688

Pt. 1767 7 CFR Ch. XVII (1–1–00 Edition)

PART 1767—ACCOUNTING REQUIREMENTS FOR RUS ELECTRIC

BORROWERS

Subpart A—General [Reserved]

Sec.

1767.1—1767.9 [Reserved]

Subpart B—Uniform System of Accounts

1767.10 Definitions.

1767.11 Purpose.

1767.12 Accounting system requirements.

1767.13 Departures from the prescribed RUS

Uniform System of Accounts.

1767.14 Interpretations of the RUS Uniform

System of Accounts.

1767.15 General instructions.

1767.16 Electric plant instructions.

1767.17 Operating expense instructions.

1767.18 Assets and other debits.

1767.19 Liabilities and other credits.

1767.20 Plant accounts.

1767.21 Operating income.

1767.22 Other income and deductions.

1767.23 Interest charges.

1767.24 Extraordinary items.

1767.25 Retained earnings.

1767.26 Operating revenue.

1767.27 Operation and maintenance expenses.

1767.28 Customer accounts expenses.

1767.29 Customer service and informational

expenses.

1767.30 Sales expenses.

1767.31 Administrative and general expenses.

1767.32—1767.40 [Reserved]

1767.41 Accounting methods and procedures

required of all RUS borrowers.

1767.42—1767.45 [Reserved]

Subpart C—Depreciation Rates and

Procedures [Reserved]

1767.46—1767.65 [Reserved]

Subpart D—Preservation of Records

[Reserved]

1767.66—1767.85 [Reserved]

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

6941 et seq.

SOURCE: 58 FR 59825, Nov. 10, 1993, unless

otherwise noted.

Subpart A—General [Reserved]

§§ 1767.1—1767.9 [Reserved]

Subpart B—Uniform System of

Accounts

§ 1767.10 Definitions.

As used in this part:

Accounting borrower is an RUS borrower.

Accounts are the accounts prescribed

in this system of accounts.

Actually issued as applied to securities issued or assumed by the utility,

are those which have been sold to bona

fide purchasers for a valuable consideration, those issued as dividends on

stock, and those which have been

issued in accordance with contractual

requirements direct to trustees of sinking funds.

Actually outstanding as applied to securities issued or assumed by the utility, are those which have been actually

issued and are neither retired nor held

by or for the utility; provided, however, that securities held by trustees

shall be considered as actually outstanding.

Amortization is the gradual extinguishment of an amount in an account

by distributing such amount over a

fixed period, over the life of the asset

or liability to which it applies, or over

the period during which it is anticipated the benefit will be realized.

Associated (affiliated) companies are

companies or persons that directly, or

indirectly through one or more intermediaries, control, or are controlled

by, or under common control with, the

accounting company.

Book Cost means the amount at

which property is recorded in these accounts without deduction of related

provisions for accrued depreciation,

amortization, or for other purposes.

Capital lease is a lease of property

used in utility or nonutility operations, which meets one or more of the

criteria stated in §1767.15 (s).

CFC is the National Rural Utilities

Cooperative Finance Corporation.

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Rural Utilities Service, USDA § 1767.10

Continuing Property Records are company plant records for retirement units

and mass property that provide, as either a single record, or in separate

records readily obtainable by references made in a single record, the

following information:

(1) For each retirement unit:

(i) The name or description of the

unit, or both;

(ii) The location of the unit;

(iii) The date the unit was placed in

service;

(iv) The cost of the unit as set forth

in §1767.16 (b) and (c); and

(v) The plant control account to

which the cost of the unit is charged.

(2) For each category of mass property:

(i) A general description of the property and quantity;

(ii) The quantity placed in service by

vintage year;

(iii) The average cost as set forth in

§1767.16 (b) and (c); and

(iv) The plant control account to

which the costs are charged.

Control (including the terms controlling, controlled by, and under common

control with) is the possession, directly

or indirectly, of the power to direct or

cause the direction of the management

and policies of a company, whether

such power is exercised through one or

more intermediary companies, or

alone, or in conjunction with, or pursuant to an agreement, and whether such

power is established through a majority or minority ownership or through

voting of securities; common directors,

officers, or stockholders; voting trusts;

holding trusts; associated companies;

contracts; or any other direct or indirect means.

Cost is the amount of money actually

paid for property or services. When the

consideration given is other than cash

in a purchase and sale transaction, as

distinguished from a transaction involving the issuance of common stock

in a merger or a pooling of interest, the

value of such consideration shall be determined on a cash basis.

Cost of removal is the cost of demolishing, dismantling, tearing down or

otherwise removing electric plant, including the cost of transportation and

handling incidental thereto.

Customer is a consumer or patron.

Debt expense includes all expenses incurred in connection with the issuance

and initial sale of evidence of debt,

such as fees for drafting mortgages and

trust deeds; fees and taxes for issuing

or recording evidences of debt; costs of

engraving and printing bonds and certificates of indebtedness; fees paid to

trustees; specific costs of obtaining

governmental authority; fees for legal

services; fees and commissions paid underwriters, brokers, and salesmen for

marketing such evidences of debt; fees

and expenses of listing on exchanges;

and other like costs.

Depreciation, as applied to depreciable electric plant, is the loss in service value, not restored by current

maintenance, incurred in connection

with the consumption or prospective

retirement of electric plant in the

course of service from causes which are

known to be in current operation and

against which the utility is not protected by insurance. Among the causes

to be given consideration are wear and

tear, decay, action of the elements, inadequacy, obsolescence, changes in the

art, changes in demand and requirements of public authorities.

Discount, as applied to the securities

issued or assumed by the utility, is the

excess of the par (stated value of nopar stocks) or face value of the securities plus interest or dividends accrued

at the date of the sale over the cash

value of the consideration received

from their sale.

FASB is the Financial Accounting

Standards Board.

G&T is a generation and transmission

cooperative.

Investment advances are advances,

represented by notes or by book accounts only, with respect to which it is

mutually agreed or intended between

the creditor and debtor that they shall

be settled by the issuance of securities

or shall not be subject to current settlement.

Minor items of property are the associated parts or items of which retirement

units are composed.

Net salvage value is the salvage value

of property retired less the cost of removal.

Nominally issued, as applied to securities issued or assumed by the utility,

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§ 1767.10 7 CFR Ch. XVII (1–1–00 Edition)

are those which have been signed, certified, or otherwise executed, and

placed with the proper officer for sale

and delivery, or pledged, or otherwise

placed in some special funds of the

utility, but which have not been sold,

or issued direct to trustees of sinking

funds in accordance with contractual

requirements.

Nominally outstanding, as applied to

securities issued or assumed by the

utility, are those which, after being actually issued, have been reacquired by

or for the utility under circumstances

which require them to be considered as

held alive and not retired, provided,

however, that securities held by trustees shall be considered as actually outstanding.

NRECA is the National Rural Electric

Cooperative Association.

Operating lease is a lease of property

used in utility or nonutility operations, which does not meet any of the

criteria stated in §1767.15 (s).

Original cost, as applied to electric

plant, is the cost of such property to

the person first devoting it to public

service.

Person is an individual, a corporation, a partnership, an association, a

joint stock company, a business trust,

or any organized group of persons,

whether incorporated or not, or any receiver or trustee.

Premium, as applied to securities

issued or assumed by the utility, is the

excess of the cash value of the consideration received from their sale over

the sum of their par (stated value of

no-par stocks) or face value and interest or dividends accrued at the date of

sale.

Project is a complete unit of improvement or development, consisting of a

power house, all water conduits, all

dams and appurtenant works and

structures (including navigation structures) which are a part of said unit,

and all storage, diverting, or forebay

reservoirs directly connected therewith, the primary line or lines transmitting power therefrom to the point

of junction with the distribution system or with the interconnected primary transmission system, all miscellaneous structures used and useful

in connection with said unit or any

part thereof, and all water rights,

rights of way, ditches, dams, reservoirs, lands, or interest in lands the

use and occupancy of which are necessary or appropriate in the maintenance and operation of such unit.

Property retired, as applied to electric

plant, is property which has been removed, sold, abandoned, destroyed, or

which for any cause has been withdrawn from service.

REA means the Rural Electrification

Administration formerly an agency of

the United States Department of Agriculture and predecessor agency to RUS

with respect to administering certain

electric and telephone loan programs.

Regulatory Assets and Liabilities are

assets and liabilities that result from

rate actions of regulatory agencies.

Regulatory assets and liabilities arise

from specific revenues, expenses, gains,

or losses that would have been included

in net income determinations in one

period under the general requirements

of the Uniform System of Accounts but

for it being probable:

(1) That such items will be included

in a different period(s) for purposes of

developing the rates the utility is authorized to charge for its utility services; or

(2) In the case of regulatory liabilities, that refunds to customers, not

provided for in the other accounts, will

be required.

Replacing (including replacement) when

not otherwise indicated in the context,

is the construction or installation of

electric plant in place of property retired, together with the removal of the

property retired.

Research, Development, and Demonstration (RD&D) includes all expenditures incurred by borrowers either directly or through another person or organization (such as a research institute, industry association, foundation,

university, engineering company or

similar contractor) in pursuing research, development, and demonstration activities including experiment,

design, installation, construction, or

operation. This definition includes expenditures for the implementation or

development of new and/or existing

concepts until technically feasible and

commercially feasible operations are

verified. Such research, development,

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Rural Utilities Service, USDA § 1767.11

and demonstration costs should be reasonably related to the existing or future utility business, broadly defined,

of the borrower or in the environment

in which it operates or expects to operate. The term includes, but is not limited to, all such costs incidental to the

design, development or implementation of an experimental facility, a

plant process, a product, a formula, an

invention, a system or similar items,

and the improvement of already existing items of a like nature; amounts expended in connection with the proposed

development and/or proposed delivery

of alternate sources of electricity; and

the costs of obtaining its own patent,

such as attorney’s fees expended in

making and perfecting a patent application. The term includes preliminary

investigations and detailed planning of

specific projects for securing for customers non-conventional electric

power supplies that rely on technology

that has not been verified previously to

be feasible. The term does not include

expenditures for efficiency surveys;

studies of management, management

techniques, and organization; or consumer surveys, advertising, promotions, or items of a like nature.

Retirement units are those items of

electric plant which, when retired with

or without replacement, are accounted

for by crediting the book cost thereof

to the electric plant accounts in which

included.

RUS means the Rural Utilities Service, an agency of the United States Department of Agriculture established

pursuant to Section 232 of the Federal

Crop Insurance Reform and Department of Agriculture Reorganization

Act of 1994 (Pub. L. 103–354, 108 Stat.

3178), successor to REA with respect to

administering certain electric and telephone programs. See 7 CFR 1700.1.

RUS Form 7 is the August 1988 revision (or the revision of any other date

which may be specified) of such RUS

Form 7, Financial and Statistical Report, or any later revision which shall

have been at the time prescribed for

use by RUS.

RUS Form 12 is the November 1979 revision (or the revision of any other

date which may be specified) of such

RUS Form 12, Operating Report—Financial, or any later revision which

shall have been at the time prescribed

for use by RUS.

RUS USoA is the USoA prescribed in

this subpart.

Salvage value is the amount received

for property retired, less any expenses

incurred in connection with the sale or

in preparing the property for sale; or, if

retained, the amount at which the material recovered is chargeable to materials and supplies, or other appropriate

accounts.

Service life is the time between the

date electric plant is includible in electric plant in service, or electric plant

leased to others, and the date of its retirement. If depreciation is accounted

for on a production basis rather than

on a time basis, service life should be

measured in terms of the appropriate

unit of production.

Service value is the difference between

original cost and net salvage value of

electric plant.

State is a State admitted to the

Union, the District of Columbia, and

any organized Territory of the United

States.

Subsidiary company is a company

which is controlled by the utility

through ownership of voting stock.

(See the definition of control in

§1767.10.) A corporate joint venture in

which a corporation is owned by a

small group of businesses as a separate

and specific business or project for the

mutual benefit of the members of the

group is a subsidiary company for the

purposes of this system of accounts.

Utility is an RUS borrower.

Work order is an order authorizing

the construction of utility plant. It

serves as the basis for the accounts or

subaccounts in which costs are recorded.

[58 FR 59825, Nov. 10, 1993, as amended at 59

FR 66440, Dec. 27, 1994]

§ 1767.11 Purpose.

(a) The standard form of RUS loan

documents for electric borrowers requires that the borrower keep books,

records, and accounts in which full and

true entries will be made of all of the

dealings, business and affairs of the

borrower in accordance with the methods and principles of accounting of this

part.

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§ 1767.12 7 CFR Ch. XVII (1–1–00 Edition)

(b) This subpart implements these

provisions of the RUS loan documents

by prescribing the RUS USoA for electric borrowers and by providing accounting methodologies and procedures

which are applicable to particular situations.

§ 1767.12 Accounting system requirements.

(a) Each RUS electric borrower must

maintain and keep its books of accounts and all other books and records

that support the entries in such books

of accounts in accordance with

§§1767.18–1767.31.

(b) Each RUS electric borrower shall

maintain and keep its books of accounts and all other books and records

which support the entries in such

books of accounts in accordance with

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

specific factual circumstances.

§ 1767.13 Departures from the prescribed RUS Uniform System of Accounts.

(a) No departures are to be made to

the prescribed RUS USoA without the

prior written approval of RUS. RUS

grants a departure to any borrower

electing to delay implementation of

the functional (activity-based) accounting requirements of this part

through December 31, 1997. Requests

for departures from the RUS USoA

shall be addressed, in writing, to the

Director, Program Accounting Services

Division (PASD).

(b) RUS borrowers subject to the jurisdiction of a state regulatory authority with jurisdiction over rates and/or

accounting for electric utilities will

not:

(1) Request approval of such authority to use accounting methodologies

and principles that depart from the

provisions herein; or

(2) File with such authority, any documents or information, including without limitation, any filings associated

with the borrower’s rates, based upon

accounting methods and principles inconsistent with the provisions of this

part.

(c) If any state regulatory authority

with jurisdiction over an RUS borrower

prescribes accounting methods or principles for the borrower that are inconsistent with the provisions of this part,

the borrower must immediately notify

the Director, BAD, and provide such

documents, information, and reports as

RUS may request to evaluate the impact that such accounting methods or

principles may have on the interests of

RUS.

(1) If RUS determines that the accounting methods and principles do not

adversely impact RUS interests, RUS

will permit the borrower to use the accounting methods and principles as

prescribed by the state regulatory authority to comply with the provisions

of the RUS loan documents.

(2) If RUS determines that the accounting methods and principles may

adversely impact RUS’s interests, RUS

may require that, for the purposes of

complying with provisions of RUS loan

documents, including, without limitation, those provisions relating to financial coverage standards (e.g. ‘‘TIER’’),

the borrower continue to maintain

books, records, and accounts in accordance with this subpart.

(i) RUS may, however, approve requests by the borrower to maintain

such additional books, records, and accounts as necessary to comply with the

requirements of the state regulatory

authority.

(ii) Such approval will not waive,

modify or amend the requirements of

the RUS loan documents or of this subpart.

(d) RUS borrowers will not implement the provisions of Statement of

Financial Accounting Standards

(SFAS) No. 71, Accounting for the Effects of Certain Types of Regulation,

SFAS No. 90, Regulated Enterprises—

Accounting for Abandonments and Disallowances of Plant Costs, SFAS No.

92, Regulated Enterprises—Accounting

for Phase-in Plans, without the prior

written approval of RUS except as provided for in paragraphs (d)(1) through

(d)(5) of this section. Requests for approval shall be addressed, in writing, to

the Director, PASD. The specific deferrals set forth in paragraphs (d)(1)

through (d)(5) of this section may be

implemented without the prior written

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Rural Utilities Service, USDA § 1767.15

approval of RUS provided that the deferrals comply with Statement No. 71

and that the RUS borrowers implementing such deferrals continue to

meet the requirements set forth in

Statement No. 71 for doing so:

(1) The deferral and amortization of

prior service pension costs (See

§1767.41, Interpretation No. 606, Pension Costs), remapping expenses (See

§1767.41, Interpretation No. 613, Mapping Costs), and preliminary survey

and investigation charges (See §1767.17,

Interpretation No. 111, Engineering

Contracts for System Planning);

(2) The deferral of any current period

expense or expenses, on a cumulative

basis for the fiscal year, only if a borrower would have met each of its financial tests or coverage ratios that it has

covenanted with RUS to meet for that

fiscal year, had the deferral not been

made;

(3) The deferral of any cost that will

be fully amortized within the next 12

succeeding months;

(4) The accelerated amortization of

any previously deferred expense; and

(5) The deferral of revenues coincident with a moratorium imposed by

the National Rural Electric Cooperative Association on its Retirement and

Security Program, provided, however,

that the deferral is for the sole purpose

of offsetting future pension costs.

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

submission of:

(1) A detailed description of the proposed departure;

(2) The specific accounting journal

entries that will be used including the

account number and title, and the dollar amounts where appropriate;

(3) The total dollar amount of the departure and the impact on margins

during the time period of the departure; and

(4) Any additional information RUS

may deem necessary to adequately

evaluate the borrower’s request.

(f) RUS will, within 90 days of final

receipt of this information, render a

decision on the borrower’s request for a

departure from the prescribed RUS

USoA.

(1) If, due to extenuating circumstances, RUS is unable to reach a

decision within the required time period, RUS will notify the borrower of

the delay within this same 90-day period, and provide a projected decision

date.

(2) The requested departure from the

prescribed RUS USoA must not be implemented until final approval is

granted by RUS.

[58 FR 59825, Nov. 10, 1993, as amended at 60

FR 55429, Nov. 1, 1995; 62 FR 42289, Aug. 6,

1997]

§ 1767.14 Interpretations of the RUS

Uniform System of Accounts.

To maintain uniformity in accounting, borrowers must submit questions

concerning interpretations of the RUS

USoA, in writing, to the Director,

BAD, for consideration and decision.

(Approved by the Office of Management and

Budget under control number 0572–0002)

[60 FR 55429, Nov. 1, 1995]

§ 1767.15 General instructions.

(a) Records. (1) Each utility shall

keep its books of account, and all other

books, records, and memoranda which

support the entries in such books of account so as to be able to furnish readily full information as to any item included in any account.

(2) Each entry shall be supported by

such detailed information as will permit ready identification, analysis, and

verification of all facts relevant thereto.

(3) The books and records referred to

herein include not only accounting

records in a limited technical sense,

but all other records, such as minute

books, stock books, reports, correspondence, memoranda, etc., which

may be useful in developing the history

of or facts regarding any transaction.

(4) No utility shall destroy any such

books or records unless the destruction

thereof is permitted by the rules and

regulations of RUS in 7 CFR chapter

XVII.

(5) In addition to the prescribed accounts, clearing accounts, temporary

or experimental accounts, and subdivisions of any accounts, may be kept,

provided the integrity of the prescribed

accounts is not impaired.

(6) All amounts included in the accounts prescribed herein for electric

plant and operating expenses shall be

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§ 1767.15 7 CFR Ch. XVII (1–1–00 Edition)

just and reasonable and any payments

or accruals by the utility in excess of

just and reasonable charges shall be included in Account 426.5, Other Deductions.

(7) The arrangement or sequence of

the accounts prescribed herein shall

not be controlling as to the arrangement or sequence in report forms

which may be prescribed by RUS.

(b) Numbering system. (1) The account

numbering plan used herein consists of

a system of three-digit whole numbers

as follows:

100–199 Assets and other debits.

200–299 Liabilities and other credits.

300–399 Plant accounts.

400–432, 434–435 Income accounts.

433, 436–439 Retained earnings accounts.

440–459 Revenue accounts.

500–599 Production, transmission, and distribution expenses.

900–949 Customer accounts, customer service and informational, sales, and general

and administrative expenses.

(2) In certain instances, numbers

have been skipped in order to allow for

possible later expansion or to permit

better coordination with the numbering system for other utility departments.

(3) The numbers prefixed to account

titles are to be considered as parts of

the titles.

(i) Each utility, however, may adopt,

for its own purposes, a different system

of account numbers provided that the

numbers herein prescribed shall appear

in the descriptive headings of the ledger accounts and in the various sources

of original entry.

(ii) If a utility uses a different group

of account numbers and it is not practicable to show the prescribed account

numbers in the various sources of

original entry, such reference to the

prescribed account numbers may be

omitted from the various sources of

original entry.

(iii) Each utility using different account numbers for its own purposes

shall keep readily available, a list of

such account numbers which it uses

and a reconciliation of such account

numbers with the account numbers

provided herein.

(iv) The utility’s records shall be so

kept as to permit ready analysis by

prescribed accounts (by direct reference to sources of original entry to

the extent practicable) and to permit

preparation of financial and operating

statements directly from such records

at the end of each accounting period

according to the prescribed accounts.

(c) Accounting period. (1) Each utility

shall keep its books on a monthly basis

so that for each month, all transactions applicable thereto, as nearly as

may be ascertained, shall be entered in

the books of the utility.

(2) Amounts applicable or assignable

to specific utility departments shall be

so segregated monthly.

(3) Each utility shall close its books

at the end of each fiscal year unless

otherwise authorized by RUS.

(d) Submission of questions. To maintain uniformity of accounting, utilities

shall submit questions of doubtful interpretation to RUS for consideration

and decision.

(e) Item lists. (1) Lists of ‘‘items’’ appearing in the texts of the accounts or

elsewhere herein are for the purpose of

more clearly indicating the application

of the prescribed accounting.

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

(3) The appearance of an item in a

list warrants the inclusion of the item

in the account mentioned only when

the text of the account also indicates

inclusion inasmuch as the same item

frequently appears in more than one

list.

(4) The proper entry in each instance

must be determined by the texts of the

accounts.

(f) Extraordinary items. (1) Net income

shall reflect all items of profit and loss

during the period with the exception of

prior period adjustments as described

in §1767.15 (g) and long-term debt as described in §1767.15 (q).

(2) Those items related to the effects

of events and transactions which have

occurred during the current period and

which are not typical or customary

business activities of the company

shall be considered extraordinary

items.

(3) They will be events and transactions of significant effect which

would not be expected to recur frequently and which would not be considered as recurring factors in any evaluation of the ordinary operating processes of business.

695

Rural Utilities Service, USDA § 1767.15

(i) In determining significance, items

of a similar nature should be considered in the aggregate.

(ii) Dissimilar items should be considered individually; however, if they

are few in number, they may be considered in the aggregate.

(iii) To be considered as extraordinary under the above guidelines, an

item should be more than approximately 5 percent of income, computed

before extraordinary items.

(iv) RUS approval must be obtained

to treat an item of less than 5 percent,

as extraordinary. (See Accounts 434

and 435.)

(g) Prior period items. (1) Items of profit and loss related to the following

shall be accounted for as prior period

adjustments and excluded from the determination of net income for the current year:

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

(ii) Adjustments that result from realization of income tax benefits of

preacquisition operating loss

carryforwards of purchased subsidiaries.

(2) All other items of profit and loss

recognized during the year shall be included in the determination of net income for that year.

(h) Unaudited items. (1) Whenever a financial statement is required by RUS,

if it is known that a transaction has

occurred which affects the accounts

but the amount involved in the transaction and its effect upon the accounts

cannot be determined with absolute accuracy, the amount shall be estimated

and such estimated amount included in

the proper accounts.

(2) The utility is not required to anticipate minor items which would not

appreciably affect the accounts.

(i) Distribution of pay and expenses of

employees. Charges to electric plant, operating expense, and other accounts for

services and expenses of employees engaged in activities chargeable to various accounts, such as construction,

maintenance, and operations, shall be

based upon the actual time engaged in

the respective classes of work, or in

case that method is impracticable,

upon the basis of a study of the time

actually engaged during a representative period.

(j) Payroll distribution. (1) Underlying

accounting data shall be maintained so

that the distribution of the cost of

labor charged direct to the various accounts will be readily available.

(2) Such underlying data shall permit

a reasonably accurate distribution to

be made of the cost of labor charged

initially to clearing accounts so that

the total labor cost may be classified

among construction, cost of removal,

electric operating functions (steam

generation, nuclear generation, hydraulic generation, transmission, distribution, etc.) and nonutility operations.

(k) Accounting on an accrual basis. (1)

The utility is required to keep its accounts on the accrual basis.

(i) This requires the inclusion, in its

accounts, of all known transactions of

appreciable amount which affect the

accounts.

(ii) If bills covering such transactions

have not been received or rendered, the

amounts shall be estimated and appropriate adjustments made when the bills

are received.

(2) When payments are made in advance for items such as insurance,

rents, taxes, or interest, the amount

applicable to future periods shall be

charged to Account 165, Prepayments,

and spread over the periods to which

applicable, by credits to Account 165,

and charges to the accounts appropriate for the expenditure.

(l) Records for each plant. (1) Separate

records shall be maintained by electric

plant accounts of the book cost of each

plant owned, including additions by the

utility to plant leased from others, and

of the cost of operating and maintaining each plant owned or operated.

(2) The term ‘‘plant’’ as used herein

includes each generating station and

each transmission line or appropriate

group of transmission lines.

(m) Accounting for other departments.

(1) If the utility also operates other

utility departments, such as gas or

water, it shall keep such accounts for

the other departments as may be prescribed by proper authority and in the

absence of prescribed accounts, it shall

keep such accounts as are proper or

necessary to reflect the results of operating each such department.

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§ 1767.15 7 CFR Ch. XVII (1–1–00 Edition)

(2) It is not intended that proprietary

and similar accounts which apply to

the utility as a whole shall be departmentalized.

(n) Transactions with associated companies. (1) Each utility shall keep its accounts and records so as to be able to

furnish accurately and expeditiously

statements of all transactions with associated companies.

(2) The statements may be required

to show the general nature of the

transactions, the amounts involved

therein and the amounts included in

each account prescribed herein with respect to such transactions. Transactions with associated companies

shall be recorded in the appropriate accounts for transactions of the same nature. Nothing herein contained, however, shall be construed as restraining

the utility from subdividing accounts

for the purpose of recording separately

transactions with associated companies.

(o) Contingent assets and liabilities. (1)

Contingent assets represent a possible

source of value to the utility contingent upon the fulfillment of conditions

regarded as uncertain.

(2) Contingent liabilities include

items which may, under certain conditions, become obligations of the utility

but which are neither direct nor assumed liabilities at the date of the balance sheet. The utility shall be prepared to give a complete statement of

significant contingent assets and liabilities (including cumulative dividends on preference stock) in its audited financial statements; its RUS

Form 7, Financial and Statistical Report, or its RUS Form 12, Operating

Report—Financial; and at such other

times as may be requested by RUS.

(p) Separate accounts or records for

each licensed project. The accounts or

records of each borrower shall be so

kept as to show for each project (including pumped storage) under license:

(1) The actual legitimate original

cost of the project, including the original cost of the original project, the

original cost of additions thereto and

betterments thereof, and credits for

property retired from service, as determined under RUS’s regulations in 7

CFR chapter XVII;

(2) The charges for operation and

maintenance of the project property directly assignable to the project;

(3) The credits and debits to the depreciation and amortization accounts,

and the balances in such accounts; and

(4) The credits and debits to the operating revenue, income, and retained

earnings accounts that can be identified with and directly assigned to the

project.

NOTE: The purpose of this instruction is to

insure that accounts or records are currently

maintained by each borrower from which reports may be made to RUS for use in determining the net investment in each licensed

project. The instruction covers only the

debit and credit items appearing in the borrower’s accounts which may be identified

with and assigned directly to any project. In

the determination of the net investment, allocations of items affecting the net investment may be required where direct assignment is not practicable.

(q) Long-term debt: premium, discount

and expense, and gain or loss on reacquisition—(1) Premium, discount and expense. (i) A separate premium, discount

and expense account shall be maintained for each class and series of longterm debt (including receivers’ certificates) issued or assumed by the utility.

(ii) The premium will be recorded in

Account 225, Unamortized Premium on

Long-Term Debt, the discount will be

recorded in Account 226, Unamortized

Discount on Long-Term Debt—Debit,

and the expense of issuance shall be recorded in Account 181, Unamortized

Debt Expense.

(iii) The premium, discount and expense shall be amortized over the life

of the respective issues under a plan

which will distribute the amounts equitably over the life of the securities.

(A) The amortization shall be

charged or credited on a monthly basis

with the amounts relating to discount

and expense charged to Account 428,

Amortization of Debt Discount and Expense.

(B) The amounts relating to premium

shall be credited to Account 429, Amortization of Premium on Debt—Credit.

(2) Reacquisition, without refunding. (i)

When long-term debt is reacquired or

redeemed without being converted into

another form of long-term debt and

when the transaction is not in connection with a refunding operation (primarily redemptions for sinking fund

697

Rural Utilities Service, USDA § 1767.15

purposes), the difference between the

amount paid upon reacquisition and

the face value; plus any unamortized

premium less any related unamortized

debt expense and reacquisition costs;

or less any unamortized discount, related debt expense and reacquisition

costs applicable to the debt redeemed,

retired and cancelled, shall be included

in Account 189, Unamortized Loss on

Reacquired Debt, or Account 257,

Unamortized Gain on Reacquired Debt,

as appropriate.

