27

UNITED STATES DEPARTMENT OF AGRICULTURE

Rural Electrification Administration

Bulletin 1770 B-1

RD-GD-1992-11

SUBJECT: Part 32, Uniform System of Accounts, and Supplementary

Accounts Required of REA Telephone Borrowers.

TO: All Telephone Borrowers

REA Telephone Staff

REA Economic Development and Technical Services Staff

EFFECTIVE DATE: Date of Approval.

EXPIRATION DATE: Date of change in 47 CFR part 32 or in 7 CFR

1770.15 by rulemaking.

OFFICE OF PRIMARY INTEREST: Technical Accounting and Auditing

Staff, Borrowers Accounting Division.

PREVIOUS INSTRUCTIONS: This is a new bulletin.

FILING INSTRUCTIONS: File with 7 CFR part 1770.

PURPOSE: This bulletin 1770 B-1 sets forth, in a more userfriendly format, the FCC Uniform System of Accounts (USOA) for

Telecommunication Companies. This bulletin is a reprint of

already codified procedures and policies found in 47 CFR part 32,

revised as of October 1, 1989, and found in 7 CFR Part 1770,

Accounting System Requirements for REA Telephone Borrowers,

revised as of February 1, 1990, as specified in 7 CFR 1770.15,

Supplementary Accounts Required of REA Telephone Borrowers. This

bulletin is for use by borrowers, consultants, and other

interested parties.

Every effort has been made to ensure the accuracy of this

document. However, in case of discrepancies, the regulations at

7 CFR part 1770 and 47 CFR part 32 are the authorized sources.

 George E. Pratt 11/12/92

_________________________ ___________________

Administrator Date

Disclaimer: The contents of this guidance document does not 

have the force and effect of law and is not meant to bind the 

public in any way. This document is intended only to provide 

clarity to the public regarding existing requirements under 

the law or agency policies.
28

PART 32 - UNIFORM SYSTEM OF ACCOUNTS

FOR TELECOMMUNICATIONS COMPANIES

TABLE OF CONTENTS

SUBPART A - PREFACE

ù32.1 Background

ù32.2 Basis of the accounts

ù32.3 Authority

ù32.4 Communications Act

SUBPART B - GENERAL INSTRUCTIONS

ù32.11 Classification of companies

ù32.12 Records

ù32.13 Accounts - general

ù32.14 Regulated accounts

ù32.15 [Reserved]

ù32.16 Changes in accounting standards

ù32.17 Interpretation of accounts

ù32.18 Waivers

ù32.19 Address for reports and correspondence

ù32.20 Numbering convention

ù32.21 Sequence of accounts

ù32.22 Comprehensive interperiod tax allocation

ù32.23 Nonregulated activities

ù32.24 Compensated absences

ù32.25 Unusual items and contingent liabilities

ù32.26 Materiality

ù32.27 Transaction with affiliates

SUBPART C - INSTRUCTIONS FOR BALANCE SHEET ACCOUNTS

ù32.101 Structure of the balance sheet accounts

ù32.102 Nonregulated investments

ù32.103 Balance sheet accounts for other than regulated-

 fixed assets to be maintained

ù32.1120 Cash and equivalents

REA 1120.11 Cash - general fund

REA 1120.12 Cash - construction fund trustee

REA 1120.13 Cash - transfer of funds

REA 1120.21 Special cash deposits

REA 1120.31 Petty cash fund

REA 1120.32 Change fund

ù32.1130 Cash

REA 1130.1 Cash - general fund

REA 1130.2 Cash - construction fund trustee

REA 1130.3 Cash - transfer of funds

ù32.1140 Special cash deposits

ù32.1150 Working cash advances

REA 1150.1 Petty cash fund
29

REA 1150.2 Change fund

ù32.1160 Temporary investments

ù32.1180 Telecommunications accounts receivable

ù32.1181 Accounts receivable allowance - telecommunications

ù32.1190 Other accounts receivable

ù32.1191 Accounts receivable allowance - other

ù32.1200 Notes receivable

ù32.1201 Notes receivable allowance

ù32.1210 Interest and dividends receivable

ù32.1220 Inventories

REA 1220.1 Material and supplies

REA 1220.2 Property held for sale or lease

REA 1220.3 Exempt materials - clearing

ù32.1280 Prepayments

REA 1280.1 Prepaid rents

REA 1280.2 Prepaid taxes

REA 1280.3 Prepaid insurance

REA 1280.4 Prepaid directory expenses

REA 1280.5 Other prepayments

ù32.1290 Prepaid rents

ù32.1300 Prepaid taxes

ù32.1310 Prepaid insurance

ù32.1320 Prepaid directory expenses

ù32.1330 Other prepayments

ù32.1350 Other current assets

REA 1350.1 Subscriptions to capital stock

REA 1350.2 Subscriptions to memberships

REA 1350.3 Subscriptions to members' equity certificates

REA 1350.4 Other current assets

ù32.1401 Investments in affiliated companies

ù32.1402 Investments in nonaffiliated companies

REA 1402.1 Investments in nonaffiliated companies - Class B RTB

 stock

REA 1402.11 Investments in nonaffiliated companies - Class B RTB

 stock - cr.

REA 1402.2 Investments in nonaffiliated companies - Class C RTB

 stock

REA 1402.3 Other investments in nonaffiliated companies

ù32.1406 Nonregulated investments

ù32.1407 Unamortized debt issuance expense

ù32.1408 Sinking funds

ù32.1410 Other noncurrent assets

ù32.1438 Deferred maintenance and retirements

ù32.1439 Deferred charges

ù32.1500 Other jurisdictional assets - net

ù32.2000 Instructions for telecommunications plant accounts

ù32.2001 Telecommunications plant in service

REA 2001.1 Telecommunications plant in service - classified

REA 2001.2 Telecommunications plant in service - unclassified

ù32.2002 Property held for future telecommunication use

ù32.2003 Telecommunications plant under construction -

 short-term

REA 2003.1 Telecommunications plant under construction -

 short-term - contract
30
31

REA 2003.2 Telecommunications plant under construction -

 short-term - force account

REA 2003.3 Telecommunications plant under construction -

 short-term - work orders

ù32.2004 Telecommunications plant under construction -

 long-term

REA 2004.1 Telecommunications plant under construction -

 long-term - contract

REA 2004.2 Telecommunications plant under construction -

 long-term - force account

REA 2004.3 Telecommunications plant under construction -

 long-term - work orders

ù32.2005 Telecommunications plant adjustment

ù32.2006 Nonoperating plant

ù32.2007 Goodwill

ù32.2110 Land and support assets

ù32.2111 Land

ù32.2112 Motor vehicles

ù32.2113 Aircraft

ù32.2114 Special purpose vehicles

ù32.2115 Garage work equipment

ù32.2116 Other work equipment

ù32.2121 Buildings

ù32.2122 Furniture

ù32.2123 Office equipment

ù32.2124 General purpose computers

ù32.2210 Central office - switching

REA 2210.11 Central office switching - analog

REA 2210.21 Central office switching - digital

REA 2210.31 Central office switching - electro-mechanical -

 step-by-step

REA 2210.32 Central office switching - electro-mechanical -

 crossbar

REA 2210.33 Central office switching - electro-mechanical -

 other

ù32.2211 Analog electronic switching

ù32.2212 Digital electronic switching

ù32.2215 Electro-mechanical switching

ù32.2220 Operator systems

ù32.2230 Central office - transmission

REA 2230.11 Central office transmission - radio systems -

 satellite and earth station facilities

REA 2230.12 Central office transmission - radio systems - other

REA 2230.21 Central office transmission - circuit equipment

ù32.2231 Radio system

ù32.2232 Circuit equipment

ù32.2310 Information origination/termination

ù32.2311 Station apparatus

ù32.2321 Customer premises wiring

ù32.2341 Large private branch exchanges

ù32.2351 Public telephone terminal equipment

ù32.2362 Other terminal equipment

ù32.2410 Cable and wire facilities

ù32.2411 Poles
32

ù32.2421 Aerial cable

ù32.2422 Underground cable

ù32.2423 Buried cable

ù32.2424 Submarine cable

ù32.2425 Deep sea cable

ù32.2426 Intrabuilding network cable

ù32.2431 Aerial wire

ù32.2441 Conduit systems

ù32.2680 Amortizable tangible assets

ù32.2681 Capital leases

ù32.2682 Leasehold improvements

ù32.2690 Intangibles

ù32.3000 Instructions for balance sheet accounts -

 depreciation and amortization

ù32.3100 Accumulated depreciation

REA 3100x Retirement work in progress

ù32.3200 Accumulated depreciation - held for future

 telecommunications use

ù32.3300 Accumulated depreciation - nonoperating

ù32.3400 Accumulated amortization - tangible

ù32.3410 Accumulated amortization - capitalized leases

ù32.3420 Accumulated amortization - leasehold improvements

ù32.3500 Accumulated amortization - intangible

ù32.3600 Accumulated amortization - other

ù32.4000 Instructions for balance sheet accounts -

 liabilities and stockholders' equity

ù32.4010 Accounts payable

REA 4010.11 Accounts payable to affiliated companies

REA 4010.21 Accounts payable to nonaffiliated companies

REA 4010.22 Accounts payable - employees' income tax withheld

REA 4010.23 Accounts payable - FICA taxes withheld

REA 4010.24 Accounts payable - federal excise taxes

REA 4010.25 Accounts payable - payroll

ù32.4020 Notes payable

ù32.4030 Advance billing and payments

ù32.4040 Customers' deposits

ù32.4050 Current maturities - long-term debt

ù32.4060 Current maturities - capital leases

ù32.4070 Income taxes - accrued

REA 4070.1 Income taxes accrued - federal

REA 4070.2 Income taxes accrued - state and local

ù32.4080 Other taxes - accrued

REA 4080.1 Other taxes accrued - property

REA 4080.2 Other taxes accrued - employer's portion - FICA

REA 4080.3 Other taxes accrued - federal unemployment

REA 4080.4 Other taxes accrued - state unemployment

REA 4080.5 Other taxes accrued - miscellaneous

ù32.4100 Net current deferred operating income taxes

ù32.4110 Net current deferred nonoperating income taxes

ù32.4120 Other accrued liabilities

REA 4120.1 Unmatured interest accrued - REA notes

REA 4120.2 Unmatured interest accrued - Telephone Bank notes

REA 4120.3 Unmatured interest accrued - Federal Financing Bank

 notes
33

REA 4120.4 Unmatured interest accrued - Bank for Cooperatives

 notes

REA 4120.5 Unmatured interest accrued - Rural Telephone Finance

 Cooperative notes

REA 4120.6 Other accrued liabilities

ù32.4130 Other current liabilities

REA 4130.1 Patronage capital payable

REA 4130.2 Other current liabilities - miscellaneous

ù32.4210 Funded debt

REA 4210.11 Funded debt - other

REA 4210.12 REA notes

REA 4210.13 Telephone Bank notes

REA 4210.14 Federal Financing Bank notes

REA 4210.15 Bank for Cooperatives notes

REA 4210.16 Rural Telephone Finance Cooperative notes

REA 4210.17 REA notes - deferred interest

REA 4210.18 REA notes - advance payments, dr.

REA 4210.19 Funded debt - other - unadvanced, dr.

REA 4210.20 REA notes - unadvanced, dr.

REA 4210.21 Telephone Bank notes - unadvanced, dr.

REA 4210.22 Federal Financing Bank notes - unadvanced, dr.

REA 4210.23 Bank for Cooperatives notes - unadvanced, dr.

REA 4210.24 Rural Telephone Finance Cooperative notes -

 unadvanced, dr.

ù32.4220 Premium on long-term debt

ù32.4230 Discount on long-term debt

ù32.4240 Reacquired debt

ù32.4250 Obligations under capital leases

ù32.4260 Advances from affiliated companies

ù32.4270 Other long-term debt

REA 4270.1 Members' redeemable equity certificates subscribed

 but unissued

REA 4270.2 Members' redeemable equity certificates issued

REA 4270.3 Other long-term debt

ù32.4310 Other long-term liabilities

ù32.4320 Unamortized operating investment tax credits - net

ù32.4330 Unamortized nonoperating investment tax credits -

 net

ù32.4340 Net noncurrent deferred operating income taxes

ù32.4350 Net noncurrent deferred nonoperating income taxes

ù32.4360 Other deferred credits

ù32.4370 Other jurisdictional liabilities and deferred

 credits - net

ù32.4510 Capital stock

ù32.4520 Additional paid-in capital

ù32.4530 Treasury stock

ù32.4540 Other capital

REA 4540.11 Capital stock subscribed

REA 4540.12 Memberships subscribed but unissued

REA 4540.13 Members' equity certificates subscribed but unissued

REA 4540.21 Memberships issued

REA 4540.22 Members' equity certificates issued

REA 4540.23 Members' equity - other

REA 4540.31 Installments paid on capital stock
34

REA 4540.32 Installments paid on memberships subscribed

REA 4540.33 Installments paid on equity certificates subscribed

REA 4540.41 Other capital - miscellaneous

ù32.4550 Retained earnings

REA 4550.1 Operating margins

REA 4550.2 Nonoperating margins

REA 4550.3 Other margins

REA 4550.4 Patronage capital assignable

REA 4550.5 Patrons' capital credits assigned

REA 4550.6 Gain on the retirement of capital credits

SUBPART D - INSTRUCTIONS FOR REVENUE ACCOUNTS

ù32.4999 General

ù32.5000 Basic local service revenue

ù32.5001 Basic area revenue

ù32.5002 Optional extended area revenue

ù32.5003 Cellular mobile revenue

ù32.5004 Other mobile services revenue

ù32.5010 Public telephone revenue

ù32.5040 Local private line revenue

ù32.5050 Customer premises revenue

ù32.5060 Other local exchange revenue

ù32.5069 Other local exchange revenue settlements

ù32.5080 Network access revenue

ù32.5081 End user revenue

ù32.5082 Switched access revenue

ù32.5083 Special access revenue

ù32.5084 State access revenue

ù32.5100 Long distance message revenue

ù32.5110 Unidirectional long distance revenue

ù32.5111 Long distance inward-only revenue

ù32.5112 Long distance outward-only revenue

ù32.5120 Long distance private network revenue

ù32.5121 Subvoice grade long distance private network revenue

ù32.5122 Voice grade long distance private network revenue

ù32.5123 Audio program grade long distance private network

 revenue

ù32.5124 Video program grade long distance private network

 revenue

ù32.5125 Digital transmission long distance private network

 revenue

ù32.5126 Long distance private network switching revenue

ù32.5128 Other long distance private network revenue

ù32.5129 Other long distance private network revenue

 settlements

ù32.5160 Other long distance revenue

ù32.5169 Other long distance revenue settlements

ù32.5200 Miscellaneous revenue

ù32.5230 Directory revenue

ù32.5240 Rent revenue

ù32.5250 Corporate operations revenue

ù32.5260 Miscellaneous revenue

ù32.5261 Special billing arrangements revenue
35

ù32.5262 Customer operations revenue

ù32.5263 Plant operations revenue

ù32.5264 Other incidental regulated revenue

ù32.5269 Other revenue settlements

ù32.5270 Carrier billing and collection revenue

ù32.5280 Nonregulated operating revenue

ù32.5300 Uncollectible revenue

ù32.5301 Uncollectible revenue - telecommunications

ù32.5302 Uncollectible revenue - other

SUBPART E - INSTRUCTIONS FOR EXPENSE ACCOUNTS

ù32.5999 General

ù32.6110 Network support expenses

ù32.6112 Motor vehicle expense

ù32.6113 Aircraft expense

ù32.6114 Special purpose vehicles expense

ù32.6115 Garage work equipment expense

ù32.6116 Other work equipment expense

ù32.6120 General support expenses

ù32.6121 Land and building expense

ù32.6122 Furniture and artworks expense

ù32.6123 Office equipment expense

ù32.6124 General purpose computers expense

ù32.6210 Central office switching expenses

REA 6210.11 Analog electronic expense

REA 6210.21 Digital electronic expense

REA 6210.31 Electro-mechanical expense

ù32.6211 Analog electronic expense

ù32.6212 Digital electronic expense

ù32.6215 Electro-mechanical expense

ù32.6220 Operator systems expense

ù32.6230 Central office transmission expense

REA 6230.11 Radio systems expense

REA 6230.21 Circuit equipment expense

ù32.6231 Radio systems expense

ù32.6232 Circuit equipment expense

ù32.6310 Information origination/termination expenses

ù32.6311 Station apparatus expense

ù32.6341 Large private branch exchange expense

ù32.6351 Public telephone terminal equipment expense

ù32.6362 Other terminal equipment expense

ù32.6410 Cable and wire facilities expenses

ù32.6411 Poles expense

ù32.6421 Aerial cable expense

ù32.6422 Underground cable expense

ù32.6423 Buried cable expense

ù32.6424 Submarine cable expense

ù32.6425 Deep sea cable expense

ù32.6426 Intrabuilding network cable expense

ù32.6431 Aerial wire expense

ù32.6441 Conduit systems expense

ù32.6510 Other property, plant and equipment expenses
36

ù32.6511 Property held for future telecommunications use

 expense

ù32.6512 Provisioning expense

ù32.6530 Network operations expenses

ù32.6531 Power expense

ù32.6532 Network administration expense

ù32.6533 Testing expense

ù32.6534 Plant operations administration expense

ù32.6535 Engineering expense

ù32.6540 Access expense

ù32.6560 Depreciation and amortization expenses

REA 6560.1 Depreciation expense

REA 6560.2 Amortization expense

ù32.6561 Depreciation expense - telecommunications plant in

 service

ù32.6562 Depreciation expense - property held for future

 telecommunications use

ù32.6563 Amortization expense - tangible

ù32.6564 Amortization expense - intangible

ù32.6565 Amortization expense - other

ù32.6610 Marketing

ù32.6611 Product management

ù32.6612 Sales

ù32.6613 Product advertising

ù32.6620 Services

ù32.6621 Call completion services

ù32.6622 Number services

ù32.6623 Customer services

ù32.6710 Executive and planning

ù32.6711 Executive

ù32.6712 Planning

ù32.6720 General and administrative

ù32.6721 Accounting and finance

ù32.6722 External relations

ù32.6723 Human resources

ù32.6724 Information management

ù32.6725 Legal

ù32.6726 Procurement

ù32.6727 Research and development

ù32.6728 Other general and administrative

ù32.6790 Provision for uncollectible notes receivable

SUBPART F - INSTRUCTIONS FOR OTHER INCOME ACCOUNTS

ù32.6999 General

ù32.7099 Content of accounts

ù32.7100 Other operating income and expenses

ù32.7110 Income from custom work

ù32.7130 Return from nonregulated use of regulated facilities

ù32.7140 Gains and losses from foreign exchange

ù32.7150 Gains and losses from the disposition of land and

 artworks

ù32.7160 Other operating gains and losses

ù32.7199 Content of accounts
37

ù32.7200 Operating taxes

REA 7200.1 Operating investment tax credits - net

REA 7200.2 Operating federal income taxes

REA 7200.3 Operating state and local income taxes

REA 7200.41 Operating taxes - property

REA 7200.42 Operating taxes - miscellaneous

REA 7200.5 Provision for deferred operating income taxes - net

ù32.7210 Operating investment tax credits - net

ù32.7220 Operating federal income taxes

ù32.7230 Operating state and local income taxes

ù32.7240 Operating other taxes

REA 7240.1 Operating taxes - property

REA 7240.2 Operating taxes - miscellaneous

ù32.7250 Provision for deferred operating income taxes - net

ù32.7299 Content of accounts

ù32.7300 Nonoperating income and expense

REA 7300.1 Dividend income

REA 7300.2 Interest income

REA 7300.3 Income from sinking and other funds

REA 7300.4 Allowance for funds used during construction

REA 7300.5 Gains or losses from the disposition of certain

 property

REA 7300.6 Other nonoperating income and expense

ù32.7310 Dividend income

ù32.7320 Interest income

ù32.7330 Income from sinking and other funds

ù32.7340 Allowance for funds used during construction

ù32.7350 Gains or losses from the disposition of certain

 property

ù32.7360 Other nonoperating income

ù32.7370 Special charges

ù32.7399 Content of accounts

ù32.7400 Nonoperating taxes

REA 7400.1 Nonoperating investment tax credits - net

REA 7400.2 Nonoperating federal income taxes

REA 7400.3 Nonoperating state and local income taxes

REA 7400.4 Nonoperating other taxes

REA 7400.5 Provision for deferred nonoperating income taxes -

 net

ù32.7410 Nonoperating investment tax credits - net

ù32.7420 Nonoperating federal income taxes

ù32.7430 Nonoperating state and local income taxes

ù32.7440 Nonoperating other taxes

ù32.7450 Provision for deferred nonoperating income taxes -

 net

ù32.7499 Content of accounts

ù32.7500 Interest and related items

ù32.7510 Interest on funded debt

ù32.7520 Interest expense - capital leases

ù32.7530 Amortization of debt issuance expense

ù32.7540 Other interest deductions

ù32.7599 Content of accounts

ù32.7600 Extraordinary items

REA 7600.1 Extraordinary income credits
38

REA 7600.2 Extraordinary income charges

REA 7600.3 Current income tax effect of extraordinary items -

 net

REA 7600.4 Provision for deferred income tax effect of

 extraordinary items - net

ù32.7610 Extraordinary income credits

ù32.7620 Extraordinary income charges

ù32.7630 Current income tax effect of extraordinary items -

 net

ù32.7640 Provision for deferred income tax effect of

 extraordinary items - net

ù32.7899 Content of accounts

ù32.7910 Income effect of jurisdictional ratemaking

 differences - net

ù32.7990 Nonregulated net income

SUBPART G - GLOSSARY

ù32.9000 Glossary of terms

SUBPART A - PREFACE

ù32.1 Background.

The revised Uniform System of Accounts (USOA) is a historical

financial accounting system which reports the results of

operational and financial events in a manner which enables both

management and regulators to assess these results within a

specified accounting period.

The USOA also provides the financial community and others with

financial performance results. In order for an accounting system

to fulfill these purposes, it must exhibit consistency and

stability in financial reporting (including the results published

for regulatory purposes).

Accordingly, the USOA has been designed to reflect stable,

recurring financial data based to the extent regulatory

considerations permit upon the consistency of the well

established body of accounting theories and principles commonly

referred to as generally accepted accounting principles.

ù32.2 Basis of the accounts.

(a) The financial accounts of a company are not used to

record, in monetary terms, the basic transactions which occur.

Certain natural groupings of these transactions are called (in

different contexts) transaction cycles, business processes,

functions or activities. The concept, however, is the same in

each case; i.e., the natural groupings represented what happens

within the company on a consistent and continuing basis.
39

This repetitive nature of the natural groupings, over long

periods of time, lends an element of stability to the financial

account structure.

(b) Within the telecommunications industry companies, certain

recurring functions (natural groupings) do take place in the

course of providing products and services to customers. These

accounts reflect, to the extent feasible, those functions. For

example, the primary bases of the accounts containing the

investment in telecommunications plant are the functions

performed by the assets. In addition, because of the anticipated

effects of future innovations, the telecommunications plant

accounts are intended to permit technological distinctions.

Similarly, the primary bases of plant operations, customer

operations and corporate operations expense accounts are the

functions performed by individuals. The revenue accounts, on the

other hand, reflect a market perspective of natural groupings

based primarily upon the products and services purchased by

customers.

(c) In the course of developing the bases for this account

structure, several other alternatives were explored. It was, for

example, determined that because of the variety and continual

changing of various costs allocation mechanisms, the financial

accounts of a company should not reflect an a priori allocation

of revenues, investments or expenses to products or services,

jurisdictions or organizational structures. (Note also ù32.14

(c) and (d) of Subpart B). It was also determined that costs (in

the case of assets) should not be recorded based solely upon

physical attributes such as location, description or size.

(d) Care has been taken in this account structure to avoid

confusing a function with an organizational responsibility,

particularly as it related to the expense accounts. Whereas in

the past specific organizations may have performed specific

functions, the future environment with its increasing

mechanization and other changes will result in entirely new or

restructured organizations. Thus, any relationships drawn

between organizations and accounts would become increasingly

meaningless with the passage of time.

(e) These accounts, then, are intended to reflect a

functional and technological view of the telecommunications

industry. This view will provide a stable and consistent

foundation for the recording of financial data.

(f) The financial data contained in the accounts, together

with the detailed information contained in the underlying

financial and other subsidiary records required by this

Commission, will provide the information necessary to support

separations, costs of service and management reporting

requirements. The basic account structure has been designed to

remain stable as reporting requirements change.
40
41

ù32.3 Authority.

This Uniform System of Accounts has been prepared under the

following authority: Section 4 of the Communications Act of 1934,

as amended, 47 U.S.C. Section 154 (1984); Sections 219, 220 of

the Communications Act of 1934, as amended, 47 U.S.C.

Sections 219, 220 (1984).

ù32.4 Communications Act.

Attention is directed to the following extract from

Section 220 of the Communications Act of 1934, 47 U.S.C. 220

(1984):

(e) Any person who shall willfully make any false entry in

the accounts of any book of accounts or in any record or

memoranda kept by any such carrier, or who shall willfully

destroy, mutilate, alter, or by any other means or device falsify

any such account, or memoranda, or who shall willfully neglect or

fail to make full, true, and correct entries in such accounts,

records, or memoranda of all facts and transactions appertaining

to the business of the carrier, shall be deemed guilty of a

misdemeanor, and shall be subject, upon conviction, to a fine of

not less the $1,000 nor more than $5,000 or imprisonment for a

term of not less than one year nor more than three years, or both

such fine and imprisonment: Provided, that the Commission may in

its discretion issue orders specifying such operating, accounting

or financial papers, records, books, blanks, or documents which

may after a reasonable time, be destroyed, and prescribing the

length of time such books, papers, or documents shall be

preserved.

For regulations governing the periods for which records are to

be retained, see Part 42, Preservation of Records of

Communications Common Carriers, of this chapter which relates to

preservation of records.

SUBPART B - GENERAL INSTRUCTIONS

ù32.11 Classification of companies.

(a) For accounting purposes, companies are divided into

classes as follows:

(1) Class A. Companies having annual revenues from regulated

telecommunications operations of $100,000,000 or more.

(2) Class B. Companies having annual revenues from regulated

telecommunications operations of less than $100,000,000.

(b) Class A companies shall keep all the accounts of this

system of accounts which are applicable to their affairs and are

designated as Class A accounts. These companies shall also keep
42

Basic Property Records in compliance with the requirements of

ù32.2000(e) and (f).

(c) Class B companies shall keep all the accounts of this

system of accounts which are applicable to their affairs and are

designated as Class B accounts. These companies shall also keep

Continuing Property Records in compliance with the requirements

of ù32.2000(e)(7)(A) and ù32.2000 (f) of Subpart C.

(d) Class B companies that desire more detailed accounting

may adopt the accounts prescribed for Class A companies upon the

submission of a written notification to the Commission.

(e) The initial classification of a company shall be

determined by its lowest annual operating revenues for the five

immediately preceding years. Subsequent changes in

classification shall be made when the annual operating revenues

show a greater or lesser classification for five consecutive

years. Companies becoming subject to the jurisdiction of the

Commission and not having revenue data for the five immediately

preceding years shall estimate the amount of their annual

revenues and adopt the scheme of accounts appropriate for the

amount of such estimated revenues.

ù32.12 Records.

(a) The company's financial records shall be kept in

accordance with generally accepted accounting principles to the

extent permitted by this system of accounts.

(b) The company's financial records shall be kept with

sufficient particularity to show fully the facts pertaining to

all entries in these accounts. The detail records shall be filed

in such manner as to be readily accessible for examination by

representatives of this Commission.

(c) The Commission shall require a company to maintain

financial and other subsidiary records in such manner that

specific information, of a type not warranting disclosure as an

account or subaccount, will be readily available. When this

occurs, or where the full information is not otherwise recorded

in the general books, the subsidiary records shall be maintained

in sufficient detail to facilitate the reporting of the required

specific information. The subsidiary records, in which the full

details are shown, shall be sufficiently referenced to permit

ready identification and examination by representatives of this

Commission.

ù32.13 Accounts - general.

(a) As a general rule, all accounts kept by reporting

companies shall conform in numbers and titles to those prescribed

herein. However, reporting companies may use different numbers

for internal purposes when separate accounts (or subaccounts)
43

maintained are consistent with the title and content of accounts

and subaccounts prescribed in this system.

(i) For Class A reporting companies, accounts which are

clearly summaries of other accounts or subaccounts are to be used

for reporting purposes and are not otherwise required to be

maintained.

(ii) A company may subdivide any of the accounts prescribed.

The titles of all such subaccounts shall refer by number or title

to the controlling account.

(iii) A company may establish temporary or experimental

accounts provided that within 30 days of the opening of such

accounts the company notifies the Commission of the nature and

purpose thereof.

(b) Exercise of the preceding options shall be allowed only

if the integrity of the prescribed accounts is not impaired.

(c) As of the date a company becomes subject to this system

of accounts, the company is authorized to make any such

subdivisions, reclassifications or consolidations of existing

balances as are necessary to meet the requirements of this system

of accounts.

(d) Nothing contained in this Part shall prohibit or excuse

any company, receiver, or operating trustee of any carrier from

subdividing the accounts hereby prescribed for the purpose of:

(i) Complying with the requirements of the state

commission(s) having jurisdiction; or

(ii) Securing the information required in the prescribed

reports to such commission(s).

(e) Where the use of subsidiary records is considered

necessary in order to secure the information required in reports

to any state commission, the company shall incorporate the

following controls into their accounting system with respect to

such subsidiary records.

(i) Subsidiary records shall be reconciled to the company's

general ledger or books of original entry, as appropriate.

(ii) The company shall adequately document the accounting

procedures related to subsidiary records.

(iii) The subsidiary records shall be maintained at an

adequate level of detail to satisfy state regulators.

ù32.14 Regulated accounts.

(a) In the context of this Part, the regulated accounts shall
44

be interpreted to include the investments, revenues and expenses

associated with those telecommunications products and services to

which the tariff filing requirements contained in Title II of the

Communications Act of 1934, as amended, are applied, except as

may be otherwise provided by the Commission. Regulated

telecommunications products and services are thereby fully

subject to the accounting requirements as specified in Title II

of the Communications Act of 1934, as amended and as detailed in

Sections 0 through 7 of this Part of the Commission's Rules and

Regulations.

(b) In addition to those amounts considered to be regulated

by the provisions of (a) above, those telecommunications products

and services to which the tariff filing requirements of the

several state jurisdictions are applied shall be accounted for as

regulated, except where such treatment is prescribed or otherwise

excluded from the requirements pertaining to regulated

telecommunications products and services by this Commission.

(c) In the application of the detailed accounting

requirements contained in this part, when a regulated activity

involves the common or joint use of assets and resources in the

provision of regulated and nonregulated products and services,

companies shall account for these activities within the accounts

prescribed in this system for telephone company operations.

Assets and expenses shall be subdivided in subsidiary records

among amounts solely assignable to nonregulated activities,

amounts solely assignable to regulated activities, and amounts

related to assets used and expenses incurred jointly or in

common, which will be allocated between regulated and

nonregulated activities. Companies shall submit reports

identifying regulated and nonregulated amounts in the manner and

at the times prescribed by this Commission. Nonregulated revenue

items not qualifying for incidental treatment, as provided in

ù32.4999(i) shall be recorded in Account 5280, Nonregulated

Operating Revenue.

(d) Other income items which are incidental to the provision

of regulated products and services shall be accounted for as

regulated activities.

(e) All costs and revenues related to the offering of

regulated products and services which result from arrangements

for joint participation or apportionment between two or more

telephone companies (e.g., joint operating agreements, settlement

agreements, cost-pooling agreements) shall be recorded within the

detailed regulated accounts. Under joint operating agreements,

the creditor will initially charge the entire expenses to the

appropriate primary accounts. The proportion of such expenses

borne by the debtor shall be credited by the creditor and charged

by the debtor to the account initially charged. Any allowances

for return on property used will be accounted for as provided in

Account 5240, Rent Revenue.
45

(f) All items of nonregulated revenue, investment and expense

that are not properly includible in the detailed, regulated

accounts prescribed in Subparts A through F of this Part, as

determined by paragraphs (a) through (e) of this section shall be

accounted for and included in reports to this Commission as

specified in ù32.23 of this subpart.

ù32.15 [Reserved]

ù32.16 Changes in accounting standards.

(a) The company's records and accounts shall be adjusted to

apply new accounting standards prescribed by the Financial

Accounting Standards Board or successor authoritative accounting

standard-setting groups, in a manner consistent with generally

accepted accounting principles. The change in accounting

standard will automatically take effect 90 days after the company

informs this Commission of its intention to follow the new

standard, unless the Commission notifies the company to the

contrary. Concurrent with informing this Commission of its

intent to adopt an accounting standards change, the company shall

also file a revenue requirement study for the current year and a

projection for three years into the future analyzing the effects

of the accounting standards change. Furthermore, any change

subsequently adopted shall be disclosed in annual reports to this

Commission.

(b) The changes in accounting standards which this Commission

approves will not necessarily be binding on the ratemaking

practices of the various state commission.

ù32.17 Interpretation of accounts.

To the end that uniform accounting shall be maintained within

the prescribed system, questions involving matters of

significance which are not clearly provided for shall be

submitted to the Chief, Common Carrier Bureau, for explanation,

interpretation, or resolution. Questions and answers thereto

with respect to this system of accounts will be maintained by the

Common Carrier Bureau.

ù32.18 Waivers.

A waiver from any provision of this system of accounts shall

be made by the Federal Communications Commission upon its own

initiative or upon the submission of written request therefor

from any telecommunications company, or group of

telecommunications companies, provided that such a waiver is in

the public interest and each request for waiver expressly

demonstrates that: existing peculiarities or unusual

circumstances warrant a departure from a prescribed procedure or

technique; a specifically defined alternative procedure or

technique will result in a substantially equivalent or more

accurate portrayal of operating results or financial condition,
46

consistent with the principles embodied in the provisions of this

system of accounts, and the application of such alternative

procedure will maintain or improve uniformity in substantive

results as among telecommunication companies.

ù32.19 Address for reports and correspondence.

Reports, statements, and correspondence submitted to the

Federal Communications Commission in accordance with or relating

to instructions and requirements contained herein shall be

addressed to the Common Carrier Bureau, Federal Communications

Commission, Washington, D.C., 20554.

ù32.20 Numbering convention.

(a) The number "32" (appearing to the left of the first

decimal point) indicated the part number.

(b) The numbers immediately following to the right of the

decimal point indicate, respectively, the Section or Account.

All Part 32 account numbers contain 4 digits to the right of the

decimal point.

(c) Cross references to accounts are made by citing the

account numbers to the right of the decimal point; e.g.,

Account 2232 rather than the corresponding complete Part 32

reference number ù32.2232.

ù32.21 Sequence of accounts.

The order in which the accounts are presented in this system

of accounts is not to be considered as necessarily indicative of

the order in which they will be scheduled at all times in reports

to this Commission.

ù32.22 Comprehensive interperiod tax allocation.

(a) Companies shall apply interperiod tax allocation (tax

normalization) to all book/tax timing differences which would be

considered material for published financial report purposes.

Furthermore, companies shall also apply intraperiod tax

allocation if any item or group of similar items when aggregated

would yield debit or credit entries which exceed or would exceed

5 percent of the gross deferred income tax expense debits or

credits during any calendar year over the life of the timing

difference.

Book/tax timing differences, other than those resulting from

accelerated depreciation or waiver, however, shall be phased-in

over a period of five years as directed by this Commission. The

tax effects of book/tax timing differences shall be normalized

and the deferrals shall be included in the following accounts:
47

4100 Net Current Deferred Operating Income Taxes

4110 Net Current Deferred Nonoperating Income Taxes

4340 Net Noncurrent Deferred Operating Income Taxes

4350 Net Noncurrent Deferred Nonoperating Income Taxes

In lieu of the accounting prescribed herein, any company shall

treat the increase/reduction in current income taxes payable

resulting from the use of flow through accounting in prior years

and the phase-in years as an increase/reduction in current income

tax expense.

