidences of debt; cost of engraving and printing bonds and certificates of indebtedness; fees paid 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.
(15) Depreciation, as applied to depreciable service company property, means the loss in service value not restored by current maintenance. Among the causes to be used as consideration for causes of loss in service value are wear and tear, decay, action of the elements, inadequacy, obsolescence, changes in the art, changes in demand and requirements of public authorities.
(16) Direct cost means the labor costs and expenses which can be identified through a cost allocation system as being applicable to services performed for a single or group of associate and non-associate companies. Cost incidental to or related to a directly charged item must be classified as direct costs.
(17) Discount, as applied to the securities issued or assumed by the service company, means 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.
(18) Electric utility company means any company that owns or operates facilities used for the generation, transmission, or distribution of electric energy for sale. For the purposes of this subchapter, “electric utility company” shall not include entities that engage only in marketing of electric energy.
(19) Gas utility company means any company that owns or operates facilities used for distribution at retail (other than the distribution only in enclosed portable containers or distribution to tenants or employees of the company operating such facilities for their own use and not for resale) of natural or manufactured gas for heat, light, or power. For the purposes of this subchapter, “gas utility company” shall not include entities that engage only in marketing of natural and manufactured gas.
(20) Goods means any goods, equipment (including machinery), materials, supplies, appliances, or similar property (including coal, oil, or steam, but not including electric energy, natural or manufactured gas, or utility assets) which is sold, leased, or furnished, for a charge.
(21) Holding company.
(i) In general. The term “holding company” means—
(A) Any company that directly or indirectly owns, controls, or holds, with power to vote, 10 percent or more of the outstanding voting securities of a public-utility company or of a holding company of any public-utility company; and
(B) Any person, determined by the Commission, after notice and opportunity for hearing, to exercise directly or indirectly (either alone or pursuant to an arrangement or understanding with one or more persons) such a controlling influence over the management or policies of any public-utility company or holding company as to make it necessary or appropriate for the rate protection of utility customers with respect to rates that such person be subject to the obligations, duties, and liabilities imposed by this subchapter upon holding companies.
(ii) Exclusions. The term “holding company” does not include—
(A) A bank, savings association, or trust company, or their operating subsidiaries that own, control, or hold, with the power to vote, public utility or public utility holding company securities so long as the securities are—
( 1 ) Held as collateral for a loan;
( 2 ) Held in the ordinary course of business as a fiduciary; or
( 3 ) Acquired solely for purposes of liquidation and in connection with a loan previously contracted for and owned beneficially for a period of not more than two years; or
(B) A broker or dealer that owns, controls, or holds with the power to vote public utility or public utility holding company securities so long as the securities are—
( 1 ) Not beneficially owned by the broker or dealer and are subject to any voting instructions which may be given by customers or their assigns; or
( 2 ) Acquired in the ordinary course of business as a broker, dealer, or underwriter with the bona fide intention of effecting distribution within 12 months of the specific securities so acquired.
(22) Holding company system means a holding company, together with its subsidiary companies.
(23) Indirect cost means the costs of a general overhead nature such as general services, housekeeping costs, and other support cost which cannot be separately identified to a single or group of associate and non-associate companies and, therefore, must be allocated. Costs incidental to or related to indirect items should also be classified as an indirect cost.
(24) Investment advances means 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 must be settled by the issuance of securities or must not be subject to current settlement.
(25) Lease, capital means a lease of property used by the service company, which meets one or more of the criteria stated in General Instructions in § 367.18.
(26) Lease, operating means a lease of property used by a service company, which does not meet any of the criteria stated in General Instructions in § 367.18.
(27) Minor items of property means the associated parts or items of which retirement units are composed.
(28) Natural gas company means a person engaged in the transportation of natural gas in interstate commerce or the sale of such gas in interstate commerce for resale.
(29) Net salvage value means the salvage value of property retired less the cost of removal.
(30) Nominally issued , as applied to securities issued or assumed by the service company, means 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 fund of the service company, but which have not been sold, or issued direct to trustees of sinking funds in accordance with contractual requirements.
(31) Nominally outstanding , as applied to securities issued or assumed by the service company, means those which, after being actually issued, have been reacquired by or for the service company under circumstances which require them to be considered as held alive and not retired, provided, however, that securities held by trustees must be considered as actually outstanding.
(32) Non-associate company means a person, partnership, organization, government body or company which is not a member of the holding company system.
(33) Non-utility company means a company that is not a utility company.
(34) Person means an individual or company.
(35) Premium , as applied to securities issued or assumed by the service company, means 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.
(36) Public utility means any person who owns or operates facilities used for transmission of electric energy in interstate commerce or sales of electric energy at wholesale in interstate commerce.
(37) Public-utility company means an electric utility company or gas utility company.
(38) Regulatory assets and liabilities are the assets and liabilities that result from rate actions for regulatory agencies. Regulatory assets and liabilities arise from specific revenues, expenses, gains, or losses that would have been included in net income determination in one period under the general requirements of the Uniform System of Accounts but for it being probable:
(i) That such items will be included in a different period(s) for purposes of developing rates the service company is authorized to charge for its services; or
(ii) In the case of regulatory liabilities, that refunds to customers, not provided for in other accounts, will be required.
(39) Replacing or replacement , when not otherwise indicated in the context, means the construction or installation of service property in place of property retired, together with the removal of the property retired.
(40) Research, development, and demonstration (RD&D) means expenditures incurred by a service company, for the service company or on behalf of others, either directly or through another person or organization (such as 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. When conducted on behalf of an associate or non-associate utility company such research, development, and demonstration costs should be reasonably related to the existing or future business of such company. The term includes, but is not limited to: All the 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 or substitute or synthetic gas supplies (alternate fuel sources, for example, an experimental coal gasification plant or an experimental plant synthetically producing gas from liquid hydrocarbons); 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 or pipeline gas 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; consumer surveys, advertising, promotions, or items of a like nature.
(41) Retained earnings means the accumulated net income of the service company less distribution to stockholders and transfers to other capital accounts.
(42) Retirement units means those items of property which, when retired, with or without replacement, are accounted for by crediting the book cost of the retirement units to the property account in which it is included.
(43) Salvage value means 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 recoverable is chargeable to materials and supplies, or other appropriate account.
(44) Service means any managerial, financial, legal, engineering, purchasing, marketing, auditing, statistical, advertising, publicity, tax, research, or any other service (including supervision or negotiation of construction or of sales), information or data, which is sold or furnished for a charge.
(45) Service company means any associate company within a holding company system organized specifically for the purpose of providing non-power goods or services or the sale of goods or construction work to any public utility or any natural gas company, or both, in the same holding company system.
(46) Service cost means the total of direct and indirect costs incurred to provide a service to an associate or non-associate company which are properly charged to expense by the service company.
(47) Service life means the time between the date property is placed in service, or property is leased to others, and the date of its retirement. If depreciation is accounted for on a production basis rather than on a time basis, then service life should be measured in terms of the appropriate unit of production.
(48) Service value means the difference between the cost and net salvage value of service property.
(49) State commission means any commission, board, agency, or officer, by whatever name designated, of a State, municipality, or other political subdivision of a State that, under the laws of such State, has jurisdiction to regulate public-utility companies.
(50) Uniform System of Accounts (USofA) means the Uniform System of Accounts for Centralized Service Companies prescribed in this part, as amended from time to time.
(51) Utility company means a public-utility company or natural gas company whose rates are regulated by the Commission, state commission or other similar regulatory body.
(b) [Reserved]
§ 367.2   Companies for which this system of accounts is prescribed.
(a) Unless otherwise exempted or granted a waiver by Commission rule or order pursuant to §§ 366.3 and 366.4 of this chapter, this Uniform System of Accounts applies to any centralized service company operating, or organized specifically to operate, within a holding company system for the purpose of providing non-power services to any public utility or any natural gas company, or both, in the same holding company system.
(b) This Uniform System of Accounts is not applicable to:
(1) Service companies that are specifically organized as a special-purpose company such as a fuel supply company or a construction company.
(2) Electric or gas utility companies.
(3) Companies primarily engaged:
(i) In the production of goods, including exploration and development of fuel resources,
(ii) In the provision of water, telephone, or similar services, the sale of which is normally subject to public rate regulation,
(iii) In the provision of transportation, whether or not regulated, or
(iv) In the ownership of property, including leased property and fuel reserves, for the use of associate companies.
(4) A service company that provides services exclusively to a local gas distribution company.
(5) Holding companies.
(c) To the extent that the term service company is used in this Uniform System of Accounts, it applies only to centralized service companies.
§ 367.3   Records.
(a) Each service company must keep its books of account, and all other books, records, and memoranda that support the entries in the books of account, so as to be able to furnish full information on any item included in any account. Each entry must be supported by sufficient detailed information that will permit ready identification, analysis, and verification of all facts relevant and related to the records.
(b) The books and records referred to in this part include not only accounting records in a limited technical sense, but all other records, such as minutes books, stock books, reports, correspondence, and memoranda, that may be useful in developing the history of or facts regarding any transaction.
(c) No service company may destroy any books or records unless the destruction is permitted by the rules and regulations of the Commission.
(d) In addition to prescribed accounts, clearing accounts, temporary or experimental accounts, and subaccounts of any accounts may be kept, provided the integrity of the prescribed accounts is not impaired.
(e) The arrangement or sequence of the accounts prescribed in this part must not be controlling as to the arrangement or sequence in report forms that may be prescribed by the Commission.
§ 367.4   Numbering system.
(a) The account numbering plan used in this part consists of a system of three-digit whole numbers as follows:
(1) 100-199, Assets and other debits.
(2) 200-299, Liabilities and other credits.
(3) 300-399, Property accounts.
(4) 400-432 and 434-435, Income accounts.
(5) 433, 436 and 439, Retained earnings accounts.
(6) 457-458, Revenue accounts.
(7) 500-599, Electric operating expenses.
(8) 800-894, Gas operating expenses.
(9) 900-949, Customer accounts, customer service and informational, sales, and general and administrative expenses.
(b) The numbers prefixed to account titles are to be considered as parts of the titles. Each service company, however, may adopt for its own purposes a different system of account numbers ( See also General Instructions in § 367.3(d)) provided that the numbers prescribed in this part must appear in the descriptive headings of the ledger accounts and in the various sources of original entry; however, if a service company uses a different system of account numbers and it is not practicable to show the prescribed account numbers in the various sources of original entry, the reference to the prescribed account numbers may be omitted from the various sources of original entry. Each service company using different account numbers for its own purposes must keep readily available a list of the account numbers that it uses and a reconciliation of those account numbers with the account numbers provided in this part. It is intended that the service company's records must be kept so 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 the records at the end of each accounting period according to the prescribed accounts.
§ 367.5   Accounting period.
Each service company must keep its books on a monthly basis so that for each month all transactions applicable to the account, as nearly as may be ascertained, must be entered in the books of the service company. Amounts applicable or assignable to a single or group of associate and non-associate companies must be segregated monthly. Each service company must close its books at the end of each calendar year unless otherwise authorized by the Commission.
§ 367.6   Submittal of questions.
To maintain uniformity of accounting, service companies must submit questions of doubtful interpretation to the Commission for consideration and decision.
§ 367.7   Item list.
Lists of items appearing in the texts of the accounts or elsewhere in this part are for the purpose of indicating clearly the application of the prescribed accounting. The lists are intended to be representative, but not exhaustive. 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. The proper entry in each instance must be determined by the texts of the accounts.
§ 367.8   Extraordinary items.
Extraordinary items are to be recognized according to the rules which are considered generally accepted accounting principles. These items are related to the effects of events and transactions that have occurred during the current period and that are of an unusual nature and infrequent occurrence. Each item recognized as extraordinary must be disclosed in the notes to financial statements ( See Accounts 434 and 435 in §§ 367.4340 and 367.4350).
§ 367.9   Prior period items.
(a) Items of profit and loss related to the following must be accounted for as prior period adjustments and excluded from the determination of net income for the current year:
(1) Correction of an error in the financial statements of a prior year.
(2) Adjustments that result from realization of income tax benefits of pre-acquisition operating loss carry forwards of purchased subsidiaries.
(b) All other items of profit and loss recognized during the year must be included in the determination of net income for that year.
§ 367.10   Unaudited items.
Whenever a financial statement is required by the Commission, if it is known that a transaction has occurred that affects the accounts but the amount involved in the transaction and its effect upon the accounts cannot be determined with absolute accuracy, the amount must be estimated and the estimated amount included in the proper accounts. The service company is not required to anticipate minor items that would not appreciably affect the accounts.
§ 367.11   Distribution of pay and expenses of employees.
The charges to property, operating expense and other accounts for services and expenses of employees engaged in activities chargeable to various accounts, such as construction, maintenance, and operations, must be based upon the actual time engaged in the respective classes of work, or an appropriate allocation method.
§ 367.12   Payroll distribution.
Underlying accounting data must be maintained so that the distribution of the cost of labor charged direct to the various accounts will be readily available. The underlying data must 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, or operating functions.
§ 367.13   Accounting to be on accrual basis.
(a) The service company is required to keep its accounts on the accrual basis. This requires the inclusion in its accounts of all known transactions of appreciable amount that affect the accounts. If bills covering the transactions have not been received or rendered, the amounts must be estimated and appropriate adjustments made when the bills are received. When the amount is ascertained, the necessary adjustments must be made through the accounts in which the estimate was recorded. If it is determined during the interval that a material adjustment will be required, the estimate must be adjusted through the current accounts. The service company is not required to anticipate minor items which would not appreciably affect these accounts.
(b) When payments are made in advance for items such as insurance, rents, taxes or interest, the amount applicable to future periods must be charged to account 165, Prepayments (§ 367.1650), and spread over the periods to which they are applicable by credits to account 165 (§ 367.1650), and charges to the accounts appropriate for the expenditure.
§ 367.14   Transactions with associate companies.
Each service company must keep its accounts and records so as to be able to furnish accurately and expeditiously statements of all transactions with associate companies. The statements may be required to show the general nature of the transactions, the amounts involved in the transactions and the amounts included in each account prescribed in this part with respect to such transactions. Transactions with associate companies must be recorded in the appropriate accounts for transactions of the same nature. Nothing contained in this part, however, must be construed as restraining the service company from subdividing accounts for the purpose of recording separately transactions with associate companies.
§ 367.15   Contingent assets and liabilities.
Contingent assets represent a possible source of value to the service company contingent upon the fulfillment of conditions regarded as uncertain. Contingent liabilities include items that, under certain conditions, may become obligations of the service company but that are neither direct nor assumed liabilities at the date of the balance sheet. The service company must be prepared to give a complete statement of significant contingent assets and liabilities (including cumulative dividends on preference stock) in its annual report and at such other times as may be requested by the Commission.