(ii) The utility shall amortize the recorded amounts equally on a monthly

basis over the remaining life of the respective security issues (old original

debt).

(iii) The amount so amortized shall

be charged to Account 428.1, Amortization of Loss on Reacquired Debt, or

credited to Account 429.1, Amortization

of Gain on Reacquired Debt—Credit, as

appropriate.

(3) Reacquisition, with refunding. (i)

When the redemption of one issue or

series of bonds or other long-term obligations is financed by another issue or

series before the maturity date of the

first issue, the difference between the

amount paid upon refunding and the

face value; plus any unamortized premium less related debt expense or less

any unamortized discount and related

debt expense, applicable to the debt refunded, shall be included in Account

189, Unamortized Loss on Reacquired

Debt, or Account 257, Unamortized

Gain on Reacquired Debt, as appropriate.

(ii) The utility may elect to account

for such amounts as follows:

(A) Write them off immediately when

the amounts are insignificant;

(B) Amortize them by equal monthly

amounts over the remainder of the

original life of the issue retired; or

(C) Amortize them by equal monthly

amounts over the life of the new issue.

(iii) Once an election is made, it shall

be applied on a consistent basis.

(iv) The amounts in paragraphs

(q)(3)(ii)(A), (B), or (C) of this section

shall be charged to Account 428.1, Amortization of Loss on Reacquired Debt,

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

(4) Under methods in paragraphs

(q)(3)(ii)(B) and (C) of this section, the

increase or reduction in current income taxes resulting from the reacquisition should be apportioned over the

remainder of the original life of the

issued retired or over the life of the

new issue, as appropriate, as directed

more specifically in paragraphs (q)(5)

and (6) of this section.

(5) When the utility recognizes the

loss in the year of reacquisition as a

tax deduction, Account 410.1, Provision

for Deferred Income Taxes, Utility Operating Income, shall be debited and

Account 283, Accumulated Deferred Income Taxes—Other, shall be credited

with the amount of the related tax effect, such amount to be allocated to

the periods affected in accordance with

the provisions of Account 283.

(6) When the utility chooses to recognize the gain in the year of reacquisition as a taxable gain, Account 411.1,

Provision for Deferred Income Taxes—

Credit, Utility Operating Income, shall

be debited with the amount of the related tax effect, such amount to be allocated to the periods affected in accordance with the provisions of Account 190, Accumulated Deferred Income Taxes.

(7) When the utility chooses to use

the optional privilege of deferring the

tax on the gain attributable to the reacquisition of debt by reducing the depreciable basis of utility property for

tax purposes, pursuant to Section 108

of the Internal Revenue Code (26 U.S.C.

108), the related tax effects shall be deferred as the income is recognized for

accounting purposes, and the deferred

amounts shall be amortized over the

life of the associated property on a vintage year basis.

(i) Account 410.1, Provision for Deferred Income Taxes, Utility Operating

Income, shall be debited, and Account

282, Accumulated Deferred Income

Taxes—Other Property, shall be credited with an amount equal to the estimated income tax effect applicable to

the portion of the income, attributable

to reacquired debt, recognized for accounting purposes during the period.

(ii) Account 282 shall be debited and

Account 411.1, Provision for Deferred

Income Taxes—Credit, Utility Operating Income, shall be credited with an

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§ 1767.15 7 CFR Ch. XVII (1–1–00 Edition)

amount equal to the estimated income

tax effects, during the life of the property, attributable to the reduction in

the depreciable basis for tax purposes.

(8) The tax effects relating to gain or

loss shall be allocated as above to utility operations except in cases where a

portion of the debt reacquired is directly applicable to nonutility operations.

(i) In that event, the related portion

of the tax effects shall be allocated to

nonutility operations.

(ii) Where it can be established that

reacquired debt is generally applicable

to both utility and nonutility operations, the tax effects shall be allocated between utility and nonutility

operations based on the ratio of net investment in utility plant to net investment in nonutility plant.

(9) Premium, discount, or expense on

debt shall not be included as an element in the cost of construction or acquisition of property (tangible or intangible), except under the provisions

of Account 432, Allowance for Borrowed

Funds Used During Construction—

Credit.

(10) Alternate method. Where a regulatory authority or a group of regulatory authorities having prime rate

jurisdiction over the utility specifically disallows the rate principle of

amortizing gains or losses on reacquisition of long-term debt without refunding, and does not apply the gain or loss

to reduce interest charges in computing the allowed rate of return for

rate purposes, the following alternate

method may be used to account for

gains or losses relating to reacquisition

of long-term debt, with or without refunding:

(i) The difference between the

amount paid upon reacquisition of any

long-term debt and the face value, adjusted for unamortized discount, expenses or premium, as the case may be,

applicable to the debt redeemed shall

be recognized currently in income and

recorded in Account 421, Miscellaneous

Nonoperating Income, or Account 426.5,

Other Deductions.

(ii) When this alternate method of accounting is used, the utility shall include a footnote to each financial

statement, prepared for public use, explaining why this method is being used

along with the treatment given for

ratemaking purposes.

(r) Comprehensive interperiod income

tax allocation. (1) Where there are timing differences between the periods in

which transactions affect taxable income and the periods in which they

enter into the determination of pretax

accounting income, the income tax effects of such transactions are to be recognized in the periods in which the differences between book accounting income and taxable income arise and in

the periods in which the differences reverse using the deferred tax method.

(2) Comprehensive interperiod tax allocation should be followed whenever

transactions enter into the determination of pretax accounting income for

the period even though some transactions may affect the determination

of taxes payable in a different period.

(3) Utilities are not required to utilize comprehensive interperiod income

tax allocation until the deferred income taxes are included as an expense

in the rate level by the regulatory authority having rate jurisdiction over

the utility.

(4) Where comprehensive interperiod

tax allocation accounting is not practiced the utility shall include as a note

to each financial statement, prepared

for public use, a footnote explanation

setting forth the utility’s accounting

policies with respect to interperiod tax

allocation and describing the treatment for rate making purposes of the

tax timing differences by regulatory

authorities having rate jurisdiction.

(5) Should the utility be subject to

more than one agency having rate jurisdiction, its accounts shall appropriately reflect the ratemaking treatment (deferral or flow through) of each

jurisdiction.

(6) Once comprehensive interperiod

tax allocation has been initiated either

in whole or in part it shall be practiced

on a consistent basis and shall not be

changed or discontinued without prior

RUS approval.

(7) Tax effects deferred currently will

be recorded as deferred debits or deferred credits in Accounts 190, Accumulated Deferred Income Taxes; 281, Accumulated Deferred Income Taxes—Accelerated Amortization Property; 282,

Accumulated Deferred Income Taxes—

699

Rural Utilities Service, USDA § 1767.15

Other Property, and 283, Accumulated

Deferred Taxes—Other, as appropriate.

(8) The resulting amounts recorded in

these accounts shall be disposed of as

prescribed in this system of accounts

or as otherwise authorized by RUS.

(s) Criteria for classifying leases. (1) If,

at its inception, a lease meets one or

more of the following criteria, the

lease shall be classified as a capital

lease:

(i) The lease transfers ownership of

the property to the lessee by the end of

the lease term.

(ii) The lease contains a bargain purchase option.

(iii) The lease term is equal to 75 percent or more of the estimated economic life of the leased property. However, if the beginning of the lease term

falls within the last 25 percent of the

total estimated economic life of the

leased property, including earlier years

of use, this criterion shall not be used

for purposes of classifying the lease.

(iv) The present value at the beginning of the lease term of the minimum

lease payments, excluding that portion

of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon,

equals or exceed 90 percent of the excess of the fair value of the leased property to the lessor at the inception of

the lease over any related investment

tax credit retained by the lessor and

expected to be realized by lessor.

(A) However, if the beginning of the

lease term falls within the last 25 percent of the total estimated economic

life of the leased property, including

earlier years of use, this criterion shall

not be used for purposes of classifying

the lease.

(B) The lessee utility shall compute

the present value of the minimum

lease payments using its incremental

borrowing rate, unless it is practicable

for the utility to learn the implicit

rate computed by the lessor, and the

implicit rate computed by the lessor is

less than the lessee’s incremental borrowing rate. If both of those conditions

are met, the lessee shall use the implicit rate.

(2) If, at any time, the lessee and lessor agree to change the provisions of

the lease, other than by renewing the

lease or extending its term, in a manner that would have resulted in a different classification of the lease under

the criteria in paragraph (s)(1) of this

section had the changed terms been in

effect at the inception of the lease, the

revised agreement shall be considered

as a new agreement over its term, and

the criteria in paragraph (s)(1) of this

section shall be applied for purposes of

the expiration of the existing lease

term, such as the exercise of a lease renewal option other than those already

included in the lease term, shall be

considered as a new agreement and

shall be classified according to the

above provision. Changes in estimates

(for example, changes in estimates of

the economic life or of the residual

value of the leased property) or

changes in circumstances (for example,

default by the lessee) shall not give

rise to a new classification of a lease

for accounting purposes.

(t) Accounting for leases. (1) All leases

shall be classified as either capital or

operating leases.

(2) The utility shall record a capital

lease as an asset in Account 101.1,

Property Under Capital Leases, and Account 120.6, Nuclear Fuel Under Capital

Leases; as appropriate, and an obligation in Account 227, Obligations Under

Capital Leases—Noncurrent, or Account 243, Obligations Under Capital

Leases—Current, at an amount equal

to the present value at the beginning of

the lease term of minimum lease payments during the lease term, excluding

that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be

paid by the lessor, together with any

profit thereon. However, if the amount

so determined exceeds the fair value of

the leased property at the inception of

the lease, the amount recorded as the

asset and obligation shall be the fair

value.

(3) Rental payments on all leases

shall be charged to rent expense, fuel

expense, construction work in progress,

or other appropriate accounts as they

become payable.

(4) For a capital lease, for each period

during the lease term, the amounts recorded for the asset and obligation

shall be reduced by an amount equal to

the portion of each lease payment that

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§ 1767.15 7 CFR Ch. XVII (1–1–00 Edition)

would have been allocated to the reduction of the obligation, if the payment

had been treated as a payment on an

installment obligation (liability) and

allocated between interest expense and

a reduction of the obligation so as to

produce a constant periodic rate of interest on the remaining balance.

(u) Allowances. (1) Title IV of the

Clean Air Act Amendments of 1990,

Pub. L. 101–549, 104 Stat. 2399, 2584 (42

U.S.C. 7407 and 42 U.S.C. 7651), provides

for the issuance of allowances as a

means to limit the emissions of certain

airborne pollutants by various entities,

including utilities. Utilities owning allowances, other than those acquired for

speculative purposes, shall account for

such allowances at cost in Account

158.1, Allowance Inventory, or Account

158.2, Allowances Withheld, as appropriate. Allowances acquired for speculative purposes and identified as such

in contemporaneous records at the

time of purchase shall be accounted for

in Account 124, Other Investments.

(2) When purchased, allowances become eligible for use in different years,

and the allocation of the purchase cost

cannot be determined by fair value, the

purchase cost allocated to allowances

of each vintage shall be determined

through use of a present-value based

measurement. The interest rate used in

the present-value measurement shall

be the utility’s incremental borrowing

rate, in the month in which the allowances are acquired, for a loan with a

term similar to the period that it will

hold the allowances and in an amount

equal to the purchase price.

(3) The underlying records supporting

Account 158.1 and Account 158.2 shall

be maintained in sufficient detail so as

to provide the number of allowances

and the related cost by vintage year.

(4) Issuances from inventory included

in Account 158.1 and Account 158.2 shall

be accounted for on a vintage basis

using a monthly weighted-average

method of cost determination. The cost

of eligible allowances not used in the

current year shall be transferred to the

vintage for the immediately following

year.

(5) Account 158.1 shall be credited and

Account 509, Allowances, debited so

that the cost of the allowances to be

remitted for the year is charged to expense monthly based on each month’s

emissions. This may, in certain circumstances, require allocation of the

cost of an allowance between months

on a fractional basis.

(6) In any period in which actual

emissions exceed the amount allowable

based on eligible allowances owned, the

utility shall estimate the cost to acquire the additional allowances needed

and charge Account 158.1 with the estimated cost. This estimated cost of future allowance acquisitions shall be

credited to Account 158.1 and charged

to Account 509 in the same accounting

period as the related charge to Account

158.1. Should the actual cost of these

allowances differ from the estimated

cost, the differences shall be recognized

in the then-current period’s inventory

issuance cost.

(7) Any penalties assessed by the Environmental Protection Agency for the

emission of excess pollutants shall be

charged to Account 426.3, Penalties.

(8) Gains on dispositions of allowances, other than allowances held for

speculative purposes, shall be accounted for as follows. First, if there is

uncertainty as to the regulatory treatment, the gain shall be deferred in Account 254, Other Regulatory Liabilities, pending resolution of the uncertainty. Second, if there is certainty as

to the existence of a regulatory liability, the gain will be credited to Account 254, with subsequent recognition

in income when reductions in charges

to customers occur or the liability is

otherwise satisfied. Third, all other

gains will be credited to Account 411.8,

Gains from Disposition of Allowances.

Losses on disposition of allowances,

other than allowances held for speculative purposes, shall be accounted for as

follows. Losses that qualify as regulatory assets shall be charged directly

to Account 182.3, Other Regulatory Assets. All other losses shall be charged

to Account 411.9, Losses from Disposition of Allowances. (See the definition

of regulatory assets and liabilities.)

Gains or losses on disposition of allowances held for speculative purposes

shall be recognized in Account 421, Miscellaneous Nonoperating Income, or

Account 426.5, Other Deductions, as appropriate.

701

Rural Utilities Service, USDA § 1767.16

(9) The costs and benefits of exchange-traded allowance futures contracts used to protect the utility from

the risk of unfavorable price changes

(‘‘hedging transactions’’) shall be deferred in Account 186, Miscellaneous

Deferred Debits, or Account 253, Other

Deferred Credits, as appropriate. Such

deferred amounts shall be included in

Account 158.1, Allowance Inventory, in

the month in which the related allowances are acquired, sold or otherwise

disposed of. Where the costs or benefits

of hedging transactions are not identifiable with specific allowances, the

amounts shall be included in Account

158.1 when the futures contract is

closed. The costs and benefits of exchange-traded allowance futures contracts entered into as a speculating activity shall be charged or credited to

Account 421, Miscellaneous Nonoperating Income, or Account 426.5, Other

Deductions, as appropriate.

§ 1767.16 Electric plant instructions.

(a) Classification of electric plant at effective date of system of accounts. (1) The

electric plant accounts provided herein

are the same as those contained in the

prior system of accounts except for inclusion of accounts for nuclear production plant and some changes in classification in the general equipment accounts. Except for these changes, the

balances in the various plant accounts,

as determined under the prior system

of accounts, should be carried forward.

Any remaining balance of plant which

has not yet been classified, pursuant to

the requirements of the prior system,

shall be classified in accordance with

the following instructions.

(2) The cost to the utility of its unclassified plant shall be ascertained by

analysis of the utility’s records. Adjustments shall not be made to record

in utility plant accounts amounts previously charged to operating expenses

or to income deductions in accordance

with the USoA in effect at the time or

in accordance with the discretion of

management as exercised under a

USoA, or under accounting practices

previously followed.

(3) The detailed electric plant accounts (301 to 399, inclusive) shall be

stated on the basis of cost to the utility of plant constructed by it and the

original cost, estimated if not known,

of plant acquired as an operating unit

or system. The difference between the

original cost, as above, and the cost to

the utility of electric plant after giving

effect to any accumulated provision for

depreciation or amortization shall be

recorded in Account 114, Electric Plant

Acquisition Adjustments. The original

cost of electric plant shall be determined by analysis of the utility’s

records or those of the predecessor or

vendor companies with respect to electric plant previously acquired as operating units or systems and the difference between the original cost so determined, less accumulated provisions

for depreciation and amortization and

the cost to the utility with necessary

adjustments for retirements from date

of acquisition, shall be entered in Account 114, Electric Plant Acquisition

Adjustments. Any difference between

the cost of electric plant and its book

cost, when not properly includible in

other accounts, shall be recorded in Account 116, Other Electric Plant Adjustments.

(b) Electric plant to be recorded at cost.

(1) All amounts included in the accounts for electric plant acquired as an

operating unit or system, except as

otherwise provided in the texts of the

intangible plant accounts, shall be

stated at the cost incurred by the person who first devoted the property to

utility service. All other electric plant

shall be included in the accounts at the

cost incurred by the utility except for

property acquired by lease which qualifies as capital lease property under

§1767.15 (s), Criteria for Classifying

Leases, and is recorded in Account

101.1, Property Under Capital Lease, or

Account 120.6, Nuclear Fuel Under Capital Leases. Where the term ‘‘cost’’ is

used in the detailed plant accounts, it

shall have the meaning stated in this

paragraph (b).

(2) When the consideration given for

property is other than cash, the value

of such consideration shall be determined on a cash basis (see, however,

the definition of cost in §1767.10). In

the entry recording such transition,

the actual consideration shall be described with sufficient particularity to

identify it. The utility shall be prepared to furnish RUS the particulars of

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§ 1767.16 7 CFR Ch. XVII (1–1–00 Edition)

its determination of the cash value of

the consideration if other than cash.

(3) When property is purchased under

a plan involving deferred payments, no

charge shall be made to the electric

plant accounts for interest, insurance,

or other expenditures occasioned solely

by such form of payment.

(4) The electric plant accounts shall

not include the cost or other value of

electric plant contributed to the company. Contributions in the form of

money or its equivalent toward the

construction of electric plant shall be

credited to accounts charged with the

cost of such construction. Plant constructed from contributions of cash or

its equivalent shall be shown as a reduction to gross plant constructed

when assembling cost data in work orders for posting to plant ledgers of accounts. The accumulated gross costs of

plant accumulated in the work order

shall be recorded as a debit in the plant

ledger of accounts along with the related amount of contributions concurrently be recorded as a credit.

(c) Components of construction cost.

The cost of construction properly includible in the electric plant accounts

shall include, where applicable, the direct and overhead costs as listed and

defined hereunder:

(1) Contract work includes amounts

paid for work performed under contract

by other companies, firms, or individuals, costs incident to the award of

such contracts, and the inspection of

such work.

(2) Labor includes the pay and expenses of employees of the utility engaged on construction work, and related workmen’s compensation insurance, payroll taxes, and similar items

of expense. It does not include the pay

and expenses of employees which are

distributed to construction through

clearing accounts nor the pay and expenses included in other items hereunder.

(3) Materials and supplies includes the

purchase price at the point of free delivery plus customs duties, excise

taxes, the cost of inspection, loading

and transportation, the related stores

expenses, and the cost of fabricated

materials from the utility’s shop. In

determining the cost of materials and

supplies used for construction, proper

allowance shall be made for unused

materials and supplies, for materials

recovered from temporary structures

used in performing the work involved,

and for discounts allowed and realized

in the purchase of materials and supplies.

NOTE: The cost of individual items of

equipment of small value (for example, $500

or less) or of short life, including small portable tools and implements, shall not be

charged to utility plant accounts unless the

correctness of the accounting therefor is

verified by current inventories. The cost

shall be charged to the appropriate operating

expense or clearing accounts, according to

the use of such items, or, if such items are

consumed directly in construction work, the

cost shall be included as part of the cost of

the construction.

(4) Transportation includes the cost of

transporting employees, materials and

supplies, tools, purchased equipment,

and other work equipment (when not

under own power) to and from points of

construction. It includes amounts paid

to others as well as the cost of operating the utility’s own transportation

equipment. (See Item in paragraph

(c)(5) of this section.)

(5) Special machine service includes the

cost of labor (optional), materials and

supplies, depreciation, and other expenses incurred in the maintenance,

operation and use of special machines,

such as steam shovels, pile drivers, derricks, ditchers, scrapers, material

unloaders, and other labor saving machines; also expenditures for rental,

maintenance and operation of machines of others. It does not include the

cost of small tools and other individual

items of small value or short life which

are included in the cost of materials

and supplies. (See Item in paragraph

(c)(3) of this section.) When a particular construction job requires the

use for an extended period of time of

special machines, transportation or

other equipment, the net book cost

thereof, less the appraised or salvage

value at time of release from the job,

shall be include in the cost of construction.

(6) Shop service includes the proportion of the expense of the utility’s shop

department assignable to construction

work except that the cost of fabricated

materials from the utility’s shop shall

be included in ‘‘materials and supplies.’’

703

Rural Utilities Service, USDA § 1767.16

(7) Protection includes the cost of protecting the utility’s property from fire

or other casualties and the cost of preventing damages to others, or to the

property of others, including payments

for discovery or extinguishment of

fires, cost of apprehending and prosecuting incendiaries, witness fees in relation thereto, amounts paid to municipalities and others for fire protection, and other analogous items of expenditures in connection with construction work.

(8) Injuries and damages includes expenditures or losses in connection with

construction work on account of injuries to persons and damages to the

property of others; also the cost of investigation of and defense against actions for such injuries and damages. Insurance recovered or recoverable on account of compensation paid for injuries

to persons incident to construction

shall be credited to the account or accounts to which such compensation is

charged. Insurance recovered or recoverable on account of property damages

incident to construction shall be credited to the account or accounts

charged with the cost of the damages.

(9) Privileges and permits includes payments for and expenses incurred in securing temporary privileges, permits or

rights in connection with construction

work, such as for the use of private or

public property, streets, or highways,

but it does not include rents, or

amounts chargeable as franchises and

consents for which see Account 302,

Franchises and Consents.

(10) Rents includes amounts paid for

the use of construction quarters and office space occupied by construction

forces and amounts properly includible

in construction costs for such facilities

jointly used.

(11) Engineers and supervision includes

the portion of the pay and expenses of

engineers, surveyors, draftsmen, inspectors, superintendents and their assistants applicable to construction

work.

(12) General administration capitalized

includes the portion of the pay and expenses of the general officers and administrative and general expenses applicable to construction work.

(13) Engineering services includes

amounts paid to other companies,

firms, or individuals engaged by the

utility to plan, design, prepare estimates, supervise, inspect, or give general advice and assistance in connection with construction work.

(14) Insurance includes premiums paid

or amounts provided or reserved as

self-insurance for the protection

against loss and damages in connection

with construction, by fire or other casualty, injuries or deaths of persons

other than employees, damages to

property of others, defalcation of employees and agents, and the nonperformance of contractual obligations

of others. It does not include workmen’s compensation or similar insurance on employees included as ‘‘labor’’

in Item in paragraph (c)(2) of this section.

(15) Law expenditures includes the

general law expenditures incurred in

connection with construction and the

court and legal costs directly related

thereto, other than law expenses included in ‘‘Protection,’’ Item in paragraph (c)(7) of this section, and in Injuries and damages, Item in paragraph

(c)(8) of this section.

(16) Taxes includes taxes on physical

property (including land) during the

period of construction and other taxes

properly includible in construction

costs before the facilities become available for service.

(17) Allowance for funds used during

construction includes the net cost for

the period of construction of borrowed

funds used for construction purposes

and a reasonable rate on other funds

when so used, not to exceed, without

prior approval of RUS, allowances computed in accordance with the formula

prescribed in Item in paragraph

(c)(17)(i) of this section. No allowance

for funds used during construction

charges shall be included in these accounts upon expenditures for construction projects which have been abandoned.

(i) The formula and elements for the

computation of the allowance for funds

used during construction shall be:

704

§ 1767.16 7 CFR Ch. XVII (1–1–00 Edition)

 i

c

A s S

W d D

DPC

S

W

 A S

W P P

DPC c CDPC

= +

+ + −

= − + ++

+ +















































































































































1

1 





















Where:

Ai=Gross allowance for borrowed funds used

during construction rate.

Ac=Allowance for other funds used during

construction rate.

S=Average short-term debt.

s=Short-term debt interest rate.

D=Long-term debt.

d=Long-term debt interest rate.

P=Preferred stock.

p=Preferred stock cost rate.

C=Patronage capital assigned.

c=Entity’s incremental borrowing rate.

W=Average balance in construction work in

progress plus nuclear fuel in process of refinement, conversion, enrichment, and fabrication.

(ii) The rate shall be determined annually.

(A) The balance for long-term debt,

preferred stock, and patronage capital

assigned shall be the actual book balances as of the end of the prior year.

(B) The cost rate for long-term debt

and preferred stock shall be the

weighted average cost.

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

(D) The short-term debt balances and

related cost and the average balance

for construction work in progress plus

nuclear fuel in process of refinement,

conversion, enrichment, and fabrication shall be estimated for the current

year with appropriate adjustments as

actual data becomes available.

NOTE: When only a portion of a plant or

project is placed in operation or is completed

and ready for service but the construction

work as a whole is incomplete, that part of

the cost of the property placed in operation

or ready for service shall be treated as ‘‘Electric Plant in Service,’’ and an allowance for

funds used during construction thereon as a

charge to construction shall cease. Allowance for funds used during construction on

that part of the cost of the plant which is incomplete may continue to be charged to construction until such time as it is placed in

operation or is ready for service, except as

limited in Item in paragraph (c)(17) of this

section.

(18) Earnings and expenses during construction. The earnings and expenses

during construction shall constitute a

component of construction costs.

(i) The earnings shall include revenues received or earned for power produced by generating plants during the

construction period and sold or used by

the utility.

(A) Where such power is sold to an

independent purchaser before intermingling with power generated by

other plants, the credit shall consist of

the selling price of the energy.

(B) Where the power generated by a

plant under construction is delivered

to the utility’s electric system for distribution and sale, or is delivered to an

associated company, or is delivered to

and used by the utility for purposes

other than distribution and sale (for

manufacturing or industrial use, for

example), the credit shall be the fair

value of the energy so delivered.

(C) Revenue shall also include rentals

for lands, buildings, and other property, and miscellaneous receipts not

properly includible in other accounts.

(ii) Expenses shall consist of the cost

of operating the power plant, and other

costs incident to the production and

delivery of the power for which construction is credited under paragraph

(c)(18)(i) of this section, including the

cost of repairs and other expenses of

operating and maintaining lands,

buildings, and other property, and

other miscellaneous and like expenses

not properly includible in other accounts.

(19) Training costs. (i) When it is necessary that employees be trained to operate or maintain plant facilities that

are being constructed and such facilities are not conventional in nature, or

are new to the company’s operations,

705

Rural Utilities Service, USDA § 1767.16

these costs may be capitalized as a

component of construction cost.

(ii) Once plant is placed in service,

the capitalization of training costs

shall cease and subsequent training

costs shall be expensed. (See §1767.17

(d).)

(20) Studies. (i) Studies include the

costs of studies such as nuclear operational, safety, or seismic studies, or

environmental studies mandated by

regulatory bodies relative to plant

under construction.

(ii) Studies relative to facilities in

service shall be charged to Account 183,

Preliminary Survey and Investigation

Charges.

(d) Overhead construction costs. (1) All

overhead construction costs, such as

engineering, supervision, general office

salaries and expenses, construction engineering and supervision performed by

others than the accounting utility, law

expenses, insurance, injuries and damages, relief and pensions, taxes and interest, shall be charged to particular

jobs or units on the basis of the

amounts of such overheads reasonably

applicable thereto, to the end that each

job or unit shall bear its equitable proportion of such costs and that the entire cost of the unit, both direct and

overhead, shall be deducted from the

plant accounts as the time the property is retired.

(2) As far as practicable, the determination of payroll charges includible

in construction overheads shall be

based on time card distributions thereof.

(i) Where this procedure is impractical, special studies shall be made periodically of the time of supervisory

employees devoted to construction activities to the end that only such overhead costs as have a definite relation

to construction shall be capitalized.

(ii) The addition to direct construction cost of arbitrary percentages or

amounts to cover assumed overhead

costs is not permitted.

(3) The records supporting the entries

for overhead constructions costs shall

be so kept as to show:

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

(ii) The nature and amount of each

overhead expenditure charged to each

construction work order and to each

electric plant account; and

(iii) The bases of distribution of such

costs.

(e) Electric plant purchased or sold. (1)

When electric plant constituting an operating unit or system is acquired by

purchase, merger, consolidation, liquidation, or otherwise, after the effective date of this system of accounts,

the costs of acquisition, including expenses incidental thereto properly includible in electric plant, shall be

charged to Account 102, Electric Plant

Purchased or Sold.

(2) The accounting for the acquisition

shall then be completed as follows:

(i) The original cost of plant, estimated if not known, shall be credited

to Account 102, Electric Plant Purchased or Sold, and concurrently

charged to the appropriate electric

plant in service accounts and to Account 104, Electric Plant Leased to

Others; Account 105, Electric Plant

Held for Future Use; and Account 107,

Construction Work in Progress—Electric, as appropriate.

(ii) The depreciation and amortization applicable to the original cost of

the properties purchased shall be

charged to Account 102, Electric Plant

Purchased or Sold, and concurrently

credited to the appropriate account for

accumulated provision for depreciation

or amortization.

(iii) The cost to the utility of any

property includible in Account 121,

Nonutility Property, shall be transferred thereto.