(b) Supporting documentation shall be maintained so as to

separately identify the amount of deferred taxes which arise from

the use of an accelerated method of depreciation.

(c) With respect to the tax differentials that are phased-in,

companies shall maintain underlying entries to and the balance in

the above accounts so as to show that the deferred tax amounts

are not greater than the phase-in percentage allowed by this

Commission.

(d) The records supporting the activity in the deferred

income tax accounts shall be maintained in sufficient detail to

identify the nature of the specific timing differences giving

rise to both the debits and credits to the individual accounts.

(e) Any company that uses accelerated depreciation (or

recognizes taxable income or losses upon the retirement of

property) for income tax purposes shall normalize the tax

differentials occasioned thereby as indicated in paragraphs

(e)(1) and (e)(2) of this section.

(1) With respect to the retirement of property the book/tax

difference between:

(i) The recognition of proceeds as income and the accrual for

salvage value; and

(ii) The book and tax capital recovery, shall be normalized.

(2) Records shall be maintained so as to show the deferred

tax amounts by vintage year separately for each class or subclass

of eligible depreciable telephone plant for which an accelerated

method of depreciation has been used for income tax purposes.

When property is transferred to nonregulated activities, the

associated deferred income taxes and unamortized investment tax

credits shall also be identified and transferred to the

appropriate nonregulated accounts.

(f) The tax differentials to be normalized as indicated

herein shall also encompass the additional effect of state and

local income tax changes on Federal income taxes produced by the

provision for deferred state and local income taxes for book/tax

timing differences related to such income taxes.
48

(g) Companies that receive the tax benefits from the filing

of a consolidated income tax return by the parent company,

(pursuant to closing agreements with the Internal Revenue

Service, effective January 1, 1966) representing the deferred

income taxes from the elimination of intercompany profits for

income tax purposes on sales of regulated equipment, may credit

such deferred taxes directly to the plant account which contains

such intercompany profit rather than crediting such deferred

taxes to the applicable accounts in paragraph (a) of this

section. If the deferred income taxes are recorded as a reduction

of the appropriate plant accounts, such reduction shall be

treated as reducing the original cost of the plant and accounted

for as such.

ù32.23 Nonregulated activities.

(a) This section describes the accounting treatment of

activities classified for accounting purposes as "nonregulated."

Preemptively deregulated activities and activities (other than

incidental activities) never subject to regulation will be

classified for accounting purposes as "nonregulated." Activities

that qualify for incidental treatment under the policies of this

Commission will be classified for accounting purposes as

regulated activities. Activities that have been deregulated by a

state will be classified for accounting purposes as regulated

activities. Activities that have been deregulated at the

interstate level, but not preemptively deregulated, will be

classified for accounting purpose as regulated activities until

such time as this Commission decides otherwise. The treatment of

nonregulated activities shall differ depending on the extent of

the common or joint use of assets and resources in the provision

of both regulated and nonregulated products and services.

(b) When a nonregulated activity does not involve the joint

or common use of assets and resources in the provision of both

regulated and nonregulated products and services, carriers shall

account for these activities on a separate set of books

consistent with instructions set forth in ù32.1406 and ù32.7990.

Transfer of assets and sales of products and services between the

regulated activity and a nonregulated activity for which a

separate set of books is maintained, shall be accounted for in

accordance with the rules presented in ù32.27, Transactions with

Affiliates. In the separate set of books, carriers may establish

whatever detail they deem appropriate beyond what is necessary to

provide this Commission with the information required in ù32.1406

and ù32.7990.

(c) When a nonregulated activity does involve the common or

joint use of assets and resources in the provision of regulated

and nonregulated products and services, carriers shall account

for these activities within accounts prescribed in this system

for telephone company operations. Assets and expenses shall be

subdivided in subsidiary records among amounts solely assignable

to nonregulated activities, amounts solely assignable to
49

regulated activities, and amounts related to assets and expenses

incurred jointly or in common, which will be allocated between

regulated and nonregulated activities. Carriers shall submit

reports identifying regulated and nonregulated amounts in the

manner and at the times prescribed by this Commission.

Nonregulated revenue items not qualifying for incidental

treatment, as provided in ù32.4999(i) shall be recorded in

separate subsidiary record categories of Account 5280,

Nonregulated Operating Revenue. Amounts assigned or allocated to

regulated products or services shall be subject to Part 36 of

this chapter.

ù32.24 Compensated absences.

(a) Companies shall record a liability and charge the

appropriate expense accounts for compensated absences (vacations,

sick leave, etc.) in the year in which these benefits are earned

by employees.

(b) With respect to the liability that exists for compensated

absences which is not yet recorded on the books as of the

effective date of this Part, the liability shall be recorded in

Account 4120, Other Accrued Liabilities, with a corresponding

entry to Account 1439, Deferred Charges. This deferred charge

shall be amortized on a straight line basis over a period of ten

years.

(c) Records shall be maintained so as to show that no more

than ten percent of the deferred charge is being amortized each

year.

ù32.25 Unusual items and contingent liabilities.

Extraordinary items, prior period adjustments and liabilities

shall be submitted to this Commission for review before being

recorded in the company's books of account. The materiality of

corrections of errors in prior periods shall be measured in

relation to the summary account level used for reporting purposes

for Class A carriers, or in relation to total operating revenues

or total operating expenses for Class B carriers. For Class A

carriers, no correction in excess of one percent of the aggregate

summary account dollars or one million dollars, whichever is

higher, may be recorded in current operating accounts without

prior approval. For Class B carriers, no correction which

exceeds one percent of total operating revenues or one percent of

total operating expenses, depending on the nature of the item,

may be recorded in current operating accounts without prior

approval.

ù32.26 Materiality.

Companies shall follow this system of accounts in recording

all financial and statistical data irrespective of an individual
50

items materiality under GAAP, unless a waiver has been granted

under the provisions of ù32.18 of this subpart to do otherwise.

ù32.27 Transactions with affiliates.

(a) Unless otherwise approved by the Chief, Common Carrier

Bureau, transactions with affiliates involving asset transfers

into or out of the regulated accounts shall be recorded by the

carrier in its regulated accounts as provided in paragraphs (b)

through (f) of this section.

(b) Charges for assets purchased by or transferred to the

regulated telephone activity of a carrier from affiliates shall

be recorded in the operating accounts of the regulated activity

at the invoice price if that price is determined by a prevailing

price held out to the general public in the normal course of

business. If a prevailing price for the assets received by the

regulated activity is not available, the charges recorded by the

regulated activity for such assets shall be the lower of their

cost to the originating activity and the affiliated group less

all applicable valuation reserves, or their fair market value.

(c) Assets sold or transferred from the regulated accounts to

affiliates shall be recorded as operating revenues, incidental

revenues on asset retirements according to the nature of the

transaction involved. If such sales are reflected in tariffs on

file with a regulatory commission or in a prevailing price held

out to the general public, the associated revenues shall be

recorded at the prices contained therein in the appropriate

revenue accounts. If no tariff or prevailing price is

applicable, the proceeds from such sales shall be determined at

the higher of costs less all applicable evaluation reserves, or

estimated fair market value of the asset.

(d) Services provided to an affiliate pursuant to a tariff,

including a tariff filed with a state commission, shall be

recorded in the appropriate revenue accounts at the tariffed

rate. Services provided by an affiliate to the regulated

activity when the same services are also provided by the

affiliate to unaffiliated persons or entities, shall be recorded

at the market rate. When a carrier provides substantially all of

a service to or receives substantially all of a service from an

affiliate which are not also provided to unaffiliated persons or

entities, the services shall be recorded at cost which shall be

determined in a manner that complies with the standards and

procedures of the apportionment of joint and common costs between

the regulated and nonregulated operations of the carrier entity.

(e) Income taxes shall be allocated among the regulated

activities of the carrier, its nonregulated divisions, and

members of an affiliated group. Under circumstances in which

income taxes are determined on a consolidated basis by the

carrier and other members of the affiliated group, the income tax

expense to be recorded by the carrier shall be the same as would
51

result if determined for the carrier separately for all time

periods, except that the tax effect of carry-back and carryforward operating losses, investment tax credits, or other tax

credits generated by operations of the carrier shall be recorded

by the carrier during the period in which applied in settlement

of the taxes otherwise attributable to any member, or combination

of member, of the affiliated group.

(f) Companies that employ average schedules in lieu of actual

costs are exempt from the provisions of this section. For other

organizations, the principles set forth in this section shall

apply equally to corporations, proprietorships, partnerships and

other forms of business organizations.

SUBPART C - INSTRUCTIONS FOR BALANCE SHEET ACCOUNTS

ù32.101 Structure of the balance sheet accounts.

The Balance Sheet accounts shall be maintained as follows:

Account 1120, Cash and Equivalents, through Account 1500,

Other Jurisdictional Assets - Net, shall include assets other

than regulated-fixed assets.

Account 2001, Telecommunications Plant in Service, through

Account 2007, Goodwill, shall include the regulated-fixed assets.

Account 3100, Accumulated Depreciation, through Account 3600,

Accumulated Amortization - Other, shall include the asset and

deferred tax reserves.

Account 4010, Accounts Payable, through Account 4550, Retained

Earnings, shall include all liabilities and stockholders equity.

ù32.102 Nonregulated investments.

Nonregulated investments shall include the investment in

nonregulated activities that are conducted through the same legal

entity as the telephone company operations, but do not involve

the joint or common use of assets or resources in the provision

of both regulated and nonregulated products and services. See

ù32.14 and ù32.23.
52

ù32.103 Balance sheet accounts for other than regulated-fixed

 assets to be maintained.

BALANCE SHEET ACCOUNTS

 Class A Class B

 Account Title Account Account

 CURRENT ASSETS

Cash and Equivalents:

 Cash and equivalents 1120

 Cash 1130

 Cash - general fund 1130.1 1120.11

 Cash - construction fund trustee 1130.2 1120.12

 Cash - transfer of funds 1130.3 1120.13

 Special cash deposits 1140 1120.21

 Working cash advances 1150

 Petty cash fund 1150.1 1120.31

 Change fund 1150.2 1120.32

 Temporary investments 1160

Receivables and Allowances for Doubtful

 Accounts:

 Telecommunications accounts receivable 1180 1180

 Accounts receivable allowance -

 telecommunications 1181 1181

 Other accounts receivable 1190 1190

 Accounts receivable allowance - other 1191 1191

 Notes receivable 1200 1200

 Notes receivable allowance 1201 1201

 Interest and dividends receivable 1210 1210

Supplies:

 Inventories 1220 1220

 Material and supplies 1220.1 1220.1

 Property held for sale or lease 1220.2 1220.2

 Exempt materials - clearing 1220.3 1220.3

Prepayments:

 Prepayments 1280

 Prepaid rents 1290 1280.1

 Prepaid taxes 1300 1280.2

 Prepaid insurance 1310 1280.3

 Prepaid directory expenses 1320 1280.4

 Other prepayments 1330 1280.5

Other Current Assets:

 Other current assets 1350 1350

 Subscriptions to capital stock 1350.1 1350.1

 Subscriptions to memberships 1350.2 1350.2

 Subscriptions to members' equity

 certificates 1350.3 1350.3

 Other current assets 1350.4 1350.4
53

 Class A Class B

 Account Title Account Account

 NONCURRENT ASSETS

Investments:

 Investments in affiliated companies 1401 1401

 Investments in nonaffiliated companies 1402 1402

 Investments in nonaffiliated companies -

 Class B RTB stock 1402.1 1402.1

 Investments in nonaffiliated companies -

 Class B RTB stock - cr. 1402.11 1402.11

 Investments in nonaffiliated companies -

 Class C RTB stock 1402.2 1402.2

 Other investments in nonaffiliated

 companies 1402.3 1402.3

 Nonregulated investments 1406 1406

 Unamortized debt issuance expense 1407 1407

 Sinking funds 1408 1408

 Other noncurrent assets 1410 1410

Deferred Charges:

 Deferred maintenance and retirements 1438 1438

 Deferred charges 1439 1439

Other:

 Other jurisdictional assets - net 1500 1500

ù32.1120 Cash and equivalents.

This account shall be used by Class B companies to record

assets of the type required of Class A companies in Accounts 1130

through 1160.

REA 1120.11 Cash - general fund.

This account shall used by Class B companies. This account shall

include all unrestricted funds derived from revenues and other

sources which are on deposit in banks or other financial institutions

and available on demand. It shall also include funds in transit to

the depository for which customers and agents have received credit

on their accounts. Separate subaccounts should be maintained for

each bank account in which general fund cash is deposited.

REA 1120.12 Cash - construction fund trustee.

This account shall used by Class B companies. This account

shall include all loan funds received from REA, the Rural

Telephone Bank, the Federal Financing Bank, the Bank for

Cooperatives, the Rural Telephone Finance Cooperative, and all

non-loan funds supplied by the borrower under the terms of the

loan contract or otherwise required by REA. The offsetting

credit for funds received from REA shall be to Account 4210.20,
54

REA Notes - Unadvanced, Dr.; funds received from the Rural

Telephone Bank, to Account 4210.21, Telephone Bank Notes -

Unadvanced, Dr.; funds received from the Federal Financing Bank,

to Account 4210.22, Federal Financing Bank Notes - Unadvanced,

Dr; funds received from the Bank for Cooperatives, to

Account 4210.23, Bank for Cooperatives Notes - Unadvanced, Dr.;

and funds received from the Rural Telephone Finance Cooperative,

to Account 4210.24, Rural Telephone Finance Cooperative Notes -

Unadvanced, Dr.

REA 1120.13 Cash - transfer of funds.

This account shall used by Class B companies. This account

shall include all transfers of funds from one bank account to

another. This account shall be charged with the amount of a

check drawn for the transfer, and credited when the amount

transferred is entered into the Cash Receipts Book.

REA 1120.21 Special cash deposits.

This account shall used by Class B companies. This account

shall include all cash on special deposit, other than in sinking

and other special funds provided for elsewhere, to pay

dividends, interest, and other debts, when such payments are due

one year or less from the date of deposit; the amount of cash

deposited to insure the performance of contracts to be performed

within one year from the date of the deposit; and other cash

deposits of a special nature not provided for elsewhere. This

account shall include the amount of cash deposited with trustees

to be held until mortgaged property sold, destroyed, or

otherwise disposed of is replaced, and also cash realized from

the sale of the company's securities and deposited with trustees

to be held until invested in physical property of the company or

for disbursement when the purposes for which the securities were

sold are accomplished.

REA 1120.31 Petty cash fund.

This account shall used by Class B companies. This account

shall include funds in the custody of employees or agents for

making minor disbursements. The fund shall be operated on an

inprest basis. Expenditures shall be supported by receipts, and

reimbursements to the fund shall be for the exact amount of such

expenditures and shall be charged to the various accounts to

which the expenditures are allocable. At all times, the total

of the cash on hand and the unreimbursed expenditures shall

equal the amount of the fund.

REA 1120.32 Change fund.

This account shall used by Class B companies. This account

shall include funds in the custody of employees or agents for

making change. Records shall be kept of the amount held by each

person. Disbursements shall not be made from the fund.
55

ù32.1130 Cash.

(a) This account shall include the amount of current funds

available for use on demand in the hands of financial officers

and agents, deposited in banks or other financial institutions

and also funds in transit for which agents have received credit.

(b) Working cash advances shall be included in Account 1150,

Working Cash Advances.

REA 1130.1 Cash - general fund.

This account shall include all unrestricted funds derived from

revenues and other sources which are on deposit in banks or other

financial institutions and available on demand. It shall also

include funds in transit to the depository for which customers and

agents have received credit on their accounts. Separate subaccounts

should be maintained for each bank account in which general fund cash

is deposited.

REA 1130.2 Cash - construction fund trustee.

This account shall include all loan funds received from REA,

the Rural Telephone Bank, the Federal Financing Bank, the Bank

for Cooperatives, the Rural Telephone Finance Cooperative, and

all non-loan funds supplied by the borrower under the terms of

the loan contract or otherwise required by REA. The offsetting

credit for funds received from REA shall be to Account 4210.20,

REA Notes - Unadvanced, Dr.; funds received from the Rural

Telephone Bank, to Account 4210.21, Telephone Bank Notes -

Unadvanced, Dr.; funds received from the Federal Financing Bank,

to Account 4210.22, Federal Financing Bank Notes - Unadvanced,

Dr; funds received from the Bank for Cooperatives, to

Account 4210.23, Bank for Cooperatives Notes - Unadvanced, Dr.;

and funds received from the Rural Telephone Finance Cooperative,

to Account 4210.24, Rural Telephone Finance Cooperative Notes -

Unadvanced, Dr.

REA 1130.3 Cash - transfer of funds.

This account shall include all transfers of funds from one

bank account to another. This account shall be charged with the

amount of a check drawn for the transfer, and credited when the

amount transferred is entered into the Cash Receipts Book.

ù32.1140 Special cash deposits.

(a) This account shall include the amount of cash on special

deposit, other than in sinking and other special funds provided

for elsewhere, to pay dividends, interest, and other debts, when

such payments are due one year or less from the date of deposit;

the amount of cash deposited to insure the performance of

contracts to be performed within one year from date of the

deposit; and other cash deposits of a special nature not provided

for elsewhere. This account shall include the amount of cash

deposited with trustees to be held until mortgaged property sold,

destroyed, or otherwise disposed of is replaced, and also cash

realized from the sale of the company's securities and deposited

with trustees to be held until invested in physical property of

the company or for disbursement when the purpose for which the

securities were sold are accomplished.

(b) Cash on deposit in special accounts where the funds are

available for the current requirements of the company shall be

included in Account 1130, Cash.

(c) Cash on special deposit to be held for more than one year

from the date of deposit shall be included in Account 1410, Other

Noncurrent Assets.

ù32.1150 Working cash advances.

This account shall include the amount of cash advances to

officers, agents, employees, and others as petty cash or working

funds from which expenditures are to be made and accounted for.

REA 1150.1 Petty cash fund.

This account shall include funds in the custody of employees

or agents for making minor disbursements. The fund shall be

operated on an inprest basis. Expenditures shall be supported

by receipts, and reimbursements to the fund shall be for the

exact amount of such expenditures and shall be charged to the

various accounts to which the expenditures are allocable. At

all times, the total of the cash on hand and the unreimbursed

expenditures shall equal the amount of the fund.

REA 1150.2 Change fund.

This account shall include funds in the custody of employees

or agents for making change. Records shall be kept of the

amount held by each person. Disbursements shall not be made

from the fund.

ù32.1160 Temporary investments.

(a) This account shall include the cost of current securities

acquired for the purpose of temporarily investing cash, such as

time drafts receivable and time loans, bankers' acceptances,

United States Treasury certificates, marketable securities, and

other similar investments of a temporary character.

(b) Accumulated changes in the net unrealized losses of

current marketable equity securities shall be included in the

determination of net income in the period in which they occur in

Account 7360, Other Nonoperating Income.
(c) Subsidiary record categories shall be maintained in order

that the entity may separately report the amounts contained

herein that relate to affiliates and nonaffiliates. Such

subsidiary record categories shall be reported as required by

Part 43 of this Commission's Rules and Regulations.

ù32.1180 Telecommunications accounts receivable.

(a) This account shall include all amounts due from customers

for services rendered or billed and from agents and collectors

authorized to make collections from customers. This account

shall also include all amounts due from customers or agents for

products sold. This account shall be kept in such manner as will

enable the company to make the following analysis:

(i) Amounts due from customers who are receiving telecommunications service.

(ii) Amounts due from customers who are not receiving service

and whose accounts are in process of collection.

(b) Collections in excess of amounts charged to this account

may be credited to and carried in this account until applied

against charges for services rendered or until refunded.

(c) Subsidiary record categories shall be maintained in order

that the entity may separately report the amounts contained

herein that relate to affiliates and nonaffiliates. Such

subsidiary record categories shall be reported as required by

Part 43 of this Commission's Rules and Regulations.

ù32.1181 Accounts receivable allowance - telecommunications.

(a) This account shall be credited with amounts charged to

Account 5301, Uncollectible Revenue - Telecommunications, to

provide for uncollectible amounts included in Account 1180,

Telecommunications Accounts Receivable. There shall also be

credited to this account amounts collected which previously had

been written off through charges to this account and credits to

Account 1180. There shall be charged to this account any amounts

covered thereby which have been found to be impracticable of

collection.

(b) If no such allowance is maintained, uncollectible amounts

shall be charged directly to Account 5301, Uncollectible

Revenue - Telecommunications.

(c) Subsidiary records categories shall be maintained in

order that the entity may separately report the amounts contained

herein that relate to affiliates and nonaffiliates. Such

subsidiary record categories shall be reported as required by

Part 43 of this Commission's Rules and Regulations.
ù32.1190 Other accounts receivable.

(a) This account shall include all amounts currently due, and

not provided for in other accounts, such as those for traffic

settlements, divisions of revenue, material and supplies, matured

rents, and interest receivable under monthly settlements on

short-term loans, advances, and open accounts.

(b) Subsidiary record categories shall be maintained in order

that the entity may separately report the amounts contained

herein, that relate to affiliates and nonaffiliates. Such

subsidiary record categories shall be reported as required by

Part 43 of this Commission's Rules and Regulations.

(c) Amounts included in this account pertaining to affiliates

shall not include amounts receivable from sales of telecommunications service provided at tariffed rates. Such amounts shall be

included in Account 1180, Telecommunications Accounts Receivable.

(d) If any items included in this account are not to be paid

currently they shall be transferred to Account 1410, Other

Noncurrent Assets, or 1401, Investments in Affiliated Companies,

as appropriate.

ù32.1191 Accounts receivable allowance - other.

(a) This account shall be credited with amounts charged to

Account 5302, Uncollectible Revenue - Other, to provide for

uncollectible amounts included in Account 1190, Other Accounts

Receivable. There shall also be credited to this account amounts

collected which previously had been written off through charges

to this account and credits to Account 1190. There shall be

charged to this account any amounts covered thereby which have

been found to be impracticable of collection.

(b) If no such allowance is maintained uncollectible amounts

shall be charged directly to Account 5302, Uncollectible

Revenue - Other.

(c) Subsidiary record categories shall be maintained in order

that the entity may separately report the amounts contained

herein that relate to affiliates and nonaffiliates. Such

subsidiary record categories shall be reported as required by

Part 43 of this Commission's Rules and Regulations.

ù32.1200 Notes receivable.

(a) This account shall include the cost of demand or time

notes, bills and drafts receivable, or other similar evidences

(except interest coupons) of money receivable on demand or within

a time not exceeding one year from date of issue.

(b) Subsidiary record categories shall be maintained in order

that the entity may separately report the amounts contained
herein that relate to affiliates and nonaffiliates. Such

subsidiary record categories shall be reported as required by

Part 43 of this Commission's Rules and Regulations.

ù32.1201 Notes receivable allowance.

(a) This account shall be credited with amounts charged to

Account 6790, Provision for Uncollectible Notes Receivable, to

provide for uncollectible amounts included in Account 1200, Notes

Receivable. There shall also be credited to this account amounts

collected which previously had been written off through charges

to this account and credit to Account 1200. There shall be

charged to this account any amounts covered thereby which have

been found to be impracticable of collection.

(b) If no such allowance is maintained, uncollectible amounts

shall be charged directly to Account 6790, Provision for

Uncollectible Notes Receivable.

(c) Subsidiary record categories shall be maintained in order

that the entity may separately report the amounts contained

herein that relate to affiliates and nonaffiliates. Such

subsidiary record categories shall be reported as required by

Part 43 of this Commission's Rules and Regulations.

ù32.1210 Interest and dividends receivable.

(a) This account shall include the amount of interest accrued

to the date of the balance sheet on bonds, notes, and other

commercial paper owned, on loans made, and the amount of

dividends receivable on stocks owned.

(b) This account shall not include dividends or other returns

on securities issued or assumed by the company and held by or for

it, whether pledged as collateral, or held in its treasury, in

special deposits, or in sinking and other funds.

(c) Interest receivable under monthly settlements on shortterm loans, advances, and open accounts, shall be included in

Account 1180, Telecommunications Accounts Receivable, or

Account 1190, Other Accounts Receivable, as appropriate

(d) Dividends received and receivable from affiliated

companies accounted for on the equity method shall be included in

Account 1401, Investments in Affiliated Companies, as a reduction

of the carrying value of the investment.

ù32.1220 Inventories.

(a) This account shall include the cost of materials and

supplies held in stock and inventories of goods held for resale

or lease. The investment in inventories shall be maintained in

the following subaccounts:
1220.1 Material and supplies

1220.2 Property held for sale or lease

(b) These subaccounts shall not include items which are

related to a nonregulated activity unless that activity involved

joint or common use of assets and resources in the provision of

regulated and nonregulated products and services.

(c) 1220.1, Material and Supplies. This subaccount shall

include cost of material and supplies held in stock including

plant supplies, motor vehicles supplies, tools, fuel, other

supplies and material and articles of the company in process of

manufacture for supply stock. (Note also ù32.2000(c)(2)(iii) of

this subpart.)

(d) Transportation charges and sales and use taxes, so far as

practicable, shall be included as a part of the cost of the

particular material to which they relate. Transportation and

sales and use taxes which are not included as part of the cost of

particular material shall be equitably apportioned among the

detail accounts to which material is charged.

(e) So far as practicable, cash and other discount on

material shall be deducted in determining cost of the particular

material to which they relate or credited to the account to which

the material is charged.

When such deduction is not practicable, discounts shall be

equitably apportioned among the detail accounts to which material

is charged.

(f) Material recovered in connection with construction,

maintenance or retirement of property shall be charged to this

account as follows:

(1) Reusable items that, when installed or in service, were

retirement units shall be included in this account at the

original cost, estimated if not known. (Note also ù32.2000(d)(3)

of this subpart.)

(2) Reusable minor items that, when installed or in service,

were not retirements units shall be included in this account at

current prices new.

(3) The cost of repairing reusable material shall be charged

to the appropriate account in the Plant Specific Operations

Expense account.

(4) Scrap and nonusable material included in this account

shall be carried at the estimated amount which will be received

therefor. The difference between the amounts realized for scrap

and nonusable material sold and the amounts at which it is

carried in this account, so far as practicable, shall be adjusted
in the accounts credited when the material was taken up in this

account.

(g) Interest paid on material bills, the payments of which

are delayed, shall be charged to Account 7540, Other Interest

Deductions.

(h) Inventories of material and supplies shall be taken

during each calendar year and the adjustments to this account

shall be charged or credited to Account 6512, Provisioning

Expense.

(i) 1220.2, Property Held for Sale or Lease. This subaccount

shall include the cost of all items purchased for resale or

lease. The cost shall include applicable transportation charges,

sales and use taxes, and cash and other purchase discounts.

Inventory shortage and overage shall be charged and credited,

respectively, to Account 5820, Nonregulated Operating Revenue.

REA 1220.3 Exempt materials - clearing.

(a) This account shall include the cost of materials and

supplies designated as exempt material on the carrier's "Exempt

Material List". Charges to this account shall be cleared

monthly to the primary plant and maintenance accounts in

accordance with percentages developed by the individual

carriers.

(b) When there is a substantial amount of exempt material on

hand at the end of the year, substantial enough to distort net

income or margins, a physical inventory may be taken. The cost

of the inventory on hand shall be debited to this account and

credited to the appropriate primary plant and maintenance

accounts on a pro-rata basis related to the original charges to

these accounts. This entry shall be reversed at the first of

the year.

ù32.1280 Prepayments.

This account shall be used by Class B companies to record

assets of the type required of Class A Companies in Accounts 1290

through 1330.

REA 1280.1 Prepaid rents.

This account shall used by Class B companies. This account

shall include the amount of rents paid in advance of the period

in which it is chargeable to income, except amounts chargeable

to telecommunications plant under construction and minor amounts

which may be charged directly to the final accounts. As the

term expires for which the rents are paid, this account shall be

credited monthly and the appropriate account charged.
REA 1280.2 Prepaid taxes.

This account shall used by Class B companies. This account

shall include the balance of all taxes paid in advance of the

period in which they are chargeable to income, except amounts

chargeable to telecommunications plant under construction and

minor amounts which may be charged directly to the final

accounts. As the term expires for which the taxes are paid,

this account shall be credited monthly and the appropriate

account charged.

REA 1280.3 Prepaid insurance.

This account shall used by Class B companies. This account

shall include the amount of insurance premiums paid in advance

of the period in which they are chargeable to income, except

premiums chargeable to telecommunications plant under

construction and minor amounts which may be charged directly to

the final accounts. As the term expires for which the premiums

are paid, this account shall be credited monthly and the

appropriate account charged.

REA 1280.4 Prepaid directory expenses.

This account shall used by Class B companies. This account

shall include the cost of preparing, printing, binding, and

delivering directories and the cost of soliciting advertisements

for directories, except minor amounts which may be charged

directly to Account 6620, Services. Amounts in this account,

shall be cleared to Account 6620 by monthly charges representing

that portion of the expenses applicable to each month.

REA 1280.5 Other prepayments.

This account shall used by Class B companies. This account

shall include prepayments, other than those includable in

Accounts 1280.1 through 1280.4 except minor amounts which may be

charged directly to the final accounts. As the term expires for

which the payments apply, this account shall be credited monthly

and the appropriate account charged.

ù32.1290 Prepaid rents.

This account shall include the amounts of rents paid in

advance of the period in which they are chargeable to income,

except amounts chargeable to telecommunications plants under

construction and minor amounts which may be charged directly to

the final accounts. As the term expires for which the rents are

paid, this account shall be credited monthly and the appropriate

account charged.
ù32.1300 Prepaid taxes.

This account shall include the balance of all taxes, other

than amounts chargeable to telecommunication plant under

construction and minor amounts which may be charged to the final

accounts, paid in advance and which are chargeable to income

within one year. As the term expires for which the taxes are

paid, this account shall be credited monthly and the appropriate

account charged.

ù32.1310 Prepaid insurance.

This account shall include the amount of insurance premiums

paid in advance of the period in which they are chargeable to

income, except premiums chargeable to telecommunications plant

under construction and minor amount which may be charged directly

to the final accounts. As the term expires for which the

premiums are paid, this account shall be credited monthly and the

appropriate account charged.

ù32.1320 Prepaid directory expenses.

This account shall include the cost of preparing, printing,

binding, and delivering directories and the cost of soliciting

advertisements for directories, except minor amounts which may be

charged directly to Account 6622, Number Services. Amounts in

this account shall be cleared to Account 6622 by monthly charges

representing that portion of the expenses applicable to each

month.

ù32.1330 Other prepayments.

This account shall include prepayments, other than those

includable in Accounts 1290 through 1320, except minor amounts

which may be charged directly to the final accounts. As the term

expires for which the payments apply, this account shall be

credited monthly and the appropriate account charged.

ù32.1350 Other current assets.

This account shall include the amount of all current assets

which are not includable in Accounts 1120 through 1330.

REA 1350.1 Subscriptions to capital stock.

(a) This account shall include the balance due from

subscribers upon legally enforceable subscriptions to capital

stock.

(b) The purchase price of subscriptions shall be charged to

this account at the time the subscription is received. The par

value of the stock subscribed shall be credited to
Account 4540.11, Capital Stock Subscribed, and the difference

between the purchase price and the par value shall be credited

to Account 4520, Additional Paid-In Capital.

REA 1350.2 Subscriptions to memberships.

(a) This account shall include the balance due on

memberships subscribed. The face amount of memberships

subscribed shall be charged to this account at the time the

subscription is received. The offsetting credit shall be to

Account 4540.12, Memberships Subscribed but Unissued.

(b) A subscription ledger shall be maintained to record for

each subscriber, the amount subscribed, payments made, and the

balance due. The balance in this account shall be reconciled

monthly with the subscription ledger.

REA 1350.3 Subscriptions to members' equity certificates.

(a) This account shall include the balance due on member's

equity certificates subscribed. The face amount of certificates

subscribed shall be charged to this account at the time the

subscription is received. The offsetting credit shall be to

Account 4540.13, Members' Equity Certificates Subscribed but

Unissued, or to Account 4270.1, Members' Redeemable Equity

Certificates Subscribed but Unissued.

(b) A subscription ledger shall be maintained to record for

each subscriber, the amount subscribed, payments made, and the

balance due. The balance in this account shall be reconciled

monthly with the subscription ledger. The subscription ledger

shall be maintained in such a manner as to separately identify

redeemable and nonredeemable certificates.

REA 1350.4 Other current assets.

This account shall include the amount of all current assets

which are not includable in Accounts 1120 through 1350.3.

ù32.1401 Investments in affiliated companies.

(a) This account shall include the acquisition cost of the

company's investment in equity or other securities issued or

assumed by affiliated companies, other than securities held in

special funds which shall be charged to Account 1408, Sinking

Funds. The carrying value of the investment (securities)

accounted for on the equity method shall be adjusted to recognize

the company's share of the earnings or losses and dividends

received or receivable of the affiliated company from the date of

acquisition. (Note also Account 1210, Interest and Dividends

Receivable, and Account 7310, Dividend Income.)

(b) Declines in value of investments accounted for under the

cost method shall be charged to Account 4540, Other Capital, if
temporary and as a current period loss if permanent. Detail

records shall be maintained to reflect unrealized losses for each

investment.

(c) A subsidiary record shall be kept identifying separately

common stocks, preferred stocks, advances to affiliates, and

long-term debt. Further, the company's records shall identify

the securities pledged as collateral for any of the company's

long-term debt or short-term loans or to secure performance of

contracts.

(d) This account shall also include advances represented by

book accounts only with respect to which it is carried or

intended that they shall be either settled by issuance of capital

stock or debt; or shall not be subject to current cost

settlement.

(e) Amounts due from affiliated companies which are subject

to current settlement shall be included in Account 1180,

Telecommunications Account Receivable; Account 1190, Other

Accounts Receivable; or Account 1200, Notes Receivable, as

appropriate.

(f) Subsidiary record categories shall be maintained in order

that the entity may separately report the amounts contained

herein that relate to the equity method and the cost method.

Such subsidiary record categories shall be reported as required

by Part 43 of this Commission's Rules and Regulations.

ù32.1402 Investments in nonaffiliated companies.

(a) This account shall include the acquisition cost of the

Company's investment in securities issued or assumed by

nonaffiliated companies and individuals, other than securities

held in special funds which shall be charged to Account 1408,

Sinking Funds, and also its investment advances to such parties

and special deposits of cash for more than one year from date of

deposit.

(b) Declines in value of investment shall be charged to

Account 4540, Other Capital, if temporary and as a current period

loss if permanent. Detail records shall be maintained to reflect

unrealized losses for each investment.

(c) This account shall also include advances represented by

book accounts only with respect to which it is agreed or intended

that they shall be either settled by issuance of capital stock or

debt; or shall not be subject to current cost settlement.

(d) A subsidiary record shall be kept identifying separately

common stocks, preferred stocks, long-term debt, investment

advances and special deposits of cash for more than one year from

the date of deposit. Further, the company's record shall

identify the securities pledged as collateral for any of the
company's long-term debt or short-term debt or short-term loans

or to secure performance of contracts.

(e) Amounts due from nonaffiliated companies which are

subject to current settlement shall be included in Account 1180,

Telecommunications Accounts Receivable; Account 1190, Other

Accounts Receivable; or Account 1200, Notes Receivable, as

appropriate.

REA 1402.1 Investments in nonaffiliated companies - Class B RTB

 stock.

(a) This account shall include the par value of the required

purchase of Class B Rural Telephone Bank stock and the par value

of the Class B Rural Telephone Bank stock received as a

patronage refund. This account shall be debited at the time the

refund is received and Account 1402.11, Investments in

Nonaffiliated Companies - Class B RTB Stock - Cr., credited.

(b) This account shall be credited and Account 1402.11

debited when the patronage refund is redeemed.