§ 367.16   Long-term debt: Premium, discount and expense, and gain or loss on reacquisition.
(a) A separate premium, discount and expense account must be maintained for each class and series of long-term debt (including receivers' certificates) issued or assumed by the service company. The premium must be recorded in account 225, Unamortized premium on long-term debt (§ 367.2250), the discount must be recorded in account 226, Unamortized discount on long-term debt—Debit (§ 367.2260), and the expense of issuance must be recorded in account 181, Unamortized debt expense (§ 367.1810). The premium, discount and expense must be amortized over the life of the respective issues under a plan that will distribute the amounts equitably over the life of the securities. The amortization must be on a monthly basis, and the amounts relating to discounts and expenses must be charged to account 428, Amortization of debt discount and expense (§ 367.4280). The amounts relating to premiums must be credited to account 429, Amortization of premium on debt—Credit (§ 367.4290).
(b) When long-term debt is reacquired 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 must be recognized currently in income and recorded in account 421, Miscellaneous income or loss (§ 367.4210), or account 426.5, Other deductions (§ 367.4265).
§ 367.17   Comprehensive inter-period income tax allocation.
(a) 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. In general, comprehensive inter-period 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, as further qualified in this section.
(b) Once comprehensive inter-period tax allocation has been initiated, either in whole or in part, it must be practiced on a consistent basis and must not be changed or discontinued without prior Commission approval.
(c) Tax effects deferred currently will be recorded as deferred debits or deferred credits in accounts 190, Accumulated deferred income taxes (§ 367.1900), 282, Accumulated deferred income taxes—Other property (§ 367.2820), and 283, Accumulated deferred income taxes—Other (§ 367.2830), as appropriate. The resulting amounts recorded in these accounts must be disposed of as prescribed in this system of accounts or as otherwise authorized by the Commission.
§ 367.18   Criteria for classifying leases.
(a) If, at its inception, a lease meets one or more of the following criteria, the lease must be classified as a capital lease. Otherwise, it must be classified as an operating lease.
(1) The lease transfers ownership of the property 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 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 must not be used for purposes of classifying the lease.
(4) 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 related profit, equals or exceeds 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 the lessor. 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 must not be used for purposes of classifying the lease. The lessee must compute the present value of the minimum lease payments using its incremental borrowing rate, unless:
(i) It is practicable for the company to learn the implicit rate computed by the lessor, and
(ii) The implicit rate computed by the lessor is less than the lessee's incremental borrowing rate.
(iii) If both of those conditions are met, the lessee must use the implicit rate.
(b) 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 (a) of this section had the changed terms been in effect at the inception of the lease, the revised agreement must be considered as a new agreement over its term, and the criteria in paragraph (a) of this section must be applied for purposes of classifying the new lease. Likewise, any action that extends the lease beyond 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, must be considered as a new agreement and must be classified according to the criteria in paragraph (a) of this section. 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) must not give rise to a new classification of a lease for accounting purposes.
§ 367.19   Accounting for leases.
(a) All leases must be classified as either capital or operating leases.
(b) The service company must record a capital lease as an asset in account 101.1, Property under capital leases (§ 367.1011) and an obligation in account 227, Obligations under capital leases—Non-current (§ 367.2270), or account 243, Obligations under capital leases—Current (§ 367.2430), 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 related profit. However, if the determined amount exceeds the fair value of the leased property at the inception of the lease, the amount recorded as the asset and obligation must be the fair value.
(c) The service company, as a lessee, must recognize an asset retirement obligation ( See General Instructions in § 367.22) arising from the property under a capital lease unless the obligation is recorded as an asset and liability under a capital lease. The service company must record the asset retirement cost by debiting account 101.1, Property under capital leases (§ 367.1011), and crediting the liability for the asset retirement obligation in account 230, Asset retirement obligations (§ 367.2300). Asset retirement costs recorded in account 101.1 (§ 367.1011) must be amortized by charging rent expense ( see Operating Expense Instructions in § 367.82) or account 421, Miscellaneous income or loss (§ 367.4210), as appropriate, and crediting a separate subaccount of the account in which the asset retirement costs are recorded. Charges for the periodic accretion of the liability in account 230, Asset retirement obligations (§ 367.2300), must be recorded by a charge to account 411.10, Accretion expense (§ 367.4118), for service company property, and account 421, Miscellaneous income or loss (§ 367.4210), for non-service company property and a credit to account 230, Asset retirement obligations (§ 367.2300).
(d) Rental payments on all leases must be charged to rent expense, fuel expense, construction work in progress, or other appropriate accounts as they become payable.
(e) For a capital lease, for each period during the lease term, the amounts recorded for the asset and obligation must 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.
§ 367.20   Depreciation accounting.
(a) Method. Service companies must use a method of depreciation that allocates in a systematic and rational manner the service value of depreciable property over the service life of the property.
(b) Service lives. Estimated useful service lives of depreciable property must be supported by objective evidence and analysis, including where appropriate engineering, economic, or other depreciation studies.
(c) Rate. Service companies must use percentage rates of depreciation that are based on a method of depreciation that allocates the service value of depreciable property over the service life of the property. Where composite depreciation rates are used, they must be based on the weighted average estimated useful service lives of the depreciable property comprising the composite group.
§ 367.22   Accounting for asset retirement obligations.
(a) An asset retirement obligation represents a liability for the legal obligation associated with the retirement of a tangible, long-lived asset that a service company is required to settle as a result of an existing or enacted law, statute, ordinance, or written or oral contract, or by legal construction of a contract under the doctrine of promissory estoppel. An asset retirement cost represents the amount capitalized when the liability is recognized for the long-lived asset that gives rise to the legal obligation. The amount recognized for the liability and an associated asset retirement cost must be stated at the fair value of the asset retirement obligation in the period in which the obligation is incurred.
(b) The service company must initially record a liability for an asset retirement obligation in account 230, Asset retirement obligations (§ 367.2300), and charge the associated asset retirement costs to service company property (including account 101.1 in § 367.1011) related to the property that gives rise to the legal obligation. The asset retirement cost must be depreciated over the useful life of the related asset that gives rise to the obligations. For periods subsequent to the initial recording of the asset retirement obligation, a service company must recognize the period to period changes of the asset retirement obligation that result from the passage of time due to the accretion of the liability and any subsequent measurement changes to the initial liability for the legal obligation recorded in account 230, Asset retirement obligations (§ 367.2300), as follows:
(1) The service company must record the accretion of the liability by debiting account 411.10, Accretion expense (§ 367.4118); and
(2) The service company must recognize any subsequent measurement changes of the liability initially recorded in account 230, Asset retirement obligations (§ 367.2300), for each specific asset retirement obligation as an adjustment of that liability in account 230 with the corresponding adjustment to service company property. The service company must on a timely basis monitor any measurement changes of the asset retirement obligations.
(c) Gains or losses resulting from the settlement of asset retirement obligations associated with service company property resulting from the difference between the amount of the liability for the asset retirement obligation included in account 230, Asset retirement obligations (§ 367.2300), and the actual amount paid to settle the obligation shall be accounted for as follows:
(1) Gains shall be credited to account 421, Miscellaneous income or loss (§ 367.4210), and;
(2) Losses shall be charged to account 426.5, Other deductions (§ 367.4265).
(d) Separate subsidiary records must be maintained for each asset retirement obligation showing the initial liability and associated asset retirement cost, any incremental amounts of the liability incurred in subsequent reporting periods for additional layers of the original liability and related asset retirement cost, the accretion of the liability, the subsequent measurement changes to the asset retirement obligation, the depreciation and amortization of the asset retirement costs and related accumulated depreciation, and the settlement date and actual amount paid to settle the obligation. For purposes of analysis, a service company must maintain supporting documentation so as to be able to furnish accurately and expeditiously with respect to each asset retirement obligation the full details of the identity and nature of the legal obligation, the year incurred, the identity of the plant giving rise to the obligation, the full particulars relating to each component and supporting computations related to the measurement of the asset retirement obligation.
§ 367.23   Transactions with non-associate companies.
When a service or construction is performed for non-associate companies at an amount other than cost, the amount of revenues in excess or deficiency of the cost on servicing the non-associate companies must be charged to account 458.4, Excess or deficiency on servicing non-associate utility companies (§ 367.4584). A deficiency incurred in a project deemed beneficial to the associate companies may be charged to associate companies subject to disallowance by a State Commission or Federal Commission having jurisdiction over the rates or services of the associate companies. To the extent not charged, or if disallowed, the deficiency will be charged to account 458.4 (§ 367.4584). In computing charges to associate companies for any calendar year, any net credit in this account must be deducted from amounts reimbursable by associate companies as compensation for use of capital invested in the service company.
§ 367.24   Construction and service contracts for other companies.
(a) Expenditures made in the performance of construction or service contracts, under which the service company undertakes projects to construct physical property for associate or non-associate companies must be recorded in Account 412, Cost and expenses of construction or other services (§ 367.4120). The service company must keep records pursuant to its cost allocation system indicating the cost of each contract or project, the amount of service costs allocated to the contracts, and the additional classification of expenditures relating to projects that will meet the accounting requirements of the company for which the work is performed.
(b) Account 412 (§ 367.4120) will include:
(1) The cost of materials, construction payrolls, outside services, and other expenses which are directly attributable to the performance of service or construction contracts for other companies.
(2) The cost of goods procured directly attributable to the performance of service or construction contracts for other companies.
(3) The related salaries, expense of officers and employees, pay of employees on the service company's regular staff specifically assigned to construction work, and other expenses of maintaining the service company's organization and equipment.
(4) The support services performed by the service company in connection with the procurement of goods for associate companies.
§ 367.25   Determination of service cost.
A service must be deemed at cost and fair allocation of costs requires an accurate accounting for the elements that makes up the aggregate expense of conducting the business of the service company. In the accounts prescribed in this part, the total amounts included in the expense accounts during any period plus the amount that appropriately may be added as compensation for the use of capital constitute cost during that period.
§ 367.26   Departmental classification.
Salaries and wages and all other costs must be classified by departmental or other functional category in accordance with the departmental organization of the service company to provide a readily available basis for analysis.
§ 367.27   Billing procedures.
Charges for services to associate public-utility companies must be made monthly with sufficient information and in sufficient detail to permit such company, where applicable, to identify and classify the charge in terms of the system of accounts prescribed by the regulatory authorities to which it is subject. The information provided to associate public-utility companies must provide a summary of the accounts by service provided and showing the charges, classified as direct cost, indirect cost, and compensation for use of capital.
§ 367.28   Methods of allocation.
Indirect costs and compensation for use of capital must be allocated to projects in accordance with the service company's applicable and currently effective methods of allocation. Both direct and allocated indirect costs on projects must be assigned among those companies in the same manner. The cost accumulation system must identify the methods of allocation and the accounts to be charged. Companies must be notified in writing of any change in the methods of allocation.
§ 367.29   Compensation for use of capital.
A servicing transaction is deemed to be performed at no more than cost if the price of the service does not exceed a fair and equitable allocation of expenses plus reasonable compensation for necessary capital procured through the issuance of capital stock. Interest on borrowed capital and compensation for the use of capital must only represent a reasonable return on the amount of capital reasonably necessary for the performance of services or construction work for, or the sale of goods to, associate companies. The compensation may be estimated and must be computed monthly. The amount of compensation must be stated separately in each billing to the associate companies. An annual statement to support the amount of compensation for use of capital billed for the previous 12 months and how it was calculated must be supplied to each associate company at the end of the calendar year.
§ 367.30   Cost accumulation system for associate companies.
Service companies must maintain a detailed classification of service costs, that permits costs to be identified with the functional processes of the associate companies served. To permit the classification, each service company must maintain a cost accumulation system, as described in Definitions § 367.1(a)(12), for accumulating reimbursable costs and charges to the associate companies served, and maintain time records for all service company employees in order to support the accounting allocation of all expenses assignable to the types of services performed and chargeable to the associate companies served. Service company employee records must permit a ready identification of the hours worked, account numbers charged, and other code designations that facilitate proper classification.
§ 367.50   Service company property to be recorded at cost.
(a) All amounts included in the accounts for service company property must be stated at the cost incurred by the service company, except for property acquired by lease which qualifies as capital lease property under General Instructions in § 367.18, Criteria for classifying leases, and is recorded in Account 101.1, Property under capital leases (§ 367.1011).
(b) When the consideration given for property is other than cash, the value of the consideration must be determined on a cash basis ( See, however, Definitions § 367.1(a)(11)). In the entry recording the transaction, the actual consideration must be described with sufficient particularity to identify it. The service company must be prepared to furnish the Commission the particulars of its determination of the cash value of the consideration, if other than cash.
(c) When property is purchased under a plan involving deferred payments, no charge must be made to the service company property accounts for interest, insurance, or other expenditures occasioned solely by such form of payment.
(d) The service company property accounts must not include the cost or other value of service company property contributed to the company. Contributions in the form of money or its equivalent toward the construction of property must be credited to accounts charged with the cost of such construction. Property constructed from contributions of cash or its equivalent must be shown as a reduction to gross property constructed when assembling cost data for posting to property ledgers of accounts. The accumulated gross costs of property must be recorded as a debit in the plant ledger of accounts along with the related amount of contributions concurrently recorded as a credit.
§ 367.51   Components of construction.
(a) For service companies, the cost of construction properly included in the service company property accounts must include, where applicable, the direct and overhead costs as listed and defined as follows:
(1) Contract work 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 the work.
(2) Labor includes the pay and expenses of employees of the service company engaged in 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 that are distributed to construction through clearing accounts nor the pay and expenses included in other items in this section.
(3)(i) Materials and supplies 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 service company's shop. In determining the cost of materials and supplies used for construction, proper allowance must 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.
(ii) 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, must not be charged to service company property accounts unless the correctness of the accounting is verified by current inventories. The cost must be charged to the appropriate operating expense or clearing accounts, according to the use of the items, or, if the items are consumed directly in construction work, the cost must be included as part of the cost of the construction.
(4) Transportation 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 service company's own transportation equipment. ( See paragraph (a)(5) of this section.)
(5) Special machine service 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 paragraph (a)(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 associated net book cost, less the appraised or salvage value at time of release from the job, must be included in the cost of construction.
(6) Shop service includes the proportion of the expense of the service company's shop department assignable to construction work except that the cost of fabricated materials from the service company's shop must be included in materials and supplies.
(7) Protection includes the cost of protecting the service company'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, related witness fees, amounts paid to municipalities and others for fire protection, and other analogous items of expenditures in connection with construction work.
(8) Injuries and damages 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 the injuries and damages. Insurance recovered or recoverable on account of compensation paid for injuries to persons incident to construction must 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 must be credited to the account or accounts charged with the cost of the damages.
(9) Privileges and permits 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.