(iv) The amount remaining in Account 102, Electric Plant Purchased or

Sold, shall then be closed to Account

114, Electric Plant Acquisition Adjustments.

(3) If property acquired in the purchase of an operating unit or system is

in such physical condition when acquired that it is necessary to substantially rehabilitate it in order to bring

the property up to the standards of the

utility, the cost of such work, except

replacements, shall be accounted for as

a part of the purchase price of the

property.

(4) When any property acquired as an

operating unit or system includes duplicate or other plant which will be retired by the accounting utility in the

706

§ 1767.16 7 CFR Ch. XVII (1–1–00 Edition)

reconstruction of the acquired property

or its consolidation with previously

owned property, the proposed accounting for such property shall be presented

to RUS.

(5) In connection with the acquisition

of electric plant constituting an operating unit or system, the utility shall

procure, if possible, all existing records

relating to the property acquired or

certified copies thereof, and shall preserve such records in conformity with

regulations or practices governing the

preservation of records of its own construction.

(6) When electric plant constituting

an operating unit or system is sold,

conveyed, or transferred to another by

sale, merger, consolidation, or otherwise, the book cost of the property sold

or transferred to another shall be credited to the appropriate utility plant accounts, including amounts carried in

Account 114, Electric Plant Acquisition

Adjustments, and the amounts (estimated if not known) carried with respect thereto in the accounts for accumulated provision for depreciation and

amortization and in Account 252, Customer Advances for Construction, shall

be charged to such accounts and contra

entries made to Account 102, Electric

Plant Purchased or Sold. Unless otherwise ordered by RUS, the difference, if

any, between:

(i) The net amount of debits and

credits, and

(ii) The consideration received for

the property (less commissions and

other expenses of making the sale)

shall be included in Account 421.1, Gain

on Disposition of Property, or Account

421.2, Loss on Disposition of Property.

(See Account 102, Electric Plant Purchased or Sold.)

NOTE: In cases where existing utilities

merge or consolidate because of financial or

operating reasons or statutory requirements

rather than as a means of transferring title

of purchased properties to a new owner, the

accounts of the constituent utilities, with

the approval of RUS, may be combined. In

the event original cost has not been determined, the resulting utility shall proceed to

determine such cost as outlined herein.

(f) Expenditures on leased property. (1)

The cost of substantial initial improvements (including repairs, rearrangements, additions, and betterments)

made in the course of preparing for

utility service property leased for a period of more than one year, and the

cost of subsequent substantial additions, replacements, or betterments to

such property, shall be charged to the

electric plant account appropriate for

the class of property leased.

(i) If the service life of the improvements is terminable by action of the

lease, the cost, less net salvage, of the

improvements shall be spread over the

life of the lease by charges to Account

404, Amortization of Limited-Term

Electric Plant.

(ii) If the service life is not terminated by action of the lease but by depreciation proper, the cost of the improvements, less net salvage, shall be

accounted for as depreciable plant. The

provisions of (1) are applicable to property leased under either capital leases

or operating leases.

(2) If improvements made to property

leased for a period of more than one

year are of relatively minor cost, or if

the lease is for a period of not more

than one year, the cost of the improvements shall be charged to the account

in which the rent is included, either directly or by amortization thereof.

(g) Land and land rights. (1) The accounts for land and land rights shall

include the cost of land owned in fee by

the utility and rights, interests, and

privileges held by the utility in land

owned by others, such as leaseholds,

easements, water and water power

rights, diversion rights, submersion

rights, rights-of-way, and other like interests in land.

(i) Do not include in the accounts for

land and land rights and rights-of-way

costs incurred in connection with first

clearing and grading of land and rightsof-way and the damage costs associated

with the construction and installation

of plant.

(ii) Such costs shall be included in

the appropriate plant accounts directly

benefited.

(2) Where special assessments for

public improvements provide for deferred payments, the full amount of the

assessments shall be charged to the appropriate land account and the unpaid

balance shall be carried in an appropriate liability account.

707

Rural Utilities Service, USDA § 1767.16

(i) Interest on unpaid balances shall

be charged to the appropriate interest

account.

(ii) If any part of the cost of public

improvements is included in the general tax levy, the amount thereof shall

be charged to the appropriate tax account.

(3) The net profit from the sale of

timber, cord wood, sand, gravel, other

resources or other property acquired

with the rights-of-way or other lands

shall be credited to the appropriate

plant accounts to which related. Where

land is held for a considerable period of

time and timber and other natural resources on the land at the time of purchase increase in value, the net profit

(after giving effect to the cost of the

natural resources) from the sale of timber or its products or other natural resources shall be credited to the appropriate utility operating income account when such land has been recorded in Account 105, Electric Plant

Held for Future Use, or classified as

plant in service, otherwise to Account

421, Miscellaneous Nonoperating Income.

(4) Separate entries shall be made for

the acquisition, transfer, or retirement

of each parcel of land, and each land

right (except rights-of-way for distribution lines), or water right, having a life

of more than one year.

(i) A record shall be maintained

showing the nature of ownership, full

legal description, area, map reference,

purpose for which used, city, county,

and tax district on which situated,

from whom purchased or to whom sold,

payment given or received, other costs,

contract date and number, date of recording of deed, and book and page of

record.

(ii) Entries transferring or retiring

land or land rights shall refer to the

original entry recording its acquisition.

(5) Any difference between the

amount received from the sale of land

or land rights, less agents’ commissions and other costs incident to the

sale, and the book cost of such land or

rights, shall be included in Account

411.6, Gains from Disposition of Utility

Plant, or 411.7, Losses from Disposition

of Utility Plant, when such property

has been recorded in Account 105, Electric Plant Held for Future Use, otherwise to Account 421.1, Gain on Disposition of Property, or 421.2, Loss on Disposition of Property, as appropriate,

unless a reserve therefor has been authorized and provided. Appropriate adjustments of the accounts shall be

made with respect to any structures or

improvements located on land sold.

(6) The cost of buildings and other

improvements (other than public improvements) shall not be included in

the land accounts. If, at the time of acquisition of an interest in land, such

interest extends to buildings or other

improvements (other than public improvements) which are then devoted to

utility operations, the land and improvements shall be separately appraised and a cost allocated to land and

buildings or improvements on the basis

of the appraisals. If the improvements

are removed or wrecked without being

used in operations, the cost of removing or wrecking shall be charged and

the salvage credited to the account in

which the cost of land is recorded.

(7) When the purchase of land for

electric operations requires the purchase of more land than needed for

such purposes, the charge to the specific land account shall be based upon

the cost of the land purchased, less the

fair market value of that portion of the

land which is not to be used in utility

operations. The portion of the cost

measured by the fair market value of

the land not to be used shall be included in Account 105, Electric Plant

Held for Future Use, or Account 121,

Nonutility Property, as appropriate.

(8) Provisions shall be made for amortizing amounts carried in the accounts for limited-term interest in

land so as to apportion equitably the

cost of each interest over the life

thereof. (See Account 111, Accumulated

Provision for Amortization of Electric

Utility Plant, and Account 404, Amortization of Limited-Term Electric

Plant.)

(9) The items of cost to be included in

the accounts for land and land rights

are as follows:

(i) Bulkheads, buried, not requiring

maintenance or replacement;

(ii) First cost of acquisition including mortgages and other liens assumed

(but not subsequent interest thereon);

708

§ 1767.16 7 CFR Ch. XVII (1–1–00 Edition)

(iii) Condemnation proceedings, including court and counsel costs;

(iv) Consents and abutting damages;

(v) Conveyancers’ and notaries’ fees;

(vi) Fees, commissions, and salaries

to brokers, agents, and other in connection with the acquisition of the

land or land rights;

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

(viii) Removing, relocating, or reconstructing property of others, such as

buildings, highways, railroads, bridges,

cemeteries, churches, telephone and

power lines, etc., in order to acquire

quiet possession;

(ix) Retaining walls unless identified

with structures;

(x) Special assessments levied by

public authorities for public improvements on the basis of benefits for new

roads, new bridges, new sewers, new

curbing, new pavements, and other

public improvements, but not taxes

levied to provide for the maintenance

of such improvements;

(xi) Surveys in connection with the

acquisition, but not amounts paid for

topographical surveys and maps where

such costs are attributable to structures or plant equipment erected or to

be erected or installed on such land;

(xii) Taxes assumed, accrued to date

of transfer of title;

(xiii) Title, examining, clearing, insuring, and registering in connection

with the acquisition and defending

against claims relating to the period

prior to the acquisition;

(xiv) Appraisals prior to closing title;

(xv) Cost of dealing with distributees

or legatees residing outside of the state

or county, such as recording power of

attorney, recording will or exemplification of will, recording satisfaction of

state tax;

(xvi) Filing satisfaction of mortgage;

(xvii) Documentary stamps;

(xviii) Photographs of property at acquisition;

(xix) Fees and expenses incurred in

the acquisition of water rights and

grants;

(xx) Cost of fill to extend bulkhead

line over land under water, where riparian rights are held, which is not occasioned by the erection of a structure;

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

(xxii) Labor and expenses in connection with securing rights of way, where

performed by company employees and

company agents.

(h) Structures and improvements. (1)

The accounts for structures and improvements shall include the cost of all

buildings and facilities to house, support, or safeguard property or persons,

including all fixtures permanently attached to and made a part of buildings

and which cannot be removed therefrom without cutting into the walls,

ceilings, or floors, or without in some

way impairing the buildings, and improvements of a permanent character

on or to land.

(2) Also include those costs incurred

in connection with the first clearing

and grading of land and rights-of-way

and the damage costs associated with

construction and installation of plant.

(3) The cost of specially provided

foundations not intended to outlast the

machinery or apparatus for which provided, and the cost of angle irons, and

castings installed at the base of an

item of equipment, shall be charged to

the same account as the cost of the

machinery, apparatus, or equipment.

(4) Minor buildings and structures,

such as valve towers, patrolmen’s towers, telephone stations, fish and wildlife, and recreation facilities which are

used directly in connection with or

form a part of a reservoir, dam or waterway shall be considered a part of the

facility in connection with which constructed or operated and the cost

thereof accounted for accordingly.

(5) Where furnaces and boilers are

used primarily for furnishing steam for

some particular department and only

incidentally for furnishing steam for

heating a building and operating the

equipment therein, the entire cost of

such furnaces and boilers shall be

charged to the appropriate plant account, and no part to the building account.

(6) Where the structure of a dam

forms also the foundation of the power

plant building, such foundation shall

be considered a part of the dam.

709

Rural Utilities Service, USDA § 1767.16

(7) The cost of disposing of materials

excavated in connection with construction of structures shall be considered

as a part of the cost of such work, except when such material is used for filling, the cost of loading, hauling, and

dumping shall be equitably apportioned between the work in connection

with which the removal occurs and the

work in connection with which the material is used; and when such material

is sold, the net amount realized from

such sales shall be credited to the work

in connection with which the removal

occurs. If the amount realized from the

sale of excavated materials exceeds the

removal costs and the costs in connection with the sale, the excess shall be

credited to the land account in which

the site is carried.

(8) Lighting or other fixtures temporarily attached to building for purposes

of display or demonstration shall not

be included in the cost of the building

but in the appropriate equipment account.

(9) The items of cost to be included in

the accounts for structures and improvements are as follows:

(i) Architects’ plans and specifications including supervision;

(ii) Ash pits (when located within the

building);

(iii) Athletic field structures and improvements;.

(iv) Boilers, furnaces, piping, wiring,

fixtures, and machinery for heating,

lighting, signaling, ventilating, and air

conditioning systems, plumbing, vacuum cleaning systems, incinerator and

smoke pipe, flues, etc;

(v) Bulkheads, including dredging,

riprap fill, piling, decking, concrete,

fenders, etc., when exposed and subject

to maintenance and replacement;

(vi) Chimneys;

(vii) Coal bins and bunkers;

(viii) Commissions and fees to brokers, agents, architects and others;

(ix) Conduit (not to be removed) with

its contents;

(x) Damages to abutting property

during construction;

(xi) Docks;

(xii) Door checks and door stops;

(xiii) Drainage and sewerage systems;

(xiv) Elevators, cranes, hoists, etc.,

and the machinery for operating them;

(xv) Excavation, including shoring,

bracing, bridging, refill and disposal of

excess excavated material, cofferdams

around foundation, pumping water

from cofferdams during construction

and test borings;

(xvi) Fences and fence curbs (not including protective fences isolating

items of equipment, which shall be

charged to the appropriate equipment

accounts);

(xvii) Fire protection systems when

forming a part of a structure;

(xviii) Flagpole;

(xix) Floor covering (permanently attached);

(xx) Foundations and piers for machinery, constructed as a permanent

part of a building or other item listed

herein;

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

structure;

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

cable;

(xxiii) Landscaping, lawns,

shrubbery, etc.;

(xxiv) Leases, voiding upon purchase

to secure possession of structures;

(xxv) Leased property, expenditures

on;

(xxvi) Lighting fixtures and outside

lighting system;

(xxvii) Mailchutes when part of a

building;

(xxviii) Marquee, permanently attached to the building;

(xxix) Painting, first cost;

(xxx) Permanent paving, concrete,

brick, flagstone, asphalt, etc., within

the property lines;

(xxxi) Partitions, including movable;

(xxxii) Permits and privileges;

(xxxiii) Platforms, railings and

gratings when constructed as a part of

a structure;

(xxxiv) Power boards for services to a

building;

(xxxv) Refrigerating systems for general use;

(xxxvi) Retaining walls except when

identified with land;

(xxxvii) Roadways, railroads, bridges,

and trestles intrasite except railroads

provided for in equipment accounts;

(xxxviii) Roofs;

(xxxix) Scales, connected to and

forming a part of a structure;

710

§ 1767.16 7 CFR Ch. XVII (1–1–00 Edition)

(xl) Screens;

(xli) Sewer systems, for general use;

(xlii) Sidewalks, culverts, curbs and

streets constructed by the utility on

its property;

(xliii) Sprinkling systems;

(xliv) Sump pumps and pits;

(xlv) Stacks—brick, steel, or concrete, when set on foundation forming

part of general foundation and steelwork of a building;

(xlvi) Steel inspection during construction;

(xlvii) Storage facilities constituting

a part of a building;

(xlviii) Storm doors and windows;

(xlix) Subways, areaways, and tunnels, directly connected to and forming

part of a structure;

(l) Tanks, constructed as part of a

building or as a distinct structural

unit;

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

(lii) Temporary water connection

during construction (net cost);

(liii) Temporary shanties and other

facilities used during construction (net

cost);

(liv) Topographical maps;

(lv) Tunnels, intake and discharge,

when constructed as part of a structure, including sluice gates, and those

constructed to house mains;

(lvi) Vaults constructed as part of a

building;

(lvii) Watchmen’s sheds and clock

systems (net cost when used during

construction only);

(lviii) Water basins or reservoirs;

(lix) Water front improvements;

(lx) Water meters and supply system

for a building or for general company

purposes;

(lxi) Water supply piping, hydrants,

and wells;

(lxii) Wharves;

(lxiii) Window shades and ventilators;

(lxiv) Yard drainage system;

(lxv) Yard lighting system; and

(lxvi) Yard surfacing, gravel, concrete, or oil (First cost only).

NOTE: Structures and improvements accounts shall be credited with the cost of coal

bunkers, stacks, foundations, subways, and

tunnels, the use of which has terminated

with the removal of the equipment with

which they are associated even though they

have not been physically removed.

(i) Equipment. (1) The cost of equipment chargeable to the electric plant

accounts, unless otherwise indicated in

the text of an equipment account, includes the net purchase price thereof,

sales taxes, investigation and inspection expenses necessary to such purchase, expenses of transportation when

borne by the utility, labor employed,

materials, and supplies consumed, and

expenses incurred by the utility in unloading and placing the equipment in

readiness to operate.

(2) Also include those costs incurred

in connection with the first clearing

and grading of land and rights-of-way

and the damage costs associated with

construction and installation of plant.

(3) Exclude from equipment accounts

hand and other portable tools, which

are likely to be lost or stolen or which

have relatively small value (for example, $500 or less) or short life, unless

the correctness of the accounting

therefor as electric plant is verified by

current inventories.

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

(ii) Portable drills and similar tool

equipment when used in connection

with the operation and maintenance of

a particular plan or department, such

as production, transmission, or distribution or in ‘‘stores’’, shall be

charged to the plant accounts appropriate for their use.

(4) The equipment accounts shall include angle irons and similar items

which are installed at the base of an

item of equipment, but piers and foundations which are designed to be as

permanent as the buildings which

house the equipment, or which are constructed as a part of the building and

which cannot be removed without cutting into the walls, ceilings, or floors

or, without in some way impairing the

building, shall be included in the building accounts.

(5) The equipment accounts shall include the necessary costs of testing or

running a plant or parts thereof during

an experimental or test period prior to

such plant becoming ready for or

placed in service.

(i) The utility shall furnish RUS with

full particulars of and justification for

711

Rural Utilities Service, USDA § 1767.16

any test or experimental run extending

beyond a period of 120 days for nuclear

plant, and a period of 90 days for all

other plant.

(ii) Such particulars shall include a

detailed operational and downtime log

showing days of production, gross kilowatts generated by hourly increments,

types, and periods of outages by hours

with explanation thereof, beginning

with the first date the equipment was

either tested or synchronized on the

line to the end of the test period.

(6) The cost of efficiency or other

tests made subsequent to the date

equipment becomes available for service shall be charged to the appropriate

expense accounts, except that tests to

determine whether equipment meets

the specifications and requirements as

to efficiency, or performance guaranteed by manufacturers, made after operations have commenced and within

the period specified in the agreement

or contract of purchase, may be

charged to the appropriate electric

plant accounts.

(j) Additions and retirements of electric

plant. (1) For the purpose of avoiding

undue refinement in accounting for additions to and retirements and replacements of electric plant, all property

shall be considered as consisting of retirement units and minor items of

property.

(2) The addition and retirement of retirement units shall be accounted for

as follows:

(i) When a retirement unit is added

to electric plant, the cost thereof shall

be added to the appropriate electric

plant account, except that when units

are acquired in the acquisition of any

electric plant constituting an operating system, they shall be accounted

for as provided in paragraph (e) of this

section.

(ii) When a retirement unit is retired

from electric plant, with or without replacement, the book cost thereof shall

be credited to the electric plant account in which it is included, determined in the manner set forth in Item

in paragraph (j)(4) of this section. If the

retirement unit is of a depreciable

class, the book cost of the unit retired

and credited to electric plant shall be

charged to the accumulated provision

for depreciation applicable to such

property. The cost of removal and the

salvage shall be charged or credited, as

appropriate, to such depreciation account.

(3) The addition and retirement of

minor items of property shall be accounted for as follows:

(i) When a minor item of property

which did not previously exist is added

to plant, the cost thereof shall be accounted for in the same manner as for

the addition of a retirement unit, as

set forth in Item in paragraph (j)(2)(i)

of this section, if a substantial addition

results, otherwise the charge shall be

to the appropriate maintenance expense account.

(ii) When a minor item of property is

retired and not replaced, the book cost

thereof shall be credited to the electric

plant account in which it is included;

and, in the event the minor item is a

part of depreciable plant, the account

for accumulated provision for depreciation shall be charged with the book

cost and cost of removal and credited

with the salvage. If, however, the book

cost of the minor item retired and not

replaced has been or will be accounted

for by its inclusion in the retirement

unit of which it is a part when such

unit is retired, no separate credit to

the property account is required when

such minor item is retired.

(iii) When a minor item of depreciable property is replaced independently of the retirement unit of which it

is a part, the cost of replacement shall

be charged to the maintenance account

appropriate for the item, except that if

the replacement effects a substantial

betterment (the primary aim of which

is to make the property affected more

useful, more efficient, of greater durability, or of greater capacity), the excess cost of the replacement over the

estimated cost at current prices of replacing without betterment shall be

charged to the appropriate electric

plant accounts.

(4) The book cost of electric plant retired shall be the amount at which

such property is included in the electric plant accounts, including all components of construction costs. The

book cost shall be determined from the

utility’s records and if this cannot be

done, it shall be estimated. When it is

impracticable to determine the book

712

§ 1767.16 7 CFR Ch. XVII (1–1–00 Edition)

cost of each unit, due to the relatively

large number or small cost thereof, an

appropriate average book cost of the

units with due allowance for any differences in size and character, shall be

used as the book cost of the units retired.

(5) The book cost of land retired shall

be credited to the appropriate land accounts. If the land is sold, the difference between the book cost (less any

accumulated provision for depreciation

or amortization therefore which has

been authorized and provided) and the

sale price of the land (less commissions

and other expenses of making the sale)

shall be recorded in Account 411.6,

Gains from Disposition of Utility

Plant, or Account 411.7, Losses from

Disposition of Utility Plant, when the

property has been recorded in Account

105, Electric Plant Held for Future Use,

otherwise to Accounts 421.1, Gain on

Disposition of Property, or 421.2, Loss

on Disposition of Property, as appropriate. If the land is not used in utility

service but is retained by the utility,

the book cost shall be charged to Account 105, Electric Plant Held for Future Use, or Account 121, Nonutility

Property, as appropriate.

(6) The book cost less net salvage of

depreciable electric plant retired shall

be charged in its entirety to Account

108, Accumulated Provision for Depreciation of Electric Utility Plant in

Service. Any amounts which, by approval or order of RUS, are charged to

Account 182.1, Extraordinary Property

Losses, shall be credited to Account

108.

(7) The accounting for the retirement

of amounts included in Account 302,

Franchises and Consents, and Account

303, Miscellaneous Intangible Plant,

and the items of limited-term interest

in land included in the accounts for

land and land rights, shall be as provided for in the text of Account 111, Accumulated Provision for Amortization

of Electric Utility Plant in Service;

Account 404, Amortization of LimitedTerm Electric Plant; and Account 405,

Amortization of Other Electric Plant.

(k) Work order and property record system required. (1) Each utility shall

record all construction and retirements

of electric plant by means of work orders or job orders. Separate work orders may be opened for additions to

and retirements of electric plant or the

retirements may be included with the

construction work order, provided,

however, that all items relating to the

retirements shall be kept separate

from those relating to construction

and provided, further, that any maintenance costs involved in the work shall

likewise be segregated.

(2) Each utility shall keep its work

order system so as to show the nature

of each addition to or retirement of

electric plant, the total cost thereof,

the source or sources of costs, and the

electric plant account or accounts to

which charged or credited. Work orders

covering jobs of short duration may be

cleared monthly.

(3) Each utility shall maintain

records in which, for each plant account, the amounts of the annual additions and retirements are classified so

as to show the number and cost of the

various record units or retirement

units.

(l) Transfers of property. When property is transferred from one electric

plant account to another, from one

utility department to another, such as

from electric to gas, from one operating division or area to another, to or

from Account 101, Electric Plant in

Service; Account 104, Electric Plant

Leased to Others; Account 105, Electric

Plant Held for Future Use, and Account 121, Nonutility Property, the

transfer shall be recorded by transferring the original cost thereof from the

one account, department, or location

to the other. Any related amounts carried in the accounts for accumulated

provision for depreciation or amortization shall be transferred in accordance

with the segregation of such accounts.

(m) Common utility plant. (1) If the

utility is engaged in more than one

utility service, such as electric, gas,

and water, and any of its utility plant

is used in common for several utility

services or for other purposes to such

an extent and in such manner that it is

impracticable to segregate it by utility

services currently in the accounts,

such property, with the approval of

RUS, may be designated and classified

as ‘‘common utility plant.’’

(2) The book amount of utility plant

designated as common plant shall be

713

Rural Utilities Service, USDA § 1767.16

included in Account 118, Other Utility

Plant, and if applicable in part to the

electric department, shall be segregated and accounted for in subaccounts as electric plant is accounted

for in Accounts 101 to 107, inclusive,

and electric plant adjustments in Account 116, Other Electric Plant Adjustments; any amounts classifiable as

common plant acquisition adjustments

or common plant adjustments shall be

subject to disposition as provided in

Paragraphs C and B of Accounts 114

and 116, respectively, for amounts classified in those accounts. The original

cost of common utility plant in service

shall be classified according to the detailed utility plant accounts appropriate for the property.

(3) The utility shall be prepared to

show, at any time, and to report to

RUS annually, or more frequently, if

required, and by utility plant accounts

(301 to 399) the book cost of common

utility plant, the allocation of such

cost to the respective departments

using the common utility plant, and

the basis of the allocation.

(4) The accumulated provision for depreciation and amortization of the utility shall be segregated so as to show

the amount applicable to the property

classified as common utility plant.

(5) The expenses of operation, maintenance, rents, depreciation and amortization of common utility plant shall

be recorded in the accounts prescribed

herein, but designated as common expenses, and the allocation of such expenses to the departments using the

common utility plant shall be supported in such manner as to reflect

readily the basis of allocation used.

(n) Transmission and distribution plant.

For the purpose of this system of accounts:

(1) Transmission system is all land,

conversion structures, and equipment

employed at a primary source of supply

(i.e. generating station, or point of receipt in the case of purchased power) to

change the voltage or frequency of

electricity for the purpose of its more

efficient or convenient transmission;

all land, structures, lines, switching

and conversion stations, high tension

apparatus, and their control and protective equipment between a generating or receiving point and the entrance to a distribution center or

wholesale point; and all lines and

equipment whose primary purpose is to

augment, integrate or tie together the

sources of power supply.

(2) Distribution system is all land,

structures, conversion equipment,

lines, line transformers, and other facilities employed between the primary

source of supply (i.e. generating station, or point of receipt in the case of

purchased power) and of delivery to

customers, which are not includible in

transmission system, as defined in

Item in paragraph (n)(1) of this section,

whether or not such land, structures,

and facilities are operated as part of a

transmission system or as part of a distribution system.

NOTE: Stations which change electricity

from transmission to distribution voltage

shall be classified as distribution stations.

(3) Where poles or towers support

both transmission and distribution

conductors, the poles, towers, anchors,

guys, and rights-of-way shall be classified as transmission system. The conductors, cross-arms, braces, grounds,

tiewire, and insulators shall be classified as transmission or distribution facilities, according to the purpose for

which used.

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

(5) Land (other than rights-of-way)

and structures used jointly for transmission and distribution purposes shall

be classified as transmission or distribution according to the major use

thereof.

(o) Hydraulic production plant. For

purpose of this system of accounts hydraulic production plant is all land and

land rights, structures and improvements used in connection with hydraulic power generation, reservoirs, dams

and waterways, water wheels, turbines,

generators, accessory electric equipment, roads, railroads, and bridges and

structures and improvements used in

connection with fish and wildlife, and

recreation.

714

§ 1767.17 7 CFR Ch. XVII (1–1–00 Edition)

(p) Nuclear fuel records required. Each

utility shall keep all the necessary

records to support the entries to the

various nuclear fuel plant accounts

classified under ‘‘Assets and Other Debits,’’ Utility Plant Accounts 120.1

through 120.5, inclusive; Account 518,

Nuclear Fuel Expense; and Account 157,

Nuclear Materials Held for Sale. These

records shall be so kept as to readily

furnish the basis of the computation of

the net nuclear fuel costs.

§ 1767.17 Operating expense instructions.

(a) Supervision and engineering. The

supervision and engineering includible

in the operating expense accounts shall

consist of the salary, employee pensions and benefits, social security and

other payroll taxes, injuries and damages, and other expenses of superintendents, engineers, clerks, other

employees, and consultants engaged in

supervising and directing the operation

and maintenance of each utility function. Whenever allocations are necessary in order to arrive at the amount

to be included in any account, the

method and basis of allocation shall be

reflected by underlying records.

(1) Labor items:

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

(ii) Preparing or reviewing budgets,

estimates, and drawings relating to operation or maintenance for departmental approval;

(iii) Preparing instructions for operations and maintenance activities;

(iv) Reviewing and analyzing operating results;

(v) Establishing organizational setup

of departments and executing changes

therein;

(vi) Formulating and reviewing routines of departments and executing

changes therein;

(vii) General training and instruction

of employees by supervisors whose pay

is chargeable hereto. Specific instructions and training in a particular type

of work is chargeable to the appropriate functional account (See paragraph (c)(19) of this section); and

(viii) Secretarial work for supervisory personnel, but not general clerical and stenographic work chargeable

to other accounts.

(2) Expense items:

(i) Employee pensions and benefits;

(ii) Social security and other payroll

taxes;

(iii) Injuries and damages;

(iv) Consultants’ fees and expenses;

and

(v) Meals, traveling, and incidental

expenses.

(b) Maintenance. (1) The cost of maintenance chargeable to the various operating expense and clearing accounts includes labor, employee pensions and

benefits, social security and other payroll taxes, injuries and damages, materials, overheads, and other expenses incurred in maintenance work. A list of

work operations applicable generally

to utility plant is included in this paragraph (b). Other work operations applicable to specific classes of plant are

listed in functional maintenance expense accounts.

(2) Materials recovered in connection

with the maintenance of property shall

be credited to the same account to

which the maintenance cost was

charged.