REA 1402.11 Investments in nonaffiliated companies - Class B

 RTB stock - cr.

(a) This account shall include the par value of Class B

Rural Telephone Bank stock received as a patronage refund. This

account shall be credited at the time the refund is received and

Account 1402.1, Investments in Nonaffiliated Companies - Class B

RTB Stock, debited.

(b) This account shall be debited and Account 1402.1

credited when the patronage refund is redeemed.

REA 1402.2 Investments in nonaffiliated companies - Class C RTB

 stock.

This account shall include the par value of the company's

investment in Class C Rural Telephone Bank stock. Cash

dividends on Class C stock shall be recorded in

Account 7310/7300.1, Dividend Income, when declared.

REA 1402.3 Other investments in nonaffiliated companies.

(a) This account shall include the acquisition cost of the

company's investment in securities issued by nonaffiliated

companies, other than securities held in special funds which

shall be charged to Account 1408, Sinking Funds, and also its

investment advances to such parties and special deposits of cash

for more than one year from the date of deposit.

(b) Declines in value of investments shall be charged to

Account 4540.41, Other Capital, if temporary and as a current
period loss if permanent. Detailed records shall be maintained

to reflect unrealized losses for each investment.

ù32.1406 Nonregulated investments.

(a) This account shall include the carrier's investment in

nonregulated activities accounted for in a separate set of books

as provided in ù32.23(b).

(b) This account shall be subdivided as follows:

1406.1 Permanent investment

1406.2 Receivable/payable

1406.3 Current net income or loss

ù32.1407 Unamortized debt issuance expense.

(a) This account shall include the total unamortized balance

of debt issuance expense for all classes of outstanding long-term

debt. Amounts included in this account shall be amortized

monthly and charged to Account 7530, Amortization of Debt

Issuance Expense.

(b) Debt Issuance expense includes all expenses in connection

with the issuance and sale of evidence of debt, such as fees for

drafting mortgages and trust deeds; fees and taxes for issuing or

recording evidences of debt; costs of engraving and printing

bonds, certificates of indebtedness, and other commercial paper;

fees paid trustees; specific costs of obtaining governmental

authority; fees for legal services; fees and commissions paid

underwriters, brokers, and salesmen; fees and expenses of listing

on exchanges, and other like costs.

(c) A subsidiary record shall be kept of each issue

outstanding.

ù32.1408 Sinking funds.

(a) This account shall include the amount of cash and other

assets which are held by trustees or by the company's treasurer

in a distinct fund, for the purpose of redeeming outstanding

obligations.

(b) Interest or other income arising from funds carried in

this account shall generally be charged to this account.

(c) A subsidiary record shall be kept for each sinking fund

which shall designate the obligation in support of which the fund

was created.

ù32.1410 Other noncurrent assets.

This account shall include the amount of all noncurrent assets

which are not includable in Accounts 1401 through 1408.
ù32.1438 Deferred maintenance and retirements.

(a) This account shall include such items as the unprovidedfor loss in service value of telecommunications plant for

extraordinary non-recurring retirement not considered in

depreciation and the cost of extensive replacements of plant

normally chargeable to the current period Plant Specific

Operations Expense accounts.

(b) Charges provided for in paragraph (a) above shall be

included in this account only upon direction or approval from

this Commission. However, the company's application to this

Commission for such approval shall give full particulars

concerning the property retired, the extensive replacements, the

amounts chargeable to operating expenses and the period over

which in its judgement the amount of such charges should be

distributed.

ù32.1439 Deferred charges.

(a) This account shall include all deferred charges not

provided for in Accounts 1438, Deferred Maintenance and

Retirements, and 1500, Other Jurisdictional Assets - Net. Such

charges include unaudited amounts and other debit balances in

suspense that cannot be cleared and disposed of until additional

information is received; the amount, pending determination of

loss, of funds on deposit with banks which have failed; revenue,

expense, and income items held in suspense; amounts paid for

options pending final disposition.

(b) This account shall include the cost of preliminary

surveys, plans, investigation, etc., made for construction

projects under contemplation. If the projects are carried out,

the preliminary costs shall be included in the cost of the plant

constructed. If the projects are abandoned, the preliminary

costs shall be charged to Account 7370, Special Charges.

(c) This account shall include also the cost of valuations,

inventories, and appraisals taken in connection with the

acquisition or sale of property. If the property is subsequently

acquired, the preliminary costs shall be accounted for as a part

of the cost of acquisition, or if it is sold, such costs shall be

deducted from the sale price in accounting for the property sold.

If purchases or sales are abandoned, the preliminary costs

included herein (including options paid, if any) shall be charged

to Account 7370.

ù32.1500 Other jurisdictional assets - net.

This account shall include the cumulative impact on assets of

jurisdictional ratemaking practices which vary from those of this

Commission. All entries recorded in this account shall be

recorded net of any applicable income tax effects and shall be
supported by subsidiary records where necessary as provided for

in ù32.13(e) of Subpart B.

ù32.2000 Instructions for telecommunications plant accounts.

(a) Purpose of telecommunications plant accounts.

(1) The telecommunications plant accounts (2001 to 2007

inclusive) are designed to show the investment in the company's

tangible and intangible telecommunications plant which ordinarily

has a service life of more than one year, including such plant

whether used by the company or others in providing

telecommunications service.

(2) The telecommunications plant accounts shall not include

the cost or other value of telecommunications plant contributed

to the company. Contributions in the form of money or its

equivalent toward the construction of telecommunications plant

shall be credited to the accounts charged with the cost of such

construction. Amounts of non-recurring reimbursements based on

the cost of plant or equipment furnished in rendering service to

a customer shall be credited to the accounts charged with the

cost of the plant or equipment. Amounts received for

construction which are ultimately to be repaid wholly or in part,

shall be credited to Account 4360, Other Deferred Credits; when

final determination has been made as to the amount to be returned

any unrefunded amounts shall be credited to the accounts charged

with the cost of such construction. Amounts received for the

construction of plant, the ownership of which rests with or will

revert to others, shall be credited to the accounts charged with

the cost of such construction. (Note also Account 7110, Income

from Custom Work.)

(3) When telecommunications plant ordinarily having a service

life of more than one year is installed for temporary use in

providing telecommunications service, it shall be accounted for

in the same manner as plant having a service life of more than

one year. This includes temporary installations of plant (such

as poles, wire and cable) installed to maintain service during

the progress of highway reconstruction or during interruptions

due to storms or other casualties, equipment used for training of

operators, equipment used to provide intercepting positions in

central offices to handle traffic for a short period following

extensive system changes and similar installations of property

used to provide telecommunications service.

(4) The cost of individual items of equipment, classifiable

to Accounts 2112, Motor Vehicles; 2113, Aircraft; 2114, Special

Purpose Vehicles; 2115, Garage Work Equipment; 2116, Other Work

Equipment; 2122, Furniture; 2123, Office Equipment; and 2124,

General Purpose Computers, costing $500 or less or having a life

less than one year shall be charged to the applicable Plant

Specific Operations Expense accounts. If the aggregate

investment in the items is relatively large at the time of
acquisition, such amounts shall be maintained in an applicable

materials and supplies account until the items are used.

Note: An 11/21/89 Order on Reconsideration (FCC 89-298)

provided relief from the requirement to keep Continuing Property

Record requirements in effect for items costing between $200 and

$500 that had been capitalized prior to the change in expense

limit.

(b) Telecommunications plant acquired.

(1) Property, plant and equipment acquired from an entity,

whether or not affiliated with the accounting company, shall be

accounted for at original costs, except that property, plant and

equipment acquired from a nonaffiliated entity shall be accounted

for at acquisition cost if the purchase price is less than

$100,000 for Class A companies or $25,000 for Class B companies.

(2) The accounting property plant and equipment to be

recorded at original cost shall be as follows:

(i) The amount of money paid (or current money value of any

consideration other than money exchanged) for the property

(together with preliminary expenses incurred in connection with

the acquisition) shall be charged to Account 1439, Deferred

Charges.

(ii) The original cost, estimated if not known, of

telecommunications plant, governmental franchises and other

similar rights acquired shall be charged to the applicable

telecommunications plant accounts, telecommunications plant under

construction, and property held for future telecommunications

use, as appropriate, and credited to Account 1439. When the

actual original cost cannot be determined and estimates are used,

the company shall be prepared to furnish the Commission with the

particulars of such estimates.

(iii) Depreciation and amortization of plant acquired shall

be credited to Account 3100, Accumulated Depreciation, or

Account 3200, Accumulated Depreciation - Held for Future

Telecommunications Use; 3400, Accumulated Amortization -

Tangible; 3410, Accumulated Amortization - Capitalized Leases;

3420, Accumulated Amortization - Leasehold Improvements; 3500,

Accumulated Amortization - Intangibles; and 3600, Accumulated

Amortization - Other, and debited to Account 1439.

(iv) Any amount remaining in Account 1439, applicable to the

plant acquired, shall upon completion of the entries provided in

paragraphs (b)(2)(i), (ii) and (iii) above, be debited or

credited, as applicable to Account 2007, Goodwill, or to

Account 2005, Telecommunications Plant Adjustment, as

appropriate.

(3) A memorandum record shall be kept showing the amount of

contributions in aid of construction applicable to the property

acquired as shown by the accounts of the previous owner.

(4) Companies shall submit to the Commission for

consideration and approval copies of journal entries recording

acquisition of telecommunications plant covered by this

instruction when the consideration paid is $1,000,000 or greater

(Class A companies) and $250,000 or greater (Class B companies).

The text of such entries shall give a complete description of the

property acquired and the basis upon which the amounts of the

entries have been determined.

(c) Cost of construction.

(1) Telecommunications plant represents an economic resource

which will be used to provide future services, the cost of which

will be allocated in a rational and systematic manner to the

future periods in which it provides benefits. In accounting for

construction costs, the utility shall charge to the telecommunications plant accounts, where applicable, all direct and indirect

costs.

(2) Direct and indirect costs shall include, but not be

limited to:

(i) "Labor" includes the wages and expenses of employees

directly engaged in or in direct charge of construction work. It

includes expenses directly related to an employee's wages, such

as worker's compensation insurance, payroll taxes, benefits and

other similar items of expense.

(ii) "Engineering" includes the portion of the wages and

expenses of engineers, draftsmen, inspectors, and their direct

supervision applicable to construction work. In includes

expenses directly related to an employee's wages, such as

worker's compensation insurance, payroll taxes, benefits and

other similar items of expense.

(iii) "Material and supplies" includes the purchase price of

material used at the point of free delivery plus the costs of

inspection, loading and transportation, and an equitable portion

of provisioning expense. In determining the cost of material

used, proper allowance shall be made for unused material, for

material recovered from temporary structures used in performing

the work involved, and for discounts allowed and realized in the

purchase of material. This item does not include construction

material that is stolen or rendered unusable due to vandalism.

Such material should be charged to the applicable plant specific

operations expense accounts.

(iv) "Transportation" includes the cost of transporting

employees, material and supplies, tools and other work equipment

to and from the physical construction location. It includes
amounts paid therefore to other companies or individuals and the

cost of using the company's own motor vehicles or other

transportation equipment.

(v) "Contract work" includes amounts paid for work performed

under contract or other agreement by other companies, firms or

individuals; engineering and supervision applicable to such work;

cost incident to the award of contracts; and the inspection of

such work. The cost of construction work performed by affiliated

companies and other details relating thereto shall be available

from the work in progress and supporting records.

(vi) "Protection" includes the cost of protecting the

company's property from fire or other casualties and the cost of

preventing damages to others or the property of others.

(vii) "Privileges, Permits and Rights of way" includes such

costs incurred in obtaining these privileges, permits, or rights

of way in connection with construction work, such as for use of

private property, streets or highways. The cost of such

privileges and permits shall be included in the cost of the work

for which the privileges or permits are obtained, except for

costs includable in Account 2111, Land, and Account 2690,

Intangibles.

(viii) "Taxes" includes taxes properly includable in

construction costs before the facilities are completed for

service, which taxes are assessed separately from taxes on

operating property or under conditions that permit separate

identification of the amount chargeable to construction.

(ix) "Special machine service" includes the cost of labor

expended, materials and supplies consumed and other expenses

incurred in the maintenance, operation and use of special and

other labor saving machines (other than transportation equipment)

such as trenching equipment, cable plows and pole setting trucks.

Also included are expenditures for rental, maintenance and

operation of such machines owned by others. When a construction

job requires the purchase of special machines, the cost thereof,

less the appraised or salvage value at the time of release from

the job, shall be included in the cost of construction.

(x) "Allowance for funds used during construction" includes

the cost of debt and equity funds used in the construction of

telecommunications property and shall be applied to

telecommunications property designed to be completed in over one

year as described in ù32.2004 of this subpart. Allowance for

funds used during construction shall be charged to the accounts

appropriate for the cost of the property acquired or constructed

as follows:

(A) Reasonable amounts of interest during the construction

period (before the property is received or is completed ready for

telecommunications service) on general funds expended for any
acquisition or construction of telecommunications plant shall be

computed on amounts in Account 2004, Telecommunications Plant

Under Construction - Long-Term, and shall be charged thereto.

Such amounts shall be credited to Account 7340, Allowance For

Funds Used During Construction.

(B) When funds, derived from the sales of bonds, notes and

other interest bearing debt, are specifically acquired and

separately held for use in the construction of telecommunications

plant, the total interest, discount or premium shall in included

in the cost of telecommunications plant and credited to

Account 7340, Allowance for Funds Used During Construction;

provided, however, that no interest charge for a period longer

than six months prior to the commencement of construction work

shall be made unless specifically authorized by the Commission.

(C) During the period of suspension of a construction

project, no allowance for funds used during construction for a

period longer than six months from the date of its suspension

shall be included in these accounts unless specifically

authorized by the Commission. No allowance for funds used during

construction shall be included in these accounts on expenditures

for construction projects which have been abandoned.

(D) No amount of allowance for funds used during construction

shall be accrued retroactively for any telecommunications plant

which was once included in Account 2003, Telecommunications Plant

Under Construction - Short-Term. No reversal of allowance for

funds used during construction is necessary for plant included in

Account 2004, but completed in less than one year.

(xi) "Insurance" includes premiums paid specifically for

protection against loss and damage in connection with the

construction of telecommunications plant due to fire or other

casualty, injury to or death of employees or others, damages to

property of others, defalcations of employees and agents, and the

nonperformance of contractual obligations of others.

(xii) "Construction services" include the cost of telephone,

electricity, power, construction quarters, office space and

equipment directly related to the construction project.

(xiii) "Indirect construction costs" shall include indirect

costs such as general engineering, supervision and support. Such

costs, in addition to direct supervision, shall include indirect

plant operations and engineering supervision up to, but not

including, supervision by executive officers whose pay and

expenses are chargeable to Account 6711, Executive. The records

supporting the entries for indirect construction cost shall be

kept so as to show the nature of the expenditures, the individual

jobs and accounts charged, and the bases of the distribution.

The amounts charged to each plant account for indirect costs

shall be readily determinable. The instructions contained herein
shall not be interpreted as permitting the addition to plant of

amounts to cover indirect costs based on arbitrary allocations.

(xiv) The cost of construction shall not include any amounts

classifiable as Corporate Operations Expense.

(d) Telecommunications plant retired.

(1) Telecommunications plant accounts shall at all times

disclose the original cost of all property in service. When any

item of property subject to plant retirement accounting is worn

out, lost, sold, destroyed, abandoned, surrendered upon lapse of

title, becomes permanently unserviceable, is withdrawn or for any

other reason is retired from service, the plant accounts

applicable to that item shall be credited with the original cost

of the plant retired whether replaced or not (except as provided

for minor items in paragraph (d)(2)(ii) of this section).

Normally, these retirements credits with respect to such plant as

entire buildings, entire central offices, all plant abandoned and

any large sections of plant withdrawn from service, shall be

entered in the accounts for the month in which use of the

property ceased. For any other plant withdrawn from service, the

retirement credits shall be entered no later than the next

succeeding month. Literal compliance with the provision for

timing of entries with respect to property amounting to less than

$50,000 retired under any one project is not required if an

unreasonable amount of recordkeeping and estimating of

quantities, original costs and salvage is necessary. The

retirement entry shall refer to the continuing property record,

or records supplemental thereto, from which the cost was obtained

(note also paragraph (d)(3) of this section). Every company

shall establish procedures which will ensure compliance with

these requirements.

(2) To avoid undue refinement, depreciable telecommunications

plant shall be accounted for as follows:

(i) Retirement units: This group includes major items of

property, a representative list of which shall be prescribed by

this Commission. In lieu of the retirement units prescribed with

respect to a particular account, a company may, after obtaining

specific approval by this Commission, establish and maintain its

own list of retirement units for a portion or all of the plant in

any such account. For items included on the retirement units

list, the original cost of any such items retired shall be

credited to the plant account and charged to Account 3100,

Accumulated Depreciation, whether or not replaced. The original

cost of retirement units installed in place of property retired

shall be charged to the applicable telecommunications plant

account.

(ii) Minor items: This group includes any part or element of

plant which is not designated as a retirement unit. The original

cost of a minor item of property when included in the specific or
average cost for a retirement unit or units requires no separate

credit to the telecommunications plant account when such a minor

item is retired. The cost of replacement shall be charged to the

account applicable for the cost of repairs of the property.

However, if the replacement effects a substantial betterment (the

primary aim of which is to make the property affected more

useful, of greater durability, of greater capacity or more

economical in operation), the excess cost of such a replacement,

over the estimated cost at the then current prices of replacement

without betterment of the minor items being retired, shall be

charged to the applicable telecommunications plant account.

(3) The cost of property to be retired shall be the amount at

which property is included in the telecommunications plant

accounts. However, when it is impracticable to determine the

cost of each item due to the relatively large number or small

cost of such items, the average cost of all the items covered by

an appropriate subdivision of the account shall be used in

determining the cost to be assigned to such items when retired.

The method used in determining average cost must give due regard

to the quantity, vintage, size and kind of items, the area in

which they were installed and their classification in other

respects. Average cost may be applied in retirement of such items

as poles, wire, cable, cable terminals, conduit and booths. Any

company may use average cost of property installed in a year or

band of years as approved by the Commission. It should be

understood, however, that the use of average costs shall not

relieve the company of the requirement for maintaining its

continuing property records to show, where practicable, dates of

installation and removal for purposes of mortality studies. (See

ù32.2000(f) of this subpart, Standard Practices for Establishing

and Maintaining Continuing Property Records.)

(4) The accounting for the retirement of property, plant and

equipment shall be as provided above except:

(i) Amounts included in Account 2005, Telecommunications

Plant Adjustment; Account 2680, Amortizable Tangible Assets;

Account 2681, Capital Leases; Account 2682, Leasehold

Improvements; Account 2690, Intangibles; and any amounts

associated with amortizable leaseholds, easements, and similar

rights in land included in Account 2111, Land, shall be debited,

as appropriate, to Accounts 3400, 3410, 3420, 3500, or 3600, and

credited to the applicable accounts.

(ii) Amounts in Account 2111, Land, and amounts for works of

art recorded in Account 2122, Furniture, shall be treated at

disposition as a gain or loss and shall be credited or debited to

Account 7150, Gains and Losses from Disposition of Land and

Artwork, as applicable. If land or artwork is retained by the

company and held for sale, the cost shall be charged to

Account 2006, Nonoperating Plant.
(5) When the telecommunications plant is sold together with

traffic associated therewith, the original cost of the property

shall be credited to the applicable plant accounts and the

estimated amounts carried with respect thereto in the accumulated

depreciation and amortization accounts shall be charged to such

accumulated accounts. The difference, if any between the net

amount of such debit and credit items and the consideration

received (less commissions and other expenses of making the sale)

for the property shall be included in Account 7350, Gains and

Losses from Disposition of Certain Property. The accounting for

depreciable telecommunications plant sold without the traffic

associated therewith shall be in accordance with the accounting

provided in ù32.3100(c) of this subpart.

(e) Basic property records.

(1) The basic property records are that portion of the local

property accounting system which preserves the following detailed

information:

(i) The identity, vintage, location and original cost of

units of property;

(ii) Original and ongoing transactional data (plant account

activity) in terms of such units; and

(iii) Any other specific financial and cost accounting

information not properly warranting separate disclosure as an

account or subaccount but which is needed to support regulatory,

cost, tax, management and other specific accounting information

needs and requirements.

(2) The basic property records must be (i) subject to

internal accounting controls, (ii) auditable, (iii) equal in the

aggregate to the total investment reflected in the financial

property control accounts as well as the total of the cost

allocations supporting the determination of cost-of-service at

any particular point in time, and (iv) maintained throughout the

life of the property.

(3) The basic property records shall consist of (i)

continuing property records and (ii) records supplemental thereto

which together reveal clearly, by accounting area, the detailed

and systematically summarized information necessary to meet fully

the requirements of paragraphs (e)(1) and (e)(2) of this section.

(4) Companies shall establish and maintain basic property

records for each class of property recorded in the several plant

accounts which comprise the balance sheet Account 2001,

Telecommunications Plant In Service; Account 2002, Property Held

for Future Telecommunications Use; and Account 2006, Nonoperating

Plant.
(5) The company shall notify the Commission of a plan for the

basic property record as follows:

(i) Not later than June 30 of the year following that in

which it becomes subject to this system of accounts, the company

shall file with the Commission two (2) copies of a complete plan

of the method to be used in the compilation of a basic property

record with respect to each class of property. The plan shall

include a list of proposed accounting areas accompanied by

description of the boundaries of each area as defined in

accordance with the requirements of ù32.2000(f)(1)(i) and (ii) of

this subpart. The plan shall also include a list of property

record units proposed for use under each regulated plant account.

These property record units shall be selected such that the

requirements of ù32.2000(f)(2)(i), (ii) and (iii) of this subpart

can be satisfied.

(ii) The company shall submit to the Commission one copy of

any major proposed changes in its basic property record plan at

least 30 days before the effective date of the proposed changes.

(6) The company shall prepare and maintain the basic property

record as follows:

(i) Not later than June 30 of the year following that in

which the company becomes subject to this system of accounts,

begin the preparation of a basic property record.

(ii) Compete within two years of the prescribed beginning

date, basic property records for all property as of the end of

the preceding calendar year.

(iii) Promptly process in the basic property records all

property changes affecting periods sub sequent to initial

establishment of the basic property record.

(7) The basic property record components (see paragraph (c)

above) shall be arranged in conformity with the regulated plant

accounts prescribed in this system of accounts as follows:

(i) The continuing property records shall be compiled on the

basis of original cost (or other book cost consistent with this

system of accounts). The continuing property records shall be

maintained as prescribed in ù32.2000(f)(2)(iii) of this subpart

in such manner as will meet the following basic objectives:

(A) Provide for the verification of property record units by

physical examination.

(B) Provide for accurate accounting for retirements.

(C) Provide data for use in connection with depreciation

studies.
(ii) The records supplemental to the continuing property

records shall disclose such service designations, usage

measurement criteria, apportionment factors, or other data as may

be prescribed by the Commission in this Part or other Parts of

its Rules and Regulations. Such data are subject to the same

general controls and standards for auditability and support as

are all other elements of the basic property records.

(f) Standard practices for establishing and maintaining

continuing property records.

(1) Accounting area.

(i) The continuing property record, as related to each

primary plant account, shall be established and maintained by

subaccounts for each accounting area. An accounting area is the

smallest territory of the company for which accounting records of

investment are maintained for all plant accounts within the area.

Areas already established for administrative, accounting,

valuation, or other purposes may be adopted for this purpose when

appropriate. In no case shall the boundaries of accounting areas

cross either State lines or boundaries prescribed by the

Commission.

(ii) In determining the limit of each area consideration

shall be given to the quantities of property, construction

conditions, operating districts, county and township lines,

taxing district boundaries, city limits, and other political or

geographical limits, in order that the area adopted may have

maximum adaptability, within the confines of practicability, for

both the company's purpose and those of Federal, State, and

municipal authorities.

(2) Property record units.

(i) In each of the established accounting areas, the "property

record units" which are to be maintained in the continuing

property record shall be set forth separately, classified by size

and type with the amount of original cost (or other appropriate

book cost) associated with such units. When a list of property

record units has been accepted by the Commission, they shall

become the units referred to in this statement of standard

practices. Such units shall apply to only the regulated portion

of this system of accounts.

(ii) When it is found necessary to revise this list because of

the addition of units used in providing new types of service, or

new units resulting from improvements in technology, or because

of the grouping or elimination of units which no longer merit

separate recognition as property record units, one copy of such

changes shall be submitted to the Commission. Upon appropriate

showing by the company, the Commission may specifically exempt

the company from these filing requirements.
(iii) The continuing property record shall reveal the

description, location, date of placement, the essential details

of construction, and the original cost (note also ù32.2000(f)(3)

of this subpart) of the property record units. The continuing

property record and other underlying records of construction

costs shall be so maintained that, upon retirement of one or more

retirement units or of minor items without replacement when not

included in the costs of retirement units, the actual cost or a

reasonably accurate estimate of the cost of the plant retired can

be determined.

(3) Methods of determining original cost of property record

units. The original cost of the property record units shall be

determined by analyses of the construction costs incurred as

shown by completion reports and other data, accumulated in the

respective construction work orders or authorization. Costs

shall be allocated to and associated with the property record

units to facilitate accounting for retirements. The original

cost of property record units shall be determined by unit

identification or averaging as described in paragraphs (f)(3)(i)

and (ii) of this section.

(i) Unit identification. Cost shall be identified and

maintained by specific location for property record units

contained within certain regulated plant accounts or account

groupings such as land, buildings, central office switching,

central office network management, motor vehicles, garage work

equipment, and furniture. In addition, units involved in any

unusual or special type of construction shall be recorded by

their specific location costs (note also paragraph

ù32.2000(f)(3)(ii)(B) of this subpart.

(ii) Averaging.

(A) Average costs may be developed for plant consisting of a

large number of similar units such as terminal equipment, poles,

wire, cable, cable terminals, conduit, furniture, and work

equipment. Units of similar size and type within each specified

accounting area and regulated plant account may be grouped. Each

such average cost shall be set forth in the continuing property

record of the units with which it is associated.

(B) The averaging of costs permitted under the provisions of

the foregoing paragraph is restricted to plant installed in a

particular vintage or band of years incurred within an accounting

area. This paragraph does not permit the inclusion of the cost

of units involved in any unusual or special type of construction.

The units involved in such unusual or special type of

construction shall be recorded at cost by location.

(4) Estimates. In cases where the actual original cost of

property cannot be ascertained, such as pricing an inventory for

the initial entry of a continuing property record or the pricing

of an acquisition for which the continuing property record has
not been maintained, the original cost may be estimated. Any

estimated original cost shall be consistent with the accounting

practices in effect at the time the property was constructed.

(5) Identification of property record units. There shall be

shown in the continuing property record or in record supplements

thereof, a complete description of the property records units in

such detail as to identify such units. The description shall

include the identification of the work order under which

constructed, the year of installation (unless not determinable

per ù32.2000(f)(4) of this subpart, specific location of the

property within each accounting area in such manner that it can

be readily spot-checked for proof of physical existence, the

accounting company's number or designation, and any other

description used in connection with the determination of the

original cost. Descriptions of units of similar size and type

shall follow prescribed groupings.

(6) Reinstalled units. When units to which average costs are

not applied, i.e., specific and fixed location units, are removed

or retired and subsequently reinstalled, the date when the unit

was first charged to the appropriate plant account shall, when

required for adequate service life studies and reasonably

accurate retirement accounting, be shown in addition to the date

of reinstallation.

(7) Age and service life of property. The continuing

property record shall disclose the age of existing property and

the supporting records shall disclose the service life of

property retired. Exceptions from this requirement for any

property record unit shall be submitted to the Commission for

approval.

(8) Reference to sources of information. There shall be

shown by appropriate reference the source of all entries. All

drawings, computations, and other detailed records which support

quantities and costs of estimated costs shall be retained as a

part of on in support of the continuing property record.

(9) Jointly owned property.

(i) With respect to jointly owned property, there shall be

shown in the continuing property record or records supplemental

thereto:

(A) The identity of all joint owners.

(B) The percentage owned by the accounting company.

(ii) When regulated plant is constructed under arrangements

for joint ownership, the amount received by the construction

company from the other joint owner or owners shall be credited as

a reduction of the gross cost of the plant in place.
(iii) When a sale of a part interest in regulated plant is

made, the fractional interest sold shall be treated as a

retirement and the amount received shall be treated as salvage.

The continuing property record or records supplemental thereto

shall be so maintained as to identify separately retirements of

this nature from physical retirements of jointly owned plant.

(iv) If jointly owned regulated property is substantial in

relation to the total of the same kind of regulated property

owned wholly by the company, such jointly owned regulated

property shall be appropriately segregated in the continuing

property record.

(g) Depreciation accounting.

(1) Computation of depreciation rates.

(i) Unless otherwise provided by the Commission, either

through prior approval or upon prescription by the Commission,

depreciation percentage rates shall be computed in conformity

with a group plan of accounting for depreciation and shall be

such that the loss in service value of the property, except for

losses excluded under the definition of depreciation, may be

distributed under the straight-line method during the service

life of the property.

(ii) In the event any composite percentage rate becomes no

longer applicable, revised composite percentage rates shall be

computed in accordance with subparagraph (i) of this section.

(iii) The company shall keep such records of property and

property retirements as will allow the determination of the

service life of property which has been retired, or facilitate

the determination of service life indications by mortality,

turnover, or other appropriate methods. Such records will also

allow the determination of the percentage of salvage value and

cost of removal for property retired from each class of

depreciable plant.

(2) Depreciation charges.

(i) A separate annual percentage rate for each depreciation

category of telecommunications plant shall be used in computing

depreciation charges.

(ii) Companies, upon receiving prior approval from this

Commission, or upon prescription by this Commission, shall apply

such depreciation rate, except where provisions of

paragraph (g)(2)(iv) of this paragraph apply, as will ratably

distribute on a straight line basis the difference between the

net book cost of a class or subclass of plant and its estimated

net salvage during the known or estimated remaining service life

of the plant.

(iii) Charges for currently accruing depreciation shall be

made monthly to the appropriate depreciation accounts, and

corresponding credits shall be made to the appropriate

depreciation reserve accounts. Current monthly charges shall

normally be computed by the application of one-twelfth of the

annual depreciation rate to the monthly average balance of the

associated category of plant. The average monthly balance shall

be computed using the balance as of the first and last days of

the current month.

(iv) In certain circumstances and upon prior approval of this

Commission, monthly charges may be determined in total or in part

through the use of other methods whereby selected plant balances

or portions thereof are ratably distributed over periods

prescribed by this Commission. Such circumstances could include

but not be limited to factors such as the existence of reserve

deficiencies or surpluses, types of plant that will be completely

retired in the near future, and changes in the accounting for

plant. Where alternative methods have been used in accordance

with this subparagraph, such amounts shall be applied separately

or in combination with rates determined in accordance with

paragraph (g)(2)(ii) of this section.

(3) Acquired depreciable plant. When acquired depreciable

plant carried in Account 1439, Deferred Charges, is distributed

to the appropriate plant accounts, adjusting entries shall be

made covering the depreciation charges applicable to such plant

for the period during which it was carried in Account 1439.

(4) Plant retired for nonrecurring factors not recognized in

depreciation rates.

(i) A retirement will be considered as nonrecurring

(extraordinary) only if the following criteria are met:

(A) The impending retirement was not adequately considered in

setting past depreciation rates.

(B) The charging of the retirement against the reserve will

unduly deplete that reserve.

(C) The retirement is unusual such that similar retirements

are not likely to recur in the future.

(5) Upon direction or approval from this Commission, the

company shall credit Account 3100, Accumulated Depreciation, and

charge Account 1438, Deferred Maintenance and Retirements, with

the unprovided-for loss in service value. Such amounts shall be

distributed from Account 1438 to Account 6561, Depreciation

Expense - Telecommunications Plant in Service, or Account 6562,

Depreciation Expense - Property Held for Future

Telecommunications Use, over such period as this Commission may

direct or approve.
(h) Amortization accounting.

(1) Unless otherwise provided by this Commission, either

through approval, or upon prescription by this Commission,

amortization shall be computed on the straight-line method, i.e.,

equal annual amounts shall be applied. The cost of each type of

asset shall be amortized on the basis of the estimated life of

that asset and shall not be written off in the accounting period

in which the asset is acquired. A reasonable estimate of the

useful life may be based on the upper or lower limits even though

a fixed existence is not determinable. However, the period of

amortization shall not exceed forty years.

(2) In the event any estimated useful life becomes no longer

applicable, a revised estimated useful life shall be determined

in accordance with paragraph (h)(1) of this section.

(3) Amortization charges shall be made monthly to the

appropriate amortization expense accounts and corresponding

credits shall be made to the appropriate amortization reserve

accounts. Monthly charges shall be computed by the application

of one-twelfth to the annual amortization amount.

(4) The company shall keep such records as will allow the

determination of the useful life of the asset.

(i) Accounting for software. The original cost of initial

operating system software for computers shall be classified to

the same account as the associated hardware whether acquired

separately or in conjunction with the associated hardware.

(j) Plant accounts to be maintained by Class A and Class B

telephone companies as indicated:

 Class A Class B

 Account Title Account Account

 REGULATED PLANT

Property, Plant and Equipment:

 Telecommunications plant in service 1 2001 1 2001

 Telecommunications plant in service -

 classified 2001.1 2001.1

 Telecommunications plant in service -

 unclassified 2001.2 2001.2

 Property held for future telecommuni-

 cations use 2002 2002

 Telecommunications plant under

 construction - short-term 2003 2003

 Telecommunications plant under

 construction - short-term -

 contract 2003.1 2003.1
 Class A Class B

 Account Title Account Account

 Telecommunications plant under

 construction - short-term -

 force account 2003.2 2003.2

 Telecommunications plant under

 construction - short-term -

 work orders 2003.3 2003.3

 Telecommunications plant under

 construction - long-term 2004 2004

 Telecommunications plant under

 construction - long-term -

 contract 2004.1 2004.1

 Telecommunications plant under

 construction - long-term -

 force account 2004.2 2004.2

 Telecommunications plant under

 construction - long-term -

 work orders 2004.3 2004.3

 Telecommunications plant adjustment 2005 2005

 Nonoperating plant 2006 2006

 Goodwill 2007 2007

TELECOMMUNICATIONS PLANT IN SERVICE (TPIS)

TPIS - General Support Assets:

 Land and support assets 2110

 Land 2111

 Motor vehicles 2112

 Aircraft 2113

 Special purpose vehicles 2114

 Garage work equipment 2115

 Other work equipment 2116

 Buildings 2121

 Furniture 2122

 Office equipment 2123

 General purpose computers 2124

TPIS - Central Office Assets:

 Central office - switching 2210

 Central office switching - analog 2210.11

 Central office switching - digital 2210.21

 Central office switching - electro-

 mechanical - step-by-step 2210.31

 Central office switching - electro-

 mechanical - crossbar 2210.32

 Central office switching - electro-

 mechanical - other 2210.33

 Analog electronic switching 2211

 Digital electronic switching 2212

 Electro-mechanical switching 2215

 Operator systems 2220 2220

 Central office - transmission 2230
 Class A Class B

 Account Title Account Account

 Central office transmission - radio

 systems - satellite and earth

 station facilities 2230.11

 Central office transmission - radio

 systems - other 2230.12

 Central office transmission - circuit

 equipment 2230.21

 Radio system 2231

 Circuit equipment 2232

TPIS - Information Origination/Termination Assets:

 Information origination/termination 2310

 Station apparatus 2311

 Customer premises wiring 2321

 Large private branch exchanges 2341

 Public telephone terminal equipment 2351

 Other terminal equipment 2362

TPIS - Cable and Wire Facilities Assets:

 Cable and wire facilities 2410

 Poles 2411

 Aerial cable 2421

 Underground cable 2422

 Buried cable 2423

 Submarine cable 2424

 Deep sea cable 2425

 Intrabuilding network cable 2426

 Aerial wire 2431

 Conduit systems 2441

TPIS - Amortizable Assets:

 Amortizable tangible assets 2680

 Capital leases 2681

 Leasehold improvements 2682

 Intangibles 2690 2690

 1 Balance sheet summary account only

ù32.2001 Telecommunications plant in service.