(10) Rents include amounts paid for the use of construction quarters and office space occupied by construction forces and amounts properly includible in construction costs for the facilities jointly used.
(11) Engineering and supervision 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 includes the portion of the pay and expenses of the general officers and administrative and general expenses applicable to construction work.
(13) Engineering services includes amounts paid to other companies, firms, or individuals engaged by the service company to plan, design, prepare estimates, supervise, inspect, or give general advice and assistance in connection with construction work.
(14) Insurance 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 to or death 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 paragraph (a)(2) of this section.
(15) Law expenditures includes the general law expenditures incurred in connection with construction and the directly related court and legal costs, other than law expenses included in protection in paragraph (a)(7) of this section, and in injuries and damages in paragraph (a)(8) of this section.
(16) Taxes include 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) Interest cost on funds used during construction which are allowed to be capitalized following generally accepted accounting principles.
(18) Earnings and expenses during construction. The earnings and expenses during construction must constitute a component of construction costs.
(19) Training costs. When it is necessary that employees be trained to operate or maintain property that is being constructed and the property is not conventional in nature, or is new to the company's operations, these costs may be capitalized as a component of construction cost. Once property is placed in service, the capitalization of training costs must cease and subsequent training costs must be expensed. ( See Operating Expense Instructions in § 367.83.)
(20) Studies include the costs of studies such as safety or environmental studies mandated by regulatory bodies relative to property under construction. Studies relative to facilities in service must be charged to account 183, Preliminary survey and investigation charges (§ 367.1830).
(21) Asset retirement costs. The costs recognized as a result of asset retirement obligations incurred during the construction and testing of service company property must constitute a component of construction costs.
(b) [Reserved]
§ 367.52   Overhead construction costs.
(a) All overhead construction costs, such as engineering, supervision, general office salaries and expenses, construction engineering and supervision by others than the service company, law expenses, insurance, injuries and damages, relief and pensions, taxes and interest, must be charged to particular jobs or units on the basis of the amounts of the reasonably applicable overheads.
(b) As far as practicable, the determination of payroll charges includible in construction overheads must be based on the related time card distributions. Where this procedure is impractical, special studies must be made periodically of the time of supervisory employees devoted to construction activities to the end that only the overhead costs that have a definite relation to construction must be capitalized.
(c) The records supporting the entries for overhead construction costs must be kept so as to show the total amount of each overhead for each year, the nature and amount of each overhead expenditure charged to each construction project and to each property account, and the bases of distribution of such costs.
§ 367.53   Service company property purchased or sold.
(a) When service company property is acquired by purchase, merger, consolidation, liquidation, or otherwise, after the effective date of this system of accounts, the costs of acquisition, including related incidental expenses, must be charged to the appropriate service company property accounts and account 107, Construction work in progress (§ 367.1070), as appropriate.
(b) If property acquired is in a physical condition so that it is necessary to rehabilitate it substantially in order to bring the property up to the standards of the service company, the cost of the work, except replacements, must be accounted for as a part of the purchase price of the property.
(c) Unless otherwise authorized by the Commission, all service company property acquired from an affiliate company must be recorded at its book value. Additionally, if property is acquired that is in excess of $10 million and has been previously devoted to public service at a price above book value, the service company must file with the Commission the proposed journal entries associated with the acquisition within six months from the date of acquisition of the property.
(d) When service company property is sold, conveyed, or transferred to another by sale, merger, consolidation, or otherwise, the book cost of the property sold or transferred to another must be credited to the appropriate service company property accounts. The amounts (estimated, if not known) carried with respect the accounts for accumulated provision for depreciation and amortization must be charged to those accounts. The difference, if any, between the net amount of debits and credits and the consideration received for the property (less commissions and other expenses of making the sale) must be included in account 421.1, Gain on disposition of property (§ 367.4211), or account 421.2, Loss on disposition of property (§ 367.4212).
(e) In connection with the acquisition of service company property previously devoted to service company operations or acquired from an associate company, the service company must procure, if possible, all existing records relating to the property acquired or related certified copies, and must preserve the records in conformity with regulations or practices governing the preservation of records of its own construction.
§ 367.54   Expenditures on leased property.
(a) The cost of substantial initial improvements (including repairs, rearrangements, additions, and betterments) made to prepare service company property leased to be used for a period of more than one year, and the cost of subsequent substantial additions, replacements, or betterments to the property, must be charged to the service company property account appropriate for the class of property leased. If the service life of the improvements is terminable by action of the lease, the cost, less net salvage, of the improvements must be spread over the life of the lease by charges to account 404, Amortization of limited-term service property (§ 367.4040). However, if the service life is not terminated by action of the lease but by depreciation proper, the cost of the improvements, less net salvage, must be accounted for as depreciable property. The provisions of this paragraph are applicable to property leased under either capital leases or operating leases.
(b) 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 must be charged to the account in which the rent is included, either directly or by amortization.
§ 367.55   Land and land rights.
(a) The accounts for land and land rights must include the cost of land owned in fee by the service company and rights. Interests, and privileges held by the service company 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. 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 property. The costs must be included in the appropriate property accounts directly benefited.
(b) Where special assessments for public improvements provide for deferred payments, the full amount of the assessments must be charged to the appropriate land account and the unpaid balance must be carried in an appropriate liability account. Interest on unpaid balances must be charged to the appropriate interest account. If any part of the cost of public improvements is included in the general tax levy, the related amount must be charged to the appropriate tax account.
(c) 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 must be credited to the appropriate property account to which it is 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 increases in value, the net profit (after giving effect to the cost of the natural resources) from the sales of timber or its products or other natural resources must be credited to the appropriate operating income account when the land has been recorded in account 101, Service company property (§ 367.1010), otherwise to account 421, Miscellaneous income or loss (§ 367.4210).
(d) Separate entries must 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. A record must 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. Entries transferring or retiring land or land rights must refer to the original entry recording its acquisition.
(e) 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, must be included in account 421.1, Gain on disposition of property (§ 367.4211), or account 421.2, Loss on disposition of property (§ 367.4212), when the property has been recorded in account 101, Service company property (§ 367.1010). Appropriate adjustments of the accounts must be made with respect to any structures or improvements located on the land sold.
(f) The cost of buildings and other improvements (other than public improvements) must not be included in the land accounts. If, at the time of acquisition of an interest in land the interest extends to buildings or other improvements (other than public improvements) that are then devoted to operations, the land and improvements must be separately appraised and the 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 must be charged and the salvage credited to the account in which the cost of the land is recorded.
(g) Provisions must be made for amortizing amounts carried in the accounts for limited-term interests in land so as to apportion equitably the cost of each interest over the life thereof. ( See account 111, Accumulated provision for amortization of service company property in § 367.1110, and account 404, Amortization of limited-term property in § 367.4040.)
(h) The items of cost to be included in the accounts for land and land rights are as follows:
(1) Bulkheads, buried, not requiring maintenance or replacement.
(2) Cost, first, of acquisition including mortgages and other liens assumed (but not the related subsequent interest).
(3) Condemnation proceedings, including court and counsel costs.
(4) Consents and abutting damages, payment for.
(5) Conveyancers' and notaries' fees.
(6) Fees, commissions, and salaries to brokers, agents and others in connection with the acquisition of the land or land rights.
(7) Leases, cost of voiding upon purchase to secure possession of land.
(8) Removing, relocating, or reconstructing, property of others, such as buildings, highways, railroads, bridges, cemeteries, churches, telephone and power lines, in order to acquire quiet possession.
(9) Retaining walls unless identified with structures.
(10) 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.
(11) Surveys in connection with the acquisition, but not amounts paid for topographical surveys and maps where the costs are attributable to structures or plant equipment erected or to be erected or installed on the land.
(12) Taxes assumed, accrued to date of transfer of title.
(13) Title, examining, clearing, insuring and registering in connection with the acquisition and defending against claims relating to the period prior to the acquisition.
(14) Appraisals prior to closing title.
(15) 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.
(16) Filing satisfaction of mortgage.
(17) Documentary stamps.
(18) Photographs of property at acquisition.
(19) Fees and expenses incurred in the acquisition of water rights and grants.
(20) 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.
(21) Sidewalks and curbs constructed by the service company on public property.
(22) Labor and expenses in connection with securing rights of way, where performed by company employees and company agents.
§ 367.56   Structures and improvements.
(a) The accounts for structures and improvements must 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 that cannot be removed from the buildings and facilities 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. 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 property.
(b) The cost of specially-provided foundations not intended to outlast the machinery or apparatus for which provided, and associated costs, such as angle irons, castings, and other items installed at the base of an item of equipment, must be charged to the same account as the cost of the machinery, apparatus, or equipment.
(c) Where the structure of a dam also forms the foundation of the service company building, the foundation must be considered a part of the dam.
(d) The cost of disposing of materials excavated in connection with construction of structures must be considered as a part of the cost of that work, except as follows:
(1) When the material is used for filling, the cost of loading, hauling, and dumping must be equitably apportioned between the work in connection with which the removal occurs and the work in connection with which the material is used.
(2) When the material is sold, the net amount realized from the sales must 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 must be credited to the land account in which the site is carried.
(e) Lighting or other fixtures temporarily attached to buildings for purposes of display or demonstration must not be included in the cost of the building but in the appropriate equipment account.
(f) This account must include the following items:
(1) Architects” plans and specifications including supervision.
(2) Ash pits (when located within the building).
(3) Athletic field structures and improvements.
(4) 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 and similar items.
(5) Bulkheads, including dredging, riprap fill, piling, decking, concrete, fenders, and similar items when exposed and subject to maintenance and replacement.
(6) Chimneys.
(7) Coal bins and bunkers.
(8) Commissions and fees to brokers, agents, architects, and others.
(9) Conduit (not to be removed) with its contents.
(10) Damages to abutting property during construction.
(11) Docks.
(12) Door checks and door stops.
(13) Drainage and sewerage systems.
(14) Elevators, cranes, hoists, and the machinery for operating them.
(15) Excavation, including shoring, bracing, bridging, refill and disposal of excess excavated material, cofferdams around foundation, pumping water from cofferdams during construction, and test borings.
(16) Fences and fence curbs (not including protective fences isolating items of equipment, which must be charged to the appropriate equipment account).
(17) Fire protection systems when forming a part of a structure.
(18) Flagpole.
(19) Floor covering (permanently attached).
(20) Foundations and piers for machinery, constructed as a permanent part of a building or other item listed in this paragraph (f).
(21) Grading and clearing when directly occasioned by the building of a structure.
(22) Intrasite communication system, poles, pole fixtures, wires, and cables.
(23) Landscaping, lawns, shrubbery and similar items.
(24) Leases, voiding upon purchase to secure possession of structures.
(25) Leased property, expenditures on.
(26) Lighting fixtures and outside lighting system.
(27) Mail chutes when part of a building.
(28) Marquee, permanently attached to building.
(29) Painting, first cost.
(30) Permanent paving, concrete, brick, flagstone, asphalt, within the property lines.
(31) Partitions, including movable.
(32) Permits and privileges.
(33) Platforms, railings, and gratings when constructed as a part of a structure.
(34) Power boards for services to a building.
(35) Refrigerating systems for general use.
(36) Retaining walls except when identified with land.
(37) Roadways, railroads, bridges, and trestles intrasite except railroads provided for in equipment accounts.
(38) Roofs.
(39) Scales, connected to and forming a part of a structure.
(40) Screens.
(41) Sewer systems, for general use.
(42) Sidewalks, culverts, curbs and streets constructed by the service company on its property.
(43) Sprinkling systems.
(44) Sump pumps and pits.
(45) Stacks—brick, steel, or concrete, when set on foundation forming part of general foundation and steelwork of a building.
(46) Steel inspection during construction.
(47) Storage facilities constituting a part of a building.
(48) Storm doors and windows.
(49) Subways, areaways, and tunnels, directly connected to and forming part of a structure.
(50) Tanks, constructed as part of a building or as a distinct structural unit.
(51) Temporary heating during construction (net cost).
(52) Temporary water connection during construction (net cost).
(53) Temporary shanties and other facilities used during construction (net cost).
(54) Topographical maps.
(55) Tunnels, intake and discharge, when constructed as part of a structure, including sluice gates, and those constructed to house mains.
(56) Vaults constructed as part of a building.
(57) Watchmen's sheds and clock systems (net cost when used during construction only).
(58) Water basins or reservoirs.
(59) Water front improvements.
(60) Water meters and supply system for a building or for general company purposes.
(61) Water supply piping, hydrants and wells.
(62) Wharves.
(63) Window shades and ventilators.
(64) Yard drainage system.
(65) Yard lighting system.
(66) Yard surfacing, gravel, concrete, or oil. (First cost only.)
(g) Structures and Improvements accounts must be credited with the cost of structures created to house, support, or safeguard equipment, 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.
§ 367.57   Equipment.
(a) The cost of equipment chargeable to the service company property accounts, unless otherwise indicated in the text of an equipment account, includes the related net purchase price, sales taxes, investigation and inspection expenses necessary to such purchase, expenses of transportation when borne by the service company, labor employed, materials and supplies consumed, and expenses incurred by the service company in unloading and placing the equipment in readiness to operate. 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 property.
(b) Exclude from equipment accounts hand and other portable tools, that are likely to be lost or stolen or that have relatively small value (for example, $500 or less) or short life, unless the correctness of the related accounting as service company property is verified by current inventories. Special tools acquired and included in the purchase price of equipment must be included in the appropriate property account. Portable drills and similar tool equipment when used in connection with the operation and maintenance of a particular plant or department, such as production, transmission, distribution, or similar items, or in stores, must be charged to the property account appropriate for their use.
(c) The equipment accounts must include angle irons and similar items that are installed at the base of an item of equipment, but piers and foundations that are designed to be as permanent as the buildings that house the equipment, or that are constructed as a part of the building and that cannot be removed without cutting into the walls, ceilings or floors or without in some way impairing the building, must be included in the building accounts.
(d) The cost of efficiency or other tests made subsequent to the date equipment becomes available for service must be charged to the appropriate expense accounts, except that tests to determine whether equipment meets the specifications and requirements as to efficiency, performance, and similar items, 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 service company property account.
§ 367.58   Property record system required for service company property.
(a) Each service company must keep its cost allocation system so as to show the nature of each addition to or retirement of service company property, the related total cost, the source or sources of costs, and the property account or accounts to which charged or credited. Records covering jobs of short duration may be cleared monthly.
(b) Each service company must maintain records in which, for each property 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.
§ 367.59   Additions and retirements of property.
(a) For the purpose of avoiding undue refinement in accounting for additions to and retirements and replacements of service company property, all property will be considered as consisting of retirement units and minor items of property. Each company must maintain a written property units listing for use in accounting for additions and retirements of property and apply the listing consistently.
(b) The addition and retirement of retirement units must be accounted for as follows:
(1) When a retirement unit is added, the related cost must be added to the appropriate service company property account.