(3) If the book cost of any property is

carried in Account 102, Electric Plant

Purchased or Sold, the cost of maintaining such property shall be charged

to the accounts for maintenance of

property of the same class and use, the

book cost of which is carried in other

electric plant in service accounts.

Maintenance of property leased from

others shall be treated as provided in

paragraph (c) of this section.

(4) Items:

(i) Direct field supervision of maintenance;

(ii) Inspecting, testing, and reporting

on condition of plant specifically to determine the need for repairs, replacements, rearrangements, and changes

and inspecting and testing the adequacy of repairs which have been made;

(iii) Work performed specifically for

the purpose of preventing failure, restoring serviceability or maintaining

life of plant;

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

(v) Repairing for reuse materials recovered from plant;

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

715

Rural Utilities Service, USDA § 1767.18

(vii) Net cost of installing, maintaining, and removing temporary facilities

to prevent interruptions in service; and

(viii) Replacing or adding minor

items of plant which do not constitute

a retirement unit.

(c) Rents. (1) The rent expense accounts provided under the several functional groups of expense accounts shall

include all rents, including taxes paid

by the lessee on leased property, for

property used in utility operations, except minor amounts paid for occasional

or infrequent use of any property or

equipment and all amounts paid for use

of equipment that, if owned, would be

includible in plant Accounts 391 to 398

inclusive, which shall be treated as an

expense item and included in the appropriate function account and rents

which are chargeable to clearing accounts, and distributed therefrom to

the appropriate account.

(2) If rents cover property used for

more than one function such as production and transmission, or by more than

one department, the rents shall be apportioned to the appropriate rent expense or clearing accounts of each department on an actual, or if necessary,

an estimated basis.

(3) When a portion of property or

equipment rented from others for use

in connection with utility operations is

subleased, the revenue derived from

such subleasing shall be credited to the

rent revenue account in operating revenues; provided, however, that in case

the rent was charged to a clearing account, amounts received from subleasing the property shall be credited

to such clearing account.

(4) The cost, when incurred by the

lessee, of operating and maintaining

leased property, shall be charged to the

accounts appropriate for the expense if

the property were owned.

(5) The cost incurred by the lessee of

additions and replacements to electric

plant leased from others shall be account for as provided in §1767.16 (f).

(d) Training costs. (1) When it is necessary that employees be trained to

specifically operate or maintain plant

facilities that are being constructed,

the related costs shall be accounted for

as a current operating and maintenance expense.

(2) These expenses shall be charged to

the appropriate functional accounts

currently as they are incurred.

(3) When the training costs involved

relate to facilities which are not conventional in nature, or are new to the

company’s operations, see §1767.16

(c)(19), for the accounting.

[58 FR 59825, Nov. 10, 1993, as amended at 62

FR 42290, Aug. 6, 1997]

§ 1767.18 Assets and other debits.

The asset and other debits accounts

identified in this section shall be used

by all RUS borrowers.

ASSETS AND OTHER DEBITS

Utility Plant

101 Electric Plant in Service

101.1 Property Under Capital Leases

102 Electric Plant Purchased or Sold

103 Experimental Electric Plant Unclassified

104 Electric Plant Leased to Others

105 Electric Plant Held for Future Use

106 Completed Construction not Classified—

Electric

107 Construction Work in Progress—Electric

107.1 Construction Work in Progress—Contract

107.2 Construction Work in Progress—Force

Account

107.3 Construction Work in Progress—Special Equipment

108 Accumulated Provision for Depreciation

of Electric Utility Plant

108.1 Accumulated Provision for Depreciation of Steam Production Plant

108.2 Accumulated Provision for Depreciation of Nuclear Production Plant

108.3 Accumulated Provision for Depreciation of Hydraulic Production Plant

108.4 Accumulated Provision for Depreciation of Other Production Plant

108.5 Accumulated Provision for Depreciation of Transmission Plant

108.6 Accumulated Provision for Depreciation of Distribution Plant

108.7 Accumulated Provision for Depreciation of General Plant

108.8 Retirement Work in Progress

109 [Reserved]

110 [Reserved]

111 Accumulated Provision for Amortization of Electric Utility Plant

112 [Reserved]

113 [Reserved]

114 Electric Plant Acquisition Adjustments

115 Accumulated Provision for Amortization of Electric Plant Acquisition Adjustments

116 Other Electric Plant Adjustments

716

§ 1767.18 7 CFR Ch. XVII (1–1–00 Edition)

118 Other Utility Plant

119 Accumulated Provision for Depreciation

and Amortization of Other Utility Plant

120.1 Nuclear Fuel in Process of Refinement, Conversion, Enrichment, and Fabrication

120.2 Nuclear Fuel Materials and Assemblies—Stock Account

120.3 Nuclear Fuel Assemblies in Reactor

120.4 Spent Nuclear Fuel

120.5 Accumulated Provision for Amortization of Nuclear Fuel Assemblies

120.6 Nuclear Fuel Under Capital Leases

Other Property and Investments

121 Nonutility Property

122 Accumulated Provision for Depreciation

and Amortization of Nonutility Property

123 Investment in Associated Companies

123.1 Patronage Capital from Associated Cooperatives

123.3 Investment in Associated Organizations—Federal Economic Development

Loans

123.4 Investment in Associated Organizations—Non-Federal Economic Development Loans

123.11 Investment in Subsidiary Companies

123.21 Subscriptions to Capital Term Certificates—Supplemental Financing

123.22 Investments in Capital Term Certificates—Supplemental Financing

123.23 Other Investments in Associated Organizations

124 Other Investments

124.1 Other Investments—Federal Economic

Development Loans

124.2 Other Investments—Non-Federal Economic Development Loans

125 Sinking Funds

126 Depreciation Fund

128 Other Special Funds

Current and Accrued Assets

131 Cash

131.1 Cash—General

131.2 Cash—Construction Fund—Trustee

131.3 Cash—Installation Loan and Collection Fund

131.4 Transfer of Cash

131.12 Cash—General—Economic Development Loan Funds

131.13 Cash—General—Economic Development Grant Funds

131.14 Cash—General—Economic Development Non-Federal Revolving Funds

132 Interest Special Deposits

133 Dividend Special Deposits

134 Other Special Deposits

135 Working Funds

136 Temporary Cash Investments

141 Notes Receivable

141.1 Accumulated Provision for

Uncollectible Notes—Credit

142 Customer Accounts Receivable

142.1 Customer Accounts Receivable—Electric

142.2 Customer Accounts Receivable—Other

143 Other Accounts Receivable

144 Accumulated Provision for

Uncollectible Accounts—Credit

144.1 Accumulated Provision for

Uncollectible Customer Accounts—Credit

144.2 Accumulated Provision for

Uncollectible Merchandising Accounts—

Credit

144.3 Accumulated Provision for

Uncollectible Accounts, Officers and Employees—Credit

144.4 Accumulated Provision for Other

Uncollectible Accounts—Credit 145 Notes

Receivable from Associated Companies

145 Notes Receivable from Associated Companies

146 Accounts Receivable from Associated

Companies

151 Fuel Stock

152 Fuel Stock Expenses Undistributed

153 Residuals

154 Plant Materials and Operating Supplies

155 Merchandise

156 Other Materials and Supplies

157 Nuclear Materials Held for Sale

158.1 Allowance Inventory

158.2 Allowances Withheld

163 Stores Expense Undistributed

165 Prepayments

165.1 Prepayments—Insurance

165.2 Other Prepayments

171 Interest and Dividends Receivable

172 Rents Receivable

173 Accrued Utility Revenues

174 Miscellaneous Current and Accrued Assets

Deferred Debits

181 Unamortized Debt Expense

182.1 Extraordinary Property Losses

182.2 Unrecovered Plant and Regulatory

Study Costs

182.3 Other Regulatory Assets

183 Preliminary Survey and Investigation

Charges

184 Clearing Accounts

184.1 Transportation Expense—Clearing

184.2 Clearing Accounts—Other

185 Temporary Facilities

186 Miscellaneous Deferred Debits

187 Deferred Losses from Disposition of

Utility Plant

188 Research, Development, and Demonstration Expenditures

189 Unamortized Loss on Reacquired Debt

190 Accumulated Deferred Income Taxes

ASSETS AND OTHER DEBITS

Utility Plant

101 Electric Plant in Service

A. This account shall include the original

cost of electric plant, included in Accounts

301 to 399, prescribed herein, owned and used

717

Rural Utilities Service, USDA § 1767.18

by the utility in its electric utility operations, and having an expectation of life in

service of more than one year from date of

installation, including such property owned

by the utility but held by nominees.

B. (See also Account 106 for unclassified

construction costs of completed plant actually in service.)

C. The cost of additions to and betterments

of property leased from others, which are includible in this account, shall be recorded in

subdivisions separate and distinct from those

relating to owned property. (See §1767.16 (f).)

101.1 Property Under Capital Leases

A. This account shall include the amount

recorded under capital leases for plant leased

from others and used by the utility in its

utility operations.

B. The electric property included in this

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

C. Records shall be maintained with respect to each capital lease reflection: (1)

name of lessor, (2) basic details of lease, (3)

terminal date, (4) original cost or fair market value of property leased, (5) future minimum lease payments, (6) executory costs, (7)

present value of minimum lease payments,

(8) the amount representing interest and the

interest rate used, and (9) expenses paid.

102 Electric Plant Purchased or Sold

A. This account shall be charged with the

cost of electric plant acquired as an operating unit or system by purchase, merger,

consolidation liquidation, or otherwise, and

shall be credited with the selling price of

like property transferred to others pending

the distribution to appropriate accounts in

accordance with §1767.16 (e).

B. Within 6 months from the date of acquisition or sale of property recorded herein,

the borrower shall file with RUS the proposed journal entries to clear from this account the amounts recorded herein.

103 Experimental Electric Plant

Unclassified

A. This account shall include the cost of

electric plant which was constructed as a research, development, and demonstration

plant under the provisions of Paragraph C,

Account 107, Construction Work in

Progress—Electric, and due to the nature of

the plant, it is desirous to operate it for a period of time in an experimental status.

B. Amounts in this account shall be transferred to Account 101, Electric Plant in Service, or Account 121, Nonutility Property, as

appropriate when the project is no longer

considered as experimental.

C. The depreciation on property in this account shall be charged to Account 403, Depreciation Expense, and credited to Account

108, Accumulated Provision for Depreciation

of Electric Utility Plant. The amounts herein shall be depreciated over a period which

would correspond to the estimated useful life

of the relevant project considering the characteristics involved. However, when projects

are transferred to Account 101, Electric

Plant in Service, a new depreciation rate

based upon the remaining service life and

undepreciated amounts, will be established.

D. Records shall be maintained with respect to each unit of experiment so that full

details may be obtained as to the cost, depreciation, and the experimental status.

E. Should it be determined that experimental plant recorded in this account will

fail to satisfactorily perform its function,

the costs thereof shall be accounted for as directed or authorized by RUS.

104 Electric Plant Leased to Others

A. This account shall include the original

cost of electric plant owned by the utility,

but leased to others as operating units or

systems, where the lessee has exclusive possession.

B. The property included in this account

shall be classified according to the detailed

accounts (301 to 399) prescribed for electric

plant in service and this account shall be

maintained in such detail as though the

property were used by the owner in its utility operations.

105 Electric Plant Held for Future Use

A. This account shall include the original

cost of electric plant (except land and land

rights) owned and held for future use in electric service under a definite plan for such

use, to include: (1) Property acquired (except

land and land rights) but never used by the

utility in electric service, but held for such

service in the future under a definite plan,

and (2) property (except land and land rights)

previously used by the utility in service but

retired from such service and held pending

its reuse in the future, under a definite plan,

in electric service.

B. This account shall also include the

original cost of land and land rights owned

and held for future use in electric service

under a plan for such use, to include land

and land rights: (1) Acquired but never used

by the utility in electric service, but held for

such service in the future under a plan, and

(2) previously held by the utility in service,

but retired from such service and held pending its reuse in the future under a plan, in

electric service. (See §1767.16 (g).)

C. In the event that property recorded in

this account shall no longer be needed or appropriate for future utility operations, the

borrower shall notify RUS of such condition

and request approval of journal entries to remove such property from this account.

718

§ 1767.18 7 CFR Ch. XVII (1–1–00 Edition)

D. Gains or losses from the sale of land and

land rights or other disposition of such property previously recorded in this account and

not placed in utility service shall be recorded directly in Accounts 411.6 or 411.7, as

appropriate, except when determined to be

significant by RUS. Upon such a determination, the amounts shall be transferred to Account 256, Deferred Gains from Disposition of

Utility Plant, or Account 187, Deferred

Losses from Disposition of Utility Plant, and

amortized to Account 411.6, Gains from Disposition of Utility Plant, or Account 411.7,

Losses from Disposition of Utility Plant, as

appropriate.

E. The property included in this account

shall be classified according to the detail accounts (301 to 399) prescribed for electric

plant in service and the account shall be

maintained in such detail as though the

property were in service.

NOTE: Materials and supplies, meters and

transformers held in reserve, and normal

spare capacity of plant in service shall not

be included in this account.

106 Completed Construction not Classified—

Electric

At the end of the year or such other date

as a balance sheet may be required by RUS,

this account shall include the total of the

balances of work orders for electric plant

which has been completed and placed in service but which work orders have not been

classified for transfer to the detailed electric

plant accounts.

NOTE: For the purpose of reporting to RUS,

the classification of electric plant in service

by accounts is required, the utility shall also

report the balance in this account tentatively classified as accurately as practicable according to prescribed account classifications. The purpose of this provision is

to avoid any significant omissions in reported amounts of electric plant in service.

107 Construction Work in Progress—

Electric

A. This account shall include the total of

the balances of work orders for electric plant

in process of construction.

B. Work orders shall be cleared from this

account as soon as practicable, after completion of the job. Further, if a project, such as

a hydroelectric project, a steam station, or a

transmission line, is designed to consist of

two or more units or circuits which may be

placed in service at different dates, any expenditures which are common to and which

will be used in the operation of the project as

a whole shall be included in electric plant in

service upon the completion and the readiness for service of the first unit. Any expenditures which are identified exclusively with

units of property not yet in service shall be

included in this account.

C. Expenditures on research, development,

and demonstration projects for construction

of utility facilities are to be included in a

separate subdivision in this account. Records

must be maintained to show separately each

project along with complete detail of the nature and purpose of the research, development, and demonstration project together

with the related costs.

D. Account 107 shall be subaccounted as

follows:

107.1 Construction Work in Progress—Contract

107.2 Construction Work in Progress—Force

Account

107.3 Construction Work in Progress—Special Equipment

108 Accumulated Provision for Depreciation

of Electric Utility Plant

A. This account shall be credited with the

following:

1. Amounts charged to Account 403, Depreciation Expense, or to clearing accounts for

current depreciation expense for electric

plant in service.

2. Amounts charged to Account 421, Miscellaneous Nonoperating Income, for depreciation expense on property included in Account 105, Electric Plant Held for Future

Use. Include, also, the balance of accumulated provision for depreciation on property

when transferred to Account 105, Electric

Plant Held for Future Use, from other property accounts. Normally, Account 108 will

not be used for current depreciation provision because, as provided herein, the service

life during which depreciation is computed

commences with the date property is includible in electric plant in service; however, if

special circumstances indicate the propriety

of current accruals for depreciation, such

charges shall be made to Account 421, Miscellaneous Nonoperating Income.

3. Amounts charged to Account 413, Expenses of Electric Plant Leased to Others,

for electric plant included in Account 104,

Electric Plant Leased to Others.

4. Amounts charged to Account 416, Costs

and Expenses of Merchandising, Jobbing, and

Contract Work, or to clearing accounts for

current depreciation expense.

5. Amounts of depreciation applicable to

electric properties acquired as operating

units or systems. (See §1767.16 (e).)

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

7. Amounts of depreciation applicable to

electric plant donated to the utility.

The utility shall maintain separate subaccounts for depreciation applicable to electric plant in service, electric plant leased to

others, and electric plant held for future

use.)

719

Rural Utilities Service, USDA § 1767.18

B. At the time of retirement of depreciable

electric utility plant, this account shall be

charged with the book cost of the property

retired and the cost of removal and shall be

credited with the salvage value and any

other amounts recovered, such as insurance.

When retirement, costs of removal and salvage are entered originally in retirement

work orders, the net total of such work orders may be included in a separate subaccount hereunder. Upon completion of the

work order, the proper distribution to subdivisions of this account shall be made as

provided in the following paragraph.

C. Account 108 shall be subaccounted as

follows:

108.1 Accumulated Provision for Depreciation of Steam Production Plant

108.2 Accumulated Provision for Depreciation of Nuclear Production Plant

108.3 Accumulated Provision for Depreciation of Hydraulic Production Plant

108.4 Accumulated Provision for Depreciation of Other Production Plant

108.5 Accumulated Provision for Depreciation of Transmission Plant

108.6 Accumulated Provision for Depreciation of Distribution Plant

108.7 Accumulated Provision for Depreciation of General Plant

108.8 Retirement Work in Progress

These subsidiary records shall reflect the

current credits and debits to this account in

sufficient detail to show separately for each

such functional classification: (1) the

amount of accrual for depreciation, (2) the

book cost of property retired, (3) cost of removal, (4) salvage, and (5) other items, including recoveries from insurance.

D. When transfers of plant are made from

one electric plant account to another, or

from or to another utility department, of

from or to nonutility property accounts, the

accounting for depreciation shall be as provided in §1767.16 (l).

E. The utility is restricted in its use of the

accumulated provision for depreciation to

the purposes set forth above. It shall not

transfer any portion of this account to retained earnings or make any other use thereof without authorization by RUS.

109 [Reserved]

110 [Reserved]

111 Accumulated Provision for

Amortization of Electric Utility Plant

A. This account shall be credited with the

following:

1. Amounts charged to Account 404, Amortization of Limited-Term Electric Plant, for

the current amortization of limited-term

electric plant investments.

2. Amounts charged to Account 421, Miscellaneous Nonoperating Income, for amortization expense on property included in Account 105, Electric Plant Held for Future

Use. Include also the balance of accumulated

provision for amortization on property when

transferred to Account 105, Electric Plant

Held for Future Use, from other property accounts. See also Paragraph A(2), Account

108, Accumulated Provision for Depreciation

of Electric Utility Plant.

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

4. Amounts charged to Account 413, Expenses of Electric Plant Leased to Others,

for the current amortization of limited-term

or other investments subject to amortization

included in Account 104, Electric Plant

Leased to Others.

5. Amounts charged to Account 425, Miscellaneous Amortization, for the amortization of intangible or other electric plant

which does not have a definite or terminable

life and is not subject to charges for depreciation expense, with RUS approval.

(The utility shall maintain subaccounts of

this account for the amortization applicable

to electric plant in service, electric plant

leased to others and electric plant held for

future use.)

B. When any property to which this account applies is sold, relinquished, or otherwise retired from service, this account shall

be charged with the amount previously credited in respect to such property. The book

cost of the property so retired less the

amount chargeable to this account and less

the net proceeds realized at retirement shall

be included in Account 421.1, Gain on Disposition of Property, or Account 421.2, Loss

on Disposition of Property, as appropriate.

C. For general ledger and balance sheet

purposes, this account shall be regarded and

treated as a single composite provision for

amortization. For purposes of analysis, however, each utility shall maintain subsidiary

records in which this account is segregated

according to the following functional classification for electric plant: (1) Steam production, (2) Nuclear production, (3) Hydraulic

production, (4) Other production, (5) Transmission, (6) Distribution, and (7) General.

These subsidiary records shall reflect the

current credits and debits to this account in

sufficient detail to show separately for each

such functional classification: (1) the

amount of accrual for amortization, (2) the

book cost of property retired, (3) cost of removal, (4) salvage, and (5) other items, including recoveries from insurance.

D. The utility is restricted in its use of the

accumulated provision for amortization to

the purposes set forth above. It shall not

transfer any portion of this account to retained earnings or make any other use thereof without authorization by RUS.

720

§ 1767.18 7 CFR Ch. XVII (1–1–00 Edition)

112 [Reserved]

113 [Reserved]

114 Electric Plant Acquisition Adjustments

A. This account shall include the difference between the cost to the accounting

utility of electric plant acquired as an operating unit or system by purchase, merger,

consolidation, liquidation, or otherwise, and

the original cost, estimated, if not known, of

such property, less the amount or amounts

credited by the accounting utility at the

time of acquisition to accumulated provisions for depreciation and amortization and

contributions in aid of construction with respect to such property.

B. With respect to acquisitions after the effective date of this system of accounts, this

account shall be subdivided so as to show the

amounts included herein for each property

acquisition and to electric plant in service,

electric plant held for future use, and electric plant leased to others. (See §1767.16 (e).)

C. Debit amounts recorded in this account

related to plant and land acquisition may be

amortized to Account 425, Miscellaneous Amortization, over a period not longer than the

estimated remaining life of the properties to

which such amounts relate. Amounts related

to the acquisition of land only may be amortized to Account 425 over a period of not

more than 15 years. Should a utility wish to

account for debit amounts in this account in

any other manner, it shall petition RUS for

authority to do so. Credit amounts recorded

in this account shall be accounted for as directed by RUS.

115 Accumulated Provision for Amortization of Electric Plant Acquisition Adjustments

This account shall be credited or debited

with amounts which are includible in Account 406, Amortization of Electric Plant Acquisition Adjustments, or Account 425, Miscellaneous Amortization, for the purpose of

providing for the extinguishment of amounts

in Account 114, Electric Plant Acquisition

Adjustments, in instances where the amortization of Account 114 is not being made by

direct write-off of the account.

116 Other Electric Plant Adjustments

A. This account shall include the difference between the original cost, estimated

if not known, and the book cost of electric

plant to the extent that such difference is

not properly includible in Account 114, Electric Plant Acquisition Adjustments. (See

§1767.16 (a)(3))

B. Amounts included in this account shall

be classified in such manner as to show the

origin of each amount and shall be disposed

of as RUS may approve or direct.

NOTE: The provisions of this account shall

not be construed as approving or authorizing

the recording of appreciation of electric

plant.

118 Other Utility Plant

This account shall include the balances in

accounts for utility plant, other than electric plant, such as gas, or railway.

119 Accumulated Provision for Depreciation

and Amortization of Other Utility Plant

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

than electric plant.

120.1 Nuclear Fuel in Process of Refinement, Conversion, Enrichment, and Fabrication

A. This account shall include the original

cost to the utility of nuclear fuel materials

while in process of refinement, conversion,

enrichment, and fabrication into nuclear

fuel assemblies and components, including

processing, fabrication, and necessary shipping costs. This account shall also include

the salvage value of nuclear materials which

are actually being reprocessed for use and

were transferred from Account 120.5, Accumulated Provision for Amortization of Nuclear Fuel Assemblies. (See §1767.10 (a)(27).)

B. This account shall be credited and Account 120.2, Nuclear Fuel Materials and Assemblies—Stock Account, shall be debited

for the cost of completed fuel assemblies delivered for use in refueling or to be held as

spares. In the case of the initial core loading,

the transfer shall be made directly to Account 120.3, Nuclear Fuel Assemblies in Reactor, upon the conclusion of the experimental or test period of the plant prior to its

becoming available for service.

Items

1. Cost of natural uranium, uranium ores

concentrates or other nuclear fuel sources,

such as thorium, plutonium, and U–233.

2. Value of recovered nuclear materials

being reprocessed for use.

3. Milling process costs.

4. Sampling and weighing, and assaying

costs.

5. Purification and conversion process

costs.

6. Costs of enrichment by gaseous diffusion

or other methods.

7. Costs of fabrication into fuel forms suitable for insertion in the reactor.

8. All shipping costs of materials and components, including shipping of fabricated fuel

assemblies to the reactor site.

9. Use charges on leased nuclear materials

while in process of refinement, conversion,

enrichment, and fabrication.

721

Rural Utilities Service, USDA § 1767.18

120.2 Nuclear Fuel Materials and

Assemblies—Stock Account

A. This account shall be debited and Account 120.1, Nuclear Fuel in Process of Refinement, Conversion, Enrichment and Fabrication, shall be credited with the cost of

fabricated fuel assemblies delivered for use

in refueling or to be carried in stock as

spares. It shall also include the original cost

of fabricated fuel assemblies purchased in

completed form. This account shall also include the original cost of partially irradiated

fuel assemblies being held in stock for reinsertion in a reactor which had been transferred from Account 120.3, Nuclear Fuel Assemblies in Reactor.

B. When fuel assemblies included in this

account are inserted in a reactor, this account shall be credited and Account 120.3,

Nuclear Fuel Assemblies in Reactor, debited

for the cost of such assemblies.

C. This account shall also include the cost

of nuclear materials and byproduct materials being held for future use and not actually in process in Account 120.1, Nuclear Fuel

in Process of Refinement, Conversion, Enrichment and Fabrication.

120.3 Nuclear Fuel Assemblies in Reactor

A. This account shall include the cost of

nuclear fuel assemblies when inserted in a

reactor for the production of electricity. The

amounts included herein shall be transferred

from Account 120.2, Nuclear Fuel Materials

and Assemblies—Stock Account, except for

the initial core loading which will be transferred directly from Account 120.1, Nuclear

Fuel in Process of Refinement, Conversion,

Enrichment and Fabrication.

B. Upon removal of fuel assemblies from a

reactor, the original cost of the assemblies

removed shall be transferred to Account

120.4, Spent Nuclear Fuel, or Account 120.2,

Nuclear Fuel Materials and Assemblies—

Stock Account, as appropriate.

120.4 Spent Nuclear Fuel

A. This account shall include the original

cost of nuclear fuel assemblies, in the process of cooling, transferred from Account

120.3, Nuclear Fuel Assemblies in Reactor,

upon removal from a reactor pending reprocessing.

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

120.5 Accumulated Provision for

Amortization of Nuclear Fuel Assemblies

A. This account shall be credited and Account 518, Nuclear Fuel Expense, shall be

debited for the amortization of the net cost

of nuclear fuel assemblies used in the production of energy. The net cost of nuclear

fuel assemblies subject to amortization shall

be the original cost of nuclear fuel assemblies, plus or less the expected net salvage

value of uranium, plutonium, and other byproducts.

B. This account shall be credited with the

net salvage value of uranium, plutonium,

and other nuclear by-products when such

items are sold, transferred or otherwise disposed. Account 120.1, Nuclear Fuel in Process

of Refinement, Conversion, Enrichment and

Fabrication, shall be debited with the net

salvage value of nuclear materials to be reprocessed. Account 157, Nuclear Materials

Held for Sale, shall be debited for the net salvage value of nuclear materials not to be reprocessed but to be sold or otherwise disposed of and Account 120.2, Nuclear Fuel Materials and Assemblies—Stock Account, will

be debited with the net salvage value of nuclear materials that will be held for future

use and not actually in process, in Account

120.1, Nuclear Fuel in Process of Refinement,

Conversion, Enrichment, and Fabrication.

C. This account shall be debited and Account 120.4, Spent Nuclear Fuel, shall be

credited with the cost of fuel assemblies at

the end of the cooling period.

120.6 Nuclear Fuel Under Capital Leases

A. This account shall include the amount

recorded under capital leases for nuclear fuel

leased from others for use by the utility in

its utility operations.

B. Records shall be maintained with respect to each capital lease reflecting: (1)

name of lessor, (2) basic details of lease, (3)

terminal date, (4) original cost or fair market value of nuclear fuel leased, (5) future

minimum lease payments, (6) the amount

representing interest and the interest rate

used, and (7) expenses paid.

Other Property and Investments

121 Nonutility Property

A. This account shall include the book cost

of land, structures, equipment, or other tangible or intangible property owned by the

utility, but not used in utility service and

not properly includible in Account 105, Electric Plant Held for Future Use.

B. This account shall also include the

amount recorded under capital leases for

property leased from others and used by the

utility in its nonutility operations. Records

shall be maintained with respect to each

lease reflecting: (1) name of lessor, (2) basic

details of lease, (3) terminal date, (4) original

cost or fair market value of property leased,

(5) future minimum lease payments, (6) executory costs, (7) present value of minimum

lessee payments, (8) the amount representing

interest and the interest rate used, and (9)

expenses paid.

722

§ 1767.18 7 CFR Ch. XVII (1–1–00 Edition)

C. This account shall be subdivided so as to

show the amount of property used in operations which are nonutility in character but

nevertheless constitute a distinct operating

activity of the company (such as operation

of an ice department where such activity is

not classed as a utility) and the amount of

miscellaneous property not used in operations. The records in support of each subaccount shall be maintained so as to show an

appropriate classification of the property.

NOTE: The gain from the sale or other disposition of property included in this account

which had been previously recorded in Account 105, Electric Plant Held for Future

Use, shall be accounted for in accordance

with Paragraph C of Account 105.