This account shall include the original cost of the investment

included in Accounts 2110 through 2690.

REA 2001.1 Telecommunications plant in service - classified.

This account shall include the original cost of the property

capitalized in Accounts 2110 through 2690.
REA 2001.2 Telecommunications plant in service - unclassified.

This account shall include the original cost of telecommunications property which has been completed and placed in service

but which has not been classified pending completion of final

inventories of construction, final cost summaries, etc. The

balance in this account is subject to depreciation charges.

ù32.2002 Property held for future telecommunications use.

(a) This account shall include the original cost of property

owned and held for no longer than two years under a definite plan

for use in telecommunications service. If at the end of two

years the property is not in service, the original cost of the

property shall be transferred to Account 2006, Nonoperating

Plant.

(b) Should a carrier desire to retain the property in this

account for a period longer than two years, it shall request

approval of this Commission. The request should include the

property item in question, demonstrate that the waiver is in the

public interest, and indicate, as precisely as possible, the

additional time required for the property to be held in this

account.

(c) Subsidiary records shall be maintained to show the

character of the amounts carried in this account.

ù32.2003 Telecommunications plant under construction - short-

 term.

(a) This account shall include the original cost of

construction projects designed to be completed in one year or

less. (Note also ù32.2000(c) of this subpart.)

(b) There may be charged directly to the appropriate plant

accounts the cost of any construction project which is estimated

to be completed and ready for service within two months from the

date on which the project was begun. There may also be charged

directly to the plant accounts the cost of any construction

project for which the gross additions to plant are estimated to

amount to less than $100,000.

(c) When the plant includable in this account is not ready

for service at the end of one year, the cost of construction of

the plant shall be transferred to Account 2004,

Telecommunications Plant Under Construction - Long-Term, without

further direction or approval of this Commission. If a

construction project has been suspended for six months or more,

the cost of the plant includable in this account shall be

transferred to Account 2004 without further direction or approval

of this Commission.
If a project is abandoned the cost included in this account

shall be charged to Account 7370, Special Charges.

(d) When any telecommunications plant, the cost of which has

been included in this account, is completed ready for service,

the cost thereto shall be credited to this account, and charged

to the appropriate telecommunications plant or other accounts.

REA 2003.1 Telecommunications plant under construction - short-

 term - contract.

This account shall include all costs incurred in the

construction of telecommunications plant performed under

contract and designed to be completed in one year or less.

Included among these costs are contractor payments, and charges

for engineering, supervision, taxes, insurance, transportation,

and other costs incurred in contract construction. This account

shall be maintained such that the various items of cost are

readily identifiable.

REA 2003.2 Telecommunications plant under construction - short-

 term - force account.

This account shall include all costs incurred in the

construction of telecommunications plant performed by the

borrowers' own employees and designed to be completed in one

year or less. Included among these costs are charges for

material, labor, engineering, supervision, taxes, insurance,

transportation, supply expense, and other costs incurred in the

construction. This account shall be maintained so that the

various items of cost are readily identified. Specific

subaccounts should be maintained to distinguish individual

projects.

REA 2003.3 Telecommunications plant under construction - short-

 term - work orders.

This account shall include all costs incurred in the

construction of telecommunications plant performed under a work

order system or a line extension contract and designed to be

completed in one year or less. This type of construction

generally includes service installations, subscriber extensions,

and minor plant improvements after the completion of the initial

system. Included among these costs are charges for labor,

materials and supplies, transportation, payroll taxes,

insurance, supervision and other costs incurred in the

construction. Subsidiary records shall be maintained to reflect

the cost of individual jobs. These records shall be reconciled

periodically with the general ledger control account. Specific

subaccounts should be maintained to accumulate costs incurred

under line extension contracts.
ù32.2004 Telecommunications plant under construction - long-

 term.

(a) This account shall include the original cost of

construction projects designed to be completed in more than one

year. (Note also ù32.2000 (c) of this subpart.)

(b) There may be charged directly to the plant accounts the

cost of any construction project for which the gross additions to

plant are estimated to the amount to less than $100,000.

(c) If a project is abandoned, the cost included in this

account shall be charged to Account 7370, Special Charges.

(d) When any telecommunications plant, the cost of which has

been included in this account, is completed and ready for

service, the cost thereof shall be credited to this account and

charged to the appropriate telecommunications plant or other

accounts.

REA 2004.1 Telecommunications plant under construction - long-

 term - contract.

This account shall include all costs incurred in the

construction of telecommunications plant performed under

contract and designed to be completed in more than one year.

Included among these costs are contractor payments, and charges

for engineering, supervision, taxes, insurance, transportation,

interest during construction, and other costs incurred in

contract construction. This account shall be maintained such

that the various items of cost are readily identified.

REA 2004.2 Telecommunications plant under construction - long-

 term - force account.

This account shall include all costs incurred in the

construction of telecommunications plant performed by the

borrowers' own employees and designed to be completed in more

than one year. Included among these costs are charges for

material, labor, engineering, supervision, taxes, insurance,

transportation, supply expense, interest during construction,

and other costs incurred in the construction. This account

shall be maintained such that the various items of cost are

readily identified. Specific subaccounts should be maintained

to distinguish individual projects.

REA 2004.3 Telecommunications plant under construction - long-

 term - work orders.

This account shall include all costs incurred in the

construction of telecommunications plant performed under a work

order system or a line extension contract and designed to be

completed in more than one year. Included among these costs are

charges for labor, materials and supplies, transportation,
payroll taxes, insurance, supervision, interest during

construction, and other costs incurred in the construction.

Subsidiary records shall be maintained to reflect the cost of

individual jobs. These records shall be reconciled periodically

with the general ledger control account. Specific subaccounts

should be maintained to accumulate costs incurred under line

extension contracts.

ù32.2005 Telecommunications plant adjustment.

(a) This account shall include amounts determined in

accordance with paragraph ù32.2000(b) of this subpart

representing the difference between:

(1) The fair market value of the telecommunications plant

acquired, plus preliminary expenses incurred in connection with

the acquisition; and

(2) The original cost of such plant, governmental franchises

and similar rights acquired, less the amounts of reserve

requirements for depreciation and amortization of the property

acquired. If the actual original cost is not known, the entries

in this account shall be based upon an estimate of such costs.

(b) The amounts recorded in this account with respect to each

property acquisition (except land and artworks) shall be disposed

of, written off, or provision shall be made for the amortization

thereof, as follows:

(1) Debit amounts may be charged to Account 7370, Special

Charges, in whole or in part, or amortized over a reasonable

period through charges to Account 7360, Other Nonoperating

Income, without further direction or approval by this Commission.

When specifically approved by this Commission, or when the

provisions of paragraph (b)(3) of this section apply, debit

amounts shall be amortized to Account 6565, Amortization

Expense - Other.

(2) Credit amounts shall be disposed of in such manner as

this Commission may approve or direct, except for credit amounts

referred to in paragraph (b)(3) of this section.

(3) Within one year from the date of inclusion in this

account of a debit or credit amount with respect to a current

acquisition, the company may dispose of the total amount from an

acquisition of telephone plant by a lump-sum charge or credit, as

appropriate, to Account 6565 without further approval of this

Commission, provided that such amount does not exceed $100,000

and that the plant was not acquired from an affiliated company.

ù32.2006 Nonoperating plant.

(a) This account shall include the company's investment in

regulated property which is not includable in the plant accounts
as operating telecommunications plant. It shall include the

company's investment in telecommunications property held for

sale. (Note also Account 1406, Nonregulated Investments.)

(b) Subsidiary records shall be maintained to show the

character of the amounts carried in this account.

ù32.2007 Goodwill.

(a) This account shall include any portion of the plant

purchase price that cannot be assigned to specifically

identifiable property acquired and such amount should be

identified as "goodwill". Such amounts included in this account

shall be amortized to Account 7360, Other Nonoperating Income, on

a straight line basis over the remaining life of the acquired

plant, not to exceed 40 years.

(b) the amounts included in this account shall be maintained

to show the nature of each amount.

ù32.2110 Land and support assets.

This account shall be used by Class B companies to record the

original cost of land and support assets of the type and

character required of Class A companies in Accounts 2111 through

2124.

ù32.2111 Land.

(a) This account shall include the original cost of all land

held in fee and of easements, and similar rights in land having a

term of more than one year used for purposes other than the

location of outside plant (See Accounts 2411 through 2441) or

externally mounted central office equipment (see Accounts 2211

and 2212). It shall also include special assessments upon land

for the construction of public improvements.

(b) When land, together with buildings thereon, is acquired,

the original cost shall be fairly apportioned between the land

and the buildings and accounted for accordingly. If the plan of

acquisition contemplates the removal of buildings, the total cost

of the land and buildings shall be accounted for as the cost of

the land, and the salvage value of the buildings when disposed of

shall be deducted from the cost of the land so determined.

(c) Annual or more frequent payments for use of land shall be

recorded in the rent subsidiary record category for Account 6121,

Land and Building Expense.

(d) When land is acquired for which there is not a definite

plan for its use in telecommunications service, its costs shall

be included in Account 2006, Nonoperating Plant.
(e) When land is acquired in excess of that required for

telecommunications purposes, the cost of such excess land shall

in included in Account 2006.

(f) Installments of assessments for public improvement,

including interest, if any, which are deferred without option to

the company shall be included in this account only as they become

due and payable. Interest on assessments which are not paid when

due shall be included in Account 7540, Other Interest Deductions.

(g) When land is purchased for immediate use in a

construction project, its cost shall be included in Account 2003,

Telecommunications Plant Under Construction - Short-Term, or

Account 2004, Telecommunications Plant Under Construction - LongTerm, as appropriate, until such time as the project involved is

completed and ready for service.

(h) The original cost of leaseholds, easements, rights of

way, and similar rights in land having a term of more than one

year and not includable in Account 2111 shall be included in the

accounts for outside plant or externally mounted central office

equipment in connection with which the rights were acquired.

ù32.2112 Motor vehicles.

This account shall include the original cost of motor vehicles

of the type which are designed and routinely licensed to operate

on public streets and highways.

ù32.2113 Aircraft.

This account shall include the original cost of aircraft and

any associated equipment and furnishings installed as an integral

part of the aircraft.

ù32.2114 Special purpose vehicles.

This account shall include the original cost of special

purpose vehicles.

ù32.2115 Garage work equipment.

This account shall include the original cost of tools and

equipment used to maintain items included in Accounts 2112

through 2116.

ù32.2116 Other work equipment.

This account shall include the original cost of power operated

equipment, general purpose tools and other items of work

equipment.
ù32.2121 Buildings.

(a) This account shall include the original cost of

buildings, and the cost of all permanent fixtures, machinery,

appurtenances and appliances installed as a part thereof. It

shall include costs incident to the construction or purchase of a

building and to securing possession and title.

(b) When land, together with the buildings thereon, is

acquired, the original cost shall be fairly apportioned between

the land and buildings, and the amount applicable to the

buildings shall be included in this account. The amount

applicable to the land shall be included in Account 2111, Land.

(c) This account shall not include the cost of any telephone

equipment or wiring apparatus for generating or controlling

electricity for operating the telephone system.

ù32.2122 Furniture.

This account shall include the original cost of furniture in

offices, storerooms, shops, and all other quarters. This account

shall also include the cost of objects which possess aesthetic

value, are of original or limited edition, and do not have a

determinable useful life. The cost of any furniture attached to

and constituting a part of a building shall be charged to

Account 2121, Buildings.

ù32.2123 Office equipment.

(a) This account shall include the original cost of office

equipment in offices, shops and all other quarters. The cost of

any equipment attached to and constituting a part of a building

shall be charged to Account 2121, Buildings.

(b) Office Equipment shall be maintained by the following

subaccounts:

2123.1 Office Support Equipment

2123.2 Company Communications Equipment

ù32.2124 General purpose computers.

(a) This account shall include the original cost of computers

and peripheral devices which are designed to perform general

administrative information processing activities.

(b) Administrative information processing includes but is not

limited to activities such as the preparation of financial,

statistical, or other business analytical reports; preparation or

payroll customer bills, and cash management reports, and other

records and reports not specifically designed for testing,

diagnosis, maintenance or control of the telecommunications

network facilities.
(c) This account shall include the original cost of initial

operating system software for computers classifiable to this

account whether acquired separately or in conjunction with

associated hardware.

(d) This account does not include the cost of computers,

their associated peripheral devices, and their operating system

software associated with switching, network signaling, network

operations or other specific telecommunications plant. Such

computers, peripherals, and software shall be classified to the

appropriate switching, network signaling, network expense, or

other plant account.

ù32.2210 Central office - switching.

This account shall be used by Class B companies to record the

original cost of switching assets of the type and character

required of Class A companies in Accounts 2211 through 2215.

REA 2210.11 Central office switching - analog*.

This account shall used by Class B companies. This account

shall include the original cost of stored program control analog

circuit-switching and associated equipment. This account shall

also include the original cost of remote analog electronic

circuit switches.

REA 2210.21 Central office switching - digital*.

This account shall used by Class B companies. This account

shall include the original cost of stored program control

digital switches and their associated equipment. Included in

this account is the original cost of digital switches which

utilize either dedicated or non-dedicated circuits. This

account shall also include the original cost of remote digital

electronic switches.

REA 2210.31 Central office switching - electro-mechanical -

 step-by-step*.

This account shall used by Class B companies. This account

shall include the original cost of step-by-step and associated

circuit-switching equipment.

REA 2210.32 Central office switching - electro-mechanical -

 crossbar*.

This account shall used by Class B companies. This account

shall include the original cost of crossbar and associated

circuit switching equipment. Also included in this account is

the original cost of electronic translator system equipment used

in switching.
REA 2210.33 Central office switching - electro-mechanical -

 other*.

This account shall used by Class B companies. This account

shall include the original cost of all other types of nonelectronic circuit-switching equipment such as panel systems and

their associated circuit-switching equipment.

* Switching plant excludes switchboards which perform

operator assistance functions and equipment which is an integral

part thereof. It does not exclude equipment used solely for the

recording of calling telephone numbers in connection with

customer dialed charged traffic, dial tandem switchboards, and

special service switchboards used in conjunction with private

line service; such equipment shall be classified to the

particular switch that it serves.

ù32.2211 Analog electronic switching.

(a) This account shall include the original cost of stored

program control analog circuit switching and associated

equipment. This account shall also include the cost of remote

analog electronic circuit switches.

(b) Switching plant excludes switchboards which perform an

operator assistance function and equipment which is an integral

part thereof. It does not exclude equipment used solely for the

recording of calling telephone numbers in connection with

customer dialed charged traffic, dial tandem switchboards and

special service switchboards used in conjunction with private

line service; such equipment shall be classified to the

particular switch that it serves.

ù32.2212 Digital electronic switching.

(a) This account shall include the original cost of stored

program control digital switches and their associated equipment.

Included in this account are digital switches which utilize

either dedicated or non-dedicated circuits. This account shall

also include the cost of remote digital electronic switches.

(b) Switching plant excludes switchboards which perform an

operator assistance function and equipment which is an integral

part thereof. It does not exclude equipment used solely for the

recording of calling telephone numbers in connection with

customer dialed charged traffic, dialed tandem switchboards and

special service switchboards used in conjunction with private

line service; such equipment shall be classified to the

particular switch that it serves.

ù32.2215 Electro-mechanical switching.

(a) This account shall include the original cost of nonelectronic circuit switching equipment. The investment in
electro-mechanical switching equipment shall be maintained in the

following subaccounts:

2215.1 Step-by-Step Switching

2215.2 Crossbar Switching

2215.3 Other Electro-Mechanical Switching

(b) 2215.1, Step-by-step Switching. This subaccount shall

include the original cost of step-by-step and associated circuit

switching equipment.

(c) 2215.2, Crossbar Switching. This subaccount shall

include the original cost of crossbar and associated circuit

switching equipment. Also included in this account is the cost

of electronic translator system equipment used in switching.

(d) 2215.3, Other Electro-Mechanical Switching. This

subaccount shall include the original cost of all other types of

non-electronic circuit switching equipment such as panel systems

and their associated circuit switching equipment.

(e) Switching plant excludes switchboards which perform an

operator assistance function and equipment which is an integral

part thereof. It does not exclude equipment used solely for the

recording of calling telephone numbers in connection with

customer dialed charged traffic, dial tandem switchboards and

special service switchboards used in conjunction with private

line service; such equipment shall be classified to the

particular switch that it serves.

ù32.2220 Operator systems.

(a) This account shall include the original cost of those

items of equipment used to assist subscribers in utilizing the

network and equipment used in the provision of directory

assistance, call intercept, and other operator assisted call

completion activities.

(b) This account does not include equipment used solely for

the recording of calling telephone numbers in connection with

customer dialed charged traffic, dial tandem switchboards and

special service switchboards used in conjunction with private

line service; such equipment shall be classified to the

particular switch that it serves.

ù32.2230 Central office - transmission.

This account shall be used by Class B companies to record the

original cost of radio systems and circuit equipment of the type

and character required of Class A companies in Accounts 2231 and

2232.
REA 2230.11 Central office transmission - radio systems -

 satellite and earth station facilities.

This account shall used by Class B companies. This account

shall include the original cost of an ownership interest in

satellites (including land-side spares), other spare parts,

materials, and supplies. It shall include launch insurance and

other satellite launch costs. This account shall also include

the original cost of earth stations and spare parts, materials,

and supplies therefor.

REA 2230.12 Central office transmission - radio systems -

 other.

This account shall used by Class B companies. This account

shall include the original cost of radio equipment used to

provide radio communication channels. Radio equipment is that

equipment which is used for the generation, amplification,

propagation, reception, modulation, and demodulation of radio

waves in free space over which communications channels can be

provided. This account shall also include the associated

carrier and auxiliary equipment and patch bay equipment which is

an integral part of the radio equipment. Such equipment may be

located in central office buildings, terminal rooms, or repeater

stations or may be mounted on towers, masts, or other supports.

REA 2230.21 Central office transmission - circuit equipment.

(a) This account shall used by Class B companies. This

account shall include the original cost of equipment which is

used to reduce the number of physical pairs otherwise required

to serve a given number of subscribers by utilizing carrier

systems, concentration stages or combinations of both. It shall

include equipment that provides for simultaneous use of a number

of interoffice channels on a single transmission path. This

account shall also include the original cost of equipment which

is used for the amplification, modulation, regeneration, circuit

patching, balancing or control of signals transmitted over

interoffice communications transmission channels. This account

shall include the original cost of equipment which utilizes the

message path to carry signaling information or which utilizes

separate channels between switching offices to transmit

signaling information independent of the subscribers'

communication paths or transmission channels. This account

shall also include the original cost of associated material used

in the construction of such plant. Circuit equipment may be

located in central offices, in manholes, on poles, in cabinets

or huts or at other locations.

(b) This account excludes carrier and auxiliary equipment and

patch bay which are recorded in Account 2230.12, Central Office

Transmission - Radio Systems - Other.
ù32.2231 Radio system.

(a) This account shall include the original cost of ownership

of radio transmitters and receivers. The investment in radio

systems shall be maintained in the following subaccounts:

2231.1 Satellite and Earth Station Facilities

2231.2 Other Radio Facilities

(b) 2231.1, Satellite and Earth Station Facilities. This

subaccount shall include the original cost of ownership interest

in satellites (including landside spares), other spare parts,

material and supplies. It shall include launch insurance and

other satellite launch costs. This subaccount shall also include

the original cost of earth stations and spare parts, material or

supplies therefor.

(c) 2231.2, Other Radio Facilities.

(1) This subaccount shall include the original cost of radio

equipment used to provide radio communication channels. Radio

equipment is that equipment which is used for the generation,

amplification, propagation, reception, modulation, and

demodulation of radio waves in free space over which

communication channels can be provided. This subaccount shall

also include the associated carrier and auxiliary equipment and

patch bay equipment which in an integral part of the radio

equipment. Such equipment may be located in central office

buildings, terminal rooms, or repeater stations or may be mounted

on towers, masts or other supports.

(2) This subaccount shall be maintained in order that the

company may separately report the amounts contained herein that

relate to cellular radio facilities, non-cellular radio

facilities, and terrestrial microwave radio facilities. Such

subsidiary record categories shall be reported as required by

Part 43 of this Commission's Rules and Regulations.

ù32.2232 Circuit equipment.

(a) This account shall include the original cost of equipment

which is used to reduce the number of physical pairs otherwise

required to serve a given number of subscribers by utilizing

carrier systems, concentration stages or combinations of both.

It shall include equipment that provides for simultaneous use of

a number of interoffice channels on a single transmission path.

This account shall also include equipment which is used for the

amplification, modulation, regeneration, circuit patching,

balancing or control of signals transmitted over interoffice

communications transmission channels. This account shall include

equipment which utilizes the message path to carry signaling

information or which utilizes separate channels between switching

offices to transmit signaling information independent of the

subscribers' communication paths or transmission channels. This
account shall also include the original cost of associated

material used in the construction of such plant. Circuit

equipment may be located in central offices, in manholes, on

poles, in cabinets or huts or at other company locations.

(b) This account excludes carrier and auxiliary equipment and

patch bays which are includable in Account 2231.2, Other Radio

Facilities. This account also excludes such equipment which is

an integral component of a major unit which is classifiable to

other accounts.

(c) Subsidiary record categories shall be maintained in order

that the company may separately report the amounts contained

herein that relate to digital and analog. Such subsidiary record

categories shall be reported as required by Part 43 of this

Commission's Rules and Regulations.

ù32.2310 Information origination/termination.

This account shall be used by Class B companies to record the

original cost of information origination/termination equipment of

the type and character required of Class A companies in

Accounts 2311 through 2362.

ù32.2311 Station apparatus.

(a) This account shall include the original cost of station

apparatus, including teletypewriter equipment, telephone and

miscellaneous equipment, small private branch exchanges and radio

equipment (excluding mobile), installed for customers' use.

Items included in this account shall remain herein until finally

disposed of or until used in such manner as to warrant inclusion

in other accounts.

(b) Each company shall prepare a list of station apparatus

which shall be used as its list of disposition units for this

account, the cost of which when finally disposed of shall be

credited to this account and charged to Account 3100, Accumulated

Depreciation.

(c) The cost of cross-connection boxes, distributing frames

or other distribution points which are installed to terminate

intrabuilding network cable shall be charged to Account 2426,

Intrabuilding Network Cable.

(d) Operator head sets and transmitter in central offices and

at private branch exchanges, and test sets such as those used by

wire chiefs, outside plant technicians, and others shall be

included in Account 2116, Other Work Equipment; Account 2221,

Operator Systems; or Account 2341, Large Private Branch

Exchanges, as appropriate.

(e) Station apparatus for company official use shall be

included in Account 2123, Office Equipment.
(f) An annual inventory shall be taken of all station

apparatus in stock that are included in this account. The number

of such station apparatus items as determined by this inventory,

together with number of all other station apparatus items

included in this account, shall be compared with the

corresponding number of station apparatus items as shown by the

respective control records. The original cost of any

unreconciled differences thereby disclosed shall be adjusted

through Account 3100, Accumulated Depreciation. Appropriate

verifications shall also be made at suitable intervals and

necessary adjustments between this account and Account 3100 shall

be made for all station apparatus included in this account.

(g) Items of station apparatus in stock for which no further

use in the ordinary conduct of the business is contemplated, but

which as a precautionary measure, are held for possible future

contingencies instead of being discarded shall be excluded from

this account and included in Account 1220, Inventories.

(h) Embedded CPE is that equipment or inventory which was

tariffed or otherwise subject to the jurisdictional separations

process as of January 1, 1983.

ù32.2321 Customer premises wiring.

(a) This account shall include all amounts transferred from

the former Account 232, Station Connections, inside wiring

subclass.

(b) Embedded customer premises wiring is that investment in

customer premises wiring equipment or inventory which was

capitalized prior to October 1, 1984.

ù32.2341 Large private branch exchanges.

(a) This account shall include the original cost, including

the cost of installation, of multiple manual private branch

exchanges and of dial system private branch exchanges of types

designed to accommodate 100 or more lines or which can normally

be expanded to 100 or more lines, installed for customers' use.

This account shall also include the original cost of other large

installations of station equipment (1) which do not constitute

stations, (2) which require special or individual treatment

because of their complexity, special design, or other distinctive

characteristics, and (3) for which individual or other

specialized cost records are appropriate. (Note also

Account 2311, Station Apparatus.)

(b) The cost of intrabuilding network cables including their

associated cross-connection boxes, terminals, distributing

frames, etc., is chargeable to Account 2426, Intrabuilding

Network Cable.
(c) The cost of outside plant, whether or not on private

property, used with intrabuilding network cable shall be charged

to the appropriate outside plant accounts.

(d) [Reserved]

(e) [Reserved]

(f) Private branch exchanges for company official use shall

be included in Account 2123, Office Equipment.

(g) Embedded CPE is that equipment or inventory which is

tariffed or otherwise subject to the jurisdictional separations

process as of January 1, 1983.

(h) Inventories of large private branch exchanges equipment

are included in Account 1220, Inventories.

ù32.2351 Public telephone terminal equipment.

(a) This account shall include the original cost of coinless,

coin-operated (including public and semi-public), credit card and

pay telephones installed for use by the public.

(b) This account shall also include the original cost of

operating spares that are required to provide a continuity of

service for public telephones. The operating spares shall not

exceed six months' supply in terms of turnover and be available

to installers from locations in reasonable proximity to the

location of the installed equipment.

(c) The original cost of installing public telephone

equipment shall not include the labor and minor materials costs

of installing the public telephone equipment or premises wiring.

These costs as well as the cost of replacing a public telephone

shall be charged to Account 6351, Public Telephone Terminal

Equipment Expense. The labor and minor materials costs of

removal of public telephones will also be charged to

Account 6351.

ù32.2362 Other terminal equipment.

(a) This account shall include the original cost of other

non-CPE terminal equipment not specifically provided for

elsewhere and items such as specialized communications equipment

provided to meet the needs of the disabled, over-voltage

protection equipment, multiplexing equipment to deliver multiple

channels to customers, etc.

(b) Each company shall prepare a list of other terminal

equipment which shall be used as its list of retirement units for

this account, the cost of which when finally disposed of shall be

credited to this account and charged to Account 3100, Accumulated

Depreciation.
ù32.2410 Cable and wire facilities.

This account shall be used by Class B companies to record the

original cost of cable and wire facilities of the type and

character required of Class A companies in Accounts 2411 through

2441.

ù32.2411 Poles.

This account shall include the original cost of poles,

crossarms, guys and other material used in the construction of

pole lines and shall include the cost of towers when not

associated with buildings. This account shall also include the

cost of clearing pole line routes and of tree trimming but shall

exclude the cost of maintaining previously cleared routes.

ù32.2421 Aerial cable.

(a) This account shall include the original cost of aerial

cable and of drop and block wires served by such cable or aerial

wire as well as the cost of other material used in construction

of such plant. Subsidiary record categories, as defined below,

are to be maintained for nonmetallic aerial cable and metallic

aerial cable.

(1) Nonmetallic cable. This subsidiary record category shall

include the original cost of optical fiber cable and other

associated material used in constructing a physical path for the

transmission of telecommunications signals.

(2) Metallic cable. This subsidiary record category shall

include the original cost of single or paired conductor cable,

wire and other associated material used in constructing a

physical path for the transmission of telecommunications signals.

(b) The cost of permits and privileges for the construction

of cable and wire facilities shall be chargeable with such

construction.

ù32.2422 Underground cable.

(a) This account shall include the original cost of

underground cable installed in conduit and of other material used

in the construction of such plant. Subsidiary record categories,

as defined below, are to be maintained for nonmetallic

underground cable and metallic underground cable.

(1) Nonmetallic cable. This subsidiary record category shall

include the original cost of optical fiber cable and other

associated material used in constructing a physical path for the

transmission of telecommunications signals.

(2) Metallic cable. This subsidiary record category shall

include the original cost of single or paired conductor cable,
wire and other associated material used in constructing a

physical path for the transmission of telecommunications signals.

(b) The cost of pumping water out of manholes and of cleaning

manholes and ducts in connection with construction work and the

cost of permits and privileges for the construction of cable and

wire facilities shall be included in the account chargeable with

such construction.

(c) The cost of drop and block wires served by underground

cable shall be included in Account 2423, Buried Cable.

(d) The cost of cables leading from the main distributing

frame or equivalent to central office equipment shall be included

in the appropriate switching, transmission or other operations

asset account.

ù32.2423 Buried Cable.

(a) This account shall include the original cost of buried

cable as well as the cost of other material used in the

construction of such plant. This account shall also include the

cost of trenching for and burying cable run in conduit not

classifiable to Account 2441, Conduit Systems. Subsidiary record

categories, as defined below, are to be maintained for

nonmetallic buried cable and metallic buried cable.

(1) Nonmetallic cable. This subsidiary record category shall

include the original cost of optical fiber cable and other

associated material used in constructing a physical path for the

transmission of telecommunications signals.

(2) Metallic cable. This subsidiary record category shall

include the original cost of single or paired conductor cable,

wire and other associated material used in constructing a

physical path for the transmission of telecommunications signals.

(b) The cost of pumping water out of manholes and of cleaning

manholes and ducts in connection with construction work and the

cost of permits and privileges for the construction of cable and

wire facilities shall be included in the account chargeable with

such construction.

ù32.2424 Submarine cable.

(a) This account shall include the original cost of submarine

cable and other material used in the construction of such plant.

Subsidiary record categories, as defined below, are to be

maintained for nonmetallic submarine cable and metallic submarine

cable.

(1) Nonmetallic cable. This subsidiary record category shall

include the original cost of optical fiber cable and other
associated material used in constructing a physical path for the

transmission of telecommunications signals.

(2) Metallic cable. This subsidiary record category shall

include the original cost of single or paired conductor cable,

wire and other associated material used in constructing a

physical path for the transmission of telecommunications signals.

(b) The cost of permits and privileges for the construction

of cable and wire facilities shall be included in the account

chargeable with such construction.

ù32.2425 Deep sea cable.

(a) This account includes the original cost of deep sea cable

and other material used in the construction of such plant.

Subsidiary record categories, as defined below, are to be

maintained for nonmetallic deep sea cable and metallic deep sea

cable.

(1) Nonmetallic cable. This subsidiary record category shall

include the original cost of optical fiber cable and other

associated material used in constructing a physical path for the

transmission of telecommunications signals.

(2) Metallic cable. This subsidiary record category shall

include the original cost of single or paired conductor cable,

wire and other associated material used in constructing a

physical path for the transmission of telecommunications signals.

(b) The cost of permits and privileges for the construction

of cable and wire facilities shall be included in the account

chargeable with such construction.

ù32.2426 Intrabuilding network cable.

(a) This account shall include the original cost of cables

and wires located on the company's side of the demarcation point

or standard network interface inside subscribers' buildings or

between buildings on one customer's same premises. Intrabuilding

network cables are used to distribute network access facilities

to equipment rooms, cross-connection or other distribution points

at which connection is made with customer premises wiring.

Subsidiary record categories, as defined below, are to be

maintained for nonmetallic intrabuilding network cable and

metallic intrabuilding.

(1) Nonmetallic cable. This subsidiary record category shall

include the original cost of optical fiber cable and other

associated material used in constructing a physical path for the

transmission of telecommunications signals.

(2) Metallic cable. This subsidiary record category shall

include the original cost of single or paired conductor cable,
wire and other associated material used in constructing a

physical path for the transmission of telecommunications signals.

(b) The cost of pumping water out of manholes and of cleaning

manholes and ducts in connection with construction work and the

cost of permits and privileges for the construction of cable and

wire facilities shall be included in the account chargeable with

such construction.

(c) Intrabuilding network cable does not include the cost of

cables or wires which are classifiable as network terminating

wire, nor the cables or wires from the demarcation point or

standard network interface to subscribers' stations.

ù32.2431 Aerial wire.

(a) This account shall include the original cost of bare line

wire and other material used in the construction of such plant.

(b) The cost of permits and privileges for the construction

of cable and wire facilities shall be chargeable with such

construction.

(c) The cost of drop and block wires served by aerial wire

shall be included in Account 2421, Aerial Cable.

ù32.2441 Conduit systems.

(a) This account shall include the original cost of conduit,

whether underground, in tunnels or on bridges, which is reusable

in place. It shall also include the cost of opening trenches and

of any repaving necessary in the construction of conduit plant.

(b) The cost of pumping water out of manholes and of cleaning

manholes and ducts in connection with construction work and the

cost of permits and privileges for the construction of cable and

wire facilities shall be chargeable with such construction.

(c) The cost of protective covering for buried cable shall be

charged to Account 2423, Buried Cable, as appropriate, unless

such protective covering is reusable in place. The amounts thus

charged shall be included in the nonmetallic buried cable or

metallic buried cable subsidiary record category, as appropriate.

(d) The cost of pipes or other protective covering for

underground drop and block wires shall in included in

Account 2421, Aerial Cable, or Account 2423, Buried Cable, as

appropriate. The amounts thus charged shall be included in the

nonmetallic or metallic subsidiary record category, as

appropriate. The cost of pipes or other protective covering for

inside wires shall be included in Account 6321, Customer Premises

Wiring Expense.
ù32.2680 Amortizable tangible assets.

This account shall be used by Class B carriers to record

amounts for property acquired under capital leases and the

original cost of leasehold improvements of the type of character

required of Class A companies in Accounts 2681 and 2682.

ù32.2681 Capital leases.

(a) This account shall include all property acquired under a

capital lease. A lease qualifies as a capital lease when one or

more of the following criteria is met:

(1) By the end of the lease term, ownership of the leased

property is transferred to the lessee.

(2) The lease contains a bargain purchase option.

(3) The lease term is substantially (75% or more) equal to

the estimated useful life of the leased property. However, if

the beginning of the lease term falls within the last 25% of the

total estimated economic life of the leased property, including

earlier years of use, this criterion shall not be used for

purposes of classifying the lease.

(4) At the inception of the lease, the present value of the

minimum lease payments, excluding that portion of the payments

representing executory costs to be paid by the lessor, including

any profit thereon, equals or exceeds 90% or more of the fair

value of the leased property. However, if the beginning of the

lease term falls within the last 25% of the total estimated

economic life of the leased property, including earlier years of

use, this criterion shall not be used for purposes of classifying

the lease.

(b) All other leases are operating leases.

(c) The amounts recorded in this account at the inception of

a capital lease shall be equal to the original cost, if known, or

to the present value not to exceed fair 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 to be paid by the lessor, together with any

profit thereon.

ù32.2682 Leasehold improvements.

(a) This account shall include the original cost of leasehold

improvements made to telecommunications plant held under a

capital or operating lease, which are subject to amortization

treatment. This account shall also include those improvements

which will revert to the lessor.
(b) Improvements to leased telecommunications plant which are

of a relatively minor cost or short life or for which the period

of the lease is one year or less shall be charged to the account

chargeable with the cost of repairs to such plant.

(c) Amounts contained in this account shall be amortized over

the term of the related lease.

ù32.2690 Intangibles.

(a) This account shall include the cost of organizing and

incorporating the company, the original cost of government

franchises, the original cost of patent rights, and other

intangible property having a life of more than one year and used

in connection with the company's telecommunications operations.

(b) Subsidiary records for this account shall include a

description of each class of intangible property.

(c) The cost of other intangible assets having a life of one

year or less shall be charged directly to Account 6564,

Amortization Expense - Intangible. Such intangibles acquired at

small cost may also be charged to Account 6564, irrespective of

their term of life.

(d) This account shall not include any discounts on

securities issued, nor shall it include costs incident to

negotiating loans, selling bonds or other evidences of debt, or

expenses in connection with the issuance, sale or resale of

capital stock.