(2) When a retirement unit is retired, with or without replacement, the related book cost must be credited to the property account in which it is included, determined in the manner provided in paragraph (d) of this section. If the retirement unit is of a depreciable class, the book cost of the unit retired and credited to service company property must be charged to the accumulated provision for depreciation applicable to the property. The cost of removal and the salvage must be charged or credited, as appropriate, to the depreciation account.
(c) The addition and retirement of minor items of property must be accounted for as follows:
(1) When a minor item of property that did not previously exist is added to service company property, the related cost must be accounted for in the same manner as for the addition of a retirement unit, as provided in paragraph (b)(1) of this section, if a substantial addition results, otherwise the charge must be to the appropriate maintenance expense account.
(2) When a minor item of property is retired and not replaced, the related book cost must be credited to the property account in which it is included; and, in the event the minor item is a part of depreciable property, the account for accumulated provision for depreciation must 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 the unit is retired, no separate credit to the property account is required when the minor item is retired.
(3) When a minor item of depreciable property is replaced independently of the retirement unit of which it is a part, the cost of replacement must be charged to the maintenance account appropriate for the item. However, 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 must be charged to the appropriate property account.
(d) The book cost of service company property retired must be the amount at which the property is included in the property accounts, including all components of construction costs. The book cost must be determined from the service company's records and, if this cannot be done, it must be estimated. Service companies must furnish the particulars of the estimates to the Commission, if requested. When it is impracticable to determine the book cost of each unit, due to the relatively large number or related small cost, an appropriate average book cost of the units, with due allowance for any differences in size and character, must be used as the book cost of the units retired.
(e) The book cost of land retired must be credited to the appropriate land account. If the land is sold, the difference between the book cost (less any accumulated provision for related depreciation or amortization that has been authorized and provided) and the sale price of the land (less commissions and other expenses of making the sale) must be recorded in accounts 421.1, Gain on disposition of property (§ 367.4211) or 421.2, Loss on disposition of property (§ 367.4212), as appropriate.
(f) The book cost less net salvage of depreciable service company property retired must be charged in its entirety to account 108, Accumulated provision for depreciation of service company property (§ 367.1080).
(g) The accounting for the retirement of amounts included in account 303, Miscellaneous intangible property (§ 367.3030), and the items of limited-term interest in land included in the accounts for land and land rights, must be as provided for in the text of account 111, Accumulated provision for amortization of service company property (§ 367.1110), account 404, Amortization of limited-term property (§ 367.4040), and account 405, Amortization of other property (§ 367.4050).
§ 367.80   Supervision and engineering.
(a) The supervision and engineering includible in the operating expense accounts must consist of the pay and expenses of superintendents, engineers, clerks, other employees and consultants engaged in supervising and directing the operation and maintenance of each service company function. Wherever allocations are necessary in order to arrive at the amount to be included in any account, the method and basis of allocation must be reflected by underlying records.
(b) This account must include the following labor items:
(1) Special tests to determine efficiency of equipment operation.
(2) Preparing or reviewing budgets, estimates, and drawings relating to operation or maintenance for departmental approval.
(3) Preparing instructions for operations and maintenance activities.
(4) Reviewing and analyzing operating results.
(5) Establishing organizational setup of departments and executing related changes.
(6) Formulating and reviewing routines of departments and executing related changes.
(7) General training and instruction of employees by supervisors whose pay is chargeable to the training and instruction. Specific instruction and training in a particular type of work is chargeable to the appropriate functional expense account ( See Service Company Property in § 367.51(a)(19)).
(8) Secretarial work for supervisory personnel, but not general clerical and stenographic work chargeable to other accounts.
(c) This account must include the following expense items:
(1) Consultants' fees and expenses.
(2) Meals, traveling and incidental expenses.
§ 367.81   Maintenance.
(a) The cost of maintenance chargeable to the various operating expense and clearing accounts includes labor, materials, overheads and other expenses incurred in maintenance work. A list of work operations applicable generally to service company property is included in paragraph (d) of this section. Other work operations applicable to specific classes of property are listed in functional maintenance expense accounts.
(b) Materials recovered in connection with the maintenance of property must be credited to the same account to which the maintenance cost was charged.
(c) Maintenance of property leased from others must be treated as provided in operating expense instruction in § 367.82.
(d) This account must include the following items:
(1) Direct field supervision of maintenance.
(2) Inspecting, testing, and reporting on condition of property specifically to determine the need for repairs, replacements, rearrangements and changes and inspecting and testing the adequacy of repairs which have been made.
(3) Work performed specifically for the purpose of preventing failure, restoring serviceability or maintaining life of property.
(4) Rearranging and changing the location of property.
(5) Repairing for reuse materials recovered from property.
(6) Testing for locating and clearing trouble.
(7) Net cost of installing, maintaining, and removing temporary facilities to prevent interruptions in service.
(8) Replacing or adding minor items of plant which do not constitute a retirement unit. ( See Service Company Property Instruction in § 367.59.)
§ 367.82   Rents.
(a) The rent expense accounts provided under the several functional groups of expense accounts must include all rents, including taxes paid by the lessee on leased property, for property used in the operations of the service company, except:
(1) 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 property accounts 391 to 398 (§§ 367.3910 to 367.3980), inclusive, that must be treated as an expense item and included in the appropriate functional account, and
(2) Rents that are chargeable to clearing accounts, and distributed from the clearing accounts to the appropriate account. If rents cover property used for more than one function, such as production and transmission, or by more than one department, the rents must be apportioned to the appropriate rent expense or clearing accounts of each department on an actual, or, if necessary, an estimated basis.
(b) When a portion of property or equipment rented from others for use in connection with service company operations is subleased, the revenue derived from the subleasing must be credited to the rent revenue account in operating revenues. However, if the rent was charged to a clearing account, amounts received from subleasing the property must be credited to the clearing account.
(c) The cost, when incurred by the lessee, of operating and maintaining leased property, must be charged to the accounts appropriate for the expense if the property were owned.
(d) The cost incurred by the lessee of additions and replacements to property leased from others must be accounted for as provided in Service Company Property Instruction in § 367.54.
§ 367.83   Training costs.
When it is necessary that employees be trained to specifically operate or maintain facilities that are being constructed, the related costs must be accounted for as a current operating and maintenance expense. These expenses must be charged to the appropriate functional accounts currently as they are incurred. However, when the training costs involved relate to facilities that are not conventional in nature, or are new to the service company's operations, these costs may be capitalized until the time that the facilities are ready for functional use.
§ 367.100   Accounts 131-174, Current and accrued assets.
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 service company that are subject to current settlement, except those items for which accounts other than those designated as current and accrued assets are provided. There must not be included in the group 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 the related possible loss has been made. Items of current character but of doubtful value may be written down and for record purposes carried in these accounts at nominal value.
§ 367.101   Accounts 231-243, Current and accrued liabilities.
Current and accrued liabilities are those obligations which have either matured or which become due within one year from the date of issuance or assumption, except for: bonds, receivers' certificates and similar obligations which must be classified as long-term debt until date of maturity; accrued taxes, such as income taxes, which must be classified as accrued liabilities even though payable more than one year from date; compensation awards, which must 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 one year from date of issuance or assumption by the service company, it shall be credited to a long-term debt account appropriate for the transaction, except, however, the current liabilities previously mentioned.
§ 367.102   Accounts 408.1 and 408.2, Taxes other than income taxes.
(a) These accounts must 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 to each account, with concurrent credits to account 236, Taxes accrued (§ 367.2360), or account 165, Prepayments (§ 367.1650), 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) Special assessments for street and similar improvements must be included in the appropriate service company property account.
(d) Taxes specifically applicable to construction must be included in the cost of construction.
(e) Gasoline and other sales taxes must be charged as far as practicable to the same account as the materials on which the tax is levied.
(f) Social security and other forms of so-called payroll taxes must be distributed to utility and non-utility functions on a basis related to payroll. Amounts applicable to construction must be charged to the appropriate plant account.
(g) Interest on tax refunds or deficiencies must not be included in these accounts but in accounts 419, Interest and dividend income (§ 367.4190), or 431, Other interest expense (§ 367.4310), as appropriate.
§ 367.103   Accounts 409.1, 409.2, and 409.3, Income taxes.
(a) These accounts must include the amounts 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 must be made to account 236, Taxes accrued (§ 367.2360), and as the exact amounts of taxes become known, the current tax accruals must be adjusted by charges or credits to these accounts, so that these accounts include the actual taxes payable by the service company.
(b) The accruals for income taxes shall be apportioned to Operating Income, Other Income and Deductions, and Extraordinary Items so that, as nearly as practicable, each tax will be included in the appropriate account based on the income which gave rise to the tax.
(c) Taxes assumed by the service company on interest must be charged to account 431, Other interest expense (§ 367.4310).
(d) Interest on tax refunds or deficiencies must not be included in these accounts but in account 419, Interest and dividend income (§ 367.4190), or account 431, Other interest expense (§ 367.4310), as appropriate.
§ 367.104   Accounts 410.1, 410.2, 411.1, and 411.2, Provision for deferred income taxes.
(a) Accounts 410.1 (§ 367.4101) and 410.2 (§ 367.4102) must be debited, and Accumulated Deferred Income Taxes must 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 (§ 367.1900), 282 (§ 367.2820), and 283 (§ 367.2830). There must not be netted against entries required to be made to these accounts any credit amounts appropriately includible in accounts 411.1 (§ 367.4111) or 411.2 (§ 367.4112).
(b) Accounts 411.1 (§ 367.4111) and 411.2 (§ 367.4112) must be credited, and Accumulated Deferred Income Taxes must 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 (§ 367.1900), 282 (§ 367.2820), and 283 (§ 367.2830). There must not be netted against entries required to be made to these accounts any debit amounts appropriately includible in account 410.1 (§ 367.4101) or 410.2 (§ 367.4102).
§ 367.105   Accounts 411.4, and 411.5, Investment tax credit adjustments.
(a) Account 411.4 (§ 367.4114) must be debited with the amounts of investment tax credits related to service company property that are credited to account 255, Accumulated deferred investment tax credits (§ 367.2550), 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 in § 367.2550).
(b) Account 411.4 (§ 367.4114) must be credited with the amounts debited to account 255 (§ 367.2550) for proportionate amounts of tax credit deferrals allocated over the average useful life of service company 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 (§ 367.4115) must also be debited and credited as directed in paragraphs (a) and (b), for investment tax credits related to other income and deductions.
§ 367.106   Accounts 426.1, 426.2, 426.3, 426.4, and 426.5, Miscellaneous expense accounts.
These accounts must include miscellaneous expense items which are nonoperating in nature but which are properly deductible before determining total income before interest charges.
§ 367.1010   Account 101, Service company property.
(a) This account must include the cost of service company property, included in accounts 301 (§ 367.3010), 303 (§ 367.3030) and 389 to 399.1 (§§ 376.3890 to 367.3991), owned and used by the service company in its operations, and having an expectation of life in service of more than one year from date of installation.
(b) The cost of additions to, and betterments of, property leased from others, that are includible in this account, must be recorded in subaccounts separate and distinct from those relating to owned property. (See Service Company Property Instruction in § 367.54.)
§ 367.1011   Account 101.1, Property under capital leases.
(a) This account must include the amount recorded under capital leases for property leased from others and used by the service company in its operations.
(b) The property included in this account must be classified separately according to detailed accounts 301 (§ 367.3010), 303 (§ 367.3030) and 389 to 399.1 (§§ 367.3890 to 367.3991) prescribed for service company property.
(c) Records must 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 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.
§ 367.1060   Account 106, Completed construction not classified.
At the end of the year or such other date as a balance sheet may be required by the Commission, this account must include the total of the balances of construction projects for service company property which has been completed and placed in service but have not been classified for transfer to the detailed service company property accounts.
§ 367.1070   Account 107, Construction work in progress.
(a) This account must include the total of the balances of construction projects for service company property in process of construction.
(b) Construction projects must be cleared from this account as soon as practicable after completion of the job. Further, if a project is designed to consist of two or more units that may be placed in service at different dates, any expenditures that are common to and that will be used in the operation of the project as a whole must be included in service company property upon the completion and the readiness for service of the first unit. Any expenditures that are identified exclusively with units of property not yet in service must be included in this account.
(c) Expenditures on research, development, and demonstration projects for construction of facilities are to be included in a separate subaccount 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.
§ 367.1080   Account 108, Accumulated provision for depreciation of service company property.
(a) This account must be credited with the following:
(1) Amounts charged to account 403, Depreciation expense (§ 367.4030), or to clearing accounts for current depreciation expense for service company property.
(2) Amounts charged to account 416, Costs and expenses of merchandising, jobbing, and contract work (§ 367.4160), or to clearing accounts for current depreciation expense.
(3) Amounts of depreciation applicable to properties acquired. ( See Service Company Property Instruction in § 367.53.)
(4) Amounts of depreciation applicable to service company property donated to the service company.
(b) The service company must maintain separate subaccounts for depreciation applicable to service company property.
(c) At the time of retirement of depreciable service company property, this account must be charged with the book cost of the property retired and the cost of removal, and must be credited with the salvage value and any other amounts recovered, such as insurance.
(d) The subsidiary records for this account must reflect the current credits and debits to this account in sufficient detail to show the following separately:
(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.
(e) The service company is restricted in its use of the accumulated provision for depreciation to the purposes identified in paragraphs (a) through (d) of this section. It must not transfer any portion of this account to retained earnings or make any other use of the depreciation without authorization by the Commission.
§ 367.1110   Account 111, Accumulated provision for amortization of service company property.
(a) This account must be credited with the following:
(1) Amounts charged to account 404, Amortization of limited-term property (§ 367.4040), for the current amortization of limited-term service company property investments.
(2) Amounts charged to account 405, Amortization of other property (§ 367.4050).
(3) Amounts charged to account 425, Miscellaneous amortization (§ 367.4250), for the amortization of intangible or other property, that does not have a definite or terminable life and is not subject to charges for depreciation expense, with Commission approval.
(b) The service company must maintain subaccounts of this account for the amortization applicable to service company property and property leased to others.
(c) When any property to which this account applies is sold, relinquished, or otherwise retired from service, this account must be charged with the amount previously credited in respect to the property. The book cost of the retired property less the amount chargeable to this account and less the net proceeds realized at retirement must be included in account 421.1, Gain on disposition of property (§ 367.4211), or account 421.2, Loss on disposition of property (§ 367.4212), as appropriate.
(d) For general ledger and balance sheet purposes, this account must be regarded and treated as a single composite provision for amortization. The subsidiary records must reflect the current credits and debits to this account in sufficient detail to show the following separately:
(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.