122 Accumulated Provision for Depreciation

and Amortization of Nonutility Property

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

123 Investment in Associated Companies

A. This account shall include the book cost

of investments in securities issued or assumed by associated companies and investment advances to such companies, including

interest accrued thereon when such interest

is not subject to current settlement, provided that the investment does not relate to

a subsidiary company. (If the investment relates to a subsidiary company, it shall be included in Account 123.11, Investment in Subsidiary Companies.) Include herein the offsetting entry to the recording of amortization of discount or premium on interest

bearing investments. (See Account 419, Interest and Dividend Income.)

B. This account shall be maintained in

such manner as to show the investment in

securities of, and advances to, each associated company together with full particulars

regarding any of such investments that are

pledged.

NOTE A: Securities and advances of associated companies owned and pledged shall be

included in this account, but such securities,

if held in special deposits or in special funds,

shall be included in the appropriate deposit

or fund account. A complete record of securities pledged shall be maintained.

NOTE B: Securities of associated companies

held as temporary cash investments are includible in Account 136, Temporary Cash Investments.

NOTE C: Balances in open accounts with associated companies, which are subject to

current settlement, are includible in Account 146, Accounts Receivable from Associated Companies.

NOTE D: The utility may write down the

cost of any security in recognition of a decline in the value thereof. Securities shall be

written off or written down to a nominal

value if there is no reasonable prospect of

substantial value. Fluctuations in market

value shall not be recorded but a permanent

impairment in the value of securities shall

be recognized in the accounts. When securities are written off or written down, the

amount of the adjustment shall be charged

to Account 426.5, Other Deductions, or to an

appropriate account for accumulated provisions for loss in value established as a separate subdivision of this account.

C. Account 123 shall be subaccounted as

follows:

123.1 Patronage Capital from Associated Cooperatives

123.3 Investment in Associated Organizations—Federal Economic Development

Loans

123.4 Investment in Associated Organizations—Non-Federal Economic Development Loans

123.11 Investment in Subsidiary Companies

123.21 Subscriptions to Capital Term Certificates—Supplemental Financing

123.22 Investment in Capital Term Certificates—Supplemental Financing

123.23 Other Investments in Associated Organizations

123.1 Patronage Capital from Associated

Cooperatives

This account shall include patronage capital credits allocated to the accounting borrower by G&T cooperatives. It shall also include capital credits, deferred patronage refunds, or like items from other associated

cooperatives. The account shall be maintained so as to reflect separately, the allocations of patronage capital and patronage refunds from each organization that makes

such allocations to the borrower.

123.3 Investment in Associated Organizations—Federal Economic Development

Loans

This account shall include investment advances of Federal funds received from a

Rural Economic Development Grant to associated organizations for authorized rural

economic development projects.

123.4 Investment in Associated Organizations—Non-Federal Economic Development Loans

This account shall include investment advances of non-Federal funds from the Rural

Economic Development Grant revolving fund

to associated organizations for authorized

rural economic development projects.

123.11 Investment in Subsidiary Companies

A. This account shall include the cost of

investments in securities issued or assumed

by subsidiary companies and investment advances to such companies, including interest

723

Rural Utilities Service, USDA § 1767.18

accrued thereon when such interest is not

subject to current settlement, plus the equity in undistributed earnings or losses of

such subsidiary companies since acquisition.

This account shall be credited with any dividends declared by such subsidiaries.

B. This account shall be maintained in

such a manner as to show separately for each

subsidiary: the cost of such investments in

the securities of the subsidiary at the time

of acquisition; the amount of equity in the

subsidiary’s undistributed net earnings or

net losses since acquisition; advances or

loans to such subsidiary; and full particulars

regarding any such investments that are

pledged.

123.21 Subscriptions to Capital Term

Certificates—Supplemental Financing

This account shall include the total subscriptions to capital term certificates of

CFC. When subscriptions are paid, this account shall be credited and Account 123.22,

Investments in Capital Term Certificates—

Supplemental Financing, debited.

123.22 Investments in Capital Term

Certificates—Supplemental Financing

This account shall include paid subscriptions in capital term certificates of CFC or

other supplemental lenders.

123.23 Other Investments in Associated

Organizations

This account shall include investments in

capital stock, securities, membership fees,

and investment advances to associated organizations other than provided for elsewhere.

This account shall be maintained in such a

manner as to show the investment in stock

and securities of and advances to each associated organization.

Items

1. Investments in capital stock of associated organizations.

2. Investments in securities issued by associated organizations.

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

4. Investment advances to associated organizations.

124 Other Investments

A. This account shall include the book cost

of investments in securities issued or assumed by nonassociated companies, investment advances to such companies, and any

investments not accounted for elsewhere. Include also the offsetting entry to the recording of amortization of discount or premium

on interest bearing investments. (See Account 419, Interest and Dividend Income.)

B. The records shall be maintained in such

manner as to show the amount of each investment and the investment advances to

each person.

C. Account 124 shall be subaccounted as

follows:

124.1 Other Investments—Federal Economic

Development Loans

124.2 Other Investments—Non-Federal Economic Development Loans

NOTE A: Securities owned and pledged shall

be included in this account, but securities

held in special deposits or in special funds

shall be included in appropriate deposit or

fund accounts. A complete record of securities pledged shall be maintained.

NOTE B: Securities held as temporary cash

investments shall not be included in this account.

NOTE C: See Note D of Account 123.

124.1 Other Investments—Federal Economic

Development Loans

This account shall include investment advances of Federal funds received from a

Rural Economic Development Grant to nonassociated organizations for authorized rural

economic development projects.

124.2 Other Investments—Non-Federal

Economic Development Loans

This account shall include investment advances of non-Federal funds from the Rural

Economic Development Grant revolving fund

to nonassociated organizations for authorized rural economic development projects.

125 Sinking Funds

This account shall include the amount of

cash and book cost of investments held in

sinking funds. A separate account, with appropriate title, shall be kept for each sinking

fund. Transfers from this account to special

deposit accounts, may be made as necessary

for the purpose of paying matured sinking

fund obligations, or obligations called for redemption but not presented, or the interest

thereon.

126 Depreciation Fund

This account shall include the amount of

cash and the book cost of investments which

have been segregated in a special fund for

the purpose of identifying such assets with

the accumulated provisions for depreciation.

128 Other Special Funds

This account shall include the amount of

cash and book cost of investments which

have been segregated in special funds for insurance, employee pensions, savings, relief,

hospital, and other purposes not provided for

elsewhere. A separate account, with appropriate title, shall be kept for each fund.

NOTE: Amounts deposited with a trustee

under the terms of an irrevocable trust

agreement for pensions or other employee

724

§ 1767.18 7 CFR Ch. XVII (1–1–00 Edition)

benefits shall not be included in this account.

Current and Accrued Assets

Current and accrued assets are cash, those

assets which are readily convertible into

cash or are held for current use in operations

or construction, current claims against others, payment of which is reasonably assured,

and amounts accruing to the utility which

are subject to current settlement, except

such items for which accounts other than

those designated as current and accrued assets are provided. There shall not be included

in the category of accounts designated as

current and accrued assets any item, the

amount or collectibility of which is not reasonably assured, unless an adequate provision for possible loss has been made therefor.

Items of current character but of doubtful

value may be written down, and for record

purposes carried in these accounts at nominal value.

131 Cash

A. This account shall include the amount

of current cash funds except working funds.

B. Account 131 shall be subaccounted as

follows:

131.1 Cash—General

131.2 Cash—Construction Fund—Trustee

131.3 Cash—Installation Loan and Collection Fund

131.4 Transfer of Cash

131.12 Cash—General—Economic Development Loan Funds

131.13 Cash—General—Economic Development Grant Funds

131.14 Cash—General—Economic Development Non-Federal Revolving Funds

131.1 Cash—General

This account shall include all cash of the

organization not provided for elsewhere. Separate subaccounts may be maintained for

each bank account in which general cash is

maintained. Funds held by others for current

obligations shall be recorded in Account 134,

Other Special Deposits.

131.2 Cash—Construction Fund—Trustee

This account shall include the cash received from the Rural Utilities Service, CFC,

and any other source of supplemental financing for financing the construction, purchase,

and operation of electric facilities. RUS construction loan fund advances shall be

charged to this account and credited to Account 224.4, RUS Notes Executed—Construction—Debit. CFC and other supplemental

lender construction loan fund advances shall

be charged to this account and credited to

Account 224.13, Supplemental Financing

Notes Executed—Debit.

131.3 Cash—Installation Loan and

Collection Fund

A. This account shall include the cash advanced on installation loans made subsequent to September 13, 1957. Such advances

shall be debited to this account as received

and credited to Account 224.10, RUS Notes

Executed—Installation—Debit. This account

shall also include interest and principal collections received on consumers’ loans financed from RUS loans made subsequent to

September 13, 1957.

B. Payments shall be made from this account solely for financing consumers’ loans

for the purpose of wiring of consumers’

premises, and the acquisition and installation of electrical and plumbing appliances

and equipment by consumers. The cash in

this account is also used for the payment of

principal and interest on installation loans

made by RUS, subsequent to September 13,

1957, in accordance with the terms of the

loan agreement.

131.4 Transfer of Cash

This account shall be used in transferring

funds from one bank account to another.

This account is charged when the check is

drawn for the transfer and entered in the

check register, and credited when the

amount transferred is entered in the cash receipts book. This account is to be used as a

clearing account and should not have a balance at the end of an accounting period.

131.12 Cash—General—Economic

Development Funds

This account shall include the cash received from the Rural Utilities Service for

Rural Economic Development Loans. Economic development loan advances shall be

charged to this account and credited to Account 224.17, RUS Notes Executed—Economic

Development—Debit.

131.13 Cash—General—Economic

Development Grant Funds

This account shall include cash received

from the Rural Utilities Service for Rural

Economic Development Grants. Economic

development grant funds shall be charged to

this account and credited to Account 224.18,

Other Long-Term Debt—Grant Funds; Account 208, Donated Capital; or Account 421,

Miscellaneous Nonoperating Income, as appropriate. This account shall be credited and

either Account 123.3, Investment in Associated Organizations—Federal Economic Development Loans, or Account 124.1, Other Investments—Federal Economic Development

Loans, shall be debited, as appropriate, with

the amount of an economic development revolving fund loan.

725

Rural Utilities Service, USDA § 1767.18

131.14 Cash—General—Economic

Development Non-Federal Revolving Funds

This account shall include all non-Federal

funds comprising the economic development

revolving fund. It shall include all funds supplied by the borrower as well as all cash received from the repayment of loans made

from the economic development revolving

fund. This account shall be credited and either Account 123.4, Investment in Associated

Organizations—Non-Federal Economic Development Loans, or Account 124.2, Other Investments—Non-Federal Economic Development Loans, shall be debited, as appropriate,

with the amount of an economic development revolving fund loan.

132 Interest Special Deposits

This account shall include special deposits

with fiscal agents or others for the payment

of interest.

133 Dividend Special Deposits

This account shall include special deposits

with fiscal agents or others for the payment

of dividends.

134 Other Special Deposits

This account shall include deposits with

fiscal agents or others for special purposes

other than the payment of interest and dividends. Such special deposits may include

cash deposited with Federal, state, or municipal authorities as a guaranty for the fulfillment of obligations; cash deposited with

trustees to be held until mortgaged property

sold, destroyed, or otherwise disposed of is

replaced; and cash realized from the sale of

the accounting utility’s securities and deposited with trustees to be held until invested

in property of the utility. Entries to this account shall specify the purpose for which the

deposit is made.

NOTE: Assets available for general corporate purposes shall not be included in this

account. Further, deposits for more than one

year, which are not offset by current liabilities, shall not be charged to this account

but to Account 128, Other Special Funds.

135 Working Funds

This account shall include cash advanced

to officers, agents, employees, and others as

petty cash or working funds.

136 Temporary Cash Investments

A. This account shall include the book cost

of investments, such as demand and time

loans, bankers’ acceptances, United States

Treasury certificates, marketable securities,

and other similar investments, acquired for

the purpose of temporarily investing cash.

B. This account shall be so maintained as

to show separately temporary cash investments in securities of associated companies

and of others. Records shall be kept of any

pledged investments.

141 Notes Receivable

A. This account shall include the book

cost, not includible elsewhere, of all collectible obligations in the form of notes receivable and similar evidences (except interest

coupons) of money due on demand or within

one year from the date of issue, except, however, notes receivable from associated companies. (See Account 136, Temporary Cash

Investments, and Account 145, Notes Receivable from Associated Companies.)

NOTE: The face amount of notes receivable

discounted, sold, or transferred without releasing the utility from liability as endorser

thereon, shall be credited to a separate subdivision of this account and appropriate disclosure shall be made in the financial statements of any contingent liability arising

from such transactions.

B. Account 141 shall be subaccounted as

follows:

141.1 Accumulated Provision for

Uncollectible Notes—Credit

141.1 Accumulated Provision for

Uncollectible Notes—Credit

This account shall be credited with

amounts provided for losses on notes receivable which may become uncollectible, and

also with collections on notes previously

charged hereto. Concurrent charges shall be

made to Account 904, Uncollectible Accounts.

142 Customer Accounts Receivable

A. This account shall include amounts due

from customers for utility service and for

merchandising, jobbing, and contract work.

This account shall not include amounts due

from associated companies.

B. This account shall be maintained so as

to permit ready segregation of the amounts

due for merchandising, jobbing, and contract

work.

C. Account 142 shall be subaccounted as

follows:

142.1 Customer Accounts Receivable—Electric

142.2 Customer Accounts Receivable—Other

142.1 Customer Accounts Receivable—

Electric

This account shall include amounts due

from customers for utility service.

142.2 Customer Accounts Receivable—Other

This account shall include amounts due

from customers for merchandising, jobbing,

and contract work.

726

§ 1767.18 7 CFR Ch. XVII (1–1–00 Edition)

143 Other Accounts Receivable

A. This account shall include amounts due

the utility upon open accounts, other than

amounts due from associated companies and

from customers for utility services and merchandising, jobbing and contract work.

B. This account shall be maintained so as

to show separately amounts due on subscriptions to capital stock and from officers and

employees. The account shall not include

amounts advanced to officers or others as

working funds. (See Account 135, Working

Funds.)

144 Accumulated Provision for

Uncollectible Accounts—Credit

A. This account shall include amounts provided for losses on accounts receivable which

may become uncollectible, and also with collections on accounts previously charged

hereto. Concurrent charges shall be made to

Account 904, Uncollectible Accounts, for

amounts applicable to utility operations,

and to corresponding accounts for other operations. Records shall be maintained so as

to show the write-offs of accounts receivable

for each utility department.

B. Account 144 shall be subaccounted as

follows:

144.1 Accumulated Provision for

Uncollectible Customer Accounts—Credit

144.2 Accumulated Provision for

Uncollectible Merchandising Accounts—

Credit

144.3 Accumulated Provision for

Uncollectible Accounts, Officers and Employees—Credit

144.4 Accumulated Provision for Other

Uncollectible Accounts—Credit

144.1 Accumulated Provision for

Uncollectible Customer Accounts—Credit

This account shall be credited with

amounts provided for losses on accounts receivable which may become uncollectible,

and also with collections on accounts previously charged hereto. Concurrent charges

shall be made to Account 904, Uncollectible

Accounts.

144.2 Accumulated Provision for

Uncollectible Merchandising Accounts—

Credit

This account shall be credited with

amounts provided for losses on merchandising, jobbing, and contract work which

may become uncollectible, and also with collections on accounts previously charged

hereto. Concurrent charges shall be made to

Account 904, Uncollectible Accounts, for

amounts applicable to utility operations,

and to corresponding accounts for other operations.

144.3 Accumulated Provision for

Uncollectible Accounts, Officers and Employees—Credit

This account shall be credited with

amounts provided for losses on accounts receivable from officers and employees which

may become uncollectible and also with collections on accounts previously charged

hereto. Concurrent charges shall be made to

Account 904, Uncollectible Accounts.

144.4 Accumulated Provision for Other

Uncollectible Accounts—Credit

This account shall be credited with

amounts provided for losses on accounts receivable which may become uncollectible

and for which the recording of this credit has

not been provided for elsewhere. This account shall also be credited with collections

on accounts previously charged hereto. Concurrent charges shall be made to Account

904, Uncollectible Accounts, for amounts applicable to utility operations and to corresponding accounts for other operations.

145 Notes Receivable from Associated

Companies

This account shall include notes upon

which associated companies are liable, and

which mature and are expected to be paid in

full not later than one year from the date of

issue, together with any interest thereon,

and debit balances subject to current settlement in open accounts with associated companies. Items which do not bear a specified

due date but which have been carried for

more than twelve months and items which

are not paid within twelve months from due

date shall be transferred to Account 123, Investment in Associated Companies.

NOTE: The face amount of notes receivable

discounted, sold or transferred without releasing the utility from liability as endorser

thereon, shall be credited to a separate subdivision of this account and appropriate disclosure shall be made in the financial statements of any contingent liability arising

from such transactions.

146 Accounts Receivable from Associated

Companies

This account shall include drafts upon

which associated companies are liable, and

which mature and are expected to be paid in

full not later than one year from the date of

issue, together with any interest thereon,

and debit balances subject to current settlement in open accounts with associated companies. Items which do not bear a specified

due date but which have been carried for

more than twelve months and items which

are not paid within twelve months from due

date shall be transferred to Account 123, Investment in Associated Companies.

NOTE: On the balance sheet, accounts receivable from an associated company may be

727

Rural Utilities Service, USDA § 1767.18

offset against accounts payable to the same

company.

151 Fuel Stock

This account shall include the book cost of

fuel on hand.

Items

1. Invoice price of fuel less any cash or

other discounts.

2. Freight, switching, demurrage, and

other transportation charges, not including,

however, any charges for unloading from the

shipping medium.

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

4. Operating, maintenance and depreciation expenses, and ad valorem taxes on utility-owned transportation equipment used to

transport fuel from the point of acquisition

to the unloading point.

5. Lease or rental costs of transportation

equipment used to transport fuel from the

point of acquisition to the unloading point.

152 Fuel Stock Expenses Undistributed

A. This account may include the cost of

labor and of supplies used and expenses incurred in unloading fuel from the shipping

medium and in the handling thereof prior to

its use, if such expenses are sufficiently significant in amount to warrant being treated

as a part of the cost of fuel inventory rather

than being charged direct to expense as incurred.

B. Amounts included herein shall be

charged to expense as the fuel is used to the

end that the balance herein shall not exceed

the expenses attributable to the inventory of

fuel on hand.

Items

Labor:

1. Procuring and handling of fuel.

2. All routine fuel analyses.

3. Unloading from shipping facility and

placing in storage.

4. Moving of fuel in storage and transferring from one station to another.

5. Handling from storage or shipping facility to first bunker, hopper, bucket, tank, or

holder of boiler house structure.

6. Operation of mechanical equipment such

as locomotives, trucks, cars, boats, barges,

and cranes.

Supplies and Expenses:

1. Tools, lubricants and other supplies.

2. Operating supplies for mechanical equipment.

3. Transportation and other expenses in

moving fuel.

4. Stores expenses applicable to fuel.

153 Residuals

This account shall include the book cost of

any residuals produced in the production or

manufacturing processes.

154 Plant Materials and Operating Supplies

A. This account shall include the cost of

materials purchased primarily for use in the

utility business for construction, operation

and maintenance purposes. It shall also include the book cost of materials recovered in

connection with construction, maintenance,

or the retirement of property, such materials

being credited to construction, maintenance,

or accumulated depreciation provision, respectively, and included herein as follows:

1. Reusable materials consisting of large

individual items shall be included in this account at original cost, estimated if not

known. The cost of repairing such items

shall be charged to the maintenance account

appropriate for the previous use.

2. Reusable materials consisting of relatively small items, the identity of which

(from the date of original installation to the

final abandonment or sale thereof) cannot be

ascertained without undue refinement in accounting, shall be included in this account at

current prices new for such items. The cost

of repairing such items shall be charged to

the appropriate expense account as indicated

by previous use.

3. Scrap and nonusable materials included

in this account shall be carried at the estimated net amount realizable therefrom. The

difference between the amounts realized for

scrap and nonusable materials sold and the

net amount at which the materials were carried in this account, as far as practicable,

shall be adjusted to the accounts credited

when the materials were charged to this account.

B. Materials and supplies issued shall be

credited hereto and charged to the appropriate construction, operating expense, or

other account on the basis of a unit price determined by the use of cumulative average,

first-in-first-out, or such other method of inventory accounting as conforms with accepted accounting standards consistently applied.

Items

1. Invoice price of materials less cash or

other discounts.

2. Freight, switching, or other transportation charges when practicable to include

as part of the cost of particular materials to

which they relate.

3. Customs duties and excise taxes.

4. Costs of inspection and special tests

prior to acceptance.

5. Insurance and other directly assignable

charges.

NOTE: Where expenses applicable to materials purchased cannot be directly assigned

728

§ 1767.18 7 CFR Ch. XVII (1–1–00 Edition)

to particular purchases, they shall be

charged to Account 163, Stores Expense Undistributed.

155 Merchandise

This account shall include the book cost of

materials and supplies and appliances and

equipment held primarily for merchandising,

jobbing, and contract work. The principles

prescribed in accounting for utility materials and supplies shall be observed with respect to items carried in this account.

156 Other Materials and Supplies

This account shall include the book cost of

materials and supplies held primarily for

nonutility purposes. The principles prescribed in accounting for utility materials

and supplies shall be observed with respect

to items carried in this account.

157 Nuclear Materials Held for Sale

This account shall include the net salvage

value of uranium, plutonium, and other nuclear materials held by the company for sale

or other disposition that are not to be reused

by the company in its electric utility operations. This account shall be debited and Account 120.5, Accumulated Provision for Amortization of Nuclear Fuel Assemblies, credited for such net salvage value. Any difference between the amount recorded in this

account and the actual amount realized from

the sale of materials shall be debited or credited, as appropriate, to Account 518, Nuclear

Fuel Expense, at the time of such sale.

158.1 Allowance Inventory

A. This account shall include the cost of

allowances owned by the utility and not

withheld by the Environmental Protection

Agency. See §1767.15 (u) and Account 158.2,

Allowances Withheld.

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

dioxide.

C. Separate subdivisions of this account

shall be maintained so as to separately account for those allowances usable in the current year and in each subsequent year. The

underlying records of these subdivisions

shall be maintained in sufficient detail so as

to identify each allowance included; the origin of each allowance; and the acquisition

cost, if any, of the allowance.

158.2 Allowances Withheld

A. This account shall include the cost of

allowances owned by the utility but withheld

by the Environmental Protection Agency.

(See §1767.15 (u).)

B. The inventory cost of the allowances released by the Environmental Protection

Agency for use by the utility shall be transferred to Account 158.1, Allowance Inventory.

C. The underlying records of this account

shall be maintained in sufficient detail so as

to identify each allowance included; the origin of each allowance; and the acquisition

cost, if any, of the allowances.

163 Stores Expense Undistributed

A. This account shall include the cost of

supervision, labor, and expenses incurred in

the operation of general storerooms, including purchasing, storage, handling, and distribution of materials and supplies.

B. This account shall be cleared by adding

to the cost of materials and supplies issued,

a suitable loading charge which will distribute the expense equitably over stores

issues. The balance in the account at the

close of the year shall not exceed the amount

of stores expenses reasonably attributable to

the inventory of materials and supplies, exclusive of fuel, as any amount applicable to

fuel costs should be included in Account 152,

Fuel Stock Expenses Undistributed.

Items

Labor:

1. Inspecting and testing materials and

supplies when not assignable to specific

items.

2. Unloading from shipping facility and

placing in storage.

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

handled through stores.

4. Getting materials from stock and in

readiness to go out.

5. Inventorying stock received or stock on

hand by stores employees but not including

inventories by general department employees as part of internal or general audits.

6. Purchasing department activities in

checking material needs, investigating

sources of supply, analyzing prices, preparing and placing orders, and related activities to extent applicable to materials handled through stores. (Optional: Purchasing

department expenses may be included in administrative and general expenses.)

7. Maintaining stores equipment.

8. Cleaning and tidying storerooms and

stores offices.

9. Keeping stock records, including the recording and posting of material receipts and

issues and maintaining inventory records of

stock.

10. Collecting and handling scrap materials

in stores.

Supplies and Expenses:

1. Adjustments of inventories of materials

and supplies but not including large differences which can readily be assigned to important classes of materials and equitably

distributed among the accounts to which

729

Rural Utilities Service, USDA § 1767.18

such classes of materials have been charged

since the previous inventory.

2. Cash and other discounts not practically

assignable to specific materials.

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

4. Heat, light, and power for storerooms

and store offices.

5. Brooms, brushes, sweeping compounds

and other supplies used in cleaning and

tidying storerooms and stores offices.

6. Injuries and damages.

7. Insurance on materials and supplies and

on stores equipment.

8. Losses due to breakage, leakage, evaporation, fire or other causes, less credits for

amounts received from insurance, transportation companies, or others in compensation

of such losses.

9. Postage, printing, stationery, and office

supplies.

10. Rent of storage space and facilities.

11. Communication service.

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

13. Transportation expense on inward

movement of stores and on transfer between

storerooms but not including charges on materials recovered from retirements which

shall be accounted for as part of the cost of

removal.

NOTE: A physical inventory of each class of

materials and supplies shall be made at least

every two years.

165 Prepayments

A. This account shall include amounts representing prepayments of insurance, rents,

taxes, interest, and miscellaneous items, and

shall be kept or supported in such manner as

to disclose the amount of each class of prepayment.

B. Account 165 shall be subaccounted as

follows:

165.1 Prepayments—Insurance

165.2 Other Prepayments

171 Interest and Dividends Receivable

This account shall include the amount of

interest on bonds, mortgages, notes, commercial paper, loans, open accounts, and deposits, the payment of which is reasonably

assured, and the amount of dividends declared or guaranteed on stocks owned.

NOTE A: Interest which is not subject to

current settlement shall not be included

herein but in the account in which the associated principle is recorded.

NOTE B: Interest and dividends receivable

from associated companies shall be included

in Account 146, Accounts Receivable from

Associated Companies.

172 Rents Receivable

This account shall include rents receivable

or accrued on property rented or leased by

the utility to others.

NOTE: Rents receivable from associated

companies shall be included in Account 146,

Accounts Receivable from Associated Companies.

173 Accrued Utility Revenues

At the option of the utility, the estimated

amount accrued for service rendered, but not

billed at the end of any accounting period,

may be included herein. If accruals are made

for unbilled revenues, accruals shall also be

made for unbilled expenses, such as the purchase of energy.

174 Miscellaneous Current and Accrued

Assets

This account shall include the book cost of

all other current and accrued assets, appropriately designated and supported so as to

show the nature of each asset included herein.

Deferred Debits

181 Unamortized Debt Expense

This account shall include expenses related

to the issuance or assumption of debt securities. Amounts recorded in this account shall

be amortized over the life of each respective

issue under a plan which will distribute the

amount equitably over the life of the security. The amortization shall be on a monthly

basis, and the amounts thereof shall be

charged to Account 428, Amortization of

Debt Discount and Expense. Any

unamortized amounts outstanding at the

time that the related debt is prematurely reacquired shall be accounted for as indicated

in §1767.15 (q).

182.1 Extraordinary Property Losses

A. When authorized or directed by RUS,

this account shall include extraordinary

losses which could not reasonably have been

anticipated and which are not covered by insurance or other provisions, such as unforeseen damages to property.

B. Application to RUS for permission to

use this account shall be accompanied by a

statement giving a complete explanation

with respect to the items which it is proposed to include herein, the period over

which, and the accounts to which it is proposed to write off the charges, and other pertinent information.

182.2 Unrecovered Plant and Regulatory

Study Costs

A. This account shall include: (1) nonrecurring costs of studies and analyses mandated by regulatory bodies related to plants

730

§ 1767.18 7 CFR Ch. XVII (1–1–00 Edition)

in service, transferred from Account 183, Preliminary Survey and Investigations Charges,

and not resulting in construction; and (2)

when authorized by RUS, significant unrecovered costs of plant facilities where construction has been cancelled or which have

been prematurely retired.

B. This account shall be credited and Account 407, Amortization of Property Losses,

Unrecovered Plant and Regulatory Study

Costs, shall be debited over the period specified by RUS.

C. Any additional costs incurred, relative

to the cancellation or premature retirement,

may be included in this account and amortized over the remaining period of the original amortization period. Should any gains or

recoveries be realized relative to the cancelled or prematurely retired plant, such

amounts shall be used to reduce the

unamortized amount of the costs recorded

herein.

D. In the event that the recovery of costs

included herein is disallowed in the rate proceedings, the disallowed costs shall be

charged to Account 426.5, Other Deductions,

in the year of such disallowance.

182.3 Other Regulatory Assets

A. This account shall include the amounts

of regulatory-created assets, not includable

in other accounts, resulting from the ratemaking actions of regulatory agencies. (See

the definition of regulatory assets and liabilities.)