(e) When charges are made to this account for expenses

incurred in mergers, consolidations, or reorganizations, amounts

previously included in this account on the books of the various

companies concerned shall not be carried over.

(f) Franchise taxes payable annually or more frequently shall

be charged to Account 7240, Operating Other Taxes.

(g) This account shall not include the cost of plant,

material and supplies, or equipment furnished to municipalities

or other governmental authorities when given other than as

initial consideration for franchises or similar rights. (Note

also Account 6728, Other General and Administrative.)

(h) This account shall not include the original cost of

easements, rights of way, and similar rights in land having a

term of more than one year. Such amounts shall be recorded in

Account 2111, Land, or in the appropriate outside plant account

(see Accounts 2411 through 2441), or in the appropriate central

office account (see Accounts 2211 through 2232).
ù32.3000 Instructions for balance sheet accounts - depreciation

 and amortization.

(a) Depreciation and Amortization Subsidiary Records:

(1) Subsidiary record categories shall be maintained for each

class of depreciable telecommunications plant in Account 3100 for

which there is a prescribed depreciation rate. (See also

ù32.2000(g)(1)(iii) of this subpart.)

(2) Subsidiary records shall be maintained for Accounts 3400,

3410, 3420, 3500, and 3600 in accordance with ù32.2000(h)(4) of

this subpart.

(b) Depreciation and amortization accounts to be maintained

by Class A and Class B telephone companies as indicated:

 Class A Class B

 Account Title Account Account

Depreciation and Amortization:

 Accumulated depreciation 3100 3100

 Retirement work in progress 3100x 3100x

 Accumulated depreciation - held for

 future telecommunications use 3200 3200

 Accumulated depreciation - nonoperating 3300 3300

 Accumulated amortization - tangible 3400

 Accumulated amortization - capitalized

 leases 3410

 Accumulated amortization - leasehold

 improvements 3420

 Accumulated amortization - intangible 3500 3500

 Accumulated amortization - other 3600 3600

ù32.3100 Accumulated depreciation.

(a) This account shall include the accumulated depreciation

associated with the investment contained in Account 2001,

Telecommunications Plant in Service.

(b) This account shall be credited with depreciation amounts

concurrently charged to Account 6561, Depreciation Expense -

Telecommunications Plant in Service. (Note also Account 3300,

Accumulated Depreciation - Nonoperating.)

(c) At the time of retirement of depreciable operating

telecommunications plant, this account shall be charged with the

original cost of the property retired plus the cost of removal

and credited with the salvage value and any insurance proceeds

recovered.

(d) This account shall be credited with amounts charged to

Account 1438, Deferred Maintenance and Retirements, as provided
in ù32.2000(g)(4) of this subpart. This account shall be

credited with amounts charged to Account 6561 with respect to

other than relatively minor losses in service values suffered

through terminations of service when charges for such

terminations are made to recover the losses.

Note: A 1/21/88 FCC Order in CC Docket No. 87-447 (FCC 88-6)

adopted policy changes to permit a one-time five-year

amortization period commencing 1/01/87 of LECs' reserve

imbalances. Action was taken to eliminate the large industrywide reserve deficiency faster than previous procedures allowed.

REA 3100x Retirement work in progress.

This account shall be charged with the original cost of

property retired from the telecommunications plant accounts. It

shall also be charged with all of the costs incurred in removing

the retired plant from service. This account shall be credited

with the salvage value of materials recovered in the retirement

of the telecommunications plant. At such time as the retirement

work order is complete, the net income/loss resulting therefrom

shall be transferred from this account to the appropriate

primary plant depreciation reserve account.

ù32.3200 Accumulated depreciation - held for future telecommuni-

 cations use.

(a) This account shall include the accumulated depreciation

associated with the investment contained in Account 2002,

Property Held for Future Telecommunications Use.

(b) This account shall be credited with amounts concurrently

charged to Account 6562, Depreciation Expense - Property Held for

Future Telecommunications Use.

ù32.3300 Accumulated depreciation - nonoperating.

(a) This account shall include the accumulated amortization

and depreciation associated with the investment contained in

Account 2006, Nonoperating Plant.

(b) This account shall be credited with amortization and

depreciation amounts concurrently charged to Account 7360, Other

Nonoperating Income.

(c) When nonoperating plant not previously used in telecommunications service is disposed of, this account shall be charged

with the amount previously credited hereto with respect to such

property and the book cost of the property so retired less the

amount chargeable to this account and less the value of the

salvage recovered or the proceeds from the sale of the property

shall be included in Account 7350, Gains or Losses on Disposition

of Certain Property. In case the property had been used in

telecommunications service previous to its inclusion in
Account 2006, Nonoperating Plant, the amount accrued for

depreciation thereon after its retirement from telecommunications

service shall be charged to this account and credited to

Account 3100, Accumulated Depreciation, and the accounting for

its retirement from Account 2006 shall be in accordance with that

applicable to telecommunications plant retired.

ù32.3400 Accumulated amortization - tangible.

This account shall be used by Class B companies to record

accumulated amortization of the type and character required of

Class A companies in Accounts 3410 and 3420.

ù32.3410 Accumulated amortization - capitalized leases.

(a) This account shall include the accumulated amortization

associated with the investment contained in Account 2681, Capital

Leases.

(b) This account shall be credited with amounts for the

amortization of capital leases concurrently charged to

Account 6563, Amortization Expense - Tangible. (Note also

Account 3300, Accumulated Depreciation - Nonoperating.)

(c) When any item carried in Account 2681 is sold, is

relinquished, or is otherwise retired from service, this account

shall be charged with the cost of the retired item. Remaining

amounts associated with the item shall be debited to

Account 7160, Other Operating Gains and Losses, or Account 7360,

Other Nonoperating Income, as appropriate.

ù32.3420 Accumulated amortization - leasehold improvements.

(a) This account shall include the accumulated amortization

associated with the investment contained in Account 2682,

Leasehold Improvements.

(b) This account shall be credited with amounts for the

amortization of leasehold improvements concurrently charged to

Account 6563, Amortization Expense - Tangible. (Note also

Account 3300, Accumulated Depreciation - Nonoperating.)

(c) When any item carried in Account 2682 is sold, is

relinquished, or is otherwise retired from service, this account

shall be charged with the cost of the retired item. Remaining

amounts associated with the item shall be debited to

Account 7360, Other Nonoperating Income.

ù32.3500 Accumulated amortization - intangible.

(a) This account shall include the accumulated amortization

associated with the investment contained in Account 2690,

Intangibles.
(b) This account shall be credited with amortization amounts

concurrently charged to Account 6564, Amortization - Intangible.

(Note also Account 3300, Accumulated Depreciation -

Nonoperating.)

(c) When any item carried in Account 2690 is sold,

relinquished, or otherwise retired from service, this account

shall be charged with the cost of the retired item. Remaining

amounts associated with the item shall be debited to

Account 7360, Other Nonoperating Income.

ù32.3600 Accumulated amortization - other.

(a) This account shall include the accumulated amortization

associated with the investment contained in Account 2005,

Telecommunications Plant Adjustment.

(b) This account shall be credited with amortization amounts

concurrently charged to Account 6565, Amortization Expense -

Other. (Note also Account 3300, Accumulated Depreciation -

Nonoperating.)

(c) When any item carried in Account 2005 is sold,

relinquished, or otherwise retired from service, this account

shall be charged with the cost of the retired item. Remaining

amounts associated with the item shall be debited Account 7360,

Other Nonoperating Income.

ù32.4000 Instructions for balance sheet accounts - liabilities

 and stockholders' equity.

Liabilities and stockholders' equity accounts to be maintained

by Class A and Class B telephone companies:

 Class A Class B

 Account Title Account Account

Current Liabilities:

 Accounts payable 4010 4010

 Accounts payable to affiliated

 companies 4010.11 4010.11

 Accounts payable to nonaffiliated

 companies 4010.21 4010.21

 Accounts payable - employees' income

 tax withheld 4010.22 4010.22

 Accounts payable - FICA taxes withheld 4010.23 4010.23

 Accounts payable - federal excise taxes 4010.24 4010.24

 Accounts payable - payroll 4010.25 4010.25

 Notes payable 4020 4020

 Advance billing and payments 4030 4030

 Customers' deposits 4040 4040

 Current maturities - long-term debt 4050 4050

 Current maturities - capital leases 4060 4060

 Income taxes - accrued 4070 4070
 Class A Class B

 Account Title Account Account

 Income taxes accrued - federal 4070.1 4070.1

 Income taxes accrued - state and local 4070.2 4070.2

 Other taxes - accrued 4080 4080

 Other taxes accrued - property 4080.1 4080.1

 Other taxes accrued - employer's

 portion - FICA 4080.2 4080.2

 Other taxes accrued - federal

 unemployment 4080.3 4080.3

 Other taxes accrued - state

 unemployment 4080.4 4080.4

 Other taxes accrued - miscellaneous 4080.5 4080.5

 Net current deferred operating income

 taxes 4100 4100

 Net current deferred nonoperating income

 taxes 4110 4110

 Other accrued liabilities 4120 4120

 Unmatured interest accrued - REA notes 4120.1 4120.1

 Unmatured interest accrued - Telephone

 Bank notes 4120.2 4120.2

 Unmatured interest accrued - Federal

 Financing Bank notes 4120.3 4120.3

 Unmatured interest accrued - Bank for

 Cooperatives notes 4120.4 4120.4

 Unmatured interest accrued - Rural

 Telephone Finance Cooperative notes 4120.5 4120.5

 Other accrued liabilities 4120.6 4120.6

 Other current liabilities 4130 4130

 Patronage capital payable 4130.1 4130.1

 Other current liabilities - miscellaneous 4130.2 4130.2

Long-Term Debt:

 Funded debt 4210 4210

 Funded debt - other 4210.11 4210.11

 REA notes 4210.12 4210.12

 Telephone Bank notes 4210.13 4210.13

 Federal Financing Bank notes 4210.14 4210.14

 Bank for Cooperatives notes 4210.15 4210.15

 Rural Telephone Finance Cooperative

 notes 4210.16 4210.16

 REA notes - deferred interest 4210.17 4210.17

 REA notes - advance payments, dr. 4210.18 4210.18

 Funded debt - other - unadvanced, dr. 4210.19 4210.19

 REA notes - unadvanced, dr. 4210.20 4210.20

 Telephone Bank notes - unadvanced, dr. 4210.21 4210.21

 Federal Financing Bank notes -

 unadvanced, dr. 4210.22 4210.22

 Bank for Cooperatives notes -

 unadvanced, dr. 4210.23 4210.23

 Rural Telephone Finance Cooperative

 notes - unadvanced, dr. 4210.24 4210.24

 Premium on long-term debt 4220 4220
 Class A Class B

 Account Title Account Account

 Discount on long-term debt 4230 4230

 Reacquired debt 4240 4240

 Obligations under capital leases 4250 4250

 Advances from affiliated companies 4260 4260

 Other long-term debt 4270 4270

 Members' redeemable equity certificates

 subscribed but unissued 4270.1 4270.1

 Members' redeemable equity certificates

 issued 4270.2 4270.2

 Other long-term debt 4270.3 4270.3

Other Liabilities and Deferred Credits:

 Other long-term liabilities 4310 4310

 Unamortized operating investment tax

 credits - net 4320 4320

 Unamortized nonoperating investment tax

 credits - net 4330 4330

 Net noncurrent deferred operating

 income taxes 4340 4340

 Net noncurrent deferred nonoperating

 income taxes 4350 4350

 Other deferred credits 4360 4360

 Other jurisdictional liabilities and

 deferred credits - net 4370 4370

Stockholders' Equity:

 Capital stock 4510 4510

 Additional paid-in capital 4520 4520

 Treasury stock 4530 4530

 Other capital 4540 4540

 Capital stock subscribed 4540.11 4540.11

 Memberships subscribed but unissued 4540.12 4540.12

 Members' equity certificates subscribed

 but unissued 4540.13 4540.13

 Memberships issued 4540.21 4540.21

 Members' equity certificates issued 4540.22 4540.22

 Members' equity - other 4540.23 4540.23

 Installments paid on capital stock 4540.31 4540.31

 Installments paid on memberships

 subscribed 4540.32 4540.32

 Installments paid on equity certificates

 subscribed 4540.33 4540.33

 Other capital - miscellaneous 4540.41 4540.41

 Retained earnings 4550 4550

 Operating margins 4550.1 4550.1

 Nonoperating margins 4550.2 4550.2

 Other margins 4550.3 4550.3

 Patronage capital assignable 4550.4 4550.4

 Patrons' capital credits assigned 4550.5 4550.5

 Gain on the retirement of capital credits 4550.6 4550.6
ù32.4010 Accounts payable.

(a) This account shall include all amounts currently due to

others for recurring trade obligations, and not provided for in

other accounts, such as those for traffic settlements, material

and supplies, repairs to telecommunications plant, matured rents,

and interest payable under monthly settlements on short-term

loans, advances, and open accounts. It shall also include

amounts of taxes payable that have been withheld from employees'

salaries.

(b) Subsidiary record categories shall be maintained for this

account in order that the company may separately report the

amounts contained herein that relate to nonaffiliates and

affiliates. Such subsidiary record categories shall be reported

as required by Part 43 of this Commission's Rules and

Regulations.

(c) There shall be included herein accounts payable arising

from sharing of revenues.

REA 4010.11 Accounts payable to affiliated companies.

This account shall include all amounts currently due to

affiliated companies for recurring trade obligations, and not

provided for in other accounts, such as those for traffic

settlements, material and supplies, repairs to

telecommunications plant, matured rents, and interest payable

under monthly settlements on short-term loans, advances, and

open accounts.

REA 4010.21 Accounts payable to nonaffiliated companies.

This account shall include all amounts currently due to

nonaffiliated companies for recurring trade obligations, and not

provided for in other accounts, such as those for traffic

settlements, materials and supplies, repairs to

telecommunications plant, matured rents, and interest payable

under monthly settlements on short-term loans, advances, and

open accounts.

REA 4010.22 Accounts payable - employees' income tax withheld.

This account shall include income taxes payable that have

been withheld from employees' salaries.

REA 4010.23 Accounts payable - FICA taxes withheld.

This account shall include FICA taxes payable that have been

withheld from employees' salaries.

REA 4010.24 Accounts payable - federal excise taxes.

This account shall include Federal excise taxes payable.
REA 4010.25 Accounts payable - payroll.

This account shall include amounts payable to the company's

employees in the form of salaries or wages.

ù32.4020 Notes payable.

(a) This account shall include the face amount of notes,

drafts, and other evidences of indebtedness issued or assumed by

the company (except interest coupons) which are payable on demand

or not more than one year or less from date of issue.

(b) Subsidiary record categories shall be maintained for this

account in order that the company may separately report the

amounts contained herein that relate to nonaffiliates and

affiliates. Such subsidiary record categories shall be reported

as required by Part 43 of this Commission's Rules and

Regulations.

(c) If any part of an obligation, otherwise includable in

this account matures more than one year from date of issue, it

shall be included in Account 4210, Funded Debt; 4260, Advances

from Affiliated Companies, or other appropriate account.

(d) The records supporting the entries to this account shall

be kept so that the company can furnish complete details as to

each note, when it is issued, the consideration received, and

when it is payable.

ù32.4030 Advance billing and payments.

This account shall include the amount of advance billing

creditable to revenue accounts in future months; also advance

payments made by prospective customers prior to the establishment

of service. Amounts included in this account shall be credited

to the appropriate revenue accounts in the months in which the

service is rendered or cleared from this account as refunds are

made.

ù32.4040 Customers' deposits.

(a) This account shall include the amount of cash deposited

with the company by customers as security for the payment for

telecommunications service.

(b) Advance payments made by prospective customers prior to

the establishment of service shall be credited to Account 4030,

Advance Billing and Payments.

ù32.4050 Current maturities - long-term debt.

This account shall include the amount (including any

obligations for premiums) of long-term debt matured and unpaid

without any specific agreement for extension of maturity,
including unpresented bonds drawn for redemption through the

operation of sinking and redemption fund agreements.

ù32.4060 Current maturities - capital leases.

This account shall include the current portion of obligations

applicable to property obtained under capital leases.

ù32.4070 Income taxes - accrued.

(a) This account shall be credited or charged and the

following accounts shall be charged or credited with the

offsetting amount of current year income taxes (Federal, state

and local) accrued during the period or adjustments to prior

accruals:

7220 Operating Federal Income Taxes

7230 Operating State and Local Income Taxes

7420 Nonoperating Federal Income Taxes

7430 Nonoperating State and Local Income Taxes

7630 Current Income Tax Effect of Extraordinary Items - Net

(b) If significant, current year income taxes paid in advance

shall be reclassified to Account 1300, Prepaid Taxes.

REA 4070.1 Income taxes accrued - federal.

For Class A companies, this account shall be credited and

Accounts 7220, 7420, and 7630, as appropriate, shall be debited

for the amount of Federal income taxes accrued during the

current operating period. For Class B companies, this account

shall be credited and Accounts 7200.2, 7400.2, and 7600.3, as

appropriate, shall be debited for the amount of federal income

taxes accrued during the current operating period.

REA 4070.2 Income taxes accrued - state and local.

For Class A companies, this account shall be credited and

Accounts 7230, 7430, and 7630, as appropriate, shall be debited

for the amount of state and local income taxes accrued during

the current operating period. For Class B companies, this

account shall be credited and Accounts 7200.3, 7400.3, and

7600.3, as appropriate, shall be debited for the amount of state

and local income taxes accrued during the current operating

period.

ù32.4080 Other taxes - accrued.

(a) This account shall be credited or charged and

Account 7240, Operating Other Taxes, or 7440, Nonoperating Other

Taxes, or for payroll related costs, the appropriate expense

accounts shall be charged or credited for all taxes, other than

Federal, State and local income taxes, accrued or adjusted for

previous accruals during the period. Among the taxes includable
in this account are property, gross receipts, franchise, capital

stock, social security and unemployment taxes.

(b) Taxes paid in advance of the period in which they are

chargeable to income shall be included in the prepaid taxes

Account 1300, Prepaid Taxes, or 1410, Other Noncurrent Assets, as

appropriate.

REA 4080.1 Other taxes accrued - property.

This account shall be credited and Account 7240.1/7200.41,

Operating Taxes - Property, shall be debited for the amount of

property taxes accrued during the current operating period.

REA 4080.2 Other taxes accrued - employer's portion - FICA.

This account shall be credited and the appropriate

construction, depreciation, or expense account shall be debited

for the employer's portion of FICA taxes accrued during the

current operating period.

REA 4080.3 Other taxes accrued - federal unemployment.

This account shall be credited and the appropriate

construction, removal, or expense account shall be debited for

the amount of Federal unemployment taxes accrued during the

current operating period.

REA 4080.4 Other taxes accrued - state unemployment.

This account shall be credited and the appropriate

construction, removal, or expense account shall be debited for

the amount of state unemployment taxes accrued during the

current operating period.

REA 4080.5 Other taxes accrued - miscellaneous.

This account shall be credited and Account 7240.2/7200.42,

Operating Taxes - Miscellaneous, shall be debited for the amount

of all other taxes accrued during the current operating period

and not provided for elsewhere such as a gross receipts tax,

franchise taxes, and capital stock taxes.

ù32.4100 Net current deferred operating income taxes.

(a) This account shall include the balance of income tax

expense related to current items from regulated operations which

have been deferred to later periods as a result of the normalized

method of accounting for tax differentials authorized by this

Commission and not provided for elsewhere.

(b) As regulated assets or liabilities which generated the

deferred income tax are reclassified from long-term or noncurrent

status to current, the appropriate deferred income tax shall be
reclassified from Account 4340, Net Noncurrent Deferred Operating

Income Taxes, to this account.

(c) This account shall be debited or credited with the amount

being debited or credited to Account 7250, Provision for Deferred

Operating Income Taxes - Net, in accordance with that account's

description and ù32.22 of Subpart B.

(d) The classification of deferred income taxes as current or

noncurrent shall follow the classification of the asset or

liability that gave rise to the deferred income tax. If there is

no related asset or liability, classification shall be based on

the expected turnaround of the tax timing difference.

(e) Subsidiary record categories shall be maintained in order

that the company may separately report the amounts contained

herein that are property related and those that are nonproperty

related. Such subsidiary record categories shall be reported as

required by Part 43 of this Commission's Rules and Regulations.

ù32.4110 Net current deferred nonoperating income taxes.

(a) This account shall include the balance of income tax

expense resulting from comprehensive interperiod tax allocation

which has been deferred to later periods.

(b) As other assets or liabilities which generated the

deferred income tax are reclassified from long-term or noncurrent

status to current, the appropriate deferred income tax shall be

reclassified from Account 4350, Net Noncurrent Deferred

Nonoperating Income Taxes, to this account.

(c) This account shall be debited or credited with the amount

being credited or debited to Account 7450, Provision for Deferred

Nonoperating Income Taxes - Net, in accordance with that

account's description and ù32.22 of Subpart B.

(d) This account shall also include the balance of the income

taxes (Federal, state and local) related to current extraordinary

items which have been deferred to later periods resulting from

comprehensive interperiod tax allocation.

(e) As the extraordinary item which generated the deferred

income tax becomes current, the appropriate deferred income tax

shall be reclassified from Account 4350, Net Noncurrent Deferred

Nonoperating Income Taxes, to this account.

(f) This account shall be debited or credited with the amount

being credited and debited to Account 7640, Provision for

Deferred Income Tax Effect of Extraordinary Items - Net.

(g) The classification of deferred income taxes as current or

noncurrent shall follow the classification of the asset or

liability that gave rise to the deferred income tax. If there is
no related asset or liability, classification shall be based on

the expected turnaround.

(h) Subsidiary record categories shall be maintained in order

that the company may separately report the amounts contained

herein that are property related and those that are nonproperty

related. Such subsidiary record categories shall be reported as

required by Part 43 of this Commission's Rules and Regulations.

ù32.4120 Other accrued liabilities.

(a) This account shall include the amount of wages,

compensated absences, interest on indebtedness of the company,

dividends on capital stock and rents accrued to the date for

which the balance sheet is made, but not payable until after that

date.

(b) This account shall be maintained so as to show separately

the amount and nature of the items accrued to the date of the

balance sheet.

(c) Matured rents, dividends and interest shall be included

in Account 4010, Accounts Payable.

(d) Interest payable under monthly settlements on short-term

loans, advances, and open accounts shall be included in

Account 4010.

REA 4120.1 Unmatured interest accrued - REA notes.

(a) This account shall include the interest accrued as of

the balance sheet date but not payable until after that date on

REA mortgage notes.

(b) Interest expense incurred during the period of

construction of telecommunications plant shall be charged to

Account 2004, Telecommunications Plant Under Construction - Long

Term, and credited to Account 7340/7300.4, Allowance for Funds

Used During Construction.

REA 4120.2 Unmatured interest accrued - Telephone Bank notes.

(a) This account shall include the interest accrued as of

the balance sheet date but not payable until after that date on

Rural Telephone Bank mortgage notes.

(b) Interest expense incurred during the period of

construction of telecommunications plant shall be charged to

Account 2004, Telecommunications Plant Under Construction - Long

Term, and credited to Account 7340/7300.4, Allowance for Funds

Used During Construction.
REA 4120.3 Unmatured interest accrued - Federal Financing Bank

 notes.

(a) This account shall include the interest accrued as of

the balance sheet date but not payable until after that date on

Federal Financing Bank mortgage notes.

(b) Interest expense incurred during the period of

construction of telecommunications plant shall be charged to

Account 2004, Telecommunications Plant Under Construction - Long

Term, and credited to Account 7340/7300.4, Allowance for Funds

Used During Construction.

REA 4120.4 Unmatured interest accrued - Bank for Cooperatives

 notes.

(a) This account shall include the interest accrued as of

the balance sheet date but not payable until after that date on

Bank for Cooperatives mortgage notes.

(b) Interest expense incurred during the period of

construction of telecommunications plant shall be charged to

Account 2004, Telecommunications Plant Under Construction - Long

Term, and credited to Account 7340/7300.4, Allowance for Funds

Used During Construction.

REA 4120.5 Unmatured interest accrued - Rural Telephone Finance

 Cooperative notes.

(a) This account shall include the interest accrued as of

the balance sheet date but not payable until after that date on

Rural Telephone Finance Cooperative mortgage notes.

(b) Interest expense incurred during the period of

construction of telecommunications plant shall be charged to

Account 2004, Telecommunications Plant Under Construction - Long

Term, and credited to Account 7340/7300.4, Allowance for Funds

Used During Construction.

REA 4120.6 Other accrued liabilities.

(a) This account shall include the amount of wages,

compensated absences, interest on indebtedness of the company,

dividends on capital stock, and rents accrued as of the balance

sheet date but not payable until after that date.

(b) This account shall not include interest accrued on REA,

Rural Telephone Bank, Bank for Cooperatives, Federal Financing

Bank, or Rural Telephone Finance Cooperative debt.

ù32.4130 Other current liabilities.

This account shall include liabilities of current character

which are not includable in Accounts 4010 through 4120.
REA 4130.1 Patronage capital payable.

This account shall include the amount of patronage capital

which has been authorized to be returned to patrons.

REA 4130.2 Other current liabilities - miscellaneous.

This account shall include liabilities of current character

which are not includable in Accounts 4010 through 4130.1.

ù32.4210 Funded debt.

(a) This account shall include the total face amount of

unmatured debt, maturing more than one year from date of issue,

issued by the company and not retired, and the total face amount

of similar unmatured debt of other companies, the payment of

which has been assumed by the company, including funded debt the

maturity of which has been extended by specific agreement.

(b) This account shall include such items as mortgage bonds,

collateral trust bonds, income bonds, convertible debt, debt

securities with detachable warrants and other similar obligations

maturing more than one year from date of issue.

(c) In the case of debt securities with detachable warrants

this account shall include only the face amount of the security

at the time of issuance. The value of detachable warrants shall

be charged to either Account 4220, Premium on Long-Term Debt, or

Account 4230, Discount on Long-Term Debt, as appropriate, and

credited to Account 4520, Additional Paid-in Capital, in the case

of capital stock warrants or retained in this account as a

separately identifiable amount in the case of detachable longterm debt warrants. No similar allocation shall be made for the

issuance of either convertible debt or debt securities with nondetachable warrants.

(d) Subsidiary records shall be maintained for each issue.

(e) Securities maturing in one year or less, including

securities maturing serially, shall be included in Account 4050,

Current Maturities - Long-Term Debt.

(f) Investment advances, including those represented by notes,

shall be included in Account 4270, Other Long-Term Debt.

REA 4210.11 Funded debt - other.

(a) This account shall include the total face amount of

unmatured debt, maturing more than one year from the date of

issue, issued by the company and not retired, and the total face

amount of similar unmatured debt of other companies, the payment

of which has been assumed by the company, including funded debt

the maturity of which has been extended by specific agreement.
(b) This account shall not include unmatured REA, Rural

Telephone Bank, Federal Financing Bank, Bank for Cooperatives,

or Rural Telephone Finance Cooperative debt.

REA 4210.12 REA notes.

(a) This account shall include the total face amount of

unmatured REA mortgage notes. Account 4210.20, REA Notes -

Unadvanced, Dr., shall be charged and this account credited upon

execution of the notes.

(b) If principal installments are not paid at the maturity

date, the amount due shall be transferred to Account 4050,

Current Maturities - Long-Term Debt.

REA 4210.13 Telephone Bank notes.

(a) This account shall include the total face amount of

unmatured Rural Telephone Bank mortgage notes. Account 4210.21,

Telephone Bank Notes - Unadvanced, Dr., shall be charged and

this account credited upon execution of the notes.

(b) If principal installments are not paid at the maturity

date, the amount due shall be transferred to Account 4050,

Current Maturities - Long-Term Debt.

REA 4210.14 Federal Financing Bank notes.

(a) This account shall include the total face amount of

unmatured Federal Financing Bank mortgage notes.

Account 4210.22, Federal Financing Bank Notes - Unadvanced, Dr.,

shall be charged and this account credited upon execution of the

notes.

(b) If principal installments are not paid at the maturity

date, the amount due shall be transferred to Account 4050,

Current Maturities - Long-Term Debt.

REA 4210.15 Bank for Cooperatives notes.

(a) This account shall include the total face amount of

unmatured Bank for Cooperatives mortgage notes.

Account 4210.23, Bank for Cooperatives Notes - Unadvanced, Dr.,

shall be charged and this account credited upon execution of the

notes.

(b) If principal installments are not paid at the maturity

date, the amount due shall be transferred to Account 4050,

Current Maturities - Long-Term Debt.

REA 4210.16 Rural Telephone Finance Cooperative notes.

(a) This account shall include the total face amount of

unmatured Rural Telephone Finance Cooperative mortgage notes.
Account 4210.24, Rural Telephone Finance Cooperative Notes -

Unadvanced, Dr. shall be charged and this account credited upon

execution of the notes.

(b) If principal installments are not paid at the maturity

date, the amount due shall be transferred to Account 4050,

Current Maturities - Long-Term Debt.

REA 4210.17 REA notes - deferred interest.

(a) This account shall include interest accrued on REA

mortgage notes, the payment of which has been deferred in

accordance with the terms of the notes or extension agreements.

The offsetting charge shall be to Account 7510, Interest on

Funded Debt, for Class A companies and Account 7500, Interest

and Related Items, for Class B companies.

(b) If interest payments are not made at the due date, this

account shall be debited and Account 4010.21, Accounts Payable

to Nonaffiliated Companies, credited with the amount of the

matured interest.

REA 4210.18 REA notes - advance payments, dr.

This account shall include all payments on REA mortgage notes

made in advance of the due date and not applied to a specific

quarterly payment. As these payments are applied to specific

notes, this account shall be credited and the long-term debt and

interest liability accounts debited.

REA 4210.19 Funded debt - other - unadvanced, dr.

(a) This account shall include the total face amount of

notes executed to others, for which funds have not been

received.

(b) This account shall be credited and Account 1130.1/

1120.11, Cash - General Funds, debited when funds are received

from the lender.

REA 4210.20 REA notes - unadvanced, dr.

(a) This account shall include the total face amount of REA

mortgage notes for which funds have not been received.

(b) This account shall be credited and Account 1130.2/

1120.12, Cash - Construction Fund Trustee, debited when funds

are received from REA.

REA 4210.21 Telephone Bank notes - unadvanced, dr.

(a) This account shall include the total face amount of

Rural Telephone Bank mortgage notes for which funds have not

been received.
(b) This account shall be credited and Account 1130.2/

1120.12, Cash - Construction Fund Trustee, debited when funds

are received from the Rural Telephone Bank.

REA 4210.22 Federal Financing Bank notes - unadvanced, dr.

(a) This account shall include the total face amount of

Federal Financing Bank mortgage notes for which funds have not

been received.

(b) This account shall be credited and Account 1130.2/

1120.12, Cash - Construction Fund Trustee, debited when funds

are received from the Federal Financing Bank.

REA 4210.23 Bank for Cooperatives notes - unadvanced, dr.

(a) This account shall include the total face amount of Bank

for Cooperatives mortgage notes for which funds have not been

received.

(b) This account shall be credited and Account 1130.2/

1120.12, Cash - Construction Fund Trustee, debited when funds

are received from the Bank for Cooperatives.

REA 4210.24 Rural Telephone Finance Cooperative notes -

 unadvanced, dr.

(a) This account shall include the total face amount of

Rural Telephone Finance Cooperative mortgage notes for which

funds have not been received.

(b) This account shall be credited and Account 1130.2/

1120.12, Cash - Construction Fund Trustee, debited when funds

are received from the Rural Telephone Finance Cooperative.

ù32.4220 Premium on long-term debt.

(a) This account shall include the premium associated with

all classes of long-term debt. Premium, as applied to securities

issued or assumed by the company, means the excess of the current

money value received at their sale over the sum of their book or

face amount and interest or dividends accrued at the date of the

sale.

(b) Amounts included in this account shall be amortized

monthly by the interest method and credited to Account 7510,

Interest on Funded Debt. (Note also ù32.4210(c) of this

subpart.)

(c) Subsidiary records shall be maintained to identify the

premium attributable to each issue.
ù32.4230 Discount on long-term debt.

(a) This account shall include the discount associated with

all classes of long-term debt. Discount, as applied to

securities issued or assumed by the company, means the excess of

the book or face amount of the securities plus interest or

dividends accrued at the date of the sale over the current money

value of the consideration received at their sale.

(b) Amounts included in this account shall be amortized

monthly by the interest method and charged to Account 7510,

Interest On Funded Debt. (Note also ù32.4210(c) of this

subpart.)

(c) Subsidiary records shall be maintained to identify the

discount attributable to each issue.

ù32.4240 Reacquired debt.

This account shall include the face amount of debt reacquired

prior to maturity that has not been retired. Gain or loss shall

be recognized at the time of reacquisition by credits or charges

to Account 7360, Other Nonoperating Income, except that material

gains or losses shall be treated as extraordinary. (See

Accounts 7610, Extraordinary Income Credits, and 7620,

Extraordinary Income Charges.)

ù32.4250 Obligations under capital leases.

(a) This account shall include the noncurrent portion of

obligations applicable to property obtained under capital leases.

(b) Amounts subject to current settlement shall be included

in Account 4060, Current Maturities - Capital Leases.

ù32.4260 Advances from affiliated companies.

(a) This account shall include the amount of advances from

affiliated companies.

(b) Amounts due affiliated companies which are subject to

current settlement shall be included in Account 4010 or 4020, as

appropriate.

ù32.4270 Other long-term debt.

This account shall include long-term debt not provided for

elsewhere.

REA 4270.1 Members' redeemable equity certificates subscribed

 but unissued.

(a) This account shall include the face amount of members'

equity certificates which are redeemable at some specified

future date for which subscriptions have been received but for

which certificates have not been issued. This account shall be

credited at the time the subscription is received and

Account 1350.3, Subscriptions to Members' Equity Certificates,

debited.

(b) This account shall be debited and Account 4270.2,

Members' Redeemable Equity Certificates Issued, credited when a

subscriber has paid the subscription in full and the equity

certificates are issued.

REA 4270.2 Members' redeemable equity certificates issued.

This account shall include the face amount of outstanding

members' equity certificates which are redeemable at some

specified future date. A subsidiary members' redeemable equity

certificate record shall be maintained to reflect the detail of

the balance in this account.

REA 4270.3 Other long-term debt.

This account shall include long-term debt not provided for

elsewhere.

ù32.4310 Other long-term liabilities.

(a) This account shall include amounts accrued to provide for

such items as unfunded pensions (if actuarially determined),

death benefits, deferred compensation costs and other long-term

liabilities not provided for elsewhere.

(b) Subsidiary records shall be maintained to identify the

nature of the items included herein.

ù32.4320 Unamortized operating investment tax credits - net.

(a) This account shall be credited and Account 7210,

Operating Investment Tax Credits - Net, should be debited with

investment tax credits generated from qualified expenditures

related to regulated operations which the company defers rather

than recognizes currently in income.

(b) This account shall be debited and Account 7210 credited

with a proportionate amount determined in relation to the period

of time used for computing book depreciation on the property to

which the tax credit relates.

ù32.4330 Unamortized nonoperating investment tax credits - net.

(a) This account shall be credited and Account 7410,

Nonoperating Investment Tax Credits - Net, shall be debited with

investment tax credits generated from qualified expenditures

related to other operations which the company has elected to

defer rather than recognize currently in income.
(b) This account shall be debited and Account 7410 credited

with a proportionate amount determined in relation to the useful

book life of the property to which the tax credit relates.

ù32.4340 Net noncurrent deferred operating income taxes.

(a) This account shall include the balance of income tax

expense related to noncurrent items from regulated operations

which have been deferred to later periods as a result of

comprehensive interperiod tax allocation related to timing

differences that arise from regulated operations.

(b) This account shall be credited or debited as appropriate,

and Account 7250, Provision for Deferred Operating Income Taxes -

Net, shall reflect the offset for the tax effect of revenues and

expenses from regulated operations which have been included in

the determination of taxable income, but which will not be

included in the determination of book income or for the tax

effect of revenues and expenses from regulated operations which

have been included in the determination of book income prior to

the inclusion in the determination of taxable income.