(e) The service company is restricted in its use of the accumulated provision for amortization to the purposes provided in paragraphs (a) through (d) of this section. It must not transfer any portion of this account to retained earnings or make any other use of the amortization without authorization by the Commission.
§ 367.1230   Account 123, Investment in associate companies.
(a) This account must include the book cost of investments in securities issued or assumed by associate companies and investment advances to the companies, including related accrued interest when the 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 must be included in account 123.1, Investment in subsidiary companies (§ 367.1231).) Include in this account the offsetting entry to the recording of amortization of discount or premium on interest bearing investments. ( See account 419, Interest and dividend income (§ 367.4190).)
(b) This account must be maintained in a manner so as to show the investment in securities of, and advances to, each associate company together with full particulars regarding any of the investments that are pledged.
(c) Securities and advances of associate companies owned and pledged must be included in this account, but the securities, if held in special deposits or in special funds, must be included in the appropriate deposit or fund account. A complete record of securities pledged must be maintained.
(d) Securities of associate companies held as temporary cash investments are includible in account 136, Temporary cash investments (§ 367.1360).
(e) Balances in open accounts with associate companies that are subject to current settlement are includible in account 146, Accounts receivable from associate companies (§ 367.1460).
(f) The service company must write down the cost of any security in recognition of a decline in the related value. Securities must be written off or written down to a nominal value if there is no reasonable prospect of substantial value. Fluctuations in market value must not be recorded but a permanent impairment in the value of securities must be recognized in the accounts. When securities are written off or written down, the amount of the adjustment must be charged to account 426.5, Other deductions (§ 367.4265), or to an appropriate account for accumulated provisions for loss in value established as a separate subdivision of this account.
§ 367.1240   Account 124, Other investments.
(a) This account must include the book cost of investments in securities issued or assumed by non-associate companies, investment advances to these companies, and any investments not accounted for elsewhere. This account must also include unrealized holding gains and losses on trading and available-for-sale types of security investments. 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 (§ 367.4190).)
(b) The records must be maintained in a manner so as to show the amount of each investment and the investment advances to each person.
§ 367.1280   Account 128, Other special funds.
(a) This account must include the amount of cash and book cost of investments that have been segregated in special funds for insurance, employee pensions, savings, relief, hospital, and other purposes not provided for elsewhere. This account must also include unrealized holding gains and losses on trading and available-for-sale types of security investments. A separate account with appropriate title, must be kept for each fund.
(b) Amounts deposited with a trustee under the terms of an irrevocable trust agreement for pensions or other employee benefits must not be included in this account.
§ 367.1310   Account 131, Cash.
This account must include the amount of current cash funds except working funds.
§ 367.1340   Account 134, Other special deposits.
(a) This account must include deposits with fiscal agents or others for special purposes other than the payment of interest and dividends. The special deposits may include, among other things, 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; cash realized from the sale of the accounting service company's securities and deposited with trustees to be held until invested in property of the service company. Entries to this account must specify the purpose for which the deposit is made.
(b) Assets available for general corporate purposes must not be included in this account. Further, deposits for more than one year, that are not offset by current liabilities, must be charged to account 128, Other special funds (§ 367.1280).
§ 367.1350   Account 135, Working funds.
This account must include cash advanced to officers, agents, employees, and others as petty cash or working funds.
§ 367.1360   Account 136, Temporary cash investments.
(a) This account must 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 must be maintained so as to show separately temporary cash investments in securities of associate companies and of others. Records must be kept of any pledged investments.
§ 367.1410   Account 141, Notes receivable.
(a) This account must 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 associate companies. ( See account 136, Temporary cash investments (§ 367.1360), and account 145, Notes receivable from associate companies (§ 367.1450).)
(b) The face amount of notes receivable discounted, sold, or transferred without releasing the service company from liability as a related endorser, must be credited to a separate subaccount of this account and appropriate disclosure must be made in financial statements of any contingent liability arising from the transactions.
§ 367.1420   Account 142, Customer accounts receivable.
(a) This account must include amounts due from customers for service, and for merchandising, jobbing and contract work. This account must not include amounts due from associate companies.
(b) This account must be maintained so as to permit ready segregation of the amounts due for merchandising, jobbing and contract work.
§ 367.1430   Account 143, Other accounts receivable.
(a) This account must include amounts due the service company upon open accounts, other than amounts due from associate companies and from customers for services and merchandising, jobbing and contract work.
(b) This account must be maintained so as to show separately amounts due on subscriptions to capital stock and from officers and employees, but the account must not include amounts advanced to officers or others as working funds. ( See account 135, Working funds (§ 367.1350).)
§ 367.1440   Account 144, Accumulated provision for uncollectible accounts—Credit.
(a) This account must be credited with amounts provided for losses on accounts receivable that may become uncollectible, and also with collections on related previously charged accounts. Concurrent charges must be made to account 904, Uncollectible accounts (§ 367.9040), for amounts applicable to service company operations, and to corresponding accounts for other operations. Records must be maintained so as to show the write-offs of account receivable for each service company department.
(b) This account must be subdivided to show the provision applicable to the following classes of accounts receivable:
(1) Service company customers.
(2) Merchandising, jobbing and contract work.
(3) Officers and employees.
(4) Others.
(c) Accretions to this account must not be made in excess of a reasonable provision against losses of the related character.
(d) If provisions for uncollectible notes receivable or for uncollectible receivables from associate companies are necessary, separate related subaccounts must be established under the account in which the receivable is carried.
§ 367.1450   Account 145, Notes receivable from associate companies.
(a) This account must include notes and drafts upon which associate companies are liable, and that mature and are expected to be paid in full not later than one year from the date of issue, together with any related interest, and debit balances subject to current settlement in open accounts with associate companies. Items that do not bear a specified due date but that have been carried for more than twelve months and items that are not paid within twelve months from due date must be transferred to account 123, Investment in associate companies (§ 367.1230).
(b) On the balance sheet, accounts receivable from an associate company may be set off against accounts payable to the same company.
(c) The face amount of notes receivable discounted, sold or transferred without releasing the service company from liability as endorser thereon, must be credited to a separate subaccount of this account and appropriate disclosure must be made in financial statements of any contingent liability arising from such transactions.
§ 367.1460   Account 146, Accounts receivable from associate companies.
(a) This account must include notes and drafts upon which associate companies are liable, and that mature and are expected to be paid in full not later than one year from the date of issue, together with any related interest thereon, and debit balances subject to current settlement in open accounts with associate companies. Items that do not bear a specified due date but that have been carried for more than twelve months and items that are not paid within twelve months from due date must be transferred to account 123, Investment in associate companies (§ 367.1230).
(b) On the balance sheet, accounts receivable from an associate company may be set off against accounts payable to the same company.
(c) The face amount of notes receivable discounted, sold or transferred without releasing the service company from liability as the related endorser, must be credited to a separate subaccount of this account and appropriate disclosure must be made in financial statements of any contingent liability arising from the transactions.
§ 367.1520   Account 152, Fuel stock expenses undistributed.
The service company must utilize this account, where appropriate, to include the cost of service company labor and of office supplies used and operating expenses incurred with respect to the review, analysis and management of fuel supply contracts or agreements, the accumulation of fuel information and its interpretation, the logistics and handling of fuel, and other related support functions, as a service to the company engaged in the procurement and transportation of fuel. This account must be maintained to show the expenses attributable to each company through its cost allocation system. All expenses of a service company's fuel department or functions must be cleared through this account.
§ 367.1540   Account 154, Materials and operating supplies.
(a) This account must include the cost of materials purchased primarily for use in the service company business for construction, operation and maintenance purposes. It must include the book cost of materials recovered in connection with construction, maintenance or the retirement of service company property, the materials being credited to construction, maintenance or accumulated depreciation provision, respectively. This account must include the following items:
(1) Reusable materials consisting of large individual items must be included in this account at original cost, estimated if not known. The cost of repairing the items must 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 related final abandonment or sale) cannot be ascertained without undue refinement in accounting, must be included in this account at current prices new for the items. The cost of repairing the items must be charged to the appropriate expense account as indicated by previous use.
(3) Scrap and non-usable materials included in this account must be carried at the estimated net amount realizable. The difference between the amounts realized for scrap and non-usable materials sold and the net amount at which the materials were carried in this account, as far as practicable, must be adjusted to the accounts credited when the materials were charged to this account.
(b) Materials and supplies issued must be credited in this account 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 any other method of inventory accounting that conforms with accepted accounting standards consistently applied.
(c) This account must include the following items:
(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.
(d) Where expenses applicable to materials purchased cannot be directly assigned to particular purchases, they may be charged to a stores expense clearing account (account 163, Stores expense undistributed (§ 367.1630)), and distributed from there to the appropriate account.
(e) When materials and supplies are purchased for immediate use, they need not be carried through this account, but may be charged directly to the appropriate service company property or expense account.
§ 367.1630   Account 163, Stores expense undistributed.
(a) This account must 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 must be cleared by adding to the cost of materials and supplies issued a suitable loading charge that will distribute the expense equitably over stores issues. The balance in the account at the close of the calendar year must 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 (§ 367.1520).
(c) This account must include the following labor items:
(1) Inspecting and testing materials and supplies when not assignable to specific items.
(2) Unloading from shipping facility and putting 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 recording and posting of material receipts and issues and maintaining inventory record of stock.
(10) Collecting and handling scrap materials in stores.
(d) This account must include the following supplies and expenses items:
(1) Adjustments of inventories of materials and supplies, but not including large differences that can readily be assigned to important classes of materials and equitably distributed among the accounts to which the classes of materials have been charged since the previous inventory.
(2) Cash and other discounts not practically assignable to specific materials.
(3) Freight, express, and similar items, 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 the 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 that must be accounted for as part of cost of removal.
(e) A physical inventory of each class of materials and supplies must be made at least every two years.
§ 367.1650   Account 165, Prepayments.
This account must include amounts representing prepayments of insurance, rents, taxes, interest and miscellaneous items, and must be kept or supported in a manner so as to disclose the amount of each class of prepayment.
§ 367.1710   Account 171, Interest and dividends receivable.
(a) This account must include the amount of interest on bonds, mortgages, notes, commercial paper, loans, open accounts, deposits, and other similar items, the payment of which is reasonably assured, and the amount of dividends declared or guaranteed on stocks owned.
(b) Interest that is not subject to current settlement must not be included in this account, but in the account in which is carried the principal on which the interest is accrued.
(c) Interest and dividends receivable from associate companies must be included in account 146, Accounts receivable from associate companies (§ 367.1460).
§ 367.1720   Account 172, Rents receivable.
(a) This account must include rents receivable or accrued on property rented or leased by the service company to others.
(b) Rents receivable from associate companies must be included in account 146, Accounts receivable from associate companies (§ 367.1460).
§ 367.1730   Account 173, Accrued revenues.
At the option of the service company, the estimated amount accrued for service rendered, but not billed at the end of any accounting period, may be included in this account. In case accruals are made for unbilled revenues, they must be made likewise for unbilled expenses, such as for the purchase of energy.
§ 367.1740   Account 174, Miscellaneous current and accrued assets.
This account must 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 in the account.
§ 367.1750   Account 175, Derivative instrument assets.
This account must include the amounts paid for derivative instruments, and the change in the fair value of all derivative instrument assets not designated as cash flow or fair value hedges. Account 421, Miscellaneous income or loss (§ 367.4210), must be credited or debited, as appropriate, with the corresponding amount of the change in the fair value of the derivative instrument.
§ 367.1760   Account 176, Derivative instrument assets—Hedges.
(a) This account must include the amounts paid for derivative instruments, and the change in the fair value of derivative instrument assets designated by the service company as cash flow or fair value hedges.
(b) When a service company designates a derivative instrument asset as a cash flow hedge it will record the change in the fair value of the derivative instrument in this account with a concurrent charge to account 219, Accumulated other comprehensive income (§ 367.2190), with the effective portion of the gain or loss. The ineffective portion of the cash flow hedge must be charged to the same income or expense account that will be used when the hedged item enters into the determination of net income.
(c) When a service company designates a derivative instrument as a fair value hedge it must record the change in the fair value of the derivative instrument in this account with a concurrent charge to a subaccount of the asset or liability that carries the item being hedged. The ineffective portion of the fair value hedge must be charged to the same income or expense account that will be used when the hedged item enters into the determination of net income.
§ 367.1810   Account 181, Unamortized debt expense.
This account must include expenses related to the issuance or assumption of debt securities. Amounts recorded in this account must be amortized over the life of each respective issue under a plan that will distribute the amount equitably over the life of the security. The amortization must be on a monthly basis, and the related amounts must be charged to account 428, Amortization of debt discount and expense (§ 367.4280). Any unamortized amounts outstanding at the time that the related debt is prematurely reacquired must be accounted for as indicated in General Instructions in § 367.16.
§ 367.1823   Account 182.3, Other regulatory assets.
(a) This account must include the amounts of regulatory-created assets, not includible in other accounts, resulting from the ratemaking actions of regulatory agencies. ( See Definitions § 367.1(a)(38).)
(b) The amounts included in this account are to be established by those charges which would have been included in net income, or accumulated other comprehensive 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 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 (§ 367.4074), must 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 (§ 367.4074) must be charged to account 407.3, Regulatory debits (§ 367.4073), concurrent with the recovery in rates.
(c) If rate recovery of all or part of an amount included in this account is disallowed, the disallowed amount must be charged to Account 426.5, Other deductions (§ 367.4265), or Account 435, Extraordinary deductions (§ 367.4350), in the year of the disallowance.
(d) The records supporting the entries to this account must be kept so that the service company 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.
§ 367.1830   Account 183, Preliminary survey and investigation charges.
(a) This account must be charged with all expenditures for preliminary surveys, plans, investigations, and other similar items, made for the purpose of determining the feasibility of service company projects under contemplation. If construction results, this account must be credited and the appropriate service company property account charged. If the work is abandoned, the charge must be made to account 426.5, Other deductions (§ 367.4265), or to the appropriate operating expense account.
(b) The records supporting the entries to this account must be kept so that the service company 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.
(c) The amount of preliminary survey and investigation charges transferred to service company property must not exceed the expenditures that may reasonably be determined to contribute directly and immediately and without duplication to service company property.
§ 367.1840   Account 184, Clearing accounts.
This account must include undistributed balances in clearing accounts at the date of the balance sheet. Balances in clearing accounts must be substantially cleared not later than the end of the calendar year unless the items held relate to a future period.
§ 367.1850   Account 185, Temporary facilities.
This account must include amounts shown by project for property installed for temporary use for a period of less than one year. Each project must 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 must be cleared to the construction or service project to which the facilities relate.
§ 367.1860   Account 186, Miscellaneous deferred debits.
(a) This account must include all debits not provided for elsewhere, such as miscellaneous work in progress, and unusual or extraordinary expenses, not included in other accounts, that are in the process of amortization and items the proper final disposition of which is uncertain.