B. The amounts included in this account

are to be established by those charges which

would have been included in net income determinations in the current period under the

general requirements of the Uniform System

of Accounts but for it being probable that

such items will be included in a different period(s) for purposes of developing the rates

that the utility is authorized to charge for

its utility services. When specific identification of the particular source of a regulatory

asset cannot be made, such as in plant phaseins, rate moderation plans, or rate

levelization plans, Account 407.4, Regulatory

Credits, shall be credited. The amounts recorded in this account are generally to be

charged, concurrently with the recovery of

the amounts in rates, to the same account

that would have been charged if included in

income when incurred, except all regulatory

assets established through the use of Account 407.4 shall be charged to Account 407.3,

Regulatory Debits, concurrent with the recovery of the amounts in rates.

C. If rate recovery of all or part of an

amount included in this account is disallowed, the disallowed amount shall be

charged to Account 426.5, Other Deductions,

or Account 435, Extraordinary Deductions, in

the year of the disallowance.

D. The records supporting the entries to

this account shall be kept so that the utility

can furnish full information as to the nature

and amount of each regulatory asset included in this account, including justification for inclusion of such amounts in this account.

183 Preliminary Survey and Investigation

Charges

A. This account shall be charged with all

expenditures for preliminary surveys, plans,

and investigations made for the purpose of

determining the feasibility of utility

projects under contemplation. If construction results, this account shall be credited

and the appropriate utility plant account

charged. If the work is abandoned, the

charge shall be made to Account 426.5, Other

Deductions, or to the appropriate operating

expense account.

B. This account shall also include costs of

studies and analyses mandated by regulatory

bodies related to plant in service. If construction results from such studies, this account shall be credited and the appropriate

utility plant account charged with an equitable portion of such study costs directly attributable to new construction. The portion

of such study costs not attributable to new

construction or the entire cost if construction does not result shall be charged to Account 182.2, Unrecovered Plant and Regulatory Study Costs, or the appropriate operating expense account. The costs of such

studies relative to plant under construction

shall be included directly inAccount 107,

Construction Work in Progress—Electric.

C. The records supporting the entries to

this account shall be so kept that the utility

can furnish complete information as to the

nature and the purpose of the survey, plans,

or investigations, and the nature and

amounts of the several charges.

NOTE: The amount of preliminary survey

and investigation charges transferred to utility plant shall not exceed the expenditures

which may reasonably be determined to contribute directly and immediately and without duplication to utility plant.

184 Clearing Accounts

A. This caption shall include undistributed

balances in clearing accounts at the date of

the balance sheet. Balances in clearing account shall be substantially cleared not later

than the end of the calendar year unless

items held therein relate to a future period.

B. Account 184 shall be subaccounted as

follows:

184.1 Transportation Expense—Clearing

184.2 Clearing Accounts—Other

185 Temporary Facilities

This account shall include amounts shown

by work orders for plant installed for temporary use in utility service for periods of

less than one year. Such work orders shall be

731

Rural Utilities Service, USDA § 1767.18

charged with the cost of temporary facilities

and credited with payments received from

customers and net salvage realized on removal of the temporary facilities. Any net

credit or debit resulting shall be cleared to

Account 451, Miscellaneous Service Revenues.

186 Miscellaneous Deferred Debits

This account shall include all debits not

elsewhere provided for, such as miscellaneous work in progress, and unusual or extraordinary expenses, not included in other

accounts, which are in process of amortization and items the proper final disposition of

which is uncertain.

187 Deferred Losses from Disposition of

Utility Plant

This account shall include losses from the

sale or other disposition of property previously recorded in Account 105, Electric

Plant Held for Future Use, under the provisions of Paragraphs B, C, and D thereof,

where such losses are significant and are to

be amortized over a period of 5 years, unless

otherwise authorized by RUS. The amortization of the amounts in this account shall be

made by debits to Account 411.7, Losses from

Disposition of Utility Plant. (See Account

105, Electric Plant Held for Future Use.)

188 Research, Development, and

Demonstration Expenditures

A. This account shall be charged with the

cost of all expenditures coming within the

meaning of Research, Development, and

Demonstration (RD&D) of this USoA (See

§1767.10 (a)(34)) except those expenditures

properly chargeable to Account 107, Construction Work in Progress—Electric.

B. Costs that are minor or of a general or

recurring nature shall be transferred from

this account to the appropriate operating expense function or if such costs are common

to the overall operations or cannot be feasibly allocated to the various operating accounts, such costs shall be recorded in Account 930.2, Miscellaneous General Expenses.

C. In certain instances, a company may

incur large and significant research, development, and demonstration expenditures which

are nonrecurring and which would distort

the annual research, development, and demonstration charges for the period. In such a

case, the portion of such amounts that cause

the distortion may be amortized to the appropriate operating expense account over a

period not to exceed 5 years unless otherwise

authorized by RUS.

D. The entries in this account must be so

maintained as to show separately each

project along with complete detail of the nature and purpose of the research, development, and demonstration project together

with the related costs.

189 Unamortized Loss on Reacquired Debt

This account shall include the losses on

long-term debt reacquired or redeemed. The

amounts in this account shall be amortized

in accordance with §1767.15 (q).

190 Accumulated Deferred Income Taxes

A. This account shall be debited and Account 411.1, Provision for Deferred Income

Taxes—Credit, Utility Operating Income, or

Account 411.2, Provision for Deferred Income

Taxes—Credit, Other Income and Deductions, as appropriate, shall be credited with

an amount equal to that by which income

taxes payable for the year are higher because

of the inclusion of certain items in income

for tax purposes, which items for general accounting purposes will not be fully reflected

in the utility’s determination of annual net

income until subsequent years.

B. This account shall be credited and Account 410.1, Provision for Deferred Income

Taxes, Utility Operating Income, or Account

410.2, Provision for Deferred Income Taxes,

Other Income and Deductions, as appropriate, shall be debited with an amount

equal to that by which income taxes payable

for the year are lower because of prior payment of taxes as provided by Paragraph A

above, because of difference in timing for tax

purposes of particular items of income or income deductions from that recognized by the

utility for general accounting purposes. Such

credit to this account and debit to Account

410.1 or Account 410.2 shall, in general, represent the effect on taxes payable in the current year of the smaller amount of book income recognized for tax purposes as compared to the amount recognized in the utility’s current accounts with respect to the

item or class of items for which deferred tax

accounting by the utility was authorized by

RUS.

C. Vintage year records with respect to entries to this account, as described above, and

the account balance, shall be so maintained

as to show the factor of calculation with respect to each annual amount of the item or

class of items for which deferred tax accounting by the utility is utilized.

D. The utility is restricted in its use of

this account to the purpose set forth above.

It shall not make use of the balance in this

account or any portion thereof except as provided in the text of this account, without

prior approval of RUS. Any remaining deferred tax account balance with respect to an

amount for any prior year’s tax deferral, the

amortization of which or other recognition

in the utility’s income accounts has been

completed, or other disposition made, shall

732

§ 1767.19 7 CFR Ch. XVII (1–1–00 Edition)

be debited to Account 410.1, Provision for Deferred Income Taxes, Utility Operating Income, or Account 410.2, Provision for Deferred Income Taxes, Other Income and Deductions, as appropriate, or otherwise disposed of as RUS may authorize or direct.

(See §1767.15 (t).)

[58 FR 59825, Nov. 10, 1993, as amended at 59

FR 27436, May 27, 1994; 60 FR 55429, 55430,

Nov. 1, 1995]

§ 1767.19 Liabilities and other credits.

The liabilities and other credit accounts identified in this section shall

be used by all RUS borrowers.

LIABILITIES AND OTHER CREDITS

Margins and Equities

200 Memberships

200.1 Memberships Issued

200.2 Memberships Subscribed But Unissued

201 Patronage Capital

201.1 Patronage Capital Credits

201.2 Patronage Capital Assignable

202 [Reserved]

203 [Reserved]

204 [Reserved]

205 [Reserved]

206 [Reserved]

207 [Reserved]

208 Donated Capital

209 [Reserved]

210 [Reserved]

211 Consumers’ Contributions for Debt

Service

212 [Reserved]

213 [Reserved]

214 [Reserved]

215 Appropriated Margins

215.1 Unrealized Gains and Losses—Debt

and Equity Securities

216 [Reserved]

216.1 Unappropriated Undistributed Subsidiary Earnings

217 Retired Capital Credits—Gain

218 Capital Gains and Losses

219 Other Margins and Equities

219.1 Operating Margins

219.2 Nonoperating Margins

219.3 Other Margins

219.4 Other Margins and Equities—Prior Periods

Long-Term Debt

221 Bonds

222 Reacquired Bonds

223 Advances from Associated Companies

224 Other Long-Term Debt

224.1 Long-Term Debt—RUS Construction

Loan Contract

224.2 RUS Loan Contract—Construction—

Debit

224.3 Long-Term Debt—RUS Construction

Notes Executed

224.4 RUS Notes Executed—Construction—

Debit

224.5 Interest Accrued—Deferred—RUS Construction

224.6 Advance Payments Unapplied—RUS

Long-Term Debt—Debit

224.7 Long-Term Debt—Installation Loan

Contract

224.8 RUS Loan Contract—Installation—

Debit

224.9 Long-Term Debt—Installation Notes

Executed

224.10 RUS Notes Executed—Installation—

Debit

224.11 Other Long-Term Debt—Subscriptions

224.12 Other Long-Term Debt—Supplemental Financing

224.13 Supplemental Financing Notes Executed—Debit

224.14 Other Long-Term Debt—Miscellaneous

224.15 Notes Executed—Other—Debit

224.16 Long-Term Debt—RUS Economic Development Notes Executed

224.17 RUS Notes Executed—Economic Development—Debit

225 Unamortized Premium on Long-Term

Debt

226 Unamortized Discount on Long-Term

Debt—Debit

Other Noncurrent Liabilities

227 Obligations Under Capital Leases—Noncurrent

228.1 Accumulated Provision for Property

Insurance

228.2 Accumulated Provision for Injuries

and Damages

228.3 Accumulated Provision for Pensions

and Benefits

228.4 Accumulated Miscellaneous Operating

Provisions

229 Accumulated Provision for Rate Refunds

Current and Accrued Liabilities

231 Notes Payable

232 Accounts Payable

232.1 Accounts Payable—General

232.2 Accounts Payable—RUS Construction

232.3 Accounts Payable—Other

233 Notes Payable to Associated Companies

234 Accounts Payable to Associated Companies

235 Customer Deposits

236 Taxes Accrued

236.1 Accrued Property Taxes

236.2 Accrued U.S. Social Security Tax—Unemployment

236.3 Accrued U.S. Social Security Tax—

F.I.C.A.

236.4 Accrued State Social Security Tax—

Unemployment

236.5 Accrued State Sales Tax—Consumers

236.6 Accrued Gross Revenue or Gross Receipts Tax

733

Rural Utilities Service, USDA § 1767.19

236.7 Accrued Taxes—Other

237 Interest Accrued

238 Patronage Capital and Patronage Refunds Payable

238.1 Patronage Capital Payable

238.2 Patronage Refunds Payable

239 Matured Long-Term Debt

240 Matured Interest

241 Tax Collections Payable

242 Miscellaneous Current and Accrued Liabilities

242.1 Accrued Rentals

242.2 Accrued Payroll

242.3 Accrued Employees’ Vacations and

Holidays

242.4 Accrued Insurance

242.5 Other Current and Accrued Liabilities

243 Obligations Under Capital Leases—Current

Deferred Credits

251 [Reserved]

252 Customer Advances for Construction

253 Other Deferred Credits

253.1 Other Deferred Credits—Consumers’

Energy Prepayments

254 Other Regulatory Liabilities

255 Accumulated Deferred Investment Tax

Credits

256 Deferred Gains from Disposition of Utility Plant

257 Unamortized Gain on Reacquired Debt

281 Accumulated Deferred Income Taxes—

Accelerated Amortization Property

282 Accumulated Deferred Income Taxes—

Other Property

283 Accumulated Deferred Income Taxes—

Other

LIABILITIES AND OTHER CREDITS

Margins and Equities

200 Memberships

A. This account shall include the total

amount of memberships issued and subscribed.

B. Account 200 shall be subaccounted as

follows:

200.1 Memberships Issued

200.2 Memberships Subscribed But Unissued

200.1 Memberships Issued

A. This account shall include the face

value of membership certificates outstanding. A detailed record shall be maintained to show for each member, the name,

address, date of payment, amount paid, and

certificate number.

B. If membership fees are applied against

energy bills, this account shall be debited for

the full amount of the membership with the

offsetting credit to the appropriate accounts

receivable, and to accounts payable for any

refundable amounts. Any balances that cannot be refunded, due to inability to locate

the member or because of bylaw restrictions,

shall be credited to Account 208, Donated

Capital. If determination of the ultimate disposition of the fees cannot be made immediately, the amount involved should be

transferred to Account 253, Other Deferred

Credits, until the determination is made.

C. When a transfer fee is collected, the

transaction shall be recorded by debiting Account 131.1, Cash—General, and crediting Account 451, Miscellaneous Service Revenues,

with the fee collected.

200.2 Memberships Subscribed But Unissued

This account shall include the face value of

memberships subscribed for but not issued.

When certificates are issued, the amount of

the memberships shall be transferred to Account 200.1, Memberships Issued.

201 Patronage Capital

A. This account shall include the total

amount of patronage capital assignable and

assigned.

B. Account 201 shall be subaccounted as

follows:

201.1 Patronage Capital Credits

201.2 Patronage Capital Assignable

201.1 Patronage Capital Credits

A. This account shall include the amounts

of patronage capital which have been assigned to individual patrons. A subsidiary

record, ‘‘patronage capital ledger,’’ shall be

maintained, containing an account for each

patron who has furnished capital under a

capital credits plan.

B. When the return of patrons’ capital to

individual patrons has been authorized by

the board of directors (or trustees), the

amounts authorized shall be transferred to

Account 238.1, Patronage Capital Payable.

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

201.2 Patronage Capital Assignable

A. This account shall include all amounts

transferred from Account 219.1, Operating

Margins; Account 219.2, Nonoperating Margins; Account 219.3, Other Margins; and Account 219.4, Other Margins and Equities—

Prior Periods, which are assignable to individual patrons’ capital accounts.

B. Entries to this account shall be made so

as to clearly disclose the nature and source

of each transaction. Amounts so assigned

shall be transferred to Account 201.1, Patronage Capital Credits.

734

§ 1767.19 7 CFR Ch. XVII (1–1–00 Edition)

202 [Reserved]

203 [Reserved]

204 [Reserved]

205 [Reserved]

206 [Reserved]

207 [Reserved]

208 Donated Capital

This account shall include credits arising

from forfeiture of membership fees and from

donations of capital not otherwise provided

for. Entries to this account shall be made so

as to clearly disclose the nature and source

of each transaction.

209 [Reserved]

210 [Reserved]

211 Consumers’ Contributions for Debt

Service

This account shall include the amounts

billed to consumers as ‘‘amortization

charges’’ for the purpose of servicing longterm debt.

212 [Reserved]

213 [Reserved]

214 [Reserved]

215 Appropriated Margins

This account shall include all amounts appropriated as reserves from margins. The account shall be so maintained as to show the

amount of each separate reserve and the nature and amounts of the debits and credits

thereto.

215.1 Unrealized Gains and Losses—Debt

and Equity Securities

This account shall include the unrealized

holding gains and losses for available-forsale securities.

216 [Reserved]

216.1 Unappropriated Undistributed

Subsidiary Earnings

This account shall include the balances, either debit or credit, of undistributed retained earnings of subsidiary companies

since their acquisition. When dividends are

received from subsidiary companies relating

to amounts included in this account, this account shall be debited and Account 219.2,

Nonoperating Margins, credited.

217 Retired Capital Credits—Gain

A. This account shall include credits resulting from the retirement of patronage

capital through settlement of individual patrons’ capital credits at less than 100 percent

of the capital assigned to the patron. The

portion of patronage capital not returned to

the patrons, under such settlements, shall be

debited to Account 201.1, Patronage Capital

Credits, and credited to this account.

B. This account shall also include amounts

representing patronage capital authorized to

be retired to patrons who cannot be located.

Returned checks issued for retirements of

patronage capital, after an appropriate waiting period, shall be credited to this account,

and a record maintained adequate to enable

the cooperative to make payment to the patron if and when a claim has been established by the consumer.

218 Capital Gains and Losses

No entries shall be made to this account

without the prior approval of RUS unless it

is to distribute past capital gains and losses

as capital credits or to eliminate accumulated capital losses in conformance with the

bylaws of the cooperative.

219 Other Margins and Equities

A. This account shall include total amount

of margins and equities from all sources.

B. Account 219 shall be subaccounted as

follows:

219.1 Operating Margins

219.2 Nonoperating Margins

219.3 Other Margins

219.4 Other Margins and Equities—Prior Periods

219.1 Operating Margins

This account shall be debited or credited

with the balances arising from transactions,

the details of which have been recorded in

Accounts 400, 401, 402, 403, 404, 405, 406, 407,

408, 412, 413, 414, 423, 424, 425, 426, 427, 428, and

431. Accounts 400, 401, and 402 are control accounts and, at the option of the borrower

may or may not be used. If they are not used,

the detailed revenue and expense accounts

shall be closed directly to this account.

219.2 Nonoperating Margins

This account shall be debited or credited

with the balances arising from transactions,

the details of which have been recorded in

Accounts 415, 416, 417, 417.1, 418, 419, 419.1, 421,

421.1, 421.2, 422, 434, and 435.

219.3 Other Margins

No entries shall be made to this account

unless it is to distribute or eliminate prior

balances in conformance with the bylaws of

the cooperative.

219.4 Other Margins and Equities—Prior

Periods

A. This account shall include significant

nonrecurring transactions relating to prior

735

Rural Utilities Service, USDA § 1767.19

periods. To be significant, the transaction

must be of sufficient magnitude to justify redistribution of patronage capital credits already allocated for such prior periods.

B. All entries to this account must receive

RUS prior approval.

C. These transactions are limited to items

to (1) correct an error in the financial statements of a prior year, and (2) make adjustments that result from realization of income

tax benefits of preacquisition operating loss

carryforwards. This account shall also include the related income taxes (state and

Federal) on items included herein.

D. Amounts in this account shall be transferred at the end of the year to Account

219.1, Operating Margins, or Account 219.2,

Nonoperating Margins, as appropriate. Also,

at the end of the year, these amounts should

be transferred from Account 219.1, or Account 219.2 to Account 201.2, Patronage Capital Assignable, when appropriate.

Long-Term Debt

221 Bonds

This account shall include, in a separate

subdivision for each class and series of

bonds, the face value of the actually issued

and unmatured bonds which have not been

retired or cancelled; also the face value of

such bonds issued by others, the payment of

which has been assumed by the utility.

222 Reacquired Bonds

A. This account shall include the face

value of bonds actually issued or assumed by

the utility and reacquired by it and not retired or cancelled. The account for reacquired debt shall not include securities

which are held by trustees in sinking or

other funds.

B. When bonds are reacquired, the difference between face value, adjusted for

unamortized discount, expenses or premium,

and the amount paid upon reacquisition,

shall be included in Account 189,

Unamortized Loss on Reacquired Debt, or

Account 257, Unamortized Gain on Reacquired Debt, as appropriate. (See §1767.15

(q).)

223 Advances from Associated Companies

A. This account shall include the face

value of notes payable to associated companies and the amount of open book accounts

representing advances from associated companies. It does not include notes and open accounts representing indebtedness subject to

current settlement which are includible in

Account 233, Notes Payable to Associated

Companies, or Account 234, Accounts Payable to Associated Companies.

B. The records supporting the entries to

this account shall be so kept that the utility

can furnish complete information concerning

each note and open account.

224 Other Long-Term Debt

A. This account shall include, until maturity, all long-term debt not otherwise provided for. This covers such items as receivers’ certificates, real estate mortgages executed or assumed, assessments for public improvements, notes and unsecured certificates

of indebtedness not owned by associated

companies, receipts outstanding for longterm debt, and other obligations maturing

more than one year from the date of issue or

assumption.

B. Account 224 shall be subaccounted as

follows:

224.1 Long-Term Debt—RUS Construction

Loan Contract

224.2 RUS Loan Contract—Construction—

Debit

224.3 Long-Term Debt—RUS Construction

Notes Executed

224.4 RUS Notes Executed—Construction—

Debit

224.5 Interest Accrued—Deferred—RUS Construction

224.6 Advance Payments Unapplied—RUS

Long-Term Debt—Debit

224.7 Long-Term Debt—Installation Loan

Contract

224.8 RUS Loan Contract—Installation—

Debit

224.9 Long-Term Debt—Installation Notes

Executed

224.10 RUS Notes Executed—Installation—

Debit

224.11 Other Long-Term Debt—Subscriptions

224.12 Other Long-Term Debt—Supplemental Financing

224.13 Supplemental Lender Notes Executed—Debit

224.14 Other Long-Term Debt—Miscellaneous

224.15 Notes Executed—Other—Debit

224.16 Long-Term Debt—RUS Economic Development Notes Executed

224.17 RUS Notes Executed—Economic Development—Debit

224.1 Long-Term Debt—RUS Construction

Loan Contract

A. This account shall include the contractual obligation to RUS on construction loans

covered by loan contract but not by executed

notes.

B. This account is to be used at the option

of the borrower.

224.2 RUS Loan Contract—Construction—

Debit

A. This account shall include the total

loans (for construction purposes) which are

covered by loan contract but not by executed

notes.

736

§ 1767.19 7 CFR Ch. XVII (1–1–00 Edition)

B. This account is to be used at the option

of the borrower.

224.3 Long-Term Debt—RUS Construction

Notes Executed

This account shall include the contractual

liability to RUS on construction notes executed. Records shall be maintained to show

separately for each class of obligation all details as to the date of obligation, date of maturity, interest date and rate, and securities

for the obligation.

224.4 RUS Notes Executed—Construction—

Debit

This account shall include the total

amount of the unadvanced RUS loans for

construction purposes, which are covered by

executed notes. When advances are received

from the RUS for construction, this account

shall be credited and Account 131.2, Cash—

Construction Fund—Trustee, debited with

the amount of cash advanced.

224.5 Interest Accrued—Deferred—RUS

Construction

This account shall include interest on RUS

construction obligations deferred by the

terms of mortgage notes or extension agreements.

224.6 Advance Payments Unapplied—RUS

Long-Term Debt—Debit

A. This account shall include principal

payments on mortgage notes paid in advance

of the date due and not applied to a specific

note. Also, include in this account interest

savings which are accrued and added to the

advance payment unapplied.

B. At such time as these payments are applied to a specific note or loan balances, this

account shall be credited and the long-term

debt account debited with the amount so applied.

224.7 Long-Term Debt—Installation Loan

Contract

A. This account shall include the contractual obligation to RUS on installation loans

covered by loan contract but not covered by

executed notes.

B. This account is to be used at the option

of the borrower.

224.8 RUS Loan Contract—Installation—

Debit

A. This account shall include the total

loans for installation purposes which are

covered by loan contract but not by executed

notes.

B. This account is to be used at the option

of the borrower.

224.9 Long-Term Debt—Installation Notes

Executed

This account shall include the contractual

liability to RUS on installation notes executed.

224.10 RUS Notes Executed—Installation—

Debit

This account shall include the total

amount of unadvanced loans for installation

purposes, which are covered by executed

note. When advances are received from RUS,

this account shall be credited and Account

131.3, Cash—Installation Loan and Collection

Fund, debited with the amount of cash advanced.

224.11 Other Long-Term Debt—

Subscriptions

This account shall include the contractual

obligation to purchase CFC Capital Term

Certificates and any other similar obligation

relating to supplemental financing.

224.12 Other Long-Term Debt—

Supplemental Financing

This account shall include the contractual

liability to CFC or other supplemental lenders for that portion of funds borrowed which

mature in more than one year.

224.13 Supplemental Financing Notes

Executed—Debit

This account shall include the total

amount of the unadvanced loans for construction purposes, which are covered by executed notes to CFC or other supplemental

lender. This account shall be debited with

the face amount of notes executed. When advances are received from a supplemental

lender for construction, this account shall be

credited and Account 131.2, Cash—Construction Fund—Trustee, debited with the

amount of cash advanced.

224.14 Other Long-Term Debt—

Miscellaneous

This account shall include the amount of

other long-term debt not provided for elsewhere.

224.15 Notes Executed—Other—Debit

This account shall include the total

amount of the unadvanced loans for construction purposes, which are covered by executed notes to others not included in the

foregoing accounts. When advances are received from such supplemental lender, this

account shall be credited and Account 131.2,

Cash—Construction Fund—Trustee, debited

with the amount of cash so advanced.

737

Rural Utilities Service, USDA § 1767.19

224.16 Long-Term Debt—RUS Economic

Development Notes Executed

This account shall include the contractual

liability to RUS on rural economic development notes executed. Records shall be maintained to show separately for each class of

obligation all details as to the date of obligation, date of maturity, interest date and

rate, and securities for the obligation.

224.17 RUS Notes Executed—Economic

Development—Debit

This account shall include the total

amount of the unadvanced RUS loans for

rural economic development purposes, which

are covered by executed notes. When advances are received from the RUS for rural

economic development projects, this account

shall be credited and Account 131.12, Cash—

General—Economic Development Funds,

debited with the amount of cash advanced.

225 Unamortized Premium on Long-Term

Debt

A. This account shall include the excess of

the cash value of consideration received over

the face value upon the issuance or assumption of long-term debt securities.

B. Amounts recorded in this account shall

be amortized over the life of each respective

issue under a plan which will distribute the

amount equitably over the life of the security. The amortization shall be on a monthly

basis, with the amounts thereof to be credited to Account 429, Amortization of Premium on Debt—Credit. (See §1767.15 (q).)

226 Unamortized Discount on Long-Term

Debt—Debit

A. This account shall include the excess of

the face value of long-term debt securities

over the cash value of consideration received

therefor, related to the issue or assumption

of all types and classes of debt.

B. Amounts recorded in this account shall

be amortized over the life of the respective

issues under a plan which will distribute the

amount equitably over the life of the securities. The amortization shall be on a monthly

basis, wit the amounts thereof charged to

Account 428, Amortization of Debt Discount

and Expense. (See §1767.15 (q).)

Other Noncurrent Liabilities

227 Obligations Under Capital Leases—

Noncurrent

This account shall include the portion not

due within one year, of the obligations recorded for the amounts applicable to leased

property recorded as assets in Account 101.1,

Property Under Capital Leases; Account

120.6, Nuclear Fuel Under Capital Leases; or

Account 121, Nonutility Property.

SPECIAL INSTRUCTIONS

No amounts shall be credited to Accounts

228.1 through 228.4 unless authorized by a

regulatory authority or authorities to be

collected in the utility’s rates.

228.1 Accumulated Provision for Property

Insurance

A. This account shall include amounts reserved by the utility for losses through accident, fire, flood, or other hazards to its own

property or property leased from others, not

covered by insurance. The amounts charged

to Account 924, Property Insurance, or other

appropriate accounts to cover such risks

shall be credited to this account. A schedule

of risks covered shall be maintained, giving

a description of the property involved, the

character of the risks covered and the rates

used.

B. Charges shall be made to this account

for losses covered, not to exceed the account

balance. Details of these charges shall be

maintained according to the year the casualty occurred which gave rise to the loss.

228.2 Accumulated Provision for Injuries

and Damages

A. This account shall be credited with

amounts charged to Account 925, Injuries

and Damages, or other appropriate accounts,

to meet the probable liability, not covered

by insurance, for deaths or injuries to employees and others and for damages to property neither owned nor held under lease by

the utility.

B. When liability for any injury or damage

is admitted by the utility either voluntarily

or because of the decision of a court or other

lawful authority, such as a workmen’s compensation board, the admitted liability shall

be charged to this account and credited to

the appropriate current liability account.

Details of these charges shall be maintained

according to the year the casualty occurred

which gave rise to the loss.

NOTE: Recoveries or reimbursements for

losses charged to this account shall be credited hereto; the cost of repairs to property of

others, if provided for herein, shall be

charged to this account.

228.3 Accumulated Provision for Pensions

and Benefits

A. This account shall include provisions

made by the utility and amounts contributed

by employees for pensions, accident and

death benefits, savings, relief, hospital, and

other provident purposes, where the funds

are included in the assets of the utility either in general or in segregated fund accounts.

B. Amounts paid by the utility for the purpose for which this liability is established

shall be charged hereto.

738

§ 1767.19 7 CFR Ch. XVII (1–1–00 Edition)

C. A separate account shall be kept for

each kind of provision included herein.

NOTE: If employee pension or benefit plan

funds are not included among the assets of

the utility but are held by outside trustees,

payments into such funds, or accruals therefor, shall not be included in this account.

228.4 Accumulated Miscellaneous Operating

Provisions

A. This account shall include all operating

provisions which are not provided for elsewhere.

B. This account shall be maintained in

such a manner as to show the amount of

each separate provision and the nature and

amounts of the debits and credits thereto.

NOTE: This account includes only provisions as may be created for operating purposes and does not include any reservations

of income, the credits for which should be recorded in Account 215, Appropriated Margins.

229 Accumulated Provision for Rate

Refunds

A. This account shall be credited with

amounts charged to Account 449.1, Provision

for Rate Refunds, to provide for estimated

refunds where the utility is collecting

amounts in rates subject to refund.