(c) As regulated assets or liabilities which generated the

prepaid income tax or deferred income tax are reclassified from

long-term or noncurrent status to current status, the appropriate

deferred income tax shall be reclassified from this account to

Account 4100, Net Current Deferred Operating Income Taxes.

(d) The classification of deferred income taxes as current or

noncurrent shall follow the classification of the asset or

liability that gave rise to the deferred income tax. If there is

no related asset or liability, classification shall be based on

the expected turnaround of the tax timing difference.

(e) Subsidiary record categories shall be maintained in order

that the company may separately report the amounts contained

herein that are property related and those that are nonproperty

related. Such subsidiary record categories shall be reported as

required by Part 43 of this Commission's Rules and Regulations.

ù32.4350 Net noncurrent deferred nonoperating income taxes.

(a) This account shall include the balance of income tax

expense (Federal, state and local) that has been deferred to

later periods as a result of comprehensive interperiod tax

allocation related to nonoperating timing differences.

(b) This account shall be credited or debited, as

appropriate, and Account 7450, Provision for Deferred

Nonoperating Income Taxes - Net, shall reflect the offset for the

tax effect of revenues from other operations and extraordinary

items and nonoperating expense which have been included in the

determination of taxable income, but which will not be included

in the determination of book income or for the tax effect of
nonoperating expenses and extraordinary items and nonoperating

income which have been included in the determination of book

income prior to the inclusion in the determination of taxable

income.

(c) As other assets or liabilities which generated the

prepaid income tax or deferred income tax are reclassified from

long-term or non-current status to current status, the

appropriate deferred income tax shall be reclassified from this

account to Account 4110, Net Current Deferred Nonoperating Income

Taxes.

(d) This account shall also include the balance of the income

tax effect (Federal, State and local) related to noncurrent

extraordinary items which have been included in the determination

of taxable income in a period different from when it is included

in the determination of book income, that is, more than one year.

(e) This account shall be charged or credited with the contra

amount recorded to Account 7640, Provision for Deferred Income

Tax Effect of Extraordinary Items - Net, in accordance with

paragraph ù32.22 of Subpart B.

(f) As the extraordinary item which generated the deferred

income tax becomes current, the appropriate deferred income tax

shall be reclassified from this account to Account 4110, Net

Current Deferred Nonoperating Income Taxes.

(g) The classification of deferred income taxes as current or

noncurrent shall follow the classification of the asset or

liability that gave rise to the deferred income tax. If there is

no related asset or liability, classification shall be based on

the expected turnaround of the tax timing difference.

(h) Subsidiary record categories shall be maintained in order

that the company may separately report the amounts contained

herein that are property related and those that are nonproperty

related. Such subsidiary record categories shall be reported as

required by Part 43 of this Commission's Rules and Regulations.

ù32.4360 Other deferred credits.

This account shall include the amount of all deferred credits

not provided for elsewhere, such as amounts awaiting adjustment

between accounts; and revenue, expense, and income items in

suspense.

ù32.4370 Other jurisdictional liabilities and deferred

 credits - net.

This account shall include the cumulative impact on

liabilities and deferred credits of the jurisdictional ratemaking

practices which vary from those of this Commission. All entries

recorded in this account shall be recorded net of any applicable
income tax effects and shall be supported by appropriate

subsidiary records where necessary as provided for in ù32.13 of

Subpart B.

ù32.4510 Capital stock.

(a) This account shall include the par value, stated amount,

or in the case of no-par stock, the amount received for capital

stock issued and outstanding.

(b) Subsidiary records shall be maintained so as to show

separately each class of stock.

(c) This account shall be charged with the book amount of any

stock retired.

ù32.4520 Additional paid-in capital.

(a) This account shall include the difference between the net

proceeds (including discount, premium and stock issuance expense)

received from the issuance of capital stock and the amount

includable in Account 4510, Capital Stock, unless such difference

results in a debit balance for that class of stock, in which case

the amount shall be charged to Account 4550, Retained Earnings.

(b) This account shall also include gains arising from the

retirement and cancellation of capital stock. Losses from

retirement and cancellation of capital stock shall be charged to

this account to the extent that there exist credits in this

account for the same class of stock; otherwise to Account 4550.

ù32.4530 Treasury stock.

This account shall include the cost of the company's own

capital stock which has been issued and subsequently reacquired

but not retired or resold.

ù32.4540 Other capital.

This account shall include amounts which are credits arising

from the donation by stockholders of the company's capital stock,

capital recorded upon the reorganization or recapitalization of

the company and temporary declines in the value of marketable

securities held for investment purposes. (See also Account 1401,

Investment in Affiliated Companies.)

REA 4540.11 Capital stock subscribed.

(a) This account shall include the par value of capital

stock for which legally enforceable subscriptions have been

received but for which, at the date of the balance sheet, stock

certificates have not been issued.
(b) This account shall be debited and Account 4510, Capital

Stock, credited when a subscriber has paid the subscription in

full and stock certificates are issued.

REA 4540.12 Memberships subscribed but unissued.

(a) This account shall include the face amount of

memberships subscribed but not issued. This account shall be

credited at the time the subscription is received and

Account 1350.2, Subscriptions to Memberships, debited.

(b) This account shall be debited and Account 4540.21,

Memberships Issued, credited when a subscriber has paid the

subscription in full and the membership certificates are issued.

REA 4540.13 Members' equity certificates subscribed but

 unissued.

(a) This account shall include the face amount of members'

equity certificates subscribed but not issued. This account

shall be credited at the time the subscription is received and

Account 1350.3, Subscriptions to Members' Equity Certificates,

debited.

(b) This account shall be debited and Account 4540.22,

Members' Equity Certificates Issued, credited when a subscriber

has paid the subscription in full and the members' equity

certificates are issued.

REA 4540.21 Memberships issued.

This account shall include the face amount of membership

certificates outstanding. A subsidiary membership certificate

record shall be maintained to reflect the detail of the balance

in this account.

REA 4540.22 Members' equity certificates issued.

This account shall include the face amount of members' equity

certificates outstanding. A subsidiary members' equity

certificate record shall be maintained to reflect the detail of

the balance in this account.

REA 4540.23 Members' equity - other.

This account shall include credit amounts arising from

donations, forfeitures of membership fees, forgiveness of debts

of the cooperative, and member's equities not otherwise provided

for.

REA 4540.31 Installments paid on capital stock.

(a) This account shall include the amount of installments

paid on capital stock on a partial or installment payment plan
by subscribers against whom there is no legally enforceable

subscription contract, and who are entitled to be reimbursed the

principal amount of their payments, with or without interest, in

the event they fail to complete payment for the stock and

receive certificates therefore.

(b) This account shall be debited and Account 4510, Capital

Stock, credited with the par value of capital stock when the

total subscription is received and the stock certificates are

issued. Any difference between the purchase price of the

subscription and the par value of the stock shall be credited to

Account 4520, Additional Paid-In Capital.

(c) A subsidiary ledger shall be maintained to record for

each subscriber, the amount subscribed, payments made, and the

balance due. The balance in this account shall be reconciled

monthly with the subscription ledger.

REA 4540.32 Installments paid on memberships subscribed.

(a) This account shall include the amount of installments

paid by prospective members on membership subscriptions against

whom there is no legally enforceable subscription contract, and

who are entitled to be reimbursed for the principal amount of

their payments, with or without interest, in the event they fail

to complete payment for the membership and receive certificates

therefor.

(b) This account shall be debited and Account 4540.21,

Memberships Issued, credited with the face amount of the

membership when the total subscription is received and the

membership certificates are issued.

(c) A subsidiary ledger shall be maintained to record for

each subscriber, the amount subscribed, payments made, and the

balance due. The balance in this account shall be reconciled

monthly with the subscription ledger.

REA 4540.33 Installments paid on equity certificates

 subscribed.

(a) This account shall include the amount of installments

paid by prospective members on equity certificate subscriptions

against whom there is no legally enforceable subscription

contract, and who are entitled to be reimbursed for the

principal amount of their payments, with or without interest, in

the event they fail to complete payment for the membership and

receive equity certificates therefor.

(b) This account shall be debited and Account 4540.22,

Members' Equity Certificates Issued, credited with the face

amount of the memberships when the total subscription is

received and the equity certificates are issued.
(c) A subsidiary ledger shall be maintained to record for

each subscriber, the amount subscribed, payments made, and the

balance due. The balance in this account shall be reconciled

monthly with the subscription ledger.

REA 4540.41 Other capital - miscellaneous.

This account shall include amounts which are credits arising

from capital recorded upon the reorganization or recapitalization of the company and temporary declines in the value of

marketable securities held for investment purposes.

ù32.4550 Retained earnings.

(a) This account shall include the undistributed balance of

retained earnings derived from the operations of the company and

from all other transactions not includable in the other accounts

appropriate for inclusion of stockholders' equity.

(b) Subsidiary records shall be maintained wherein are

recorded all entries to retained earnings during the year such

that the detail of the entries may be disclosed to this

Commission.

REA 4550.1 Operating margins.

This account shall include amounts received or receivable

from the furnishing of telecommunications service in excess of

costs incurred in the furnishing of such service. If costs

exceed revenues, the excess cost of furnishing

telecommunications service shall be recorded as a debit to this

account.

REA 4550.2 Nonoperating margins.

This account shall include margins arising from transactions

or activities not related to the furnishing of

telecommunications service. Included in this account are

receipts from investments, income from investments, income from

nonoperating plant, and revenues derived from services performed

for others incident to the company's regulated

telecommunications operations.

REA 4550.3 Other margins.

(a) This account shall include patronage capital credits

assigned to the cooperative by other nonprofit organizations

prior to January 1, 1970, which were not credited directly to an

operating expense account as a reduction in the cost of

furnishing telecommunications service.

(b) No entries shall be made to this account unless it is to

distribute or eliminate prior balances in conformance with the

bylaws of the cooperative.
REA 4550.4 Patronage capital assignable.

This account shall include all amounts transferred from

operating margins, nonoperating margins, and other margin

accounts which are assignable to individual patrons.

REA 4550.5 Patrons' capital credits assigned.

This account shall include the amounts of patronage capital

which have been credited to individual patrons. A subsidiary

patronage capital ledger shall be maintained so as to reflect

the amount of capital furnished by each patron and the amount of

such capital returned to the patron.

REA 4550.6 Gain on the retirement of capital credits.

(a) This account shall include credits resulting from the

retirement of patronage capital through settlement of individual

patrons' accounts at less than 100 percent of the capital

assigned to the patron. The portion of patronage capital not

returned to patrons under such settlements shall be debited to

Account 4550.5, Patrons' Capital Credits Assigned, and credited

to this account.

(b) This account shall also include amounts representing

patronage capital authorized to be retired to patrons who cannot

be located. Returned checks issued for retirements of patronage

capital, after an appropriate waiting period, shall be credited

to this account and a record shall be maintained adequate to

enable the cooperative to make payment to the patron if and when

a claim has been established by the patron.

SUBPART D - INSTRUCTIONS FOR REVENUE ACCOUNTS

ù32.4999 General.

(a) Purpose of revenue accounts. The revenue accounts are

intended to include the actual cash inflows (or equivalents) that

have or will occur as a result of the company's ongoing major or

central operations during the period. They will include the

revenues which arise from furnishing regulated telecommunications

services to others, from directory advertising, rentals of

telecommunications assets and from providing other services which

are directly associated with the provision of regulated

telecommunications services.

(b) Deductions from revenue. Corrections of overcharges,

authorized refunds of over collections previously credited to

revenue, authorized refunds and adjustments on account of failure

in service, and other corrections shall be charged to the revenue

account previously credited with the amounts involved.

(c) Commissions. Commissions paid to others or employees in

place of compensation or salaries for services rendered, such as
public telephone commissions, shall be charged to Account 6623,

Customer Services, and not to the revenue accounts.

(d) Revenue recognition. Credits shall be made to the

appropriate revenue accounts when such revenue is actually

earned. When the billing cycle encompasses more than on

accounting period, adjustments are necessary to properly

recognize the revenue applicable to the current accounting period

under report. Revenues recorded under the terms of two-tier

contracts or other variable payment plans should be deferred, if

necessary, and recognized ratably with expenses over the term of

related contract. Any amounts deferred shall be credited to

Account 4360, Other Deferred Credits.

(e) Contractual arrangements. Charges and credits resulting

from activities associated with the provision of regulated

telecommunications services shall be recorded in a manner

consistent with the nature of the underlying contractual

arrangements. The charges and credits resulting from expense

sharing or apportionment arrangements associated with the

provision of regulated telecommunications services shall be

recorded in the detailed regulated accounts. Charges and credits

resulting from revenue settlement agreements or other revenue

pooling arrangements associated with the provision of regulated

telecommunications services shall be included in the appropriate

revenue accounts. Those charges and credits resulting from

contractual revenue pooling and/or sharing agreement shall be

recorded in each prescribed revenue account and prescribed

subsidiary record categories thereof to the extent that each is

separately identifiable in the settlement process. It is not

intended that settlement amounts be allocated or generally spread

to the individual revenue accounts where they are not separately

identifiable in the settlement process. When settlement amounts

are not identifiable by a revenue account they shall be recorded

in Account 5069, Other Local Exchange Revenue Settlements; 5129,

Other Long Distance Private Network Revenue Settlements; 5169,

Other Long Distance Revenue Settlements; or 5269, Other Revenue

Settlements, as appropriate.

(f) Subsidiary records - jurisdictional subdivisions.

(1) Subsidiary record categories shall be maintained in order

that the company may separately report revenues derived from

charges imposed under intrastate, interstate and international

tariff fillings. Such subsidiary record categories shall be

reported as required by Part 43 of this Commission's Rules and

Regulations.

(2) This jurisdictional subsidiary record requirement applies

to all accounts except the Network Access Services Group where

separate accounts have been established for Federal and state

access revenues.

(g) Structure of revenue accounts.
(1) The revenue section of the system of accounts shall be

organized by revenue group summary account, account and

subsidiary record category (if required).

(2) The revenue section of this system of accounts shall be

comprised of five major groups - Local Network Services Revenues,

Network Access Services Revenues, Long Distance Network Services

Revenues, Miscellaneous Revenues, and Uncollectible Revenues,

which shall be considered as a revenue group for the purposes of

the construction of the system.

(3) Summary accounts within revenue groups shall be used to

describe aggregations of two or more accounts having a certain

commonality. Summary accounts are assigned numbers so that they

may be used by Class A telephone companies to aggregate accounts

for reporting purposes; and, as specifically directed, so that

they may be used as accounts by Class B telephone companies.

(4) Accounts shall be maintained as prescribed in this

Section subject to the conditions described in ù32.13 of

Subpart B. In certain instances, subsidiary record categories

may be required below the account level by this system of

accounts or by Commission order.

(h) Local Network Services revenues. Local Network Services

revenues (Accounts 5000-5069) shall include revenues derived from

the provision of service and equipment entirely within the basic

service area. That area is defined as the normal boundaries for

local calling plus Extended Area Service (EAS) boundaries as they

apply to that service. It includes revenues derived from both

local private network service and local public network services

as well from customer premises facilities services. Local

revenues include associated charges such as one-time service

connection or termination charges and secondary features such as

call waiting.

(i) Network Access revenues.

(1) Network Access revenues (Accounts 5080-5084) shall

include revenues derived from the provision of exchange access

services to an interexchange carrier or to an end user of

telecommunications services beyond the exchange carrier's

network.

(2) Billing and collections service provided under exchange

access tariffs shall be included in the Miscellaneous Revenue

Group.

(j) Long Distance Network Service revenues. Long Distance

Network Service revenues shall include revenues derived from the

provision of services beyond the basic service area whether

message or flat-rate and including public network switching as

well as private.
(k) Miscellaneous revenues. Miscellaneous revenues are those

revenues derived from the provision of regulated products and

services provided under tariff or contract but not contained

elsewhere. They shall also include operating revenue derived

from activities performed incident to the company's tariffed

telecommunications operations which, though non-tariffed, are

included in the regulatory process.

(l) Nonregulated revenues. The nonregulated revenue account

shall be used for nonregulated operating revenues when a

nonregulated activity involves the common or joint use of assets

or resources in the provision of regulated and nonregulated

products or services and when such activity is accounted for, as

required in ù32.23(c) of this subpart, within the accounts

prescribed in this system for telephone company operations.

Revenues from nontariffed activities offered incidental to

tariffed services may be accounted for as regulated revenues,

provided the activities are outgrowths of regulated operations

and the revenues do not exceed, in the aggregate, one percent of

total revenues for three consecutive years. Such activities must

be listed in the Commission-approved Cost Allocation Manual for

any company required to file a Cost Allocation Manual.

(m) Uncollectible revenues. Uncollectible revenues shall

include amounts originally credited to the revenue accounts which

have proved impracticable of collection.

(n) Revenue accounts to be maintained.

INCOME STATEMENT ACCOUNTS

 Class A Class B

 Account Title Account Account

Local Network Services Revenues:

 Basic local service revenue 1 5000 5000

 Basic area revenue 5001

 Optional extended area revenue 5002

 Cellular mobile revenue 5003

 Other mobile services revenue 5004

 Public telephone revenue 5010

 Local private line revenue 5040

 Customer premises revenue 5050

 Other local exchange revenue 5060

 Other local exchange revenue settlements 5069

Network Access Services Revenues:

 Network access revenue 1 5080 5080

 End user revenue 5081 5081

 Switched access revenue 5082 5082

 Special access revenue 5083 5083

 State access revenue 5084 5084
 Class A Class B

 Account Title Account Account

Long Distance Network Services Revenues:

 Long distance message revenue 5100 5100

 Unidirectional long distance revenue 1 5110

 Long distance inward-only revenue 5111

 Long distance outward-only revenue 5112

 Long distance private network revenue 1 5120

 Subvoice grade long distance private

 network revenue 5121

 Voice grade long distance private

 network revenue 5122

 Audio program grade long distance

 private network revenue 5123

 Video program grade long distance

 private network revenue 5124

 Digital transmission long distance

 private network revenue 5125

 Long distance private network

 switching revenue 5126

 Other long distance private network

 revenue 5128

 Other long distance private network

 revenue settlements 5129

 Other long distance revenue 5160

 Other long distance revenue settlements 5169

Miscellaneous Revenues:

 Miscellaneous revenue 5200

 Directory revenue 5230

 Rent revenue 5240

 Corporate operations revenue 5250

 Miscellaneous revenue 1 5260

 Special billing arrangements revenue 5261

 Customer operations revenue 5262

 Plant operations revenue 5263

 Other incidental regulated revenue 5264

 Other revenue settlements 5269

 Carrier billing and collection revenue 5270

Nonregulated Revenues:

 Nonregulated operating revenue 5280 5280

Uncollectible Revenues:

 Uncollectible revenue 1 5300 5300

 Uncollectible revenue - telecommuni-

 cations 5301

 Uncollectible revenue - other 5302

1 To be used by Class A telephone companies to summarize

accounts for reporting purposes.
ù32.5000 Basic local service revenue.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 5001 through 5004. Class B telephone companies shall

use this account for revenues of the type and character required

of Class A companies in Accounts 5001 through 5069.

ù32.5001 Basic area revenue.

(a) This account shall include revenue derived from the

provision of basic area message services such as flat rate

services and measured services. Included is revenue derived from

non-optional extended area services. Also included in revenue

derived from the billed or guaranteed portion of semi-public

services.

(b) Revenue derived from charges for nonpublished numbers or

additional and boldfaced listings in the alphabetical section of

the company's telephone directories shall be included in

Account 5230, Directory Revenue.

ù32.5002 Optional extended area revenue.

This account shall include total revenue derived from the

provision of optional extended area service.

ù32.5003 Cellular mobile revenue.

This account shall include message revenue derived from

cellular mobile telecommunications systems connected to the

public switched network placed between mobile units and other

stations within the mobile service area.

ù32.5004 Other mobile services revenues.

(a) This account shall include message revenue derived from

general radio telecommunications systems connected to the public

switched network placed between mobile units and other stations

within the mobile service area, as well as revenue from mobile

radio paging, mobile dispatching, and signaling services.

(b) Revenue from private mobile telephone services which do

not have access to the public switched network shall be included

in Account 5264, Other Incidental Regulated Revenue.

ù32.5010 Public telephone revenue.

This account shall include message revenue (e.g., coin paid)

derived from public and semi-public telephone services provided

within the basic service area.
ù32.5040 Local private line revenue.

This account shall include revenue derived from local services

that involve dedicated circuits, private switching arrangements,

and/or predefined transmission paths, whether virtual or

physical, which provide communications between specific locations

(e.g., point-to-point communications). It includes revenue from

subvoice grade, voice grade, audio and video program grade,

digital transmission and local private network switching as well

as the revenue from administrative and operational support

services associated with private network services and facilities,

e.g., charges for company-directed testing, expedited

installation, and service restoration priority.

ù32.5050 Customer premises revenue.

This account shall include revenue derived from tariffed

information origination/termination plant. Included is revenue

derived from the provision under leasing arrangements of tariffed

customer premises equipment (CPE), terminal equipment, station

apparatus and large private branch exchanges as well as tariffed

nonrecurring charges related solely to station apparatus. Also

included are all tariffed charges for customer premises

activities and facilities not related solely to station

apparatus.

ù32.5060 Other local exchange revenue.

This account shall also include revenue from the provision of

secondary features which are integrated with the telecommunications network such as call forwarding, call waiting and touchtone line service. Also included is revenue derived from the

provision of public announcement and other record message

services, directory assistance and other call completion services

(excluding operator assisted basic long distance calls), as well

as revenue derived from central office related service connection

and termination charges, and other non-premise customer specific

charges associated with public network services. This account

shall also include local revenue not provided for in other

accounts.

ù32.5069 Other local exchange revenue settlements.

This account shall include the charges and credits resulting

from contractual revenue pooling and/or sharing agreement for

tariffed local network services only when they are not separately

identifiable by local network services revenue accounts in the

settlement process. (See also ù32.4999(e) of this subpart.) To

the extent that the charges and credits resulting from a

settlement process can be identified by Local Network Services

Revenue account they shall be recorded in the applicable account.
ù32.5080 Network access revenue.

(a) This account number shall be used by Class A and Class B

telephone companies to summarize for reporting purposes the

contents of Accounts 5081 through 5084. It shall include revenue

derived from the provision of exchange access services to an

interexchange carrier or to an end user of telecommunications

service beyond the exchange carrier's network.

(b) Accounts 5081 through 5083 are for federally tariffed

access charges while Account 5084 is to be used for state

tariffed access charges.

ù32.5081 End user revenue.

This account shall contain the federally tariffed monthly flat

rate charge assessed upon end users.

ù32.5082 Switched access revenue.

(a) This account shall consist of federally tariffed charges

assessed to interexchange carriers for access to local exchange

facilities.

(b) Subsidiary record categories shall be maintained in order

that the company may separately report the amounts contained

herein that relate to limited pay telephone, carrier common line,

line termination, local switching, interception, information,

common transport and dedicated transport. Such subsidiary record

categories shall be reported as required by Part 43 of this

Commission's Rules and Regulations.

ù32.5083 Special access revenue.

(a) This account shall include all federally tariffed charges

assessed for other than end user or switched access charges

referred to in Account 5081, End User Revenue, and Account 5082,

Switched Access Revenue.

(b) Subsidiary record categories shall be maintained in order

that the company may separately report the amounts contained

herein that relate to recurring charges, nonrecurring charges and

surcharges. Such subsidiary record categories shall be reported

as required by Part 43 of this Commission's Rules and

Regulations.

ù32.5084 State access revenue.

(a) This account shall include all state tariffed charges

assessed by local exchange carriers upon interexchange carriers

and end users access for access to local exchange network for

intrastate telecommunications.
(b) Billing and collections services provided under exchange

access tariffs shall be included in Account 5270, Carrier Billing

and Collection Revenue.

ù32.5100 Long distance message revenue.

(a) This account shall be used by Class A telephone companies

for revenues derived from message services that terminate beyond

the basic service area of the originating wire center and are

individually priced. This includes those message services which

utilize the public long distance switching network and the basic

subscriber access subscriber access line. (See also

Account 5111, Long Distance Inward-Only Revenue, and

Account 5112, Long Distance Outward-Only Revenue.) It also

includes those long distance calls placed from mobile and public

telephones, as well as any charges for operator assistance or

special billing directly related to the completion of a specific

call. This account shall also include revenue derived from

individually priced message services offered under calling plans

(discounted long distance) which do not utilize dedicated access

lines, as well as those priced at the basic long distance rated

where a discounted toll charge is on a per message basis. Any

revenue derived from monthly or ones-time charges for obtaining

calling plan services shall be included in this account.

(b) Class B telephone companies shall use this account for

revenues of the type and character required of Class A companies

in Accounts 5100 through 5169.

ù32.5110 Unidirectional long distance revenue.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 5111 and 5112. It shall include revenue derived from

long distance services which permit unidirectional calls to a

subscriber from specified service areas or which permit the

subscriber to place telephone calls from one location to other

specified services areas. It shall also include revenue derived

from toll calling plans which embody flat-rate or measured time

toll service. (See also Account 5100, Long Distance Message

Revenue.)

ù32.5111 Long distance inward-only revenue.

This account shall include the revenue derived from long

distance services which permit unidirectional calls to a

subscriber from specified services areas (multipoint-to-point

service). These calls require the use of dedicated access lines

connecting a subscriber's premises and a designated central

office. These dedicated access lines are generally separate from

those required for the subscriber to place outward calls. The

call is billed to the subscriber even though it is generally

initiated by the subscriber's customer or correspondent.
ù32.5112 Long distance outward-only revenue.

This account shall include revenue derived from long distance

services which permit the subscriber to place telephone calls

from one location to other specified service areas (point-tomultipoint service). These calls are completed without operator

assistance and require the use of a dedicated access line. The

dedicated access line is generally separate from those required

for inward message services and cannot be used to place calls

within the basic service area or calls outside the selected

service areas. Outward calls are screened and blocked to

determine whether the calls are within an authorized service

area.

ù32.5120 Long distance private network revenue.

(a) This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 5121 through 5129. It shall include revenue derived

from services extending beyond the basic service area that

involve dedicated circuits, private switching arrangements,

and/or predefined transmission paths, whether virtual or

physical, which provide communications between specific locations

(e.g., point-to-point communications).

(b) Service connection charges, termination charges,

rearrangements and changes, etc., shall be included in each

account to which they apply. Revenue derived from associated

administrative and operational support services shall be included

in Account 5128, Other Long Distance Private Network Revenue.

ù32.5121 Subvoice grade long distance private network revenue.

This account which consists of revenue from narrow-band analog

private network circuits and facilities furnished exclusively

from record forms of communications, such as teletypewriter,

teletypesetter, telewriter, ticker, Morse, signaling, remote

metering, and supervisory services.

ù32.5122 Voice grade long distance private network revenue.

This account consists of revenue from private network circuits

and facilities (including multipurpose wide-band) which provide

voice grade services for the transmission of analog signals. It

includes revenue from services such as voice, data and telephoto

communication, as well as remote metering, supervisory control,

miscellaneous signaling and channels furnished for the purpose of

extending customer provided communications systems. It includes

revenue from the provision of facilities between customer

premises and (a) a serving office, (b) a carrier distribution

point or (c) an extension distribution channel, except when

furnished as a subscriber access line under an unidirectional

long distance service (in which case the revenue should be
included in Account 5111, Long Distance Inward-Only Revenue, or

Account 5112, Long Distance Outward-Only Revenue.

ù32.5123 Audio program grade long distance private network

 revenue.

(a) This account consists of revenue from private network

circuits and facilities furnished for audio program transmission

purposes, such as radio broadcasting, sound recording (wired

music) and loud speaker services. It includes revenue from the

provision of facilities for the transmission of analog signals

between customer premises and (1) a serving office, (2) a carrier

distribution point or (3) an extension distribution channel

furnished in connection with such services. It also includes

revenue from facilities furnished to carry the audio portion of a

television program if furnished under separate audio rates.

(b) If the rate for television program services includes both

the picture and sound portion of the transmission, the revenue

shall be included in Account 5124, Video Program Grade Long

Distance Private Network Revenue.

ù32.5124 Video program grade long distance private network

 revenue.

This account consists of revenue from private network circuits

and facilities furnished for television program transmission

purposes, such as commercial broadcast an educational or private

television services. It includes revenue from the provision of

facilities for the transmission of analog signals between

customer premises and (a) a serving office, (b) a carrier

distribution point or (c) an extension distribution channel

furnished in connection with such services. It also includes

revenue from both the picture and sound portions of transmission

for television program service when provided under a combined

rate schedule.

ù32.5125 Digital transmission long distance private network

 revenue.

This account consists of revenue from the provision of

circuits and facilities for the transmission of digital signals

only.

ù32.5126 Long distance private network switching revenue.

This account consists of revenue derived from the provision of

common user channels and switching capabilities used for the

transmission of telecommunication signals between three (3) or

more points in the network. Also included is revenue derived

from the provision of basic switching and transfer arrangements

used to connect private line channels.
ù32.5128 Other long distance private network revenue.

This account consists of revenue from administrative and

operation support services associated with private network

services and facilities, e.g., charges for company-directed

testing, expedited installation, and service restoration

priority. Also included is other private network services

revenue not provided for in other accounts.

ù32.5129 Other long distance private network revenue

 settlements.

This account shall include the charges and credits resulting

from contractual revenue pooling and/or sharing agreement for

tariffed long distance private network services only when they

are not identifiable by private network services revenue account

in the settlement process. (See also ù32.4999(e) of this

subpart.) To the extent that the charges and credits resulting

from a settlement process can be identified by private network

services revenue account, that shall be recorded in the

applicable account.

ù32.5160 Other long distance revenue.

This account shall include long distance revenues not provided

for elsewhere.

ù32.5169 Other long distance revenue settlements.

This account shall include the charges and credits resulting

from contractual revenue pooling and/or sharing agreements for

tariffed long distances public network services only when they

are not identifiable by long distance public network services

revenue accounts in the settlement process. (See also

ù32.4999(e) of this subpart.) To the extent that the charges and

credits resulting from a settlement process can be identified by

long distance public network services revenue account they shall

be recorded in the applicable account.

ù32.5200 Miscellaneous revenue.

Class B telephone companies shall use this account for

revenues of the type and character required of Class A companies

in Accounts 5230 through 5270.

ù32.5230 Directory revenue.

This account shall include revenue derived from alphabetical

and classified sections of directories and shall also include

fees paid by other entities for the right to publish the

company's directories. Items to be included are:

(a) All revenue derived from the classified section of the

directories;
(b) Revenue from the sale of new telephone directories

whether they are the company's own directories or directories

purchased from others. This shall also include revenue from the

sale of specially bound telephone directories and special

telephone directory covers;

(c) Amounts charged for additional and bold face listings,

marginal displays, inserts, and other advertisements in the

alphabetical section of the company's telephone directories; and

(d) Charges for unlisted and non-published telephone numbers.

ù32.5240 Rent revenue.

(a) This account shall include revenues (including taxes when

borne by the lessee) derived from the rental or subrental to

others of telecommunications services rendered by the company.

It includes revenue from the rent of such items as space in

conduit, pole line space for attachments, and any allowance for

return on property used in joint operations and shared facilities

agreements.

(b) The expense of maintaining and operating the rented

property, including depreciation and insurance, shall be included

in the appropriate operating expense accounts. Taxes applicable

to the rented property shall be included by the owner of the

rented property in appropriate tax accounts.

(c) When land or buildings are rented on an incidental basis

for non-telecommunications use the rental and expenses are

included in Account 7360, Other Nonoperating Income.

ù32.5250 Corporate operations revenue.

This account shall include revenue derived from services

rendered to other companies under a license agreement, general

service contracts, or other arrangement provided for the

furnishing of general accounting, financial, legal, patent, and

other general services associated with the provision of regulated

telecommunications services. (See also Accounts 5230 and 5270.)

ù32.5260 Miscellaneous revenue.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 5261 through 5269.

ù32.5261 Special billing arrangements revenue.

This account shall include revenue derived from the provision,

either under tariff or through contractual arrangements, of

special billing information to customers in the form of magnetic

tapes, cards or statements. Special billing information provides

detail in a format and/or at a level of detail not normally
provided in the standard billing rendered for the regulated

telephone services utilized by the customer.

ù32.5262 Customer operations revenue.

This account shall include revenue derived from the

performance of customer operations services for others incident

to the company's regulated telecommunications operations which

are not provided for elsewhere. (See also ù32.14(e) and

ù32.4999(e) of this part.)

ù32.5263 Plant operations revenue.

(a) This account shall include revenue derived from contract

services (plant maintenance) performed for others incident to the

company's regulated telecommunications operations. This includes

revenue from the incidental performance of nontariffed operating

and maintenance activities for others which are similar in nature

to those activities which are performed by the company in

operating and maintaining its own telecommunications plant

facilities.

(b) The records supporting the entries in this account shall

be maintained with sufficient particularity to identify the

revenue and associated Plant Specific Operations Expenses related

to each undertaking.

(c) This account does not include revenue related to the

performance of operation or maintenance activities under a joint

operating agreement. (See also Account 5240.)

ù32.5264 Other incidental regulated revenue.

(a) This account shall include the other incidental regulated

revenue not provided for in other revenues accounts. Such

revenues to be included are:

(1) Collection overages (collection shall be charged to

Account 6623, Customer Services.)

(2) Unclaimed refunds for telecommunications services when

not subject to escheats;

(3) Charges (penalties) imposed by the company for customer

checks returned for nonpayment;

(4) Discounts allowed customers for prompt payment;

(5) Late payments charges;

(6) Revenue from private mobile telephone services which do

not have access to the public switched network; and
(7) Other incidental revenue not provided for elsewhere in

other revenue accounts.

(b) Any definitely known amounts of losses of revenue

collections due to fire or theft, (1) at customers' coin-box

stations, (2) at public or semipublic telephone stations, (3) in

the possession of collectors en route to collection offices, (4)

on hand at collection offices, and (5) between collection offices

and banks shall be charged to Account 6728, Other General and

Administrative.

ù32.5269 Other revenue settlements.

This account shall include the charges and credits resulting

from contractual revenue pooling and/or sharing agreements for

activities included in the miscellaneous revenue accounts only

when they are not identifiable by miscellaneous revenue account

in the settlement process. (See also ù32.4999(e) of this

subpart.) To the extent that the charges and credits resulting

from a settlement process can be identified by miscellaneous

revenue accounts they shall be recorded in the applicable

account.

ù32.5270 Carrier billing and collection revenue.

This account shall include revenue derived from the provision

of billing and collection services to other telecommunications

companies. This includes amounts charged for services such as

message recording, billing, collection, billing analysis, and

billing information services, whether rendered under tariff or

contractual arrangements.

ù32.5280 Nonregulated operating revenue.

(a) This account shall include revenues derived from a

nonregulated activity involving the common or joint use of assets

or resources in the provision of regulated and nonregulated

products or services, which are not provided for elsewhere in

this system of accounts.

(b) This account shall be debited and regulated revenue

accounts shall be credited at tariffed rates when tariffed

services are provided to nonregulated activities that are

accounted for as prescribed in ù32.23(c) of this subpart.

(c) Separate subsidiary record categories shall be maintained

for each nonregulated revenue item recorded in this account.

ù32.5300 Uncollectible revenue.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 5301 and 5302. Class B telephone companies shall use
this account for revenues of the type and character required of

Class A companies in Accounts 5301 and 5302.

ù32.5301 Uncollectible revenue - telecommunications.

This account shall be charged with amounts concurrently

credited to Account 1181, Accounts Receivable Allowances -

Telecommunications.

ù32.5302 Uncollectible revenue - other.

This account shall be charged with amounts concurrently

credited to Account 1190, Other Accounts Receivable, or to

Account 1191, Accounts Receivable Allowance - Other, when such

allowance is maintained.