(b) The records supporting the entries to this account must be kept so that the service company can furnish full information as to each deferred debit included in this account.
§ 367.1880   Account 188, Research, development, or demonstration expenditures.
(a) This account must be charged with the cost of all expenditures coming within the meaning of research, development and demonstration (RD&D) of this Uniform System of Accounts ( See Definitions § 367.1(a)(40)), except those expenditures properly chargeable to account 107, Construction work in progress (§ 367.1070).
(b) Costs that are minor or of a general or recurring nature must be transferred from this account to the appropriate operating expense function or, if the costs are common to the overall operations or cannot be feasibly allocated to the various operating accounts, then the costs must be recorded in account 930.2, Miscellaneous general expenses (§ 367.9302).
(c) In certain instances, a service company may incur large and significant research, development, and demonstration expenditures that are nonrecurring and that would distort the annual research, development, and demonstration charges for the period. In such a case, the portion of such amounts that causes the distortion may be amortized to the appropriate operating expense account over a period not to exceed five years, unless otherwise authorized by the Commission.
(d) The entries in this account must be maintained so 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.
§ 367.1890   Account 189, Unamortized loss on reacquired debt.
This account must include the losses on long-term debt reacquired or redeemed. The amounts in this account must be amortized in accordance with General Instruction § 367.16.
§ 367.1900   Account 190, Accumulated deferred income taxes.
(a) This account must be debited and account 411.1, Provision for deferred income taxes—Credit, operating income (§ 367.4111), or account 411.2, Provision for deferred income taxes—Credit, other income and deductions (§ 367.4112), as appropriate, must 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 service company's determination of annual net income until subsequent years.
(b) This account must be credited and account 410.1, Provision for deferred income taxes, operating income (§ 367.4101), or account 410.2, Provision for deferred income taxes, other income and deductions (§ 367.4102), as appropriate, must 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) of this section, 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. The credit to this account and debit to account 410.1 (§ 367.4101), or 410.2 (§ 367.4102) must, 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 service company's current accounts with respect to the item or class of items for which deferred tax accounting by the service company was authorized by the Commission.
(c) The service company is restricted in its use of this account to the purpose provided in paragraphs (a) and (b) of this section. The service company must not make use of the balance in this account or any related portion except as provided in the text of this account, without prior approval of the Commission. 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 service company's income accounts has been completed, or other disposition made, must be debited to account 410.1, Provision for deferred income taxes, operating income (§ 367.4101), or account 410.2, Provision for deferred income taxes, other income and deductions (§ 367.4102), as appropriate, or otherwise disposed of as the Commission may authorize or direct. ( See General Instructions in § 367.17.)
§ 367.2010   Account 201, Common stock issued.
This account must include the par or stated value of all common capital stock issued and outstanding.
§ 367.2040   Account 204, Preferred stock issued.
This account must include the par or stated value of all preferred stock issued and outstanding.
§ 367.2110   Account 211, Miscellaneous paid-in capital.
This account must include the balance of all other credits for paid-in capital that is not properly included in proprietary capital accounts. This account may include all commissions and expenses incurred in connection with the issuance of capital stock.
§ 367.2150   Account 215, Appropriated retained earnings.
This account must include the amount of retained earnings that has been appropriated or set aside for special purposes. Separate subaccounts must be maintained under titles that will designate the purpose for which each appropriation was made.
§ 367.2160   Account 216, Unappropriated retained earnings.
This account must include the balances, either debit or credit, of unappropriated retained earnings arising from earnings of the service company. This account must not include any amounts representing the undistributed earnings of subsidiary companies.
§ 367.2161   Account 216.1, Unappropriated undistributed subsidiary earnings.
This account must 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 must be debited and account 216, Unappropriated retained earnings (§ 367.2160), credited.
§ 367.2190   Account 219, Accumulated other comprehensive income.
(a) This account must include revenues, expenses, gains, and losses that are properly includable in other comprehensive income during the period. Examples of other comprehensive income include, but are not limited to, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. Records supporting the entries to this account must be maintained so that the service company can furnish the amount of other comprehensive income for each item included in this account.
(b) This account also must be debited or credited, as appropriate, with amounts of accumulated other comprehensive income that have been included in the determination of net income during the period and in accumulated other comprehensive income in prior periods. Separate records for each category of items must be maintained to identify the amount of the reclassification adjustments from accumulated other comprehensive income to earnings made during the period.
§ 367.2230   Account 223, Advances from associate companies.
(a) This account must include the face value of notes payable to associate companies and the amount of open book accounts representing advances from associate companies. It does not include notes and open accounts representing indebtedness subject to current settlement that are includible in account 233, Notes payable to associate companies (§ 367.2330), or account 234, Accounts payable to associate companies (§ 367.2340).
(b) The records supporting the entries to this account must be kept so that the service company can furnish complete information concerning each note and open account.
§ 367.2240   Account 224, Other long-term debt.
(a) This account must include, until maturity, all long-term debt not otherwise provided for. This covers items such as receivers' certificates, real estate mortgages executed or assumed, assessments for public improvements, notes and unsecured certificates of indebtedness not owned by associate companies, receipts outstanding for long-term debt, and other obligations maturing more than one year from date of issue or assumption.
(b) Separate accounts must be maintained for each class of obligation, and records must be maintained to show for each class all details as to date of obligation, date of maturity, interest dates and rates, security for the obligation, and other similar items.
§ 367.2250   Account 225, Unamortized premium on long-term debt.
(a) This account must 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 must be amortized over the life of each respective issue under a plan that will distribute the amount equitably over the life of the security. The amortization must be on a monthly basis, with the related amounts credited to account 429, Amortization of premium on debt—Credit (§ 367.4290) ( see General Instructions in § 367.16).
§ 367.2260   Account 226, Unamortized discount on long-term debt—Debit.
(a) This account must include the excess of the face value of long-term debt securities over the related cash value of consideration received, related to the issue or assumption of all types and classes of debt.
(b) Amounts recorded in this account must be amortized over the life of the respective issues under a plan that will distribute the amount equitably over the life of the securities. The amortization must be on a monthly basis, with the related amounts charged to account 428, Amortization of debt discount and expense (§ 367.4280). ( see General Instructions in § 367.16.)
§ 367.2270   Account 227, Obligations under capital lease—Non-current.
This account must 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 (§ 367.1011).
§ 367.2282   Account 228.2, Accumulated provision for injuries and damages.
(a) This account must be credited with amounts charged to account 925, Injuries and damages (§ 367.9250), 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 service company.
(b) When liability for any injury or damage is admitted by the service company, either voluntarily or because of the decision of a court or other lawful authority, such as workmen's compensation board, the admitted liability must be charged to this account and credited to the appropriate current liability account. Details of these charges must be maintained according to the year the casualty occurred which gave rise to the loss.
(c) Recoveries or reimbursements for losses charged to this account must be credited to this account; the cost of repairs to property of others if provided for in this account must be charged to this account.
§ 367.2283   Account 228.3, Accumulated provision for pensions and benefits.
(a) This account must include provisions made by the service company 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 service company either in general or in segregated fund accounts.
(b) Amounts paid by the service company for the purposes for which this liability is established must be charged to this account.
(c) A separate account must be kept for each kind of provision included in this account.
(d) If employee pension or benefit plan funds are not included among the assets of the service company but are held by outside trustees, payments into such funds, or accruals therefore, must be included in this account.
§ 367.2300   Account 230, Asset retirement obligations.
(a) This account must include the amount of liabilities for the recognition of asset retirement obligations related to service company property. This account must be credited for the amount of the liabilities for asset retirement obligations with amounts charged to the appropriate property account to record the related asset retirement costs.
(b) The service company must charge the accretion expense to account 411.10, Accretion expense (§ 367.4118), and credit account 230, Asset retirement obligations (§ 367.2300).
(c) This account must be debited with amounts paid to settle the asset retirement obligations recorded in this account.
(d) The service company must clear from this account any gains or losses resulting from the settlement of asset retirement obligations in accordance with the instructions prescribed in the General Instructions in § 367.22.
§ 367.2310   Account 231, Notes payable.
This account must include the face value of all notes, drafts, acceptances, or other similar evidences of indebtedness, payable on demand or within a time not exceeding one year from date of issue, to other than associate companies.
§ 367.2320   Account 232, Accounts payable.
This account must include all amounts payable by the service company within one year that are not provided for in other accounts.
§ 367.2330   Account 233, Notes payable to associate companies.
(a) This account must include amounts owing to associate companies on notes, drafts, acceptances, or other similar evidences of indebtedness, and open accounts payable on demand or not more than one year from date of issue or creation.
(b) Exclude from this account notes and accounts that are includible in account 223, Advances from associate companies (§ 367.2230).
§ 367.2340   Account 234, Accounts payable to associate companies.
This account must include all amounts payable to associate companies by the service company within one year, which are not provided for in other accounts.
§ 367.2360   Account 236, Taxes accrued.
(a) This account must be credited with the amount of taxes accrued during the accounting period, corresponding debits being made to the appropriate accounts for tax charges. The 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 must be adjusted so as to include as nearly as can be determined in each year the related applicable taxes. Any amount representing a prepayment of taxes applicable to the period subsequent to the date of the balance sheet, must be shown under account 165, Prepayments (§ 367.1650).
(b) If accruals for taxes are found to be insufficient or excessive, corrections must be made through current tax accruals.
(c) Accruals for taxes must be based upon the net amounts payable after credit for any discounts, and must not include any amounts for interest on tax deficiencies or refunds. Interest received on refunds must be credited to account 419, Interest and dividend income (§ 367.4190), and interest paid on deficiencies must be charged to account 431, Other interest expense (§ 367.4310).
(d) The records supporting the entries to this account must be kept so as to show for each class of taxes, the amount accrued, the basis for the accrual, the accounts to which charged, and the amount of tax paid.
§ 367.2370   Account 237, Interest accrued.
This account must include the amount of interest accrued but not matured on all liabilities of the service company not including, however, interest that is added to the principal of the debt on which it is incurred. Supporting records must be maintained so as to show the amount of interest accrued on each obligation.
§ 367.2380   Account 238, Dividends declared.
This account must include the amount of dividends that have been declared but not paid. Dividends must be credited to this account when they become a liability.
§ 367.2410   Account 241, Tax collections payable.
(a) This account must include the amount of taxes collected by the service company through payroll deductions or otherwise pending transmittal of the taxes to the proper taxing authority.
(b) Do not include liability for taxes assessed directly against the service company that is accounted for as part of the service company's own tax expense.
§ 367.2420   Account 242, Miscellaneous current and accrued liabilities.
This account must 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.
§ 367.2430   Account 243, Obligations under capital leases—Current.
This account must include the portion, 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 (§ 367.1011).
§ 367.2440   Account 244, Derivative instrument liabilities.
This account must include the change in the fair value of all derivative instrument liabilities not designated as cash flow or fair value hedges. Account 426.5, Other deductions (§ 367.4265), must be debited or credited as appropriate with the corresponding amount of the change in the fair value of the derivative instrument.
§ 367.2450   Account 245, Derivative instrument liabilities—Hedges
(a) This account must include the change in the fair value of derivative instrument liabilities designated by the service company as cash flow or fair value hedges.
(b) A service company must record the change in the fair value of a derivative instrument liability related to a cash flow hedge in this account, with a concurrent charge to account 219, Accumulated other comprehensive income (§ 367.2190), with the effective portion of the derivative's gain or loss. The ineffective portion of the cash flow hedge must be charged to the same income or expense account that will be used when the hedged item enters into the determination of net income.
(c) A service company must record the change in the fair value of a derivative instrument liability related to a fair value hedge in this account, with a concurrent charge to a subaccount of the asset or liability that carries the item being hedged. The ineffective portion of the fair value hedge must be charged to the same income or expense account that will be used when the hedged item enters into the determination of net income.
§ 367.2530   Account, 253, Other deferred credits.
This account must 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.
§ 367.2540   Account 254, Other regulatory liabilities.
(a) This account must include the amounts of regulatory liabilities, not includible in other accounts, imposed on the service company by the ratemaking actions of regulatory agencies. (See Definitions § 367.1(a)(38).)
(b) The amounts included in this account are to be established by those credits which would have been included in net income, or accumulated other comprehensive income, determinations in the current period under the general requirements of the USofA but for it being probable that: Such items will be included in a different period(s) for purposes of developing the rates that the service company is authorized to charge for its services; or 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 (§ 367.4073), must 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: All regulatory liabilities established through the use of account 407.3 (§ 367.4073) must be credited to account 407.4, Regulatory credits (§ 367.4074); and 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 must be credited to Account 421, Miscellaneous income or loss (§ 367.4210), or Account 434, Extraordinary income (§ 367.4340), as appropriate, in the year such determination is made.
(d) The records supporting the entries to this account must be so kept that the service company 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.
§ 367.2550   Account 255, Accumulated deferred investment tax credits.
This account must be credited with all investment tax credits deferred by companies that 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 this election, a company may not transfer amounts from this account, except as authorized in this account and in accounts 411.4, Investment tax credit adjustments, service company property (§ 367.4114) or 411.5, Investment tax credit adjustments, other income and deductions (§ 367.4115), or with approval of the Commission.
§ 367.2820   Account 282, Accumulated deferred income taxes—Other property.
(a) This account must include the tax deferrals resulting from adoption of the principle of comprehensive inter-period income tax allocation described in the General Instructions in § 367.17 that are related to all property other than accelerated amortization property.
(b) This account must be credited and accounts 410.1, Provision for deferred income taxes, operating income (§ 367.4101), or 410.2, Provision for deferred income taxes, Other income and deductions (§ 367.4102), as appropriate, must be debited with tax effects related to property described in paragraph (a) of this section 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 must be debited, and accounts 411.1, Provision for deferred income taxes—Credit, operating income (§ 367.4111), or 411.2, Provision for deferred income taxes—Credit, other income and deductions (§ 367.4112), as appropriate, must be credited with tax effects related to property described in paragraph (a) of this section 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 service company is restricted in its use of this account to the purposes described in paragraphs (a) through (c) of this section. It must not transfer the balance in this account or any related portion to retained earnings or make any other use of the balance except as provided in paragraph (a) through (c) of this section without prior approval of the Commission. Upon the disposition by sale, exchange, transfer, abandonment or premature retirement of property on which there is a related balance, this account must be charged with an amount equal to the related income tax expense, if any, arising from the disposition and accounts 411.1, Income taxes deferred in prior years—Credit, operating income (§ 367.4111), or 411.2, Income taxes deferred in prior years—Credit, other income and deductions (§ 367.4112), must be credited. When property is disposed of by transfer to a wholly-owned subsidiary, the related balance in this account also must 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 must be retained to offset future group item tax deficiencies.