B. When a refund of any amount recorded

in this account is ordered by a regulatory

authority, such amount shall be charged

hereto and credited to Account 242, Miscellaneous Current and Accrued Liabilities.

C. Records supporting the entries to this

account shall be kept so as to identify each

amount recorded by the respective rate filing docket number.

Current and Accrued Liabilities

Current and accrued liabilities are those

obligations which have either matured or

which become due within 1 year from the

date thereof; except however, bonds, receivers’ certificates, and similar obligations

which shall be classified as long-term debt

until date of maturity; accrued taxes, such

as income taxes, which shall be classified as

accrued liabilities even though payable more

than one year from date; compensation

awards, which shall be classified as current

liabilities regardless of date due; and minor

amounts payable in installments which may

be classified as current liabilities. If a liability is due more than 1 year from the date of

issuance or assumption by the utility, it

shall be credited to a long-term debt account

appropriate for the transaction; except however, the current liabilities previously mentioned.

231 Notes Payable

This account shall include the face value of

all notes, drafts, acceptances, or other similar evidences of indebtedness, payable on demand or within a time not exceeding 1 year

from the date of issue, to other than associated companies.

232 Accounts Payable

A. This account shall include all amounts

payable by the utility within 1 year, which

are not provided for in other accounts.

B. Account 232 shall be subaccounted as

follows:

232.1 Accounts Payable—General

232.2 Accounts Payable—RUS Construction

232.3 Accounts Payable—Other

233 Notes Payable to Associated Companies

This account shall include amounts owing

to associated companies on notes, drafts, acceptances, or other similar evidences of indebtedness payable on demand or not more

than 1 year from the date of issue or creation.

NOTE: Notes which are includible in Account 223, Advances from Associated Companies, shall be excluded from this account.

234 Accounts Payable to Associated

Companies

This account shall include amounts owing

to associated companies on open accounts

payable on demand.

NOTE: Accounts which are includible in Account 223, Advances from Associated Companies, shall be excluded from this account.

235 Customer Deposits

This account shall include all amounts deposited with the utility by its customers as

security for the payment of bills.

236 Taxes Accrued

A. This account shall be credited with the

amount of taxes accrued during the accounting period, corresponding debits being made

to the appropriate accounts for tax charges.

Such credits may be based upon estimates,

but from time to time during the year as the

facts become known, the amount of the periodic credits shall be adjusted so as to include, as nearly as can be determined in each

year, the taxes applicable thereto. Any

amount representing a prepayment of taxes

applicable to the period subsequent to the

date of the balance sheet, shall be shown

under Account 165, Prepayments.

B. If accruals for taxes are found to be insufficient or excessive, correction therefor

shall be made through current tax accruals.

C. Accruals for taxes shall be based upon

the net amounts payable after credit for any

discounts, and shall not include any amounts

for interest on tax deficiencies or refunds.

Interest received on refunds shall be credited

to Account 419, Interest and Dividend Income, and interest paid on deficiencies shall

739

Rural Utilities Service, USDA § 1767.19

be charged to Account 431, Other Interest

Expense.

D. Account 236 shall be subaccounted as

follows:

236.1 Accrued Property Taxes

236.2 Accrued U.S. Social Security Tax—Unemployment

236.3 Accrued U.S. Social Security Tax—

F.I.C.A.

236.4 Accrued State Social Security Tax—

Unemployment

236.5 Accrued State Sales Tax—Consumers

236.6 Accrued Gross Revenue or Gross Receipts Tax

236.7 Accrued Taxes—Other

237 Interest Accrued

This account shall include the amount of

interest accrued but not matured on all liabilities of the utility not including, however, interest which is added to the principal

of the debt on which incurred. Supporting

records shall be maintained so as to show the

amount of interest accrued on each obligation.

238 Patronage Capital and Patronage

Refunds Payable

A. This account shall include the total

amount of patronage capital authorized to be

returned and paid to patrons.

B. Account 238 shall be subaccounted as

follows:

238.1 Patronage Capital Payable

238.2 Patronage Refunds Payable

238.1 Patronage Capital Payable

This account shall include the amount of

patronage capital which has been authorized

to be returned to the patron.

238.2 Patronage Refunds Payable

This account shall include the amount of

patronage refunds which have been authorized to be paid to patrons.

239 Matured Long-Term Debt

This account shall include the amount of

long-term debt (including any obligation for

premiums) matured and unpaid, without specific agreement for extension of the time of

payment and bonds called for redemption but

not presented.

240 Matured Interest

This account shall include the amount of

matured interest on long-term debt or other

obligations of the utility at the date of the

balance sheet unless such interest is added

to the principal of the debt on which incurred.

241 Tax Collections Payable

This account shall include the amount of

taxes collected by the utility through payroll deductions or otherwise, pending transmittal of such taxes to the proper taxing authority.

NOTE: Do not include liabilities for taxes

assessed directly against the utility which

are accounted for as part of the utility’s own

tax expense.

242 Miscellaneous Current and Accrued

Liabilities

A. This account shall include the amount

of all other current and accrued liabilities

not provided for elsewhere appropriately designated and supported so as to show the nature of each liability.

B. Account 242 shall be subaccounted as

follows:

242.1 Accrued Rentals

242.2 Accrued Payroll

242.3 Accrued Employees’ Vacations and

Holidays

242.4 Accrued Insurance

242.5 Other Current and Accrued Liabilities

242.1 Accrued Rentals

This account shall include unpaid joint use

pole rentals and other rentals. The records

supporting the entries to this account shall

be maintained so as to show for each class of

rental, the amount accrued, the basis for the

accrual, the accounts to which charged, and

the amount of rentals paid.

242.2 Accrued Payroll

This account shall include the accrued liability for salaries and wages at the end of

an accounting period for which the appropriate expense or other accounts have been

charged. This account is to be used whether

salaries and wages are paid on a weekly,

semimonthly, or monthly basis.

242.3 Accrued Employees’ Vacations and

Holidays

This account shall include the liability for

accrued wages for employees’ vacation, holidays, and sick leave.

242.4 Accrued Insurance

A. This account shall most commonly be

used in case of workmen’s compensation and

public liability insurance for recording the

excess amounts of earned premium over the

advance premiums. Earned premiums are

computed each month by applying the insurance rates to the actual payrolls.

B. Until the amount of the advance premiums is exhausted, the earned premium is

credited to Account 165, Prepayments.

Earned premiums in excess of the advance

premiums are credited to this account.

242.5 Other Current and Accrued Liabilities

This account shall include current and accrued liabilities not provided for elsewhere.

740

§ 1767.19 7 CFR Ch. XVII (1–1–00 Edition)

243 Obligations Under Capital Leases—

Current

This account shall include the portion, due

within 1 year, of the obligations recorded for

the amounts applicable to leased property

recorded as assets in Account 101.1, Property

Under Capital Leases; Account 120.6, Nuclear

Fuel Under Capital Leases; or Account 121,

Nonutility Property.

Deferred Credits

251 [Reserved]

252 Customer Advances for Construction

This account shall include consumer advances for construction which are to be refunded either wholly or in part. When a customer is refunded the entire amount to

which he is entitled, according to the agreement or rule under which the advance was

made, the balance, if any, remaining in this

account shall be credited to the respective

plant accounts.

253 Other Deferred Credits

This account shall include advance billings

and receipts and other deferred credit items,

not provided for elsewhere, including

amounts which cannot be entirely cleared or

disposed of until additional information has

been received.

253.1 Other Deferred Credits—Consumers’

Energy Prepayments

This account shall include the amount of

advance payments made by consumers in

connection with electric service.

254 Other Regulatory Liabilities

A. This account shall include the amounts

of regulatory liabilities, not includible in

other accounts, imposed on the utility by

the ratemaking actions of regulatory agencies.

B. The amounts included in this account

are to be established by those credits which

would have been included in net income determinations in the current period under the

general requirements of the Uniform System

of Accounts but for it being probable that:

(1) such items will be included in a different

period(s) for purposes of developing the rates

that the utility is authorized to charge for

its utility services; or (2) refunds to customers, not provided for in other accounts,

will be required. When specific identification

of the particular source of the regulatory liability cannot be made or when the liability

arises from revenues collected pursuant to

tariffs on file at a regulatory agency, Account 407.3, Regulatory Debits, shall be debited. The amounts recorded in this account

generally are to be credited to the same account that would have been credited if included in income when earned except: (1) all

regulatory liabilities established through

the use of Account 407.3 shall be credited to

Account 407.4, Regulatory Credits; and (2) in

the case of refunds, a cash account or other

appropriate account should be credited when

the obligation is satisfied.

C. If it is later determined that the

amounts recorded in this account will not be

returned to customers through rates or refunds, such amounts shall be credited to Account 421, Miscellaneous Nonoperating Income, or Account 434, Extraordinary Income,

as appropriate, in the year such determination is made.

D. The records supporting the entries to

this account shall be kept in such a manner

that the utility can furnish full information

as to the nature and amount of each regulatory liability included in this account, including justification for inclusion of such

amounts in this account.

255 Accumulated Deferred Investment Tax

Credits

A. This account shall be credited with all

investment tax credits deferred by companies which have elected to follow deferral accounting, partial or full, rather than recognizing, in the income statement, the total

benefits of the tax credit as realized. After

such election, a company may not transfer

amounts from this account, except as authorized herein and in Account 411.4, Investment Tax Credit Adjustments, Utility Operations; Account 411.5, Investment Tax Credit

Adjustments, Nonutility Operations; and Account 420, Investment Tax Credits, or with

approval of RUS.

B. Where the company’s accounting provides that investment tax credits are to be

passed on to customers, this account shall be

debited and Account 411.4 credited with a

proportionate amount determined in relation to the average useful life of electric

utility property to which the tax credits relate or such lesser period of time as allowed

by a regulatory agency having rate jurisdiction. If, however, the deferral procedure provides that investment tax credits are not to

be passed on to customers, the proportionate

restorations to income shall be credited to

Account 420.

C. Subdivisions of this account, by department, shall be maintained for deferred investment tax credits that are related to nonelectric utility or other operations. Contra

entries affecting such account subdivisions

shall be appropriately recorded in Account

413, Expenses of Electric Plant Leased to

Others; or Account 414, Other Utility Operating Income. Use of deferral or nondeferral

accounting procedures adopted for nonelectric utility or other operations are to be followed on a consistent basis.

D. Separate records for electric and nonelectric utility or other operations shall be

maintained identifying the properties giving

741

Rural Utilities Service, USDA § 1767.19

rise to the investment tax credits for each

year with the weighted-average service life

of such properties and any unused balances

of such credits. Such records are not necessary unless the tax credits are deferred.

256 Deferred Gains from Disposition of

Utility Plant

This account shall include gains from the

sale or other disposition of property previously recorded in Account 105, Electric

Plant Held for Future Use, under the provisions of Paragraphs B, C, and D thereof,

where such gains are significant and are to

be amortized over a period of 5 years, unless

otherwise authorized by RUS. The amortization of the amounts in this account shall be

made by credits to Account 411.6, Gains from

Disposition of Utility Plant. (See Account

105, Electric Plant Held for Future Use.)

257 Unamortized Gain on Reacquired Debt

This account shall include the amounts of

discount realized upon reacquisition or redemption of long-term debt. The amounts in

this account shall be amortized in accordance with §1767.15 (q).

SPECIAL INSTRUCTIONS

Accumulated Deferred Income Taxes

Before using the deferred tax accounts provided below, refer to §1767.15 (r), Comprehensive Interperiod Income Tax Allocation. The

text of these accounts are designed primarily

to cover deferrals of Federal income taxes.

However, they are also to be used when making deferrals of state and local income taxes.

Utilities and licensees which, in addition to

an electric utility department, have another

utility department, gas or water and nonutility property, and which have deferred

taxes on income with respect thereto shall

separately classify such deferrals in the accounts provided below so as to allow ready

identification of items relating to each utility deductions.

281 Accumulated Deferred Income Taxes—

Accelerated Amortization Property

A. This account shall include tax deferrals

resulting from adoption of the principles of

comprehensive interperiod tax allocation described in §1767.15 (s) that relate to property

for which the utility has availed itself of the

use of accelerated (5-year) amortization of

(1) certified defense facilities as permitted by

Section 168 of the Internal Revenue Code,

and (2) certified pollution control facilities

as permitted by Section 169 of the Internal

Revenue Code.

B. This account shall be credited and Account 410.1, Provision for Deferred Income

Taxes, Utility Operating Income, or Account

410.2, Provision for Deferred Income Taxes,

Other Income and Deductions, as appropriate, shall be debited with tax effects related to property described in Paragraph A

above where taxable income is lower than

pretax accounting income due to differences

between the periods in which revenue and expense transactions affect taxable income and

the periods in which they enter into the determination of pretax accounting income.

C. This account shall be debited and Account 411.1, Provision for Deferred Income

Taxes—Credit, Utility Operating Income, or

Account 411.2, Provision for Deferred Income

Taxes-Credit, Other Income and Deductions,

as appropriate, shall be credited with taxes

related to property described in Paragraph A

above where taxable income is higher than

pretax accounting income due to differences

between the periods in which revenue and expense transactions affect taxable income and

the periods in which they enter into the determination of pretax accounting income.

D. The utility is restricted in its use of

this account to the purposes set forth above.

It shall not transfer the balance in this account or any portion thereof to retained

earnings or make any use thereof except as

provided in the text of this account without

prior approval of RUS. Upon the disposition

by sale, exchange, transfer, abandonment, or

premature retirement of plant on which

there is a related balance therein, this account shall be charged with an amount equal

to the related income tax expense, if any,

arising from such disposition and Account

411.1, Provision for Deferred Income Taxes—

Credit, Utility Operating Income, or Account

411.2, Provision for Deferred Income Taxes—

Credit, Other Income and Deductions, as appropriate, shall be credited. When the remaining balance, after consideration of any

related income tax expense, is less than

$25,000, this account shall be charged and Account 411.1 or Account 411.2, as appropriate,

credited with such balance. If after consideration of any related income tax expense,

there is a remaining amount of $25,000 or

more, RUS shall authorize or direct how

such amount shall be accounted for at the

time approval for the disposition of accounting is granted. When plant is disposed of by

transfer to a wholly owned subsidiary, the

related balance in this account shall also be

transferred. When the disposition relates to

retirement of an item or items under a group

method of depreciation where there is no tax

effect in the year of retirement, no entries

are required in this account if it can be determined that the related balances would be

necessary to be retained to offset future

group item tax deficiencies.

282 Accumulated Deferred Income Taxes—

Other Property

A. This account shall include the tax deferrals resulting from adoption of the principle

742

§ 1767.19 7 CFR Ch. XVII (1–1–00 Edition)

of comprehensive interperiod income tax allocation described in §1767.15 (r) which are

related to all property other than accelerated amortization property.

B. This account shall be credited and Account 410.1, Provision for Deferred Income

Taxes, Utility Operating Income, or Account

410.2, Provision for Deferred Income Taxes,

Other Income and Deductions, as appropriate, shall be debited with tax effects related to property described in Paragraph A

above where taxable income is lower than

pretax accounting income due to differences

between the periods in which revenue and expense transactions affect taxable income and

the periods in which they enter into the determination of pretax accounting income.

C. This account shall be debited and Account 411.1, Provision for Deferred Income

Taxes—Credit, Utility Operating Income, or

Account 411.2, Provision for Deferred Income

Taxes—Credit, Other Income and Deductions, as appropriate, shall be credited with

tax effects related to property described in

Paragraph A above where taxable income is

higher than pretax accounting income due to

differences between the periods in which revenue and expense transactions affect taxable

income and the periods in which they enter

into the determination of pretax accounting

income.

D. The utility is restricted in its use of

this account to the purposes set forth above.

It shall not transfer the balance in this account or any portion thereof to retained

earnings or make any use thereof except as

provided in the text of this account without

prior approval of RUS. Upon the disposition

by sale, exchange, transfer, abandonment, or

premature retirement of plant on which

there is a related balance herein, this account shall be charged with an amount equal

to the related income tax expense, if any,

arising from such disposition and Account

411.1, Provision for Deferred Income Taxes—

Credit, Utility Operating Income, or Account

411.2, Provision for Deferred Income Taxes—

Credit, Other Income and Deductions, shall

be credited. When the remaining balance

after consideration of any related tax expenses, is less than $25,000, this account shall

be charged and Account 411.1 or Account

411.2, as appropriate, credited with such balance. If after consideration any related income tax expense, there a remaining amount

of $25,00 or more, RUS shall authorize or direct how such amount shall be accounted for

at the time approval for the disposition of

accounting is granted. When plant is disposed of by transfer to a wholly owned subsidiary, the related balance in this account

shall also be transferred. When the disposition relates to retirement of an item or

items under a group method of depreciation

where there is no tax effect in the year of retirement, no entries are required in this account if it can be determined that the related balance would be necessary to be retained to offset future group item tax deficiencies.

283 Accumulated Deferred Income Taxes—

Other

A. This account shall include all credit tax

deferrals resulting from the adoption of the

principles of comprehensive interperiod income tax allocation described in §1767.15 (r)

other than those deferrals which are includible in Account 281, Accumulated Deferred

Income Taxes—Accelerated Amortization

Property, and Account 282, Accumulated Deferred Income Taxes—Other Property.

B. This account shall be credited and Account 410.1, Provision for Deferred Income

Taxes, Utility Operating Income, or Account

410.2, Provision for Deferred Income Taxes,

Other Income and Deductions, as appropriate, shall be debited with tax effects related to items described in Paragraph A

above where taxable income is lower than

pretax accounting income due to differences

between the periods in which revenue and expense transactions affect taxable income and

the periods in which they enter into the determination of pretax accounting income.

C. This account shall be debited and Account 411.1, Provision for Deferred Income

Taxes—Credit, Utility Operating Income or

Account 411.2, Provision for Deferred Income

Taxes—Credit, Other Income and Deductions, as appropriate, shall be credited with

tax effects related to items described in

Paragraph A above where taxable income is

higher than pretax accounting income due to

differences between the periods in which revenue and expense transactions affect taxable

income and the periods in which they enter

into the determination of pretax accounting

income.

D. Records with respect to entries to this

account, as described above, and the account

balance, shall be so maintained as to show

the factors of calculation with respect to

each annual amount of the item or class of

items.

E. The utility is restricted in its use of this

account to the purposes set forth above. It

shall not transfer the balance in the account

or any portion thereof to retained earnings

or to any other account or make any use

thereof except as provided in the text of this

account, without prior approval of RUS.

Upon the disposition by sale, exchange,

transfer, abandonment, or premature retirement of items on which there is a related

balance herein, this account shall be charged

with an amount equal to the related income

tax effect, if any, arising from such disposition and Account 411.1, Provision For Deferred Income Taxes—Credit, Utility Operating Income, or Account 411.2, Provision

For Deferred Income Taxes-Credit, Other Income and Deductions, as appropriate, shall

be credited. When the remaining balance,

743

Rural Utilities Service, USDA § 1767.20

after consideration of any related tax expenses, is less than $25,000, this account shall

be charged and Account 411.1 or Account

411.2, as appropriate, credited with such balance. If after consideration of any related income tax expense, there is a remaining

amount of $25,000 or more, RUS shall authorize or direct how such amount shall be accounted for at the time approval for the disposition of accounting is granted.

When plant is disposed of by transfer to a

wholly owned subsidiary, the related balance

in this account shall also be transferred.

When the disposition relates to retirement of

an item or items under a group method of depreciation where there is no tax effect in the

year of retirement, no entries are required in

this account if it can be determined that the

related balance would be necessary to be retained to offset future group item tax deficiencies.

[58 FR 59825, Nov. 10, 1993, as amended at 59

FR 27436, May 27, 1994; 60 FR 55430, Nov. 1,

1995]

§ 1767.20 Plant accounts.

The plant accounts identified in this

section shall be used by all RUS borrowers.

INTANGIBLE PLANT

301 Organization

302 Franchises and Consents

303 Miscellaneous Intangible Plant

PRODUCTION PLANT

Steam Production

310 Land and Land Rights

311 Structures and Improvements

312 Boiler Plant Equipment

313 Engines and Engine Driven Generators

314 Turbogenerator Units

315 Accessory Electric Equipment

316 Miscellaneous Power Plant Equipment

Nuclear Production

320 Land and Land Rights

321 Structures and Improvements

322 Reactor Plant Equipment

323 Turbogenerator Units

324 Accessory Electric Equipment

325 Miscellaneous Power Plant Equipment

Hydraulic Production

330 Land and Land Rights

331 Structures and Improvements

332 Reservoirs, Dams and Waterways

333 Water Wheels, Turbines and Generators

334 Accessory Electric Equipment

335 Miscellaneous Power Plant Equipment

336 Roads, Railroads and Bridges

Other Production

340 Land and Land Rights

341 Structures and Improvements

342 Fuel Holders, Producers and Accessories

343 Prime Movers

344 Generators

345 Accessory Electric Equipment

346 Miscellaneous Power Plant Equipment

TRANSMISSION PLANT

350 Land and Land Rights

351 [Reserved]

352 Structures and Improvements

353 Station Equipment

354 Tower and Fixtures

355 Poles and Fixtures

356 Overhead Conductors and Devices

357 Underground Conduit

358 Underground Conductors and Devices

359 Roads and Trails

DISTRIBUTION PLANT

360 Land and Land Rights

361 Structures and Improvements

362 Station Equipment

363 Storage Battery Equipment

364 Poles, Towers and Fixtures

365 Overhead Conductors and Devices

366 Underground Conduit

367 Underground Conductors and Devices

368 Line Transformers

369 Services

370 Meters

371 Installations on Customers’ Premises

372 Leased Property on Customers’ Premises

373 Street Lighting and Signal Systems

GENERAL PLANT

389 Land and Land Rights

390 Structures and Improvements

391 Office Furniture and Equipment

392 Transportation Equipment

393 Stores Equipment

394 Tools, Shop and Garage Equipment

395 Laboratory Equipment

396 Power Operated Equipment

397 Communication Equipment

398 Miscellaneous Equipment

399 Other Tangible Property

INTANGIBLE PLANT

301 Organization

This account shall include all fees paid to

Federal or state governments for the privilege of incorporation and expenditures incident to organizing the corporation, partnership, or other enterprise and putting it into

readiness to do business.

Items

1. Cost of obtaining certificates authorizing an enterprise to engage in the publicutility business.

2. Fees and expenses for incorporation.

3. Fees and expenses for mergers or consolidations.

744

§ 1767.20 7 CFR Ch. XVII (1–1–00 Edition)

4. Office expenses incident to organizing

the utility.

5. Stock and minute books and corporate

seal.

NOTE A: This account shall not include any

discounts upon securities issued or assumed;

nor shall it include any costs incident to negotiating loans, selling bonds or other evidences of debt or expenses in connection

with the authorization, issuance, or sale of

capital stock.

NOTE B: Exclude from this account and include in the appropriate expense account the

cost of preparing and filing papers in connection with the extension of the term of incorporation unless the first organization costs

have been written off. When charges are

made to this account for expenses incurred

in mergers, consolidations, or reorganizations, amounts previously included herein or

in similar accounts in the books of the companies concerned shall be excluded from this

account.

302 Franchises and Consents

A. This account shall include amounts paid

to the Federal Government, to a state or to

a political subdivision thereof in consideration for franchises, consents, water power

licenses, or certificates, running in perpetuity or for a specified term of more than

one year, together with necessary and reasonable expenses incident to procuring such

franchises, consents, water power licenses, or

certificates of permission and approval, including expenses of organizing and merging

separate corporations, where statutes require, solely for the purpose of acquiring

franchises.

B. If a franchise, consent, water power license, or certificate is acquired by assignment, the charge to this account in respect

thereof shall not exceed the amount paid

therefor by the utility to the assignor, nor

shall it exceed the amount paid by the original grantee, plus the expense of acquisition

to such grantee. Any excess of the amount

actually paid by the utility over the amount

above specified shall be charged to Account

426.5, Other Deductions.

C. When any franchise has expired, the

book cost thereof shall be credited hereto

and charged to Account 426.5, Other Deductions, or to Account 111, Accumulated Provision for Amortization of Electric Utility

Plant, as appropriate.

D. Records supporting this account shall

be kept so as to show separately the book

cost of each franchise or consent.

NOTE: Annual or other periodic payments

under franchises shall not be included herein

but in the appropriate operating expense account.

303 Miscellaneous Intangible Plant

A. This account shall include the cost of

patent rights, licenses, privileges, and other

intangible property necessary or valuable in

the conduct of utility operations and not

specifically chargeable to any other account.

B. When any item included in this account

is retired or expires, the book cost thereof

shall be credited hereto and charged to Account 426.5, Other Deductions, or Account

111, Accumulated Provision for Amortization

of Electric Utility Plant, as appropriate.

C. This account shall be maintained in

such a manner that the utility can furnish

full information with respect to the amounts

included herein.

PRODUCTION PLANT

Steam Production

310 Land and Land Rights

This account shall include the cost of land

and land rights used in connection with

steam-power generation. (See §1767.16 (g).)

311 Structures and Improvements

This account shall include the cost, in

place, of structures and improvements used

in connection with steam-power generation.

(See §1767.16 (h).)

NOTE: Include steam production roads and

railroads in this account.

312 Boiler Plant Equipment

This account shall include the cost installed of furnaces, boilers, coal and ash handling and coal preparing equipment, steam

and feed water piping, boiler apparatus, and

accessories used in the production of steam,

mercury, or other vapor, to be used primarily for generating electricity.

Items

1. Ash handling equipment, including hoppers, gates, cars, conveyors, hoists, sluicing

equipment, including pumps and motors,

sluicing water pipe and fittings, sluicing

trenches and accessories, except sluices

which are a part of a building.

2. Boiler feed system, including feed water

heaters, evaporator condensers, heater drain

pumps, heater drainers, deaerators, and vent

condensers, boiler feed pumps, surge tanks,

feed water regulators, feed water measuring

equipment, and all associated drives.

3. Boiler plant cranes and hoists and associated drives.

4. Boilers and equipment, including boilers

and baffles, economizers, superheaters, soot

blowers, foundations and settings, water

walls, arches, grates, insulation, blowdown

system, drying out of new boilers, also associated motors or other power equipment.

5. Breeching and accessories, including

breeching, dampers, soot spouts, hoppers and

745

Rural Utilities Service, USDA § 1767.20

gates, cinder eliminators, breeching insulation, soot blowers and associated motors.

6. Coal handling and storage equipment, including coal towers, coal lorries, coal cars,

locomotives and tracks when devoted principally to the transportation of coal, hoppers, downtakes, unloading and hoisting

equipment, skip hoists and conveyors, weighing equipment, magnetic separators, cable

ways, and housings and supports for coal

handling equipment.

7. Draft equipment, including air

preheaters and accessories, induced and

forced draft fans, air ducts, combustion control mechanisms, and associated motors or

other power equipment.

8. Gas-burning equipment, including holders, burner equipment and piping, and control equipment.

9. Instruments and devices, including all

measuring, indicating, and recording equipment for boiler plant service together with

mountings and supports.

10. Lighting systems.

11. Oil-burning equipment, including tanks,

heaters, pumps with drive, burner equipment

and piping, and control equipment.

12. Pulverized fuel equipment, including

pulverizers, accessory motors, primary air

fans, cyclones and ducts, dryers, pulverized

fuel bins, pulverized fuel conveyors and

equipment, burners, burner piping, priming

equipment, air compressors, and motors.

13. Stacks, including foundations and supports, stack steel and ladders, stack brickwork, stack concrete, stack lining, stack

painting (first), when set on separate foundations, independent of substructures or superstructures of building.

14. Station piping, including pipe, valves,

fittings, separators, traps, desuperheaters,

hangers, excavation, and covering for station

piping system, including all steam, condensate, boiler feed and water supply piping, but

not condensing water, plumbing, building

heating, oil, gas, air piping or piping specifically provided for in Account 313.

15. Stoker or equivalent feeding equipment, including stokers and accessory motors, clinker grinders, fans and motors.

16. Ventilating equipment.

17. Water purification equipment, including softeners and accessories, evaporators

and accessories, heat exchanges, filters,

tanks for filtered or softened water, pumps,

and motors.

18. Water-supply systems, including pumps,

motors, strainers, raw-water storage tanks,

boiler wash pumps, intake and discharge

pipes, and tunnels not a part of a building.

19. Wood fuel equipment, including hoppers, fuel hogs and accessories, elevators and

conveyors, bins and gates, spouts, measuring

equipment and associated drives.

NOTE: When the system for supplying boiler or condenser water is elaborate, and when

it includes a dam, reservoir, canal, pipe line,

cooling ponds, or where gas or oil is used as

a fuel for producing steam and is supplied

through a pipe line system owned by the

utility, the cost of such special facilities

shall be charged to a subdivision of Account

311, Structures and Improvements.

313 Engines and Engine Driven Generators

This account shall include the cost installed of steam engines, reciprocating or rotary, and their associated auxiliaries; and

engine-driven main generators, except

turbogenerator units.