SUBPART E - INSTRUCTIONS FOR EXPENSE ACCOUNTS.

ù32.5999 General.

(a) Structure of the expense accounts.

(1) The expense section of the system of accounts shall be

organized by expense group summary account, account, and

subsidiary record category (if required).

(2) The expense section of this system of accounts shall be

comprised of four major expense groups - Plant Specific

Operations, Plant Nonspecific Operations, Customer Operations,

and Corporate Operations. Expenses to be recorded in Plant

Specific and Plant Nonspecific Operations Expense groups

generally reflect cost associated with the various kinds of

equipment identified in the plant asset accounts. Expenses to be

recorded in the Customer Operations and Corporate Operations

accounts reflect the costs of, or as associated with, functions

performed by people, irrespective of the organization in which

any particular function is performed.

(3) Summary accounts within expense groups shall be used to

describe aggregations of two or more accounts having a certain

commonality. Summary accounts are assigned numbers so that they

may be used by Class A telephone companies to aggregate accounts

for reporting purposes; and as specifically directed, so that

they may be used as accounts by Class B telephone companies.

(4) Accounts shall be maintained as prescribed in this

section subject to the conditions described in ù32.13 in

Subpart B. Subsidiary record categories may be required below the

account level by this system of accounts or by Commission order.

(b) Plant Specific Operations Expense.
(1) The Plant Specific Operations Expense accounts, 6110

through 6441, are used to record costs related to specific kinds

of telecommunications plant.

(2) The Plant Specific Operations Expense accounts

predominantly mirror the telecommunications plant in service

detail accounts and are numbered consistently with them; the

first digit of the expense account being six (6) and the

remaining digits being the same as the last three numbers of the

related plant account. In classifying Plant Specific Operations

expenses, the text of the corresponding plant account should be

consulted to ensure appropriateness.

(3) The Plant Specific Operations Expense accounts shall

include the costs of inspecting, testing (except as specified in

Account 6533, Testing Expense) and reporting on the condition of

telecommunications plant to determine the need for repairs,

replacements, rearranges and changes; performing routine work to

prevent trouble except as specified in Account 6533), replacing

items of plant other than retirement units; rearranging and

changing the location of plant not retired; repairing material

for reuse; restoring the condition of plant damaged by storms,

floods, fire, or other casualties (other than the cost of

replacing retirement units); inspecting after repairs have been

made; and receiving training to perform these kinds of work.

Also included are the costs of direct supervision (immediate or

first-level) and office support of this work.

(4) In addition to the activities specified in

paragraph (b)(3) of this section, the appropriate Plant Specific

Operations Expense accounts shall include the cost of personnel

whose principal job is the operation of plant equipment, such as

general purpose computer operators, aircraft pilots, chauffeurs

and shuttle bus drivers. However, when the operation of

equipment is performed as part of other identifiable functions

(such as the use of office equipment, capital tools or motor

vehicles) the operators' cost shall be charged to accounts

appropriate for those functions. (For costs of operator services

personnel, see Accounts 6621, Call Completion Services, and 6622,

Number Services, and for costs of test board personnel see

Account 6533.)

(c) Plant Nonspecific Operations Expense. The Plant

Nonspecific Operations Expense accounts shall include expenses

related to property held for future telecommunications use,

provisioning expenses, network operations expenses, and

depreciation and amortization expenses. Accounts in this group

(except for Accounts 6540, Access Expense, and Accounts 6560

through 6565) shall include the costs of performing activities

described in narratives for individual accounts. These costs

shall also include the costs of supervision and office support of

these activities.
(d) Customer Operations Expense. The Customer Operations

Expense accounts shall include the cost of performing customer

related marketing and services activities described in narratives

for individual accounts. These costs shall also include the

costs of supervision, office support and training for these

activities.

(e) Corporate Operations Expense. The Corporate Operations

Expense accounts shall include the costs of performing executive

and planning activities and general and administrative activities

described in narratives for individual accounts. These costs

shall also include the costs of supervision, office support and

training for these activities.

(f) Expense Matrix. The expense accounts shall be maintained

by the following subsidiary record categories, as appropriate to

each account. Such subsidiary record categories shall be

reported as required by Part 43 of this Commission's Rules and

Regulations.

(1) Salaries and wages. This subsidiary record category

shall include compensation to employees, such as; wages,

salaries, commissions, bonuses, incentive awards and termination

payments.

(2) Benefits. This subsidiary record category shall include

payroll related benefits on behalf of employees such as the

following:

Pensions

Savings plan contributions (company portion) Workers

compensation required by law

Life, hospital, medical, dental, and vision plan insurance

Social Security and other payroll taxes

(3) Rents.

(i) This subsidiary record category shall include amounts

paid for the use of personal operating property. Amounts paid for

real property shall be included in Account 6121, Land and

Buildings Expense. This category includes payments for operating

leases but does not include payments for capital leases.

(ii) This subsidiary record category is applicable only to

the Plant Specific Operations Expense accounts. Incidental rents,

e.g., short-term rental car expense, shall be categorized as

Other Expenses (see paragraph (f)(4) of this section) under the

account which reflects the function for which the incidental rent

was incurred.

(4) Other expenses. This subsidiary record category shall

include costs which cannot be classified to the other subsidiary

record categories. Included are material and supplies, including

provisioning (note also Account 6512, Provisioning Expense);
contracted services; accident and damage payments, insurance

premiums; traveling expenses and other miscellaneous costs.

(5) Clearances. This subsidiary record category shall

include amounts transferred to Construction accounts (see

ù32.2000(c)(2)(iii)), or other Plant Specific Operations Expense

accounts, and/or Account 3100, Accumulated Depreciation (cost of

removal; see ù32.2000(g)(1)(iii)), as appropriate, from

Accounts 6112, Motor Vehicle Expense; 6113, Aircraft Expense;

6114, Special Purpose Vehicles Expense; 6116, Other Work

Equipment Expense; 6534, Plant Operations Administration Expense;

and 6535, Engineering Expense. There shall also be transfers to

Construction or other Plant Specific Operations Expense accounts,

as appropriate, from Account 6512, Provisioning Expense. With

respect to these expenses, companies may establish such clearing

accounts as they deem necessary to accomplish substantially the

same results, provided that within 30 days of the opening of such

accounts, companies shall notify the Commission of the nature and

purpose thereof. Additional clearing accounts affecting other

expense areas may be established with prior approval of the

Commission. Should companies elect, the initial incurred

subsidiary record category identification may be carried through

to the final accounts without this Commission's approval.

(g) Reimbursements. Reimbursements of actual costs incurred

in connection with joint operations or projects, repairing plant

due to damages by others, and obligations to make changes in

telecommunications plant (such as highway relocations), shall be

credited to the accounts originally charged.

(h) Expense accounts to be maintained.

INCOME STATEMENT ACCOUNTS

 Class A Class B

 Account Title Account Account

Plant Specific Operations Expense:

 Network support expenses 1 2 6110 6110

 Motor vehicle expense 1 6112

 Aircraft expense 1 6113

 Special purpose vehicles expense 1 6114

 Garage work equipment expense 1 6115

 Other work equipment expense 1 6116

 General support expenses 1 2 6120 6120

 Land and building expense 1 6121

 Furniture and artworks expense 1 6122

 Office equipment expense 1 6123

 General purpose computers expense 1 6124

 Central office switching expenses 1 2 6210 6210

 Analog electronic expense 1 6211 6210.11

 Digital electronic expense 1 6212 6210.21

 Electro-mechanical expense 1 6215 6210.31

 Operator systems expense 1 6220 6220

 Class A Class B

 Account Title Account Account

 Central office transmission expense 1 2 6230 6230

 Radio systems expense 1 6231 6230.11

 Circuit equipment expense 1 6232 6230.21

 Information origination/termination

 expenses 1 2 6310 6310

 Station apparatus expense 1 6311

 Large private branch exchange expense 1 6341

 Public telephone terminal equipment

 expense 1 6351

 Other terminal equipment expense 1 6362

 Cable and wire facilities expenses 1 2 6410 6410

 Poles expense 1 6411

 Aerial cable expense 1 6421

 Underground cable expense 1 6422

 Buried cable expense 1 6423

 Submarine cable expense 1 6424

 Deep sea cable expense 1 6425

 Intrabuilding network cable expense 1 6426

 Aerial wire expense 1 6431

 Conduit systems expense 1 6441

Plant Nonspecific Operations Expense:

 Other property, plant and equipment

 expenses 1 2 6510 6510

 Property held for future telecommuni-

 cations use expense 1 6511

 Provisioning expense 1 6512

 Network operations expenses 1 2 6530 6530

 Power expense 1 6531

 Network administration expense 1 6532

 Testing expense 1 6533

 Plant operations administration expense 1 6534

 Engineering expense 1 6535

 Access expense 1 6540 6540

 Depreciation and amortization expenses 2 6560 6560

 Depreciation expense 6560.1

 Amortization expense 6560.2

 Depreciation expense - telecommuni-

 cations plant in service 6561

 Depreciation expense - property held for

 future telecommunications use 6562

 Amortization expense - tangible 6563

 Amortization expense - intangible 6564

 Amortization expense - other 6565

Customer Operations Expense:

 Marketing 1 2 6610 6610

 Product management 1 6611

 Sales 1 6612

 Product advertising 1 6613

 Services 1 2 6620 6620
123

 Class A Class B

 Account Title Account Account

 Call completion services 1 6621

 Number services 1 6622

 Customer services 1 6623

Corporate Operations Expense:

 Executive and planning 1 2 6710 6710

 Executive 1 6711

 Planning 1 6712

 General and administrative 1 2 6720 6720

 Accounting and finance 1 6721

 External relations 1 6722

 Human resources 1 6723

 Information management 1 6724

 Legal 1 6725

 Procurement 1 6726

 Research and development 1 6727

 Other general and administrative 1 6728

 Provision for uncollectible notes

 receivable 6790 6790

1 Subsidiary record categories required in accordance with

ù32.5999(f) of this subpart.

2 To be used by Class A telephone companies to summarize

accounts for reporting purposes.

ù32.6110 Network support expenses.

(a) This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 6112 through 6116. Class B telephone companies shall

use this account for expenses of the type and character required

of Class A companies in Accounts 6112 through 6116.

(b) Credits shall be made to this account by Class B

companies for amounts transferred to Construction and/or other

Plant Specific Operations Expense accounts. These amounts shall

be computed on the basis of direct labor hours. (See also

ù32.5999(f)(5) of this subpart.)

ù32.6112 Motor vehicle expense.

(a) This account shall include costs of fuel, lubrications,

license and inspection fees, washing, repainting, and minor

accessories. Also included are the costs of personnel whose

principal job is operating motor vehicles, such as chauffeurs and

shuttle bus drivers. The costs of users of motor vehicles whose

principal job is not the operation of motor vehicles shall be

charged to accounts appropriate for the activities performed.
124

(b) Credits shall be made to this account for amounts

transferred to Construction and/or to other Plant Specific

Operations Expense accounts. These amounts shall be computed on

the basis of direct labor hours. (See also ù32.5999(f)(5) of

this subpart.)

ù32.6113 Aircraft expense.

(a) This account shall include such costs as aircraft fuel,

flight crews, mechanics and ground crews, licenses and inspection

fees, washing, repainting, and minor accessories.

(b) Credits shall be made to this account for amounts

transferred to Construction and/or to other Plant Specific

Operations Expense accounts. These amounts shall be computed on

the basis of direct labor hours. (See also ù32.5999(f)(5) of

this subpart.)

ù32.6114 Special purpose vehicles expense.

(a) This account shall include such costs as fuel, licenses

and inspection fees, washing repainting, and minor accessories.

The costs of operators of this equipment shall be charged to

accounts appropriate for the activities performed.

(b) Credits shall be made to this account for amounts

transferred to Construction and/or to other Plant Specific

Operations Expense accounts. These amounts shall be computed on

the basis of direct labor hours. (See also ù32.5999(f)(5) of

this subpart.)

ù32.6115 Garage work equipment expense.

This account shall be charged only with costs incurred in

connection with the garage work equipment itself. The costs of

using this equipment to maintain motor vehicles, special purpose

vehicles, or other work equipment shall be charged to

Accounts 6112, Motor Vehicles; 6114 Special Purpose Vehicles; or

6116, Other Work Equipment, as appropriate.

ù32.6116 Other work equipment expense.

(a) This account shall be charged only with costs incurred in

connection with this work equipment itself. The costs of

operators of this equipment shall be charged to accounts

appropriate for the activities performed.

(b) Credits shall be made to this account for amounts

transferred to Construction and/or to other Plant specific

Operations Expense accounts. These amounts shall be computed on

the basis of direct labor hours. (See also ù32.5999(f)(5) of this

subpart.)
125

ù32.6120 General support expenses.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 6121 through 6124. Class B telephone companies shall

use this account for expenses of the type and character required

of Class A companies in Accounts 6121 through 6124.

ù32.6121 Land and building expense.

(a) This account shall include expenses associated with land

and buildings (excluding amortization of leasehold improvements).

This account shall also include janitorial service, cleaning

supplies, water, sewage, fuel and guard service, and electrical

power.

(b) The cost of electrical power used to operate the

telecommunications network shall be charged to Account 6531,

Power Expense, and the cost of separately metered electricity

used for operating specific types of equipment, such as

computers, shall be charged to the expense account appropriate

for such use.

ù32.6122 Furniture and artworks expense.

This account shall include expenses associated with furniture

and artworks.

ù32.6123 Office equipment expense.

This account shall be charged only with costs incurred in

connection with the office equipment itself. The costs of

operators of this equipment shall be charged to accounts

appropriate for the activities performed.

ù32.6124 General purpose computers expense.

This account shall include costs of personnel whose principal

job is the physical operation of general purpose computers and

the maintenance of operating systems. This excludes the cost of

preparation of input data or the use of outputs which are

chargeable to the accounts appropriate for the activities being

performed. Also excluded are costs incurred in planning,

developing, testing, implementing, and maintaining data bases and

application systems for general purpose computers. (See also

Account 6724, Information Management.) Separately metered

electricity for general purpose computers shall also be included

in this account.

Note: A 4/10/90 Notice of Proposed Rulemaking (NPRM) (FCC 90-

132) in CC Docket 90-215 is pending before the FCC. It proposes

eliminating Part 32 Accounts 6124, General Purpose Computers

Expense, and 6724, Information Management. Comments and Replies

were filed. Awaiting FCC Action.
126

ù32.6210 Central office switching expenses.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 6211 through 6215. Class B telephone companies shall

use this account for expenses of the type and character required

of Class A companies in Accounts 6211 through 6215.

REA 6210.11 Analog electronic expense.

This account shall used by Class B companies. This account

shall include expenses associated with analog electronic

switching.

REA 6210.21 Digital electronic expense.

This account shall used by Class B companies. This account

shall include expenses associated with digital electronic

switching.

REA 6210.31 Electro-mechanical expense.

This account shall used by Class B companies. This account

shall include expenses associated with electro-mechanical

switching.

ù32.6211 Analog electronic expense.

This account shall include expenses associated with analog

electronic switching.

ù32.6212 Digital electronic expense.

This account shall include expenses associated with digital

electronic switching.

ù32.6215 Electro-mechanical expense.

(a) This account shall include expenses associated with

electro-mechanical switching.

(b) Subsidiary record categories shall be maintained as

provided in ù32.2215(a) of Subpart C.

ù32.6220 Operator systems expense.

This account shall include expenses associated with operator

systems equipment.

ù32.6230 Central office transmission expense.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 6231 and 6232. Class B telephone companies shall use
127

this account for expenses of the type and character required of

Class A companies in Accounts 6231 and 6232.

REA 6230.11 Radio systems expense.

This account shall used by Class B companies. This account

shall include expenses associated with radio systems.

REA 6230.21 Circuit equipment expense.

This account shall used by Class B companies. This account

shall include expenses associated with circuit equipment.

ù32.6231 Radio systems expense.

(a) This account shall include expenses associated with radio

systems.

(b) Subsidiary record categories shall be maintained as

provided in ù32.2231(a) of Subpart C.

ù32.6232 Circuit equipment expense.

This account shall include expenses associated with circuit

equipment.

ù32.6310 Information origination/termination expenses.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 6311 through 6362. Class B telephone companies shall

use this account for expenses of the type and character required

of Class A telephone companies in Accounts 6311 through 6362.

ù32.6311 Station apparatus expense.

This account shall include expenses associated with station

apparatus. Expenses associated with company internal use

communication equipment shall be recorded in Account 6123, Office

Equipment Expense.

ù32.6341 Large private branch exchange expense.

This account shall include expenses associated with large

private branch exchanges. Expenses associated with company

internal use communication equipment shall be recorded in

Account 6123, Office Equipment Expense.

ù32.6351 Public telephone terminal equipment expense.

This account shall include expenses associated with public

telephone terminal equipment.
128

ù32.6362 Other terminal equipment expense.

This account shall include expenses associated with other

terminal equipment.

ù32.6410 Cable and wire facilities expenses.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 6411 through 6426. Class B telephone companies shall

use this account for expenses of the type and character required

of Class A companies in Accounts 6411 through 6426.

ù32.6411 Poles expense.

This account shall include expenses associated with poles.

ù32.6421 Aerial cable expense.

(a) This account shall include expenses associated with

aerial cable.

(b) Subsidiary record categories shall be maintained as

provided in ù32.2421(a) of Subpart C.

ù32.6422 Underground cable expense.

(a) This account shall include expenses associated with

underground cable.

(b) Subsidiary record categories shall be maintained as

provided in ù32.24.22(a) of Subpart C.

ù32.6423 Buried cable expense.

(a) This account shall include expenses associated with

buried cable.

(b) Subsidiary record categories shall be maintained as

provided in ù32.2423(a) of Subpart C.

ù32.6424 Submarine cable expense.

(a) This account shall include expenses associated with

submarine cable.

(b) Subsidiary record categories shall be maintained as

provided in ù32.2424(a) of Subpart C.

ù32.6425 Deep sea cable expense.

(a) This account shall include expenses associated with deep

sea cable.
129

(b) Subsidiary record categories shall be maintained as

provided in ù32.2425(a) of Subpart C.

ù32.6426 Intrabuilding network cable expense.

(a) This account shall include expenses associated with

intrabuilding network cable.

(b) Subsidiary record categories shall be maintained as

provided in ù32.2426(a) of Subpart C.

ù32.6431 Aerial wire expense.

This account shall include expenses associated with aerial

wire.

ù32.6441 Conduit systems expense.

This account shall include expenses associated with conduit

systems.

ù32.6510 Other property, plant and equipment expenses.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 6511 and 6512. Class B telephone companies shall use

this account for expenses of the type and character required of

Class A companies in Accounts 6511 and 6512.

ù32.6511 Property held for future telecommunications use

 expense.

This account shall include expenses associated with property

held for future telecommunications use.

ù32.6512 Provisioning expense.

(a) This account shall include costs incurred in provisioning

material and supplies, including office supplies. This includes

receiving and stocking, filling requisitions from stock,

monitoring and replenishing stock levels, delivery of material,

storage, loading or unloading and administering the reuse or

refurbishment of material. Also included are adjustments

resulting from the annual or more frequent inventory of material

and supplies.

(b) Credits shall be made to this account for amounts

transferred to construction and/or to plant specific operations

expense. These costs are to be cleared by adding to the cost of

material and supplies a suitable loading charge. (See also

ù32.5999(f)(5) of this subpart.)
130

ù32.6530 Network operations expenses.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 6531 through 6535. Class B telephone companies shall

use this account for expenses of the type and character required

of Class A companies in Accounts 6531 through 6535.

ù32.6531 Power expense.

This account shall include the cost of electrical power used

to operate the telecommunications network.

ù32.6532 Network administration expense.

This account shall include costs incurred in network

administration. This includes such activities as controlling

traffic flow, administering traffic measuring and monitoring

devices, assigning equipment and load balancing, collecting and

summarizing traffic data, administering trunking, and assigning

interoffice facilities and circuit layout work.

ù32.6533 Testing expense.

This account shall include costs incurred in testing

telecommunications facilities from a testing facility (test desk

or other testing system) to determine the condition of plant on

either a routine basis or prior to assignment of the facilities;

receiving, recording and analyzing trouble reports; testing to

determine the nature and location of reported trouble condition;

and dispatching repair persons or otherwise initiating corrective

action. (Note also ù32.5999(b)(3) of this subpart.)

ù32.6534 Plant operations administration expense.

(a) This account shall include costs incurred in the general

administration of plant operations. This includes supervising

plant operations (except as specified in ù32.5999(a)(3) of this

subpart); planning, coordinating and monitoring plant operations;

and performing staff work such as developing methods and

procedures, preparing and conducting training (except on-the-job

training) and coordinating safety programs.

(b) Credits shall be made to this account for amounts

transferred to Construction accounts. These amounts shall be

computed on the basis of direct labor hours. (See

ù32.2000(c)(2)(ii) of Subpart C.)

ù32.6535 Engineering expense.

(a) This account shall include costs incurred in the general

engineering of the telecommunications plant which are not

directly chargeable to an undertaking or project. This includes

developing input to the fundamental planning process, performing
131

preliminary work or advance planning in connection with potential

undertakings, and performing special studies of an engineering

nature.

(b) Credits shall be made to this account for amounts

transferred to Construction accounts. These amounts shall be

computed on the basis of direct labor hours. (See

ù32.2000(c)(2)(ii) of Subpart C.)

ù32.6540 Access expense.

(a) This account shall include amounts paid by interexchange

carriers or other exchange carriers to another exchange carrier

for the provision of carrier's carrier access.

(b) Subsidiary record categories shall be maintained in order

that the entity may separately report interstate and intrastate

carrier's carrier expense. Such subsidiary record categories

shall be reported as required by Part 43 of this Commission's

Rules and Regulations.

ù32.6560 Depreciation and amortization expenses.

This account shall be used by Class A telephone companies to

summarize for reporting purposes the contents of Accounts 6561

through 6565. Class B telephone companies shall use this account

for expenses of the type and character required of Class A

companies in Accounts 6561 through 6565.

REA 6560.1 Depreciation expense.

This account shall include the depreciation expense associated

with telecommunicatons plant in service (Accounts 2112 through

2441) and property held for future telecommunications use

(Account 2002).

REA 6560.2 Amortization expense.

This account shall include the amortization expense associated

with capital leases and leasehold improvements (Accounts 2681 and

2682), intangibles (Account 2690), and telecommunications plant

adjustments (Account 2005).

ù32.6561 Depreciation expense - telecommunications plant in

 service.

This account shall include the depreciation expense of

capitalized costs in Accounts 2112 through 2441, inclusive.
132

ù32.6562 Depreciation expense - property held for future

 telecommunications.

This account shall include the depreciation expense of

capitalized costs included in Account 2002, Property Held for

Future Telecommunications Use.

ù32.6563 Amortization expense - tangible.

This account shall include only the amortization of costs

included in Accounts 2681, Capital Leases, and 2682, Leasehold

Improvements.

ù32.6564 Amortization expense - intangible.

This account shall include the amortization of costs included

in Account 2690, Intangibles.

ù32.6565 Amortization expense - other.

(a) This account shall include only the amortization of costs

included in Account 2005, Telecommunications Plant Adjustment.

(b) This account shall also include lump-sum write offs of

amounts of plant acquisition adjustment as provided for in

ù32.2005(b)(3) of Subpart C.

(c) Subsidiary records shall be maintained so as to show that

character of the amounts contained in this account.

ù32.6610 Marketing.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 6611 through 6613. Class B telephone companies shall

use this account for expenses of the type and character required

of Class A companies in Accounts 6611 through 6613.

ù32.6611 Product management.

This account shall include costs incurred in performing

administrative activities related to marketing products and

services. This includes competitive analysis, product and

service identification and specification, test market planning,

demand forecasting, product life cycle analysis, pricing

analysis, and identification and establishment of distribution

channels.

ù32.6612 Sales.

This account shall include costs incurred in selling products

and services. This includes determination of individual customer

needs, development and presentation of customer proposals, sales

order preparation and handling, and preparation of sales records.
133

ù32.6613 Product advertising.

This account shall include costs incurred in developing and

implementing promotional strategies to stimulate the purchase of

products and services. This excludes nonproduct-related

advertising, such as corporate image, stock and bond issue and

employment advertisements, which shall be included in the

appropriate functional accounts.

ù32.6620 Services.

This account shall be used by Class A telephone companies to

summarize for reporting purposes the contents of Accounts 6621

through 6623. Class B telephone companies shall use this account

for expenses of the type and character required of Class A

companies in Accounts 6621 through 6623.

ù32.6621 Call completion services.

This account shall include costs incurred in helping customers

place and complete calls, except directory assistance. This

includes handling and recording; intercept; quoting rates, time

and charges; and all other activities involved in the manual

handling of calls.

ù32.6622 Number services.

This account shall include costs incurred in providing

customer number and classified listings. This includes preparing

or purchasing, compiling, and disseminating those listings

through directory assistance or other means.

ù32.6623 Customer services.

(a) This account shall include costs incurred in establishing

and servicing customer accounts. This includes:

(1) Initiating customer service orders and records;

(2) Maintaining and billing customer accounts;

(3) Collecting and investigating customer accounts, including

collecting revenues, reporting receipts, administering collection

treatment, and handling contacts with customers regarding

adjustments of bills;

(4) Collecting and reporting pay station receipts; and

(5) Instructing customers in the use of products and

services.

(b) This account shall also include amounts paid by

interexchange carriers or other exchange carriers to another

exchange carrier for billing and collection services. Subsidiary
134

record categories shall be maintained in order that the entity

may separately report interstate and intrastate amounts. Such

subsidiary record categories shall be reported as required by

Part 43 of this Commission's Rules and Regulations.

ù32.6710 Executive and planning.

This account shall be used by Class A telephone companies to

summarize for reporting purposes the contents of Accounts 6711

and 6712. Class B telephone companies shall use this account for

expenses of the type and character required of Class A companies

in Accounts 6711 and 6712.

ù32.6711 Executive.

This account shall include costs incurred in formulating

corporate policy and in providing overall administration and

management. Included are the pay, fees and expenses of boards of

directors or similar policy boards and all board-designated

officers of the company and their office staffs, e.g.,

secretaries and staff assistants.

ù32.6712 Planning.

This account shall include costs incurred in developing and

evaluating long-term courses of action for the future operations

of the company. This includes performing corporate organization

and integrated long-range planning, including management studies,

options and contingency plans, and economic strategic analysis.

ù32.6720 General and administrative.

This account shall be used by Class A telephone companies to

summarize for reporting purposes the contents of Accounts 6721

through 6728. Class B telephone companies shall use this account

for expenses of the type and character required of Class A

companies in Accounts 6721 through 6728.

ù32.6721 Accounting and finance.

This account shall include costs incurred in providing

accounting and financial services. Accounting services include

payroll and disbursements, property accounting, capital recovery,

regulatory accounting (revenue requirements, separations,

settlements and corollary cost accounting), non-customer billing,

tax accounting, internal and external auditing, capital and

operating budget analysis and control, and general accounting

(accounting principles and procedures and journals, ledgers, and

financial reports). Financial services include banking

operations, cash management, benefit investment fund management

(including actuarial services), securities management, debt trust

administration, corporate financial planning and analysis, and

internal cashier services.
135

ù32.6722 External relations.

This account shall include costs incurred in maintaining

relations with government, regulators, other companies and the

general public. This includes:

(a) Reviewing existing or pending legislation (See also

Account 7370, Special Charges, for lobbying expenses.):

(b) Preparing and presenting information for regulatory

purposes, including tariff and service cost filings, and

obtaining radio licenses and construction permits;

(c) Performing public relations and non-product related

corporate image advertising activities;

(d) Administering relations, including negotiating contracts

(See also Account 6725, Legal.), with telecommunications

companies and other utilities, businesses, and industries. This

excludes sales contracts (See also Account 6612, Sales); and

(e) Administering investor relations.

ù32.6723 Human resources.

This account shall include costs incurred in performing

personnel administration activities. This includes:

(a) Equal Employment Opportunity and Affirmative Action

Programs;

(b) Employee data for forecasting, planning and reporting;

(c) General employment services;

(d) Occupational medical services;

(e) Job analysis and salary programs;

(f) Labor relations activities;

(g) Personnel development and staffing services, including

counseling, career planning, promotion and transfer programs;

(h) Personnel policy development;

(i) Employee communications;

(j) Benefit administration;

(k) Employee activity programs;

(l) Employee safety programs; and
136

(m) Nontechnical training course development and

presentation.

ù32.6724 Information management.

This account shall include costs incurred in planning,

developing, testing, implementing and maintaining data bases and

application systems for general purpose computers.

Note: A 4/10/90 Notice of Proposed Rulemaking (NPRM) (FCC

90-132) in CC Docket 90-215 is pending before the FCC. It

proposes eliminating Part 32 Accounts 6124, General Purpose

Computers Expense, and 6724, Information Management. Comments and

Replies were filed. Awaiting FCC Action.

ù32.6725 Legal.

This account shall include costs incurred in providing legal

services. This includes conducting and coordinating litigation,

providing guidance on regulatory and labor matters, preparing,

reviewing and filing patents and contracts and interpreting

legislation. Also included are court costs, filing fees, and the

costs of outside counsel, depositions, transcripts and witnesses.

ù32.6726 Procurement.

This account shall include costs incurred in procuring

material and supplies, including office supplies. This includes

analyzing and evaluating suppliers' products, selecting

appropriate suppliers, negotiating supply contracts, placing

purchase orders, expediting and controlling orders placed for

material, developing standards for material purchased and

administering vendor or user claims.

ù32.6727 Research and development.

(a) This account shall include costs incurred in making

planned search or critical investigation aimed at discovery of

new knowledge. It also includes translating research findings

into a plan or design for a new product or process or for a

significant improvement to an existing product or process,

whether intended for sale or use.

(b) This excludes making routine alterations to existing

products, processes, and other ongoing operations even though

those alterations may represent improvements.

ù32.6728 Other general and administrative.

This account shall include costs incurred in performing

general administrative activities not directly charged to the

user, and not provided for in other accounts. This includes

providing general reference libraries, food services (e.g.,

cafeterias, lunch rooms and vending facilities), archives,
137

general security investigation services, operating official

private branch exchanges in the conduct of the business, and

telecommunications and mail services. Also included are payments

in settlement of accident and damage claims, insurance premiums

for protection against losses and damages, direct benefit

payments to or on behalf of retired and separated employees,

accident and sickness disability payments, supplemental payments

to employees while in governmental service, death payments, and

other miscellaneous costs of a corporate nature. This account

excludes the cost of office services, which are to be included in

the accounts appropriate for the activities supported.

ù32.6790 Provision for uncollectible notes receivable.

This account shall be charged with amounts concurrently

credited to Account 1200, Notes Receivable, or to Account 1201,

Notes Receivable Allowance, when such allowance is maintained.

SUBPART F - INSTRUCTIONS FOR OTHER INCOME ACCOUNTS

ù32.6999 General.

(a) Structure of Other Income Accounts. The Other Income

Accounts are designed to reflect both operating and nonoperating

income items including taxes, extraordinary items and other

income and expense items not properly included elsewhere.

(b) Other income accounts listing.

 Class A Class B

 Account Title Account Account

Other Operating Income and Expense:

 Other operating income and expenses 1 7100 7100

 Income from custom work 7110

 Return from nonregulated use of

 regulated facilities 7130

 Gains and losses from foreign exchange 7140

 Gains and losses from the disposition of

 land and artworks 7150

 Other operating gains and losses 7160

Operating Taxes:

 Operating taxes 1 7200 7200

 Operating investment tax credits - net 7210 7200.1

 Operating federal income taxes 7220 7200.2

 Operating state and local income taxes 7230 7200.3

 Operating other taxes 7240

 Operating taxes - property 7240.1 7200.41

 Operating taxes - miscellaneous 7240.2 7200.42

 Provision for deferred operating income

 taxes - net 7250 7200.5
138

 Class A Class B

 Account Title Account Account

Nonoperating Income and Expense:

 Nonoperating income and expense 1 7300 7300

 Dividend income 7310 7300.1

 Interest income 7320 7300.2

 Income from sinking and other funds 7330 7300.3

 Allowance for funds used during

 construction 7340 7300.4

 Gains or losses from the disposition of

 certain property 7350 7300.5

 Other nonoperating income 7360 7300.6

 Special charges 7370

Nonoperating Taxes:

 Nonoperating taxes 1 7400 7400

 Nonoperating investment tax credits -

 net 7410 7400.1

 Nonoperating federal income taxes 7420 7400.2

 Nonoperating state and local income taxes 7430 7400.3

 Nonoperating other taxes 7440 7400.4

 Provision for deferred nonoperating

 income taxes - net 7450 7400.5

Interest and Related Items:

 Interest and related items 1 7500 7500

 Interest on funded debt 7510

 Interest expense - capital leases 7520

 Amortization of debt issuance expense 7530

 Other interest deductions 7540

Extraordinary Items:

 Extraordinary items 1 7600 7600

 Extraordinary income credits 7610 7600.1

 Extraordinary income charges 7620 7600.2

 Current income tax effect of

 extraordinary items - net 7630 7600.3

 Provision for deferred income tax effect

 of extraordinary items - net 7640 7600.4

Jurisdictional Differences and Nonregulated Income Items:

 Income effect of jurisdictional

 ratemaking differences - net 7910 7910

 Nonregulated net income 7990 7990

1 To be used by Class A telephone companies to summarize

accounts for reporting purposes.

ù32.7099 Content of accounts.

Other Operating Income and Expense accounts are intended to

record the results of transactions, events or circumstances
139

during the periods which are incidental or peripheral to the

major or central operations of the company. They shall include

all items of an operating nature as incidental work performed for

others not provided for elsewhere. Whenever practicable the

inflows and outflows associated with a transaction, event or

circumstance shall be matched and the results shown as a net gain

or loss.

ù32.7100 Other operating income and expenses.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 7110 through 7160. Class B companies shall use this

account for other operating income an expense items of the type

and character required of Class A companies in Accounts 7110

through 7160.

ù32.7110 Income from custom work.

(a) This account shall include profits realized from custom

work (plant construction) performed for others incident to the

company's regulated telecommunications operations. This includes

profits from the incidental performance of nontariffed

construction activities (including associated engineering and

design) for others which are similar in nature to those

activities which are performed by the company in constructing its

own telecommunications plant facilities.

(b) The records supporting the entries in this account shall

be maintained with sufficient particularity to identify

separately the revenue and costs associated with each

undertaking.

ù32.7130 Return from nonregulated use of regulated facilities.

This account shall include a return on investment for the use

of regulated property plant and equipment to provide nonregulated

products and services.

ù32.7140 Gains and losses from foreign exchange.

This account shall include all gains and losses resulting from

the exchange of foreign currency. Transactions (realized) gains

or losses shall be measured based on the exchange rate in effect

on the transaction date. Unrealized gains or losses shall be

measured bases on the exchange rate in effect at the balance

sheet date.

ù32.7150 Gains and losses from the disposition of land and

 artworks.

This account shall include gains or losses resulting from the

disposition of land or artworks.
140

ù32.7160 Other operating gains and losses.

This account shall be charged or credited, as appropriate, to

record the results of transactions, events or circumstances which

are of an operational nature, but occur irregularly or are

peripheral to the major or central operations of the company and

not provided for elsewhere.

ù32.7199 Content of accounts.

The Operating Tax accounts shall include the taxes arising

from the central operations of the company.

ù32.7200 Operating taxes.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 7210 through 7250. Class B telephone companies shall

use this account for operating taxes of the type and character

required of Class A companies in Accounts 7210 through 7250.

REA 7200.1 Operating investment tax credits - net.

(a) This account shall used by Class B companies. This

account shall be charged and Account 4320, Unamortized Operating

Investment Tax Credits - Net, shall be credited with investment

tax credits generated from qualified expenditures related to

regulated operations which the company defers rather than

recognizes currently in income.