§ 367.2830   Account 283, Accumulated deferred income taxes—Other.
(a) This account must include all credit tax deferrals resulting from the adoption of the principles of comprehensive inter-period income tax allocation described in the General Instructions in § 367.17 other than those deferrals that are includible in account 282, Accumulated deferred income taxes—Other property (§ 367.2820).
(b) This account must be credited, and accounts 410.1 Provision for deferred income taxes, operating income (§ 367.4101), or 410.2 Provision for deferred income taxes, other income and deductions (§ 367.4102), as appropriate, must be debited with tax effects related to items described in paragraph (a) of this section 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 must be debited, and accounts 411.1, Provision for deferred income taxes-Credit, operating income (§ 367.4111), or 411.2, Provision for deferred income taxes-Credit, other income and deductions (§ 367.4112), as appropriate, must be credited with tax effects related to items described in paragraph (a) of this account 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 in paragraphs (a) through (c) of this section, and the account balance, must be maintained so as to show the factors of calculation with respect to each annual amount of the item or class of items.
(e) The service company is restricted in its use of this account to the purposes described in paragraphs (a) through (c) of this section. It must not transfer the balance in the account or any portion of the account to retained earnings or to any other account or make any use of the account except as provided in the text of this account, without prior approval of the Commission. Upon the disposition by sale, exchange, transfer, abandonment or premature retirement of items on which there is a related balance herein, this account must be charged with an amount equal to the related income tax effect, if any, arising from the disposition and accounts 411.1, Provision for deferred income taxes-Credit, operating income (§ 367.4111), or 411.2, Provision for deferred income taxes—Credit, other income and deductions (§ 367.4112), as appropriate, must be credited.
(f) When property is disposed of by transfer to a wholly-owned subsidiary, the related balance in this account also must 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 must be retained to offset future group item tax deficiencies.
§ 367.3010   Account 301, Organization.
(a) This account must 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.
(b) This account must include the following items:
(1) Cost of obtaining certificates authorizing the service company to engage in its business.
(2) Fees and expenses for incorporation.
(3) Fees and expenses for mergers or consolidations.
(4) Office expenses incident to organizing the service company.
(5) Stock and minute books and corporate seal.
(c) This account must not include any discounts upon securities issued or assumed; nor may 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.
(d) 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 in this account or in similar accounts in the books of the companies concerned must be excluded from this account.
§ 367.3030   Account 303, Miscellaneous intangible property.
(a) This account must include the cost of patent rights, licenses, privileges, and other intangible property necessary or valuable in the conduct of service company operations and not specifically chargeable to any other account.
(b) When any item included in this account is retired or expires, the related book cost must be credited to this account and charged to account 426.5, Other deductions (§ 367.4265), or account 111, Accumulated provision for amortization of property (§ 367.1110).
(c) This account must be maintained in a manner so that the service company can furnish full information with respect to the amounts included in this account.
§ 367.3060   Account 306, Leasehold improvements.
This account must include all costs incurred by the service company in improvements of, remodeling of, or installation of additional facilities in rented offices or buildings to suit tenant's needs, placed in service prior to January 1, 2008.
§ 367.3890   Account 389, Land and land rights.
This account must include the cost of land and land rights used for service company purposes, the cost of which is not properly includible in other land and land rights accounts ( See Service Company Property Instructions in § 367.55).
§ 367.3900   Account 390, Structures and improvements.
This account must include the cost in place of structures and improvements used for service company purposes, the cost of which is not properly includible in other structures and improvements accounts (See Service Company Property Instructions in § 367.56).
§ 367.3910   Account 391, Office furniture and equipment.
(a) This account must include the cost of office furniture and equipment owned by the service company and devoted to service company operations, and not permanently attached to buildings, except the cost of the furniture and equipment that the service company elects to assign to other property accounts on a functional basis.
(b) This account must include the following items:
(1) Bookcases and shelves.
(2) Desks, chairs, and desk equipment.
(3) Drafting-room equipment.
(4) Filing, storage, and other cabinets.
(5) Floor covering.
(6) Library and library equipment.
(7) Mechanical office equipment, such as accounting machines, typewriters, and other similar items.
(8) Safes.
(9) Tables.
§ 367.3920   Account 392, Transportation equipment.
(a) This account must include the cost of transportation vehicles used for service company purposes.
(b) This account must include the following items:
(1) Airplanes.
(2) Automobiles.
(3) Bicycles.
(4) Electrical vehicles.
(5) Motor trucks.
(6) Motorcycles.
(7) Repair cars or trucks.
(8) Tractors and trailers.
(9) Other transportation vehicles.
§ 367.3930   Account 393, Stores equipment.
(a) This account must include the cost of equipment used for the receiving, shipping, handling, and storage of materials and supplies.
(b) This account must include the following items:
(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.
§ 367.3940   Account 394, Tools, shop and garage equipment.
(a) This account must 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.
(b) This account must include the following items:
(1) Air compressors.
(2) Anvils.
(3) Automobile repair shop equipment.
(4) Battery charging equipment.
(5) Belts, shafts and countershafts.
(6) Boilers.
(7) Cable pulling equipment.
(8) Concrete mixers.
(9) Drill presses.
(10) Derricks.
(11) Electric equipment.
(12) Engines.
(13) Forges.
(14) Furnaces.
(15) Foundations and settings specially constructed for equipment in this account 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.
§ 367.3950   Account 395, Laboratory equipment.
(a) This account must include the cost installed of laboratory equipment used for general laboratory purposes.
(b) This account must include the following items:
(1) Ammeters.
(2) Balances and scales.
(3) Barometers.
(4) Calorimeters-bomb, flow, recording types, and other similar items.
(5) Current batteries.
(6) Electric furnaces.
(7) Frequency changers.
(8) Galvanometers.
(9) Gas burning equipment.
(10) Gauges.
(11) Glassware, beakers, burettes, and other similar items.
(12) Humidity testing apparatus.
(13) Inductometers.
(14) Laboratory hoods.
(15) Laboratory standard millivolt meters.
(16) Laboratory standard volt meters.
(17) Laboratory tables and cabinets.
(18) Meter-testing equipment.
(19) Millivolt meters.
(20) Motor generator sets.
(21) Muffles.
(22) Oil analysis apparatus.
(23) Panels.
(24) Phantom loads.
(25) Piping.
(26) Portable graphic ammeters, voltmeters, and wattmeters.
(27) Portable loading devices.
(28) Potential batteries.
(29) Potentiometers.
(30) Rotating standards.
(31) Specific gravity apparatus.
(32) Standard bottles for meter prover testing.
(33) Standard cell, reactance, resistor, and shunt.
(34) Stills.
(35) Sulphur and ammonia apparatus.
(36) Switchboards.
(37) Synchronous timers.
(38) Tar analysis apparatus.
(39) Testing panels.
(40) Testing resistors.
(41) Thermometers—indicating and recording.
(42) Transformers.
(43) Voltmeters.
(44) Other testing, laboratory, or research equipment not provided for elsewhere.
(45) Other items of equipment for testing gas, fuel, flue gas, water, residuals, and other similar items.
§ 367.3960   Account 396, Power operated equipment.
(a) This account must 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 the equipment and the vehicle on which the equipment is mounted.
(b) This account must include the following items:
(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.
(c) It is intended that this account include only the large units that are generally self-propelled or mounted on movable equipment.
§ 367.3970   Account 397, Communication equipment.
(a) This account must include the cost installed of telephone, telegraph, and wireless equipment for general use in connection with service company operations.
(b) This account must include the following items:
(1) Amplifiers.
(2) Antennae.
(3) Booths.
(4) Cables.
(5) Carrier terminal equipment.
(6) Conductors.
(7) Distributing boards.
(8) Extension cords.
(9) Gongs.
(10) Hand sets, manual and dial.
(11) Insulators.
(12) Intercommunicating sets.
(13) Loading coils.
(14) Microwave equipment.
(15) Operators' desks.
(16) Paraboloids.
(17) Poles and fixtures used wholly for telephone or telegraph wire.
(18) Power supply equipment.
(19) Radio transmitting and receiving sets.
(20) Reflectors.
(21) Repeaters.
(22) Remote control equipment and lines.
(23) Sending keys.
(24) Storage batteries.
(25) Switchboards.
(26) Telautograph circuit connections.
(27) Telegraph receiving sets.
(28) Telephone and telegraph circuits.
(29) Testing instruments.
(30) Towers.
(31) Underground conduit used wholly for telephone or telegraph wires and cable wires.
§ 367.3980   Account 398, Miscellaneous equipment.
(a) This account must include the cost of equipment, apparatus, and other similar items, used in the service company's operations that are not included in any other account of this system of accounts.
(b) This account must include the following items:
(1) Hospital and infirmary equipment.
(2) Kitchen equipment.
(3) Employees' recreation equipment.
(4) Radios.
(5) Restaurant equipment.
(6) Soda fountains.
(7) Operators' cottage furnishings.
(8) Other miscellaneous equipment.
§ 367.3990   Account 399, Other tangible property.
This account must include the cost of tangible service company property not provided for elsewhere.
§ 367.3991   Account 399.1, Asset retirement costs for service company property.
This account must include asset retirement costs on service company property.
§ 367.4000   Account 400, Operating revenues.
There must be shown under this caption the total amount included in the service company operating revenue accounts 457 through 459 (§§ 367.4570 through 367.4590).
§ 367.4010   Account 401, Operation expense.
There must be shown under this caption the total amount included in the service company operation expense accounts 500 through 589 (§§ 367.5000 through 367.5890), 800 through 881 (§§ 367.8000 through 367.8810) and 901 through 931 (§§ 367.9010 through 367.9310).
§ 367.4020   Account 402, Maintenance expense.
There must be shown under this caption the total amount included in the service company maintenance expense accounts 500 through 598 (§§ 367.5000 through 367.5890), 800 through 894 (§§ 367.8000 through 367.8810), and 935 (§ 367.9350).
§ 367.4030   Account 403, Depreciation expense.
(a) This account must include the amount of depreciation for all service company property, the cost of which is included in accounts 390 through 399.1 (§§ 367.3900 through 367.3991). Provide subaccounts by each class of service company property owned or leased except the depreciation expense that is charged to clearing accounts or to account 416, Costs and expenses of merchandising, jobbing and contract work (§ 367.4160).
(b) The service company must keep the records of property and property retirements that will reflect the service life of property that has been retired and aid in estimating probable service life by mortality, turnover, or other appropriate methods; and also the records that will reflect the percentage of salvage and costs of removal for property retired from each account, or related subaccount, for depreciable property.
(c) 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.
§ 367.4031   Account 403.1, Depreciation expense for asset retirement costs.
This account must include the depreciation expense for asset retirement costs included in service company property.
§ 367.4040   Account 404, Amortization of limited-term property.
This account must include amortization charges applicable to amounts included in the service company property 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 must be sufficient to distribute the book cost of each investment as evenly as may be over the period of its benefit ( See account 111, Accumulated provision for amortization of service company property (§ 367.1110)).
§ 367.4050   Account 405, Amortization of other property.
(a) When authorized by the Commission, this account must include charges for amortization of intangible or other property that does not have a definite or terminable life and that is not subject to charges for depreciation expense.
(b) This account must be supported in sufficient detail 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.
§ 367.4073   Account 407.3, Regulatory debits.
This account shall be debited, when appropriate, with amounts credited to Account 254, Other Regulatory Liabilities, to record regulatory liabilities imposed on the service company 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.
§ 367.4074   Account 407.4, Regulatory credits.
This account shall be credited, when appropriate, with 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.
§ 367.4081   Account 408.1, Taxes other than income taxes, operating income.
This account must include those taxes, other than income taxes, that relate to service company operating income. This account must be maintained so as to allow ready identification of the various classes of taxes.
§ 367.4082   Account 408.2, Taxes other than income taxes, other income and deductions.
This account must include those taxes, other than income taxes, that relate to other income and deductions.
§ 367.4091   Account 409.1, Income taxes, operating income.
This account must include the amount of those local, state and Federal income taxes that relate to service company operating income.
§ 367.4092   Account 409.2, Income taxes, other income and deductions.
This account must include the amount of those local, state and Federal income taxes (both positive and negative), that relate to other income and deductions.
§ 367.4093   Account 409.3, Income taxes, extraordinary items.
This account must include the amount of those local, state and Federal income taxes (both positive and negative), that relate to extraordinary items.
§ 367.4101   Account 410.1, Provision for deferred income taxes, operating income.
This account must include the amounts of those deferrals of taxes and allocations of deferred taxes that relate to service company operating income.
§ 367.4102   Account 410.2, Provision for deferred income taxes, other income and deductions.
This account must include the amounts of those deferrals of taxes and allocations of deferred taxes that relate to other income and deductions.
§ 367.4111   Account 411.1, Provision for deferred income taxes—Credit, operating income.
This account must include the amounts of those allocations of deferred taxes and deferrals of taxes, credit, that relate to service company operating income.
§ 367.4112   Account 411.2, Provision for deferred income taxes—Credit, other income and deductions.
This account must include the amounts of those allocations of deferred taxes and deferrals of taxes, credit, that relate to other income and deductions.
§ 367.4114   Account 411.4, Investment tax credit adjustments, service company property.
This account must include the amount of those investment tax credit adjustments that relate to service company property.
§ 367.4115   Account 411.5, Investment tax credit adjustments, other.
This account must include the amount of those investment tax credit adjustments not properly included in other accounts.
§ 367.4116   Account 411.6, Gains from disposition of service company plant.
(a) The service company must record in this account gains resulting from the settlement of asset retirement obligations related to service company plant in accordance with the accounting prescribed in General Instructions in § 367.22.
(b) Income taxes relating to losses, recorded in this account must be recorded in Account 409.1, Income Taxes, operating income (§ 367.4091).
§ 367.4117   Account 411.7, Losses from disposition of service company plant.
(a) The service company must record in this account losses resulting from the settlement of asset retirement obligations related to service company plant in accordance with the accounting prescribed in General Instructions in § 367.22.
(b) Income taxes relating to losses, recorded in this account must be recorded in Account 409.1, Income Taxes, operating income (§ 367.4091).
§ 367.4118   Account 411.10, Accretion expense.
This account must be charged for accretion expense on the liabilities associated with asset retirement obligations included in account 230, Asset retirement obligations (§ 367.2300), related to service company property.
§ 367.4120   Account 412, Cost and expenses of construction or other services.
This account must include expenditures related to the performance of construction or service contracts, under which the service company undertakes projects to construct physical property for associate or non-associate companies (see General Instructions § 367.24, Construction and service contracts for other companies) and the cost of services performed for others not provided for elsewhere.
§ 367.4160   Account 416, Costs and expenses of merchandising, jobbing and contract work.
(a) This account must include the following labor items for services provided:
(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 the work is done only for purchasers of appliances from the associated company.