Items

1. Air cleaning and cooling apparatus, including blowers, drive equipment, air ducts,

not a part of building, louvers, pumps, and

hoods.

2. Belting, shafting, pulleys, and reduction

gearing.

3. Circulating pumps, including connections between condensers and intake and discharge tunnels.

4. Cooling system, including towers,

pumps, tank, and piping.

5. Condensers, including condensate pumps,

air and vacuum pumps, ejector unloading

valves and vacuum breakers, expansion devices, and screens.

6. Cranes and hoists, including items wholly identified with items listed herein.

7. Engines, reciprocating or rotary.

8. Fire-extinguishing systems.

9. Foundations and settings, especially

constructed for and not expected to outlast

the apparatus for which provided.

10. Generators-Main, a.c. or d.c., including

field rheostats and connections for self-excited units, and excitation systems when

identified with the generating unit.

11. Governors.

12. Lighting systems.

13. Lubricating systems, including gauges,

filters, tanks, pumps, piping, and motors.

14. Mechanical meters, including gauges,

recording instruments, sampling and testing

equipment.

15. Piping-main exhaust, including connections between generator and condenser and

between condenser and hotwell.

16. Piping-main stream, including connections from main throttle valve to turbine

inlet.

17. Platforms, railings, steps, and gratings

appurtenant to apparatus listed herein.

18. Pressure oil system, including accumulators, pumps, piping, and motors.

19. Throttle and inlet valve.

20. Tunnels, intake and discharge, for condenser system, when not a part of a structure.

21. Water screens and motors.

746

§ 1767.20 7 CFR Ch. XVII (1–1–00 Edition)

314 Turbogenerator Units

This account shall include the cost installed of main turbine-driven units and accessory equipment used in generating electricity by steam.

Items

1. Air leaning and cooling apparatus, including blowers, drive equipment, air ducts

not a part of building, louvers, pumps, and

hoods.

2. Circulating pumps, including connections between condensers and intake and discharge tunnels.

3. Condensers, including condensate pumps,

air and vacuum pumps, ejectors, unloading

valves and vacuum breakers, expansion devices, and screens.

4. Generator hydrogen, gas piping, and detrainment equipment.

5. Cooling system, including towers,

pumps, tanks, and piping.

6. Cranes and hoists, including items wholly identified with items listed herein.

7. Excitation system, when identified with

main generating units.

8. Fire-extinguishing systems.

9. Foundations and settings, especially

constructed for and not expected to outlast

the apparatus for which provided.

10. Governors.

11. Lighting systems.

12. Lubricating systems, including gauges,

filters, water separators, tanks, pumps, piping, and motors.

13. Mechanical meters, including gauges,

recording instruments, sampling and testing

equipment.

14. Piping-main exhaust, including connections between turbogenerator and condenser

and between condenser and hotwell.

15. Piping-main steam, including connections from main throttle valve to turbine

inlet.

16. Platforms, railings, steps, and gratings

appurtenant to apparatus listed herein.

17. Pressure oil systems, including accumulators, pumps, and piping motors.

18. Steelwork, specially constructed for apparatus listed herein.

19. Throttle and inlet valve.

20. Tunnels, intake and discharge, for condenser system, when not a part of structure,

and water screens.

21. Turbogenerators-main, including turbine and generator, field rheostats and electric connections for self-excited units.

22. Water screens and motors.

23. Moisture separator for turbine steam.

24. Turbine lubricating oil (initial charge).

315 Accessory Electric Equipment

This account shall include the cost installed of auxiliary generating apparatus,

conversion equipment, and equipment used

primarily in connection with the control and

switching of electric energy produced by

steam power, and the protection of electric

circuits and equipment, except electric motors used to drive equipment included in

other accounts. Such motors shall be included in the account in which the equipment with which they are associated is included.

Items

1. Auxiliary generators, including boards,

compartments, switching equipment, control

equipment, and connections to auxiliary

power bus.

2. Excitation system, including motor, turbine and dual-drive exciter sets and rheostats, storage batteries and charging equipment, circuit breakers, panels and accessories, knife switches and accessories, surge

arresters, instrument shunts, conductors and

conduit, special supports for conduit, generator field and exciter switch panels, exciter

bus tie panels, generator and exciter rheostats and special housing and protective

screens.

3. Generator main connections, including

oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, current

transformers, potential transformers, protective relays, isolated panels and equipment,

conductors and conduit, special supports for

generator main leads, grounding switch, and

special housings and protective screens.

4. Station buses including main, auxiliary,

transfer, synchronizing and fault ground

buses, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks,

reactors and accessories, voltage regulators

and accessories, compensators, resistors,

starting transformers, current transformers,

potential transformers, protective relays,

storage batteries and charging equipment,

isolated panels and equipment, conductors

and conduit, special supports, special

housings, concrete pads, general station

grounding system, special fire-extinguishing

system, and test equipment.

5. Station control system, including station switchboards with panel wiring, panels

with instruments and control equipment

only, panels with switching equipment

mounted or mechanically connected, trucktype boards complete, cubicles, station supervisory control boards, generator and exciter signal stands, temperature recording

devices, frequency-control equipment, master clocks, watt-hour meters and

synchronoscope in the turbine room, station

totalizing wattmeter, boiler-room load indicator equipment, storage batteries, panels

and charging sets, instrument transformers

for supervisory metering, conductors and

conduit, special supports for conduit, switchboards, batteries, special housing for batteries, protective screens, and doors.

747

Rural Utilities Service, USDA § 1767.20

NOTE A: Do not include in this account

transformers and other equipment used for

changing the voltage or frequency of electricity for the purposes of transmission or

distribution.

NOTE B: When any item of equipment listed herein is used wholly to furnish power to

equipment included in another account, its

cost shall be included in such other account.

316 Miscellaneous Power Plant Equipment

This account shall include the cost installed of miscellaneous equipment in and

about the steam generating plant devoted to

general station use, and which is not properly includible in any of the foregoing

steam-power production accounts.

Items

1. Compressed air and vacuum cleaning

systems, including tanks, compressors,

exhausters, air filters, and piping.

2. Cranes and hoisting equipment, including cranes, cars, crane rails, monorails, and

hoists with electric and mechanical connections.

3. Fire-extinguishing equipment for general station use.

4. Foundations and settings specially constructed for and not expected to outlast the

apparatus for which provided.

5. Locomotive cranes not includible elsewhere.

6. Locomotives not includible elsewhere.

7. Marine equipment, including boats and

barges.

8. Miscellaneous belts, pulleys, and

countershafts.

9. Miscellaneous equipment, including atmospheric and weather indicating devices,

intrasite communication equipment, laboratory equipment, signal systems, callophones,

emergency whistles and sirens, fire alarms,

insect-control equipment, and other similar

equipment.

10. Railway cars not includible elsewhere.

11. Refrigerating systems, including compressors, pumps, and cooling coils.

12. Station maintenance equipment, including lathes, shapers, planers, drill presses,

hydraulic presses, and grinders with motors,

shafting, hangers, and pulleys.

13. Ventilating equipment, including items

wholly identified with apparatus listed herein.

NOTE: When any item of equipment listed

herein is wholly used in connection with

equipment included in another account, its

cost shall be included in such other account.

Nuclear Production

320 Land and Land Rights

This account shall include the cost of land

and land rights used in connection with nuclear power generation. (See §1767.16(g).)

321 Structures and Improvements

This account shall include the cost, in

place, of structures and improvements used

and useful in connection with nuclear power

generation. (See §1767.16 (h).)

NOTE: Include vapor containers and nuclear production roads and railroads in this

account.

322 Reactor Plant Equipment

This account shall include the installed

cost of reactors, reactor fuel handling and

storage equipment, pressurizing equipment,

coolant charging equipment, purification

and discharging equipment, radioactive

waste treatment and disposal equipment,

boilers, steam and feed water piping, reactor

and boiler apparatus and accessories and

other reactor plant equipment used in the

production of steam to be used primarily for

generating electricity, including auxiliary

superheat boilers and associated equipment

in systems which change temperatures or

pressure of steam from the reactor system.

Items

1. Auxiliary superheat boilers and associated fuel storage handling preparation and

burning equipment. (See Account 312, Boiler

Plant Equipment, for items, but exclude

water supply, water flow lines, and steam

lines, as well as other equipment not strictly

within the superheat function.)

2. Boiler feed system, including feed water

heaters, evaporator condensers, heater drain

pumps, heater drainers, deaerators, and vent

condensers, boiler feed pumps, surge tanks,

feed water regulators, feed water measuring

equipment, and all associated drivers.

3. Boilers and heat exchangers.

4. Instruments and devices, including all

measuring, indicating, and recording equipment for reactor and boiler plant service together with mountings and supports.

5. Lighting systems.

6. Moderators, such as heavy water, and

graphite, initial charge.

7. Reactor coolant; primary and secondary

systems, initial charge.

8. Radioactive waste treatment and disposal equipment, including tanks, ion exchangers, incinerators, condensers, chimneys, and diluting fans and pumps.

9. Foundations and settings, especially

constructed for and not expected to outlast

the apparatus for which provided.

10. Reactor including shielding, control

rods and mechanisms.

11. Reactor fuel handling equipment, including manipulating and extraction tools,

underwater viewing equipment, seal cutting

and welding equipment, fuel transfer equipment, and fuel disassembly machinery.

12. Reactor fuel element failure detection

system.

748

§ 1767.20 7 CFR Ch. XVII (1–1–00 Edition)

13. Reactor emergency poison container

and injection system.

14. Reactor pressuring and pressure relief

equipment, including pressurizing tanks and

immersion heaters.

15. Reactor coolant or moderator circulation charging, purification, and discharging

equipment, including tanks, pumps, heat exchangers, demineralizers, and storage.

16. Station piping, including pipes, valves,

fittings, separators, traps, desuperheaters,

hangers, excavation, and covering for station

piping system, including all-reactor coolant,

steam, condensate, boiler feed and water supply piping, but not condensing water, plumbing, building heating, oil, gas, or air piping.

17. Ventilating equipment.

18. Water purification equipment, including softeners, demineralizers and accessories, evaporators and accessories, heat exchangers, filters, tanks for filtered or softened water, pumps, and motors.

19. Water supply systems, including pumps,

motors, strainers, raw-water storage tanks,

boiler wash pumps, intake and discharge

pipes and tunnels not a part of a building.

20. Reactor plant cranes and hoists, and associated drives.

NOTE: When the system for supplying boiler or condenser water is elaborate, as when

it includes a dam, reservoir, canal, pipe

lines, or cooling ponds, the cost of such special facilities shall be charged to a subdivision of Account 321, Structures and Improvements.

323 Turbogenerator Units

This account shall include the cost installed of main turbine-driven units and accessory equipment used in generating electricity by steam.

Items

1. Air cleaning and cooling apparatus, including blowers, drive equipment, air ducts,

not a part of building, louvers, pumps, and

hoods.

2. Circulating pumps, including connections between condensers, and intake and

discharge tunnels.

3. Condensers, including condensate pumps,

air and vacuum pumps, ejectors, unloading

valves and vacuum breakers, expansion devices, and screens.

4. Generator hydrogen gas piping system

and hydrogen detrainment equipment, and

bulk hydrogen gas storage equipment.

5. Cooling system, including towers,

pumps, tanks, and piping.

6. Cranes and hoists, including items wholly identified with items listed herein.

7. Excitation system, when identified with

main generating units.

8. Fire extinguishing systems.

9. Foundations and settings, especially

constructed for and not expected to outlast

the apparatus for which provided.

10. Governors.

11. Lighting systems.

12. Lubricating systems, including gauges,

filters, water separators, tanks, pumps, piping, and motors.

13. Mechanical meters, including gauges,

recording instruments, sampling and testing

equipment.

14. Piping-main steam, including connections between turbogenerator and condenser

and between condenser and hotwell.

15. Piping-main steam, including connections from main throttle valve to turbine

inlet.

16. Platforms, railings, steps, and gratings

appurtenant to apparatus listed herein.

17. Pressure oil systems, including accumulators, pumps, piping, and motors.

18. Steelwork, specially constructed for apparatus listed herein.

19. Throttle and inlet valve.

20. Tunnels, intake and discharge, for condenser system, when not a part of structure,

and water screens.

21. Turbogenerators-main, including turbine and generator, field rheostats and electric connections for self-excited units.

22. Water screens and motors.

23. Moisture separators for turbine steam.

24. Turbine lubricating oil, initial charge.

324 Accessory Electric Equipment

This account shall include the cost installed of auxiliary generating apparatus,

conversion equipment, and equipment used

primarily in connection with the control and

switching of electric energy produced by nuclear power, and the protection of electric

circuits and equipment, except electric motors used to drive equipment included in

other accounts. Such motors shall be included in the account in which the equipment with which they are associated is included.

NOTE: Do not include in this account transformers and other equipment used for changing the voltage or frequency of electric energy for the purpose of transmission or distribution.

Items

1. Auxiliary generators, including boards,

compartments, switching equipment, control

equipment, and connections to auxiliary

power bus.

2. Excitation system, including motor, turbine and dual-drive exciter sets and rheostats, storage batteries, and charging equipment, circuit breakers, panels and accessories, knife switches and accessories, surge

arresters, instrument shunts, conductors and

conduit, special supports for conduit, generator field and exciter switch panels, exciter

749

Rural Utilities Service, USDA § 1767.20

bus tie panels, generator and exciter rheostats and special housing and protective

screens.

3. Generator main connections, including

oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, current

transformers, potential transformers, protective relays, isolated panels and equipment,

conductors and conduit, special supports for

generator main leads, grounding switch, special housings and protective screens.

4. Station buses, including main, auxiliary,

transfer, synchronizing and fault ground

buses, including oil circuit breakers and accessories, operating mechanisms and interlocks, reactors and accessories, voltage regulators and accessories, compensators, resistors, starting transformers, current transformers, potential transformers, protective

relays, storage batteries and charging equipment, isolated panels and equipment, conductors and conduit, special supports, special

housings, concrete pads, general station

grounding system, fire-extinguishing system,

and test equipment.

5. Station control system, including station switchboards with panel wiring, panels

with instruments and control equipment

only, panels with switching equipment

mounted or mechanically connected, trucktype boards complete, cubicles, station supervisory control boards, generator and exciter signal stands, temperature recording

devices, frequency-control equipment, master clocks, watt-hour meters and

synchronoscope in the turbine room, station

totalizing wattmeter, boiler-room load indicator equipment, storage batteries, panels

and charging sets, instrument transformers

for supervisory metering, conductors and

conduit, special supports for conduit, switchboards, batteries, special housing for batteries, protective screens, and doors.

NOTE: When any item of equipment listed

herein is used wholly to furnish power to

equipment included in another account, its

cost shall be included in such other account.

325 Miscellaneous Power Plant Equipment

This account shall include the cost installed of miscellaneous equipment in and

about the nuclear generating plant devoted

to general station use, which is not properly

includible in any of the foregoing nuclearpower production accounts.

Items

1. Compressed air and vacuum cleaning

systems, including tanks, compressors,

exhausters, air filters, and piping.

2. Cranes and hoisting equipment, including cranes, cars, crane rails, monorails, and

hoists with electric and mechanical connections.

3. Fire-extinguishing equipment for general station and site use.

4. Foundations and settings specially constructed for and not expected to outlast the

apparatus for which provided.

5. Locomotive cranes not includible elsewhere.

6. Locomotives not included elsewhere.

7. Marine equipment, including boats and

barges.

8. Miscellaneous belts, pulleys, and

countershafts.

9. Miscellaneous equipment, including atmospheric and weather recording devices,

intrasite communication equipment, laboratory equipment, signal systems, callophones,

emergency whistles and sirens, fire alarms,

insect-control equipment, and other similar

equipment.

10. Railway cars or special shipping containers not includible elsewhere.

11. Refrigerating systems, including compressors, pumps, and cooling coils.

12. Station maintenance equipment, including lathes, shapers, planers, drill presses,

hydraulic presses, and grinders with motors,

shafting, hangers, and pulleys.

13. Ventilating equipment, including items

wholly identified with apparatus listed herein.

14. Station and area radiation monitoring

equipment.

NOTE: When any item of equipment listed

herein is wholly used in connection with

equipment included in another account, its

cost shall be included in such other account.

Hydraulic Production

330 Land and Land Rights

This account shall include the cost of land

and land rights used in connection with hydraulic power generation. (See §1767.16 (g).)

It shall also include the cost of land and land

rights used in connection with (1) the conservation of fish and wildlife, and (2) recreation. Separate subaccounts shall be maintained for each of the above.

331 Structures and Improvements

This account shall include the cost, in

place, of structures and improvements used

in connection with hydraulic power generation. (See §1767.16 (h).) It shall also include

the cost, in place, of structures and improvements used in connection with (1) the conservation of fish and wildlife, and (2) recreation. Separate subaccounts shall be maintained for each of the above.

332 Reservoirs, Dams, and Waterways

This account shall include the cost in place

of facilities used for impounding, collecting,

storage, diversion, regulation, and delivery

of water used primarily for generating electricity. It shall also include the cost in place

750

§ 1767.20 7 CFR Ch. XVII (1–1–00 Edition)

of facilities used in connection with (1) the

conservation of fish and wildlife, and (2)

recreation. Separate subaccounts shall be

maintained for each of the above. (See

§1767.16 (h)(3).)

Items

1. Bridges and culverts, when not a part of

roads or railroads.

2. Clearing and preparing land.

3. Dams, including wasteways, spillways,

flash boards, spillway gates with operating

and control mechanisms, tunnels, gate

houses, and fish ladders.

4. Dikes and embankments.

5. Electric system, including conductors,

control system, transformers, and lighting

fixtures.

6. Excavation, including shoring, bracing,

bridging, refill, and disposal of excess excavated material.

7. Foundations and settings specially constructed for and not expected to outlast the

apparatus for which provided.

8. Intakes, including trash racks, rack

cleaners, control gates and valves with operating mechanisms, and intake house when

not a part of station structure.

9. Platforms, railings, steps, and gratings

appurtenant to structures listed herein.

10. Power line wholly identified with items

included herein.

11. Retaining walls.

12. Water conductors and accessories, including canals, tunnels, flumes, penstocks,

pipe conductors, forebays, tailraces, navigation locks and operating mechanisms, waterhammer and surge tanks, and supporting

trestles and structures.

13. Water storage reservoirs, including

dams, flashboards, spillway gates and operating mechanisms, inlet and outlet tunnels,

regulating valves and valve towers, silt and

mud sluicing tunnels with valve or gate towers, and all other structures wholly identified with any of the foregoing items.

333 Water Wheels, Turbines and Generators

This account shall include the cost installed of water wheels and hydraulic turbines (from connection with penstock or

flume to tailrace) and generators driven

thereby devoted to the production of electricity by water power or for the production

of power for industrial or other purposes, if

the equipment used for such purposes is a

part of the hydraulic power plant works.

Items

1. Exciter water wheels and turbines, including runners, gates, governors, pressure

regulators, oil pumps, operating mechanisms, scroll cases, draft tubes, and drafttube supports.

2. Fire-extinguishing equipment.

3. Foundations and settings, specially constructed for and not expected to outlast the

apparatus for which provided.

4. Generator cooling system, including air

cooling and washing apparatus, air fans and

accessories, and air ducts.

5. Generators-main, a.c. or d.c., including

field rheostats and connections for self-excited units and excitation system when identified with the generating unit.

6. Lighting systems.

7. Lubricating systems, including gauges,

filters, tanks, pumps, and piping.

8. Main penstock valves and appurtenances, including main valves, control

equipment, bypass valves and fittings, and

other accessories.

9. Main turbines and water wheels, including runners, gates, governors, pressure regulators, oil pumps, operating mechanisms,

scroll cases, draft tubes, and draft-tube supports.

10. Mechanical meters and recording instruments.

11. Miscellaneous water-wheel equipment,

including gauges, thermometers, meters, and

other instruments.

12. Platforms, railings, steps, and gratings

appurtenant to apparatus listed herein.

13. Scroll case filling and drain system, including gates, pipe, valves, and fittings.

14. Water-actuated pressure-regulator system, including tanks and housings, pipes,

valves, fittings and insulators, piers and anchorage, and excavation and backfill.

334 Accessory Electric Equipment

This account shall include the cost installed of auxiliary generating apparatus,

conversion equipment, and equipment used

primarily in connection with the control and

switching of electric energy produced by hydraulic power and the protection of electric

circuits and equipment, except electric motors used to drive equipment included in

other accounts, such motors being included

in the account in which the equipment with

which they are associated is included.

Items

1. Auxiliary generators, including boards,

compartments, switching equipment, control

equipment, and connections to auxiliary

power bus.

2. Excitation system, including motor, turbine, and dual-drive exciter sets and rheostats, storage batteries and charging equipment, circuit breakers, panels and accessories, knife switches and accessories, surge

arresters, instrument shunts, conductors and

conduit, special supports for conduit, generator field and exciter switch panels, exciter

bus tie panels, generator and exciter rheostats and special housings and protective

screens.

751

Rural Utilities Service, USDA § 1767.20

3. Generator main connections, including

oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, current

transformers, potential transformers, protective relays, isolated panels and equipment,

conductors and conduit, special supports for

generator main leads, grounding switch, and

special housings and protective screens.

4. Station buses, including main, auxiliary,

transfer, synchronizing, and fault ground

buses, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks,

reactors and accessories, voltage regulators

and accessories, compensators, resistors

starting transformers, current transformers,

potential transformers, protective relays,

storage batteries, and charging equipment,

isolated panels and equipment, conductors

and conduit, special supports, special fire-extinguishing system, and test equipment.

5. Station control system, including station switchboards with panel wiring, panels

with instruments and control equipment

only, panels with switching equipment

mounted for mechanically connected, trucktype boards complete, cubicles, station supervisory control devices, frequency control

equipment, master clocks, watt-hour meter,

station totalizing watt-meter, storage batteries, panels and charging sets, instrument

transformers for supervisory metering, conductors and conduit, special supports for

conduit, switchboards, batteries, special

housings for batteries, protective screens,

and doors.

NOTE A: Do not include in this account

transformers and other equipment used for

changing the voltage or frequency of electricity for the purpose of transmission or

distribution.

NOTE B: When any item of equipment listed herein is used wholly to furnish power to

equipment, it shall be included in such

equipment account.

335 Miscellaneous Power Plant Equipment

This account shall include the cost installed of miscellaneous equipment in and

about the hydroelectric generating plant

which is devoted to general station use and

is not properly includible in other hydraulic

production accounts. It shall also include the

cost of equipment used in connection with (1)

the conservation of fish and wildlife, and (2)

recreation. Separate subaccounts shall be

maintained for each of the above.

Items

1. Compressed air and vacuum cleaning

systems, including tanks, compressors,

exhausters, air filters, and piping.

2. Cranes and hoisting equipment, including cranes, cars, crane rails, monorails, and

hoists with electric and mechanical connections.

3. Fire-extinguishing equipment for general station use.

4. Foundations and settings, specially constructed for and not expected to outlast the

apparatus for which provided.

5. Locomotive cranes not includible elsewhere.

6. Locomotives not includible elsewhere.

7. Marine equipment, including boats and

barges.

8. Miscellaneous belts, pulleys, and

countershafts.

9. Miscellaneous equipment, including atmospheric and weather indicating devices.

Intrasite communication equipment, laboratory equipment, insect control equipment,

signal systems, callophones, emergency

whistles and sirens, fire alarms, and other

similar equipment.

10. Railway cars, not includible elsewhere.

11. Refrigerating system, including compressors, pumps, and cooling coils.

12. Station maintenance equipment, including lathes, shapers, planers, drill presses,

hydraulic presses, and grinders with motors,

shafting, hangers, and pulleys.

13. Ventilating equipment, including items

wholly identified with apparatus listed herein.

NOTE: When any item of equipment, listed

herein, is used wholly in connection with

equipment included in another account, its

cost shall be included in such other account.

336 Roads, Railroads, and Bridges

This account shall include the cost of

roads, railroads, trails, bridges, and trestles

used primarily as production facilities. It

also includes those roads necessary to connect the plant with highway transportation

systems, except when such roads are dedicated to public use and maintained by public

authorities.

Items

1. Bridges, including foundations, piers,

girders, trusses, and flooring.

2. Clearing land.

3. Railroads, including grading, ballast,

ties, rails, culverts, and hoists.

4. Roads, including grading, surfacing, and

culverts.

5. Structures, constructed and maintained

in connection with items listed herein.

6. Trails, including grading, surfacing, and

culverts.

7. Trestles, including foundations, piers,

girders, trusses, and flooring.

NOTE A: Roads intended primarily for connecting employees’ houses with the power

plant, and roads used primarily in connection with fish and wildlife, and recreation activities, shall not be included herein but in

Account 331, Structures and Improvements.

752

§ 1767.20 7 CFR Ch. XVII (1–1–00 Edition)

NOTE B: The cost of temporary roads and

bridges necessary during the period of construction but abandoned or dedicated to public use upon completion of the plant, shall

not be included herein but shall be charged

to the accounts appropriate for the construction.

Other Production

340 Land and Land Rights

This account shall include the cost of land

and land rights used in connection with

other power generation. (See §1767.16 (g).)

341 Structures and Improvements

This account shall include the cost in place

of structures and improvements used in connection with other power generation. (See

§1767.16 (h).)

342 Fuel Holders, Producers, and

Accessories

This account shall include the cost installed of fuel handling and storage equipment used between the point of fuel delivery

to the station and the intake pipe through

which fuel is directly drawn to the engine,

also the cost of gas producers and accessories

devoted to the production of gas for use in

prime movers driving main electric generators.

Items

1. Blower and fans.

2. Boilers and pumps.

3. Economizers.

4. Exhauster outfits.

5. Flues and piping.

6. Pipe system.

7. Producers.

8. Regenerators.

9. Scrubbers.

10. Steam injectors.

11. Tanks for storage of oil and gasoline.

12. Vaporizers.

343 Prime Movers

This account shall include the cost installed of Diesel or other prime movers devoted to the generation of electric energy,

together with their auxiliaries.

Items

1. Air-filtering system.

2. Belting, shafting, pulleys, and reduction

gearing.

3. Cooling system, including towers,

pumps, tanks, and piping.

4. Cranes and hoists, including items wholly identified with apparatus listed herein.

5. Engines, Diesel, gasoline, gas, or other

internal combustion.

6. Foundations and settings specially constructed for and not expected to outlast the

apparatus for which provided.

7. Governors.

8. Ignition system.

9. Inlet valve.

10. Lighting systems.

11. Lubricating systems, including filters,

tanks, pumps, and piping.

12. Mechanical meters, including gauges,

recording instruments, sampling, and testing

equipment.

13. Mufflers.

14. Piping.

15. Starting systems, compressed air, or

other, including compressors and drives,

tanks, piping, motors, boards and connections, and storage tanks.

16. Steelwork, specially constructed for apparatus listed herein.

17. Waste heat boilers and antifluctuators.

344 Generators

This account shall include the cost installed of Diesel or other power driven main

generators.

Items

1. Cranes and hoists, including items wholly identified with such apparatus.

2. Fire-extinguishing equipment.

3. Foundations and settings, specially constructed for and not expected to outlast the

apparatus for which provided.

4. Generator cooling system, including air

cooling and washing apparatus, air fans and

accessories, and air ducts.

5. Generators-main, a.c. or d.c., including

field rheostats and connections for self-excited units and excitation system when identified with the generating unit.

6. Lighting systems.

7. Lubricating system, including tanks, filters, strainers, pumps, piping, and coolers.

8. Mechanical meters and recording instruments.

9. Platforms, railings, steps, and gratings

appurtenant to apparatus listed herein.

NOTE: If prime movers and generators are

so integrated that it is not practical to classify them separately, the entire unit may be

included in Account 344, Generators.

345 Accessory Electric Equipment

This account shall include the cost installed of auxiliary generating apparatus,

conversion equipment, and equipment used

primarily in connection with the control and

switching of electric energy produced in

other power generating stations, and the

protection of electric circuits and equipment, except electric motors used to drive

equipment included in other accounts. Such

motors shall be included in the account in

which the equipment with which it is associated is included.

753

Rural Utilities Service, USDA § 1767.20

Items

1. Auxiliary generators, including boards,

compartments, switching equipment, control

equipment, and connections to auxiliary

power bus.

2. Excitation system, including motor, turbine and dual-drive exciter sets and rheostats, storage batteries and charging equipment, circuit breakers, panels and accessories, knife switches and accessories, surge

arresters, instrument shunts, conductors and

conduit, special supports for conduit, generator field and exciter switch panels, exciter

bus tie panels, generator and exciter rheostats and special housings and protective

screens.

3. Generator main connections, including

oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks, current

transformers, potential transformers, protective relays, isolated panels and equipment,

conductors and conduit, special supports for

generator main leads, grounding switch, and

special housing and protective screens.

4. Station control system, including station switchboards with panel wiring, panels

with instruments and control equipment

only, panels with switching equipment

mounted or mechanically connected, trunktype boards complete, cubicles