(b) This account shall be credited and Account 4320 shall be

charged ratably with the amortization of each year's investment

tax credits included in Account 4320 for investment services for

ratemaking purposes. Such amortization shall be determined in

relation to the period of time used for computing book

depreciation on the property with respect to which the tax

credits relate.

REA 7200.2 Operating federal income taxes.

(a) This account shall used by Class B companies. This

account shall be charged and Account 4070.1, Income Taxes

Accrued - Federal, shall be credited for the amount of Federal

income tax expense incurred in the current operating period..

This account shall also reflect subsequent adjustments to

amounts previously charged.

(b) Taxes should be accrued each month on an estimated basis

and adjustments made as later data becomes available.

REA 7200.3 Operating state and local income taxes.

(a) This account shall used by Class B companies. This

account shall be charged and Account 4070.2, Income Taxes
141

Accrued - State and Local, shall be credited for the amount of

state and local income tax expense incurred in the current

operating period. This account shall also reflect subsequent

adjustments to amounts previously charged.

(b) Taxes should be accrued each month on an estimated basis

and adjustments made as later data becomes available.

REA 7200.41 Operating taxes - property.

(a) This account shall used by Class B companies. This

account shall be charged and Account 4080.1, Other Taxes

Accrued - Property, shall be credited for the amount of property

tax expense incurred in the current operating period. This

account shall also reflect subsequent adjustments to amounts

previously charged.

(b) Taxes should be accrued each month on an estimated basis

and adjustments made as later data becomes available.

REA 7200.42 Operating taxes - miscellaneous.

(a) This account shall used by Class B companies. This

account shall be charged and Account 4080.5, Other Taxes

Accrued - Miscellaneous, shall be credited for the amount of all

other taxes accrued during the current operating period and not

provided for elsewhere such as gross receipts, franchise, and

capital stock tax expense incurred in the current operating

period. This account shall also reflect subsequent adjustments

to amounts previously charged.

(b) Taxes should be accrued each month on an estimated basis

and adjustments made as later data becomes available.

REA 7200.5 Provision for deferred operating income taxes - net.

(a) This account shall used by Class B companies. This

account shall be charged or credited, as appropriate, with

contra entries recorded in either Account 4100, Net Current

Deferred Operating Income Taxes, or Account 4340, Net Noncurrent

Deferred Operating Income Taxes, as appropriate, for income tax

expense that has been deferred.

(b) Subsidiary record categories shall be maintained to

distinguish between property and nonproperty related deferrals

and so that the company may separately report the amounts

contained herein that relate to Federal, state, and local income

taxes.

ù32.7210 Operating investment tax credits - net.

(a) This account shall be charges and Accounts 4320,

Unamortized Operating Investment Tax Credits - Net, shall be

credited with investment tax credits generated from qualified
142

expenditures related to regulated operations which the company

defers rather than recognizes currently in income.

(b) This account shall be credited and Account 4320 shall be

charged ratably with the amortization of each year's investment

tax credits included in Account 4320 for investment services for

ratemaking purposes. (See also Account 7410, Nonoperating

Investment Tax Credits - Net.) Such amortization shall be

determined in relation to the period of time used for computing

book depreciation on the property with respect to which the tax

credits relate.

ù32.7220 Operating federal income taxes.

(a) This account shall be charged and Account 4070, Income

Taxes - Accrued, shall be credited for the amount of Federal

Income Taxes for the current period. This account shall also

reflect subsequent adjustments to amounts previously charged.

(b) Taxes should be accrued each month on an estimated basis

and adjustments made as later data becomes available.

(c) Tax credits, other than investment tax credits, if

normalized, shall be recorded consistent with the accounting for

investment tax credits and shall be amortized to in income as

directed by this Commission.

(d) No entries shall be made to this account to reflect

interperiod tax allocations.

ù32.7230 Operating state and local income taxes.

(a) This account shall be charged and Account 4070, Income

Taxes - Accrued, shall be credited for the amount of state and

local income taxes for the current period. This account shall

also reflect subsequent adjustments to amounts previously

charged.

(b) Taxes should be accrued each month on an estimated basis

and adjustments made as later data becomes available.

(c) No entries shall be made to this account to reflect

interperiod tax allocations.

ù32.7240 Operating other taxes.

(a) This account shall be charged and Account 4080, Other

Taxes - Accrued, shall be credited for all taxes, other than

Federal, state, and local income taxes and payroll related taxes,

related to regulated operations applicable to current periods.

Among the items includable in this account are property, gross

receipts, franchise and capital stock taxes; this account shall

also reflect subsequent adjustments to amounts previously

charged.
143

(b) Special assessments for street and other improvements and

special benefit taxes, such as water taxes and the like, shall be

included in the operating expense accounts or investment

accounts, as may be appropriate.

(c) Discounts allowed for prompt payment of taxes shall be

credited to the account to which the taxes are chargeable.

(d) Interest on tax assessments which are not paid when due

shall be included in Account 7540, Other Interest Deductions.

(e) Taxes paid by the company under tax-free covenants on

indebtedness shall be charged to Account 7360, Other Nonoperating

Income.

(f) Sales and use taxes shall be accounted for, so far as

practicable, as part of the cost of the items to which the taxes

relate.

(g) Taxes on rented telecommunications plant which are borne

by the lessee shall be credited by the owners to Account 5240,

Rent Revenue, and shall be charged by the lessee to the

appropriate Plant Specific Operations Expense account.

REA 7240.1 Operating taxes - property.

(a) This account shall be charged and Account 4080.1, Other

Taxes Accrued - Property, shall be credited for the amount of

property tax expense incurred in the current operating period.

This account shall also reflect subsequent adjustments to

amounts previously charged.

(b) Taxes should be accrued each month on an estimated basis

and adjustments made as later data becomes available.

REA 7240.2 Operating taxes - miscellaneous.

(a) This account shall be charged and Account 4080.5, Other

Taxes Accrued - Miscellaneous, shall be credited for the amount

of all other taxes accrued during the current operating period

and not provided for elsewhere such as gross receipts,

franchise, and capital stock tax expense incurred in the current

operating period. This account shall also reflect subsequent

adjustments to amounts previously charged.

(b) Taxes should be accrued each month on an estimated basis

and adjustments made as later data becomes available.

ù32.7250 Provision for deferred operating income taxes - net.

(a) This account shall be charged or credited, as

appropriate, with contra entries recorded to the following

accounts for income tax expense that has been deferred in

accordance with ù32.22 of Subpart B:
144

4100 Net Current Deferred Operating Income Taxes

4340 Net Noncurrent Deferred Operating Income Taxes

(b) Subsidiary record categories shall be maintained to

distinguish between property and nonproperty related deferrals

and so that the company may separately report the amounts

contained herein that relate to Federal, state and local income

taxes. Such subsidiary record categories shall be reported as

required by Part 43 of the Commission's Rules and Regulations.

ù32.7299 Content of accounts.

The nonoperating income and expense accounts are intended to

record the results of transactions, events and circumstances

affecting the company during a period and which are not

operational in nature. They shall include such items as

nonoperating taxes, dividend income and interest income.

Whenever practicable the inflows and outflows associated with a

transaction or event shall be matched and the result shown as a

net gain or loss.

ù32.7300 Nonoperating income and expense.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 7310 through 7370. Class B telephone companies shall

use this account for nonoperating income and expense items of the

type and character required Class A companies in Account 7310

through 7370.

REA 7300.1 Dividend income.

(a) This account shall used by Class B companies. This

account shall include dividends on investments in common and

preferred stock, which is the property of the company, whether

such stock is owned by the company and held in its treasury, or

deposited in trust, or otherwise controlled.

(b) This account shall not include dividends or other

returns on securities issued or assumed by the company and held

by or for it, whether pledged as collateral, or held in its

treasury, in special deposits, or in sinking or other funds.

(c) Dividends on stocks of other companies held in sinking

or other funds shall be credited to Account 7300.3, Income from

Sinking and Other Funds.

(d) Dividends received and receivable from affiliated

companies accounted for on the equity method shall be included

in Account 1401, Investments in Affiliated Companies, as a

reduction of the carrying value of the investments.
145

REA 7300.2 Interest income.

This account shall used by Class B companies. This account

shall include interest on securities, including notes and other

evidences of indebtedness, which are the property of the

company, whether such securities are owned by the company and

held in its treasury, or deposited in trust (except in sinking

or other funds) or otherwise controlled. It shall also include

interest on bank balances, certificates of deposits, open

accounts, and other analogous items. There shall be included in

this account for each month, the applicable amount requisite to

extinguish, during the interval between the date of acquisition

and the date of maturity, the difference between the purchase

price and the par value of securities owned, the income from

which is includable in this account. Amounts thus credited or

charged shall be concurrently included in the accounts in which

the securities are carried. Any such difference remaining

unextinguished at the sale or upon the maturity and satisfaction

of such securities shall be cleared to Account 7300.6, Other

Nonoperating Income and Expense.

REA 7300.3 Income from sinking and other funds.

(a) This account shall used by Class B companies. This

account shall include the income accrued on cash, securities

issued by other companies, and other assets (not including

securities issued or assumed by the company) held in sinking and

other funds.

(b) There shall be included in this account for each month

the applicable amount requisite to extinguish, during the

interval between the date of acquisition and the date of

maturity, the difference between the purchase price and the par

value of securities held in sinking or other funds. Amounts

thus credited or charged shall be concurrently included in the

accounts in which the securities are carried. Any such

differences remaining unextinguished upon the maturity and

satisfaction of such securities shall be cleared to

Account 7300.6, Other Nonoperating Income and Expense.

REA 7300.4 Allowance for funds used during construction.

This account shall used by Class B companies. This account

shall be credited with such amounts as are charged to the

telecommunications plant accounts for the purpose or recording

an allowance for funds used for construction purposes.

REA 7300.5 Gains or losses from the disposition of certain

 property.

This account shall used by Class B companies. This account

shall include gains or losses resulting from the disposition of

land or artworks; plant with traffic, and nonoperating
146

telecommunications plant not previously used in the provision of

telecommunication services.

REA 7300.6 Other nonoperating income and expense.

This account shall used by Class B companies. This account

shall include all other items of income and gains or losses from

activities not specifically provided for elsewhere such as gains

or losses realized on the sale of temporary cash investments or

marketable equity securities; fees collected in connection with

the exchange of coupon bonds for registered bonds; uncollectible

amounts previously credited to Accounts 7300.1, 7300.2, 7300.3,

7300.4, 7300.5, and 7300.6; gains or losses from the extinguishment of debt made to satisfy sinking fund requirements; gains or

losses of a nonoperating nature arising from the exchange or

translation of foreign currency; net unrealized losses on

investments in current marketable equity securities; write-downs

or write-offs of the book costs of investments in equity

securities due to permanent impairment; amortization of

goodwill; the company's share of earnings or losses of

affiliated companies accounted for on the equity method; and the

net balance of the revenue from and the expenses of property,

plant, and equipment, the cost of which is includable in

Account 2006, Nonoperating Plant.

ù32.7310 Dividend income.

(a) This account shall include dividends on investments in

common and preferred stock, which is the property of the company,

whether such stock is owned by the company and held in its

treasury, or deposited in trust (except in sinking or other

funds, see paragraph (c) of this section), or otherwise

controlled.

(b) These accounts shall not include dividends or other

returns on securities issued or assumed by the company and held

by or for it, whether pledged as collateral, or held in its

treasury, in special deposits, or in sinking or other funds.

(c) Dividends on stocks of other companies held in sinking or

other funds shall be credited to Account 7330, Income from

Sinking and Other Funds.

(d) Dividends received and receivable from affiliated

companies accounted for on the equity method shall be included in

Account 1401, Investments in Affiliated Companies, as a reduction

of the carrying value of the investments.

ù32.7320 Interest income.

(a) This account shall include interest on securities,

including notes and other evidences of indebtedness, which are

the property of the company, whether such securities are owned by

the company and held in its treasury, or deposited in trust
147

(except in sinking or other funds, see paragraph (d) of this

section) or otherwise controlled. It shall also include interest

on bank balances, certificates of deposits, open accounts, and

other analogous items.

(b) There shall be included in this account for each month

the applicable amount requisite to extinguish, during the

interval between the date of acquisition and date of maturity,

the difference between the purchase price and the par value of

securities owned, the income from which is includable in this

account. Amounts thus credited or charged shall be concurrently

included in the accounts in which the securities are carried.

Any such difference remaining unextinguished at the sale or upon

the maturity and satisfaction of such securities shall be cleared

to Account 7360, Other Nonoperating Income.

(c) These accounts shall not include interest or other

returns on securities issues or assumed by the company and held

by or for it, whether pledged as collateral, or held in its

treasury, in special deposits, or in sinking or other funds.

(d) Interest on cash and on securities issued by others shall

be included in Account 7330, Income from Sinking and Other Funds,

when such assets are held in sinking or other funds.

(e) Cash discounts on bills for material purchased shall not

be included in this account.

ù32.7330 Income from sinking and other funds.

(a) This account shall include the income accrued on cash,

securities issued by other companies, and other assets (not

including securities or assumed by the company) held in sinking

and other funds.

(b) There shall be included in this account for each month

the applicable amount requisite to extinguish, during the

interval between the date of acquisition and the date of

maturity, the difference between the purchase price, and the par

value of securities held in sinking or other funds. Amounts thus

credited or charged shall be concurrently included in the

accounts in which the securities are carried. Any such

differences remaining unextinguished upon the maturity and

satisfaction of such securities shall be cleared to Account 7360,

Other Nonoperating Income.

ù32.7340 Allowance for funds used during construction.

This account shall be credited with such amounts as are

charged to the telecommunications plant accounts for the purpose

of recording an allowance for funds used for construction

purposes.
148

ù32.7350 Gains or losses from the disposition of certain

 property.

This account shall include gains or losses resulting from the

disposition of the following:

(a) Gains or losses from the disposition of land or artworks;

(b) Gains or losses from the disposition of plant with

traffic; and

(c) Gains or losses from the disposition of nonoperating

telecommunications plant not previously used in the provision of

telecommunications services.

ù32.7360 Other nonoperating income.

(a) This account shall include all other items of income and

gains or losses from activities not specifically provided for

elsewhere.

(b) This account shall include representative items as

follows:

(1) Fees collected in connection with the exchange of coupon

bonds for registered bonds;

(2) Gains or losses realized on the sale of temporary cash

investments or marketable equity securities;

(3) Uncollectible amounts previously credited to

Accounts 7310 through 7350, inclusive;

(4) Net unrealized losses on investments in current

marketable equity securities;

(5) Write-downs or write-offs of the book costs of investment

in equity securities due to permanent impairment;

(6) Gains or losses of nonoperating nature arising from

foreign currency exchange or translation;

(7) Gains or losses from the extinguishment of debt made to

satisfy sinking fund requirements;

(8) Amortization of goodwill;

(9) Company's share of the earnings or loses of affiliated

companies accounted for on the equity method; and

(10) The net balance of the revenue from and the expenses

(including depreciation; amortization and insurance) or property,

plant, and equipment, the cost of which is includable in

Account 2006, Nonoperating Plant.
149

ù32.7370 Special charges.

This account shall include the following costs that are

typically given special regulatory scrutiny for ratemaking

purposes. Unless specific justification to the contrary is

given, such costs are presumed to be excluded from the cost of

service in setting rates.

(a) Lobbying includes 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 approval, modification,

or revocation of franchises, or for the purpose of influencing

the decisions of public officials. This also includes

advertising, gifts, honoraria, and political contributions. This

does not include such expenditures which are directly related to

communications with and appearances before regulatory or other

governmental bodies in connection with the reporting utility's

existing or proposes operations;

(b) Contributions for charitable, social or community welfare

purposes;

(c) Membership fees and dues in social, service and

recreational or athletic clubs and organizations;

(d) Penalties and fines paid on account of violations of

statutes. This account shall also include penalties and fines

paid on account of violations of U.S. statutes including

judgments arising from a violation of antitrust laws, and

payments in settlement of civil and criminal suits alleging such

violations; and

(e) Abandoned construction projects.

ù32.7399 Content of accounts.

The Nonoperating Tax accounts shall include taxes arising from

activities which are not a part of the central operations of the

entity.

ù32.7400 Nonoperating taxes.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 7410 through 7450. Class B telephone companies shall

use this account for nonoperating taxes of the type and character

required of Class A companies in Accounts 7410 through 7450.

REA 7400.1 Nonoperating investment tax credits - net.

(a) This account shall used by Class B companies. This

account shall be charged and Account 4330, Unamortized
150

Nonoperating Investment Tax Credits - Net, shall be credited

with nonoperating investment tax credits generated from

qualified expenditures related to other operations which the

company has elected to defer rather than recognize currently in

income.

(b) This account shall be credited and Account 4330,

Unamortized Nonoperating Investment Tax Credits - Net, shall be

charged with the amortization of each year's investment tax

credits included in such accounts relating to amortization of

previously deferred investment tax credits of other property or

regulated property, the amortization of which does not serve to

reduce costs of service (but the unamortized balance does reduce

rate base) for ratemaking purposes. Such amortization shall be

determined with reference to the period of time used for

computing book depreciation on the property with respect to

which the tax credits relate.

REA 7400.2 Nonoperating federal income taxes.

(a) This account shall used by Class B companies. This

account shall be charged and Account 4070.1, Income Taxes

Accrued - Federal, shall be credited for the amount of

nonoperating Federal income taxes for the current period. This

account shall also reflect subsequent adjustments to amounts

previously charged.

(b) Taxes shall be accrued each month on an estimated basis

and adjustments made as later data becomes available. Companies

that adopt the flowthrough method of accounting for investment

tax credits shall reduce the calculated provision in this

account by the entire amount of the credit realized during the

year. Tax credits, if normalized, shall be recorded consistent

with the accounting for investment tax credits.

(c) No entries shall be made to this account to reflect

interperiod tax allocation.

REA 7400.3 Nonoperating state and local income taxes.

(a) This account shall used by Class B companies. This

account shall be charged and Account 4070.2, Income Taxes

Accrued - State and Local, shall be credited for the amount of

nonoperating state and local income taxes for the current

period. This account shall also reflect subsequent adjustments

to amounts previously charged.

(b) Taxes shall be accrued each month on an estimated basis

and adjustments made as later data becomes available.

(c) No entries shall be made to this account to reflect

interperiod tax allocation.
151

REA 7400.4 Nonoperating other taxes.

This account shall used by Class B companies. This account

shall be charged and Account 4080.5, Other Taxes Accrued -

Miscellaneous, shall be credited for all nonoperating taxes,

other than Federal, state, and local income taxes, and payroll

related taxes for the current period. Among the items

includable in this account are property, gross receipts,

franchise and capital stock taxes. This account shall also

reflect subsequent adjustments to amounts previously charged.

REA 7400.5 Provision for deferred nonoperating income taxes -

 net.

(a) This account shall used by Class B companies. This

account shall be charged or credited, as appropriate, with

contra entries recorded in either Account 4110, Net Current

Deferred Nonoperating Income Taxes, or Account 4350, Net

Noncurrent Deferred Nonoperating Income Taxes, as appropriate,

for nonoperating tax expenses that have been deferred.

(b) Subsidiary record categories shall be maintained to

distinguish between property and nonproperty related deferrals

and so that the company may separately report the amounts

contained herein that relate to Federal, state, and local income

taxes.

ù32.7410 Nonoperating investment tax credits - net.

(a) This account shall be charged and Account 4330,

Unamortized Nonoperating Investment Tax Credits - Net, shall be

credited with investment tax credits generated from qualified

expenditures related to other operations which the company has

elected to defer rather than recognize currently in income.

(b) This account shall be credited and Account 4330 shall be

charged with the amortization of each year's investment tax

credits included in such accounts relating to amortization of

previously deferred investment tax credits of other property or

regulated property, the amortization of which does not serve to

reduce costs of service (but the unamortized balance does reduce

rate base) for ratemaking purposes. Such amortization shall be

determined with reference to the period of time used for

computing book depreciation on the property with respect to which

the tax credits relate.

ù32.7420 Nonoperating federal income taxes.

(a) This account shall be charged and Account 4070, Income

Taxes - Accrued, shall be credited for the amount of nonoperating

Federal income taxes for the current period. This account shall

also reflect subsequent adjustments to amounts previously

charged.
152

(b) Taxes shall be accrued each month on an estimated basis

and adjustments made as later data becomes available.

(c) Companies that adopt the flow-through method of

accounting for investment tax credits shall reduce the calculated

provision in this account by the entire amount of the credit

realized during the year. Tax credits, other than investment tax

credits, if normalized, shall be recorded consistent with the

accounting for investment tax credits.

(d) No entries shall be made to this account to reflect

interperiod tax allocation.

ù32.7430 Nonoperating state and local income taxes.

(a) This account shall be charged and Account 4070, Income

Taxes - Accrued, should be credited for the amount of state and

local income taxes for the current period. This account shall

also reflect subsequent adjustments to amounts previously

charged.

(b) Taxes shall be accrued each month on an estimated basis

and adjustments made as later data becomes available.

(c) No entries shall be made to this account to reflect

interperiod tax allocation.

ù32.7440 Nonoperating other taxes.

This account shall be charged and Account 4080, Other Taxes -

Accrued, shall be credited for all nonoperating taxes, other than

Federal, state and local income taxes, and payroll related taxes

for the current period. Among the items includable in this

account are property, gross receipts, franchise and capital stock

taxes. This account shall also reflect subsequent adjustments to

amounts previously charged.

ù32.7450 Provision for deferred nonoperating income taxes - net.

(a) This account shall be charged or credited, as

appropriate, with contra entries recorded to the following

accounts for nonoperating tax expense that has been deferred in

accordance with ù32.22 of Subpart B:

4110 Net Current Deferred Nonoperating Income Taxes

4350 Net Noncurrent Deferred Nonoperating Income Taxes

(b) Subsidiary record categories shall be maintained to

distinguish between property and nonproperty related deferrals

and so that the company may separately report the amounts

contained herein that relate to Federal, state and local income

taxes. Such subsidiary record categories shall be reported as

required by Part 43 of this Commission's Rules and Regulations.
153

ù32.7499 Content of accounts.

Interest and related amounts shall be included in

Accounts 7510 through 7540.

ù32.7500 Interest and related items.

This account number shall be used by Class A telephone

companies to summarize for reporting purposes the contents of

Accounts 7510 through 7540. Class B telephone companies shall

use this account for interest and related items of the type and

character required of Class A companies in Accounts 7510 through

7540.

ù32.7510 Interest on funded debt.

(a) This account shall include the current accruals of

interest on all classes of debt the principal of which is

includable in Account 4210, Funded Debt. It shall also include

the interest on funded debt the maturity of which has extended by

specific agreement.

(b) This account shall be kept so that the interest on each

class of funded debt may be shown separately in the annual

reports to this Commission.

(c) These accounts shall not include charges for interest on

funded debt issued or assumed by the company and held by or for

it, whether pledged as collateral or held in its treasury, in

special deposits or in sinking or other funds.

(d) Interest expressly provided for and included in the face

amount of securities issued shall be charged at the time of

issuance to Account 1330, Other Prepayments, and cleared to this

account as the term expires to which the interest applies.

(e) This account shall also include monthly amortization of

balances in Accounts 4220, Premium on Long-Term Debt, and 4230,

Discount on Long-Term Debt.

ù32.7520 Interest expense - capital leases.

This account shall include the interest portion of each

capital lease payment.

ù32.7530 Amortization of debt issuance expense.

This account shall include the monthly amortization of the

balances in Account 1407, Unamortized Debt Issuance Expense.
154

ù32.7540 Other interest deductions.

(a) This account shall include all interest deductions not

provided for elsewhere, e.g., discount, premium, and expense on

notes maturing one year or less from date of issue.

(b) A list of representative items of indebtedness, the

interest on which is chargeable to this account, follows

(1) Advances from affiliated companies;

(2) Advances from nonaffiliated companies and other

liabilities;

(3) Assessments for public improvements past due;

(4) Bond coupons, matured and unpaid;

(5) Claims and judgments;

(6) Customers' deposits;

(7) Funded debt mature, with respect to which a definite

agreement as to extension has not been made;

(8) Notes payable on demand or maturing one year or less from

date of issue;

(9) Open accounts;

(10) Tax assessments, past due; and

(11) Discount, premium, and issuance expense of notes

maturing one year or less from date of issue.

(c) Interest payable on notes or other evidences of

indebtedness maturing serially shall be charged to Account 7510,

Interest of Funded Debt, if any portion of the obligation matures

more than one year from date of issue.

ù32.7599 Content of accounts.

These accounts are intended to segregate the effects of events

or transactions that are extraordinary. Extraordinary events and

transactions are distinguished by both their unusual nature and

by the infrequency of their occurrence, taking into account the

environment in which the company operates. These accounts shall

also include the related income tax effect of the extraordinary

items.

ù32.7600 Extraordinary items.

This account shall be used by Class A telephone companies to

summarize for reporting purposes the contents of Accounts 7610
155

through 7640. Class B telephone companies shall use this account

for expenses of the type and character required of Class A

companies in Accounts 7610 through 7640.

REA 7600.1 Extraordinary income credits.

This account shall used by Class B companies. This account

shall be credited with nontypical, noncustomary, and

infrequently recurring gains which would significantly distort

the current year's income computed before such extraordinary

items, if reported other than as extraordinary items. Income

tax relating to the amounts recorded in this account shall be

recorded in Account 7600.3, Current Income Tax Effect for

Extraordinary Items - Net, and Account 7600.4, Provision for

Deferred Income Tax Effect of Extraordinary Items - Net.

REA 7600.2 Extraordinary income charges.

This account shall used by Class B companies. This account

shall be debited with nontypical, noncustomary, and infrequently

recurring losses which would significantly distort the current

year's income computed before such extraordinary items, if

reported other than as extraordinary items. Income tax relating

to the amounts recorded in this account shall be recorded in

Account 7600.3, Current Income Tax Effect for Extraordinary

Items - Net, and Account 7600.4, Provision for Deferred Income

Tax Effect of Extraordinary Items - Net.

REA 7600.3 Current income tax effect of extraordinary items -

 net.

This account shall used by Class B companies. This account

shall be charged or credited and Account 4070.1, Income Taxes

Accrued - Federal, or Account 4070.2, Income Taxes Accrued -

State and Local, shall be credited or charged, as appropriate,

for all current income tax effects (Federal, state, and local)

of items included in Account 7600.1, Extraordinary Income

Credits, and Account 7600.2, Extraordinary Income Charges.

REA 7600.4 Provision for deferred income tax effect of

 extraordinary items - net.

This account shall used by Class B companies. This account

shall be charged or credited, as appropriate, with a contra

amount recorded in Account 4350, Net Noncurrent Deferred

Nonoperating Income Taxes, or Account 4110, Net Current Deferred

Nonoperating Income Taxes, for the income tax effects (Federal,

state, and local) of items included in Account 7600.1,

Extraordinary Income Credits, and Account 7600.2, Extraordinary

Income Charges, that have been deferred.
156

ù32.7610 Extraordinary income credits.

This account shall be credited with nontypical, noncustomary

and infrequently recurring gains which would significantly

distort the current year's income computed before such

extraordinary items, if reported other than as extraordinary

items. Income tax relating to the amounts recorded in this

account shall be recorded in Account 7630, Current Income Tax

Effect for Extraordinary Items - Net, and Account 7640, Provision

for Deferred Income Tax Effect of Extraordinary Items - Net.

ù32.7620 Extraordinary income charges.

This account shall be debited with nontypical, noncustomary

and infrequently recurring losses which would significantly

distort the current year's income computed before such

extraordinary items, if reported other than as extraordinary

items. Income tax relating to the amounts recorded in this

account shall be recorded in Account 7630, Current Income Tax

Effect for Extraordinary Items - Net, and Account 7640, Provision

for Deferred Income Tax Effect of Extraordinary Items - Net.

ù32.7630 Current income tax effect of extraordinary

 items - net.

This account shall be charged or credited and Account 4070,

Income Taxes - Accrued, shall be credited or charged for all

current income tax effects (Federal, state and local) of items

included in Accounts 7610, Extraordinary Income Credits, and

7620, Extraordinary Income Charges.

ù32.7640 Provision for deferred income tax effect of

 extraordinary items - net.

This account shall be charged or credited, as appropriate,

with a contra amount recorded to Account 4350, Net Noncurrent

Deferred Nonoperating Income Taxes, or Account 4110, Net Current

Deferred Nonoperating Income Taxes, for the income tax effects

(Federal, state and local) of items included in Accounts 7610,

Extraordinary Income Credits, and 7620, Extraordinary Income

Charges, that have been deferred in accordance with ù32.22 of

Subpart B.

ù32.7899 Content of accounts.

Jurisdictional differences and nonregulated income amounts

shall be included in Accounts 7910 and 7990.

ù32.7910 Income effect of jurisdictional ratemaking

 differences - net.

This account shall include the impact on revenues and expenses

of the jurisdictional ratemaking practices which vary from those

of this Commission. All entries recorded in this account shall
157

be recorded net of the applicable income tax effects and shall be

supported by appropriate subsidiary records, where necessary, as

provided for in ù32.13(e) of Subpart B.

ù32.7990 Nonregulated net income.

(a) This account shall be used by those companies who offer

nonregulated activities that do not involve the joint or common

use of assets or resources used in the provision of both

regulated and nonregulated products and services, and which have

not established a separate subsidiary for that purpose.

(b) All revenue and expenses (including taxes) incurred in

these nonregulated activities shall be recorded on separate books

of account for such operations. Only the net of the total

revenues and total expenses shall be recorded in this account,

with a contra debit or credit to Account 1406.3.

SUBPART G - GLOSSARY

ù32.9000 Glossary of terms.

When used in this system of accounts:

"Accelerated depreciation" means a depreciation method or

period of time, including the treatment given cost of removal and

gross salvage, used in calculating depreciation deductions on

income tax returns which is different from the depreciation

method or period of time prescribed by this Commission for use in

calculating depreciation expense recorded in a company's books of

account.

"Account" means a specific element of a chart of accounts used

to record, classify and accumulate similar financial transactions

resulting from the operations of the entity. "Accounts" or

"these accounts" refer to the accounts of this system of

accounts.

"Accounting System" means the total set of interrelated

principles, rules, requirements, definitions, accounts, records,

procedures and mechanisms necessary to operate and evaluate the

entity from a financial perspective. An accounting system

generally consists of a chart of accounts, various parallel

subsystems and subsidiary records. An accounting system is

utilized to provide the necessary financial information to users

to meet judiciary and other responsibilities.

"Affiliated companies" means companies that directly or

indirectly through one or more intermediaries, control or are

controlled by, or are under common control with, the accounting

company. See also Control.

"Amortization equipment" means that equipment which functions

with a specific type of plant or with two (2) or more types of
158

plant, e.g., switching equipment, network power equipment,

circuit equipment, common channel network signaling equipment or

network operations equipment. Associated equipment shall be

classified to the account appropriate for the type of equipment

with which it is predominantly used rather than on its own

characteristics. Illustrative examples of associated equipment

are:

Alarm and signal apparatus

Auxiliary framing

Cable and cable racks

Distributing frames and equipment thereon

Frame and aisle lighting equipment (not permanently attached

to the building)

Relay racks and panels

"Basic service area" means the minimum specified calling area

for which a tariff is prescribed.

"Book cost" means the amount at which property is recorded in

these accounts, without deduction of related allowances.

"Common carrier" or "carrier" means any person engaged as a

common carrier for hire, in interstate or foreign communication

by wire or radio or in interstate or foreign radio transmission

of energy, except where reference is made to common carriers not

subject to this Act; but a person engaged in radio broadcasting

shall not, insofar as such person is so engaged, be deemed a

common carrier.

"Company" or "the company" when not otherwise indicated in the

context, means the accounting entity. It includes such

unincorporated entities which may be subject to the

Communications Act of 1934, as amended.

"Control" (including the terms "controlling," means the

possession directly or indirectly, of the power to direct or

cause the direction of the management and policies of a company,

whether such power is exercised through one or more intermediary

companies, or alone, or in conjunction with, or pursuant to an

agreement with, one or more other companies, and whether such

power is established through a majority or minority ownership

voting of securities, common directors, officers, or

stockholders, voting trusts, holding trusts (other than money

exchanged) for property or services. See also Original Cost.

"Cost of removal" means the cost of demolishing, dismantling,

removing, tearing down, of otherwise disposing of

telecommunications plant and recovering the salvage, including

the cost of transportation and handling incident thereto.

"Depreciation" means the loss not restored by current

maintenance, incurred in connection with the consumption or

prospective retirement of telecommunications plant in the course
159

of service from causes which are known to be in current

operation, against which the company is not protected by

insurance, and the effect of which can be forecast with a

reasonable approach to accuracy. Among the causes to be given

consideration are wear and tear, decay, action of the elements,

inadequacy, obsolescence, changes in technology, changes in

demand and requirements of public authorities.

"Entity" means a legal enterprise (common carrier) engaged in

interstate communications within the meaning of the

Communications Act of 1934, as amended.

"Group plan," as applied to depreciation accounting, means the

plan under which depreciation charges are accrued upon the basis

of the original cost of all property included in each depreciable

plant account, using the average service life thereof properly

weighted, and upon the retirement of any depreciable property its

cost is charged to the depreciation reserve whether or not the

particular item has attained the average service life.

"Intangible property" means assets that have no physical

existence but instead have value because of the rights which

ownership confers.

"Intrasystems" means assets consisting of: (1) PBX and Key

System Common Equipment (a switchboard or switching equipment

shared by all stations), (2) Associated CPE station equipment

(usually telephone or Key Telephone Systems), and (3) Intrasystem

wiring (all cable or wiring and associated components which

connect the common equipment and the station equipment, located

on the customer's side of the demarcation point).

An intrasystem does not include property, plant or equipment

which are not solely dedicated to its operation.

"Minor items," as applied to depreciable telecommunications

plant, means any part or element of such plant, which when

removed, (with or without replacement) does not initiate

retirement accounting.

"Original cost" or "cost," as applied to telecommunications

plant, rights of way and other intangible property, means the

actual money cost of (or the current money value of any

consideration or other than money exchanged for) property at the

time when it was first dedicated to use by a regulated

telecommunications entity, whether the accounting company or by

predecessors.

For the application of this definition to property acquired

from predecessors see ù32.2000(b)(1) of Subpart C. Note also the

definition of Cost in this section.

"Plant retired" means plant which has been removed, sold,

abandoned, destroyed, or otherwise withdrawn from service.
160

"Retirement units," as applied to depreciable

telecommunications plant, means those items of plant which when

removed (with or without replacement) cause the initiation of

retirement accounting entries.

"Salvage value" means the amount received for property

retired, if sold, or if retained for reuse, the amount at which

the material recovered is chargeable to Account 1220, Material

and Supplies, or other appropriate account.

"Straight-line method," as applied to depreciation accounting,

means the plan under which the cost of property is charged to

operating expenses and credited to accumulated depreciation

through equal annual charges as nearly as may be during its

service life.

"Subsidiary record categories" means those segregations of

certain regulated costs, expenses and revenues which must be

maintained and are subject to specific reporting requirements of

this Commission.

"Subsystems, parallel mechanisms" means processes or

procedures which augment the use of a chart of accounts in the

financial operation of the entity. These subsystems operate on

and/or process account and subsidiary record information for

specific purposes.

"Telecommunications" means any transmission, emission, or

reception or signs, signals, writing, images or sounds or

intelligence of any nature by wire, radio, visual or other

electromagnetic systems. This encompasses the aggregate of

several modes of conveying information, signals or messages over

a distance. Included in the telecommunications industry is the

transmitting, receiving, or exchanging of information among

multiple locations. The minimum elements required for the

telecommunications process to occur are a message source, a

transmission medium and a receiver.

"Time of installation" means the date at which

telecommunications plant is placed in service.

"Time of retirement" means the date at which

telecommunications plant is retired from service.

"Tangible property" means assets characterized by physical

existence, such as land, buildings, equipment, furniture,

fixtures and tools.