(4) Installing wiring, 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.
(b) This account must include the following materials and expenses items:
(1) Advertising in newspapers, periodicals, radio, television, and other similar items.
(2) Cost of merchandise sold and of materials used in jobbing work.
(3) Stores expenses on merchandise and jobbing stocks.
(4) Fees and expenses of advertising and commercial artists' agencies.
(5) Printing booklets, dodgers, and other advertising data.
(6) Premiums given as inducement to buy appliances.
(7) Light, heat and power.
(8) Depreciation on equipment used primarily for merchandise and jobbing operations.
(9) Rent of sales rooms or of equipment.
(10) Transportation expense in delivery and pick-up of appliances by the associated company's facilities.
(11) Stationery and office supplies and expenses.
(12) Losses from uncollectible merchandise and jobbing accounts.
(c) 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.
(d) Related taxes must be recorded in account 408.2, Taxes other than income taxes, other income and deductions (§ 367.4082), or account 409.2, Income taxes, other income and deductions (§ 367.4092), as appropriate.
§ 367.4180   Account 418, Non-operating rental income.
(a) 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 of operation, maintenance, rents, depreciation, and amortization.
(b) Related taxes shall be recorded in Account 408.2, Taxes other than income taxes, other income and deductions (§ 367.4082) or Account 409.2, Income taxes, other income and deductions (§ 367.4092), as appropriate.
§ 367.4181   Account 418.1, Equity in earnings of subsidiary companies.
This account must include the service company's equity in the earnings or losses of subsidiary companies for the year.
§ 367.4190   Account 419, Interest and dividend income.
(a) This account must 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.
(b) This account may include the pro rata amount necessary to extinguish (during the interval between the date of acquisition and the date of maturity) the difference between the cost to the service company and the face value of interest-bearing securities. The amounts credited or charged must be concurrently included in the accounts in which the securities are carried.
(c) Where significant in amount, expenses, excluding operating taxes and income taxes, applicable to security investments and to interest and dividend revenues on the account must be charged in this account.
(d) Related taxes must be recorded in account 408.2, Taxes other than income taxes, other income and deductions (§ 367.4082), or account 409.2, Income taxes, other income and deductions (§ 367.4092).
(e) Interest accrued, the payment of which is not reasonably assured, dividends receivable that have not been declared or guaranteed, and interest or dividends upon reacquired securities issued or assumed by the service company must not be credited to this account.
§ 367.4191   Account 419.1, Allowance for other funds used during construction.
This account must include concurrent credits for allowance for other funds used during construction.
§ 367.4210   Account 421, Miscellaneous income or loss.
This account must include all revenue and expense items except taxes properly includible in the income account and not provided for elsewhere. Related taxes must be recorded in account 408.2, Taxes other than income taxes, other income and deductions (§ 367.4082), or account 409.2, Income taxes, other income and deductions (§ 367.4092).
§ 367.4211   Account 421.1, Gain on disposition of property.
This account must be credited with the gain on the sale, conveyance, exchange, or transfer of service or other property to another. Income taxes on gains recorded in this account must be recorded in account 409.2, Income taxes, other income and deductions (§ 367.4092).
§ 367.4212   Account 421.2, Loss on disposition of property.
This account must be charged with the loss on the sale, conveyance, exchange or transfer of service or other property to another. The reduction in income taxes relating to losses recorded in this account must be recorded in account 409.2, Income taxes, other income and deductions (§ 367.4092).
§ 367.4250   Account 425, Miscellaneous amortization.
(a) This account must include amortization charges not includible in other accounts which are properly deductible in determining the income of the service company before interest charges. Charges included in this account, if significant in amount, must be in accordance with an orderly and systematic amortization program.
(b) This account must include the following items:
(1) Amortization of intangibles included in service company property.
(2) Other miscellaneous amortization charges authorized to be included in this account by the Commission.
§ 367.4261   Account 426.1, Donations.
This account must include all payments or donations for charitable, social or community welfare purposes.
§ 367.4262   Account 426.2, Life insurance.
This account must include all payments for life insurance of officers and employees where the service company is beneficiary (net premiums less increase in cash surrender value of policies).
§ 367.4263   Account 426.3, Penalties.
This account must include payments by the service company for penalties or fines for violation of any regulatory statutes by the service company or its officials.
§ 367.4264   Account 426.4, Expenditures for certain civic, political and related activities.
(a) This account must 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.
(b) This account must not include expenditures that are directly related to appearances before regulatory or other governmental bodies in connection with an associate utility company's existing or proposed operations.
§ 367.4265   Account 426.5, Other deductions.
This account must include other miscellaneous expenses that are not properly included in service company operations.
§ 367.4270   Account 427, Interest on long-term debt.
(a) This account must include the amount of interest on outstanding long-term debt issued or assumed by the service company, the liability for which is included in account 224, Other long-term debt (§ 367.2240).
(b) This account must be kept or supported so as to show the interest accruals on each class and series of long-term debt.
(c) This account must not include interest on nominally issued or nominally outstanding long-term debt, including securities assumed.
§ 367.4280   Account 428, Amortization of debt discount and expense.
(a) This account must include the amortization of unamortized debt discount and expense on outstanding long-term debt. Amounts charged to this account must be credited concurrently to accounts 181, Unamortized debt expense (§ 367.1810), and 226, Unamortized discount on long-term debt—Debit (§ 367.2260).
(b) This account must be kept or supported so as to show the debt discount and expense on each class and series of long-term debt.
§ 367.4290   Account 429, Amortization of premium on debt—Credit.
(a) This account must include the amortization of unamortized net premium on outstanding long-term debt. Amounts credited to this account must be charged concurrently to account 225, Unamortized premium on long-term debt (§ 367.2250).
(b) This account must be kept or supported so as to show the premium on each class and series of long-term debt.
(c) This account must include the following items:
(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 service company's debt securities.
(4) Preliminary survey and investigation expenses related to abandoned projects, when not written-off to the appropriate operating expense account.
§ 367.4300   Account 430, Interest on debt to associate companies.
This account must include interest accrued on amounts included in account 223, Advances from associate companies (§ 367.2230), and account 233, Notes payable to associate companies (§ 367.2330). The records supporting the entries to this account must be kept so as to show to who 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. Separate subaccounts must be maintained for each related debt account.
§ 367.4310   Account 431, Other interest expense.
This account must include all interest charges not provided for elsewhere.
§ 367.4320   Account 432, Allowance for borrowed funds used during construction—Credit.
This account must include concurrent credits for allowance for borrowed funds used during construction.
§ 367.4330   Account 433, Balance transferred from income.
This account must include the net credit or debit transferred from income for the year.
§ 367.4340   Account 434, Extraordinary income.
This account must be credited with gains of unusual nature and infrequent occurrence that 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 must be recorded in account 409.3, Income taxes, extraordinary items (§ 367.4093) (See General Instructions in § 367.8).
§ 367.4350   Account 435, Extraordinary deductions.
This account must be debited with losses of unusual nature and infrequent occurrence that 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 must be recorded in account 409.3, Income taxes, extraordinary items (§ 367.4093) ( See General Instructions in § 367.8).
§ 367.4360   Account 436, Appropriations of retained earnings.
This account must include appropriations of retained earnings as follows:
(a) Appropriations required under terms of mortgages, orders of courts, contracts, or other agreements.
(b) Appropriations required by action of regulatory authorities.
(c) Other appropriations made at option of the service company for specific purposes.
§ 367.4370   Account 437, Dividends declared—preferred stock.
(a) This account must include amounts declared payable out of retained earnings as dividends on actually outstanding preferred or prior lien capital stock issued by the service company.
(b) Dividends must be segregated for each class and series of preferred stock as to those payable in cash, stock, and other forms. If not payable in cash, the medium of payment must be described with sufficient detail to identify it.
§ 367.4380   Account 438, Dividends declared—common stock.
(a) This account must include amounts declared payable out of retained earnings as dividends on actually outstanding common capital stock issued by the service company.
(b) Dividends must be segregated for each class of common stock as to those payable in cash, stock and other forms. If not payable in cash, the medium of payment must be described with sufficient detail to identify it.
§ 367.4390   Account 439, Adjustments to retained earnings.
(a) This account must, with prior Commission approval, include significant non-recurring transactions accounted for as prior period adjustments, as follows:
(1) Correction of an error in the financial statements of a prior year.
(2) Adjustments that result from realization of income tax benefits of reacquisition operating loss carry forwards of purchased subsidiaries. All other items of profit and loss recognized during a year must be included in the determination of net income for that year.
(b) Adjustments, charges, or credits due to losses on reacquisition, resale or retirement of the company's own capital stock must be included in this account.
§ 367.4570   Account 457, Services rendered to associate companies.
This account must include amounts billed to associate companies for services rendered at cost ( See accounts 457.1 through 457.3 in §§ 367.4571 through 367.4573). Overbillings or underbillings arising from adjustments of estimated costs to actual costs must be cleared through this account and concurrent adjustments made to other accounts involved.
§ 367.4571   Account 457.1, Direct costs charged to associate companies.
This account must include those direct costs that can be identified through a cost allocation system as being applicable to services performed for associate companies. This account must not include any compensation for use of equity capital or inter-company interest on indebtedness.
§ 367.4572   Account 457.2, Indirect costs charged to associate companies.
This account must include recovery of those indirect costs that cannot be separately identified to a single or group of associate companies and therefore must be allocated. Only journal or memorandum entries should be prepared monthly, by departments, for all such cost accumulated and billed to customers. Amounts billed to associate companies must be included in this account. This account must not include any compensation for use of equity capital or inter-company interest on indebtedness.
§ 367.4573   Account 457.3, Compensation for use of capital-associate companies.
This account must include only the portion of compensation for use of equity capital and inter-company interest on indebtedness before income taxes that is properly allocable to services rendered to each associate company.
§ 367.4580   Account 458, Services rendered to non-associate companies.
This account must include amounts billed for services rendered to non-associate companies ( See accounts 458.1 through 458.4 (§§ 367.4581 through 367.4584)).
§ 367.4581   Account 458.1, Direct costs charged to non-associate companies.
This account must include those direct costs that can be identified through a cost allocation system as being applicable to services performed for non-associate companies. This account must not include any compensation for use of equity capital or interest on indebtedness.
§ 367.4582   Account 458.2, Indirect costs charged to non-associate companies.
This account must include recovery of those indirect costs of services performed for non-associate companies that cannot be specifically assigned and therefore must be allocated. This account must not include any compensation for use of equity capital or inter-company interest on indebtedness.
§ 367.4583   Account 458.3, Compensation for use of capital—Non-associate companies.
This account must include only the portion of compensation for use of equity capital and inter-company interest on indebtedness before income taxes that is properly allocable to services rendered to non-associate utility companies. A statement to support the basis for the compensation and how it was calculated must be attached to a separate journal entry, ledger system, or memorandum file.
§ 367.4584   Account 458.4, Excess or deficiency on servicing non-associate utility companies.
This account must include the amount by which the aggregate price received for services rendered to non-associate utility companies differs from the sum of the total direct and indirect costs and compensation for use of capital which are properly allocable to such services ( See accounts 458.1 through 458.3 (§§ 367.4581 through 367.4583) and General Instructions in § 367.23).
§ 367.5000   Accounts 500-598, Electric operation and maintenance accounts.
Service companies must use accounts 500 through 598 in part 101 of this chapter.
§ 367.8000   Accounts 800-894, Gas operation and maintenance accounts.
Service companies must use accounts 800 through 894 in part 201 of this chapter.
§ 367.9010   Account 901, Supervision.
This account must include the cost of labor and expenses incurred in the general direction and supervision of customer accounting and collecting activities. Direct supervision of a specific activity must be charged to account 902, Meter reading expenses (§ 367.9020), or account 903, Customer records and collection expenses (§ 367.9030), as appropriate ( See Operating Expense Instructions in § 367.80).
§ 367.9020   Account 902, Meter reading expenses.
(a) This account must include the cost of labor, materials used and expenses incurred in reading customer meters, and determining consumption when performed by employees engaged in reading meters.
(b) This account must include the following labor items:
(1) Addressing forms for obtaining meter readings by mail.
(2) Changing and collecting meter charts used for billing purposes.
(3) Inspecting time clocks, checking seals, and other similar items, 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 (§ 367.5000), account 878, Meter and house regulator expenses (§ 367.8000), or to account 903, Customer records and collection expenses (§ 367.9030), 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.
(c) This account must include the following materials and expenses items:
(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.
§ 367.9030   Account 903, Customer records and collection expenses.
(a) This account must include the cost of labor, materials used and expenses incurred in work on customer applications, contracts, orders, credit investigations, billing and accounting, collections and complaints.
(b) This account must include the following labor items:
(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 the orders, that is chargeable to the account appropriate for the work called for by the orders.
(2) Investigations of customers” credit and keeping of records pertaining to the investigations, 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 data.
(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 of 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 the 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.
(c) This account must include the following materials and expenses items:
(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 (Major only), including transportation of customer bills and meter books under centralized billing procedure.
(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 removals, and other similar forms.
(10) Rent of mechanical equipment.
(d) The cost of work on meter history and meter location records is chargeable to account 586, Meter expenses (§ 367.5000) or account 878, Meter and house regulator expenses (§ 367.8000).
§ 367.9040   Account 904, Uncollectible accounts.
This account must be charged with amounts sufficient to provide for losses from uncollectible service company revenues. Concurrent credits must be made to account 144, Accumulated provision for uncollectible accounts—Credit (§ 367.1440). Losses from uncollectible accounts also must be charged to account 144 (§ 367.1440).
§ 367.9050   Account 905, Miscellaneous customer accounts expenses.
(a) This account must include the cost of labor, materials used and expenses incurred not provided for in other accounts.
(b) This account must include the following labor items:
(1) General clerical and stenographic work.
(2) Miscellaneous labor.
(c) This account must include the following materials and expenses items:
(1) Communication service.
(2) Miscellaneous office supplies and expenses and stationery and printing other than those specifically provided for in accounts 902 and 903 (§§ 367.9020 and 367.9030).
§ 367.9070   Account 907, Supervision.
This account must include the cost of labor 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 associate utility company's service. Direct supervision of a specific activity within customer service and informational expense classification must be charged to the account wherein the costs of such activity are included ( See Operating Expense Instructions in § 367.80).
§ 367.9080   Account 908, Customer assistance expenses.
(a) This account must include the cost of labor, 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 associate utility company's service.
(b) This account must include the following labor items:
(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 the 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 associate utility company's service.
(c) This account must include the following materials and expenses items:
(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.
(d) 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 (§ 367.4160), 587, Customer installations expenses (§ 367.5870), 879, Customer installations expenses (§ 367.8790), and 912, Demonstrating and selling expenses (§ 367.9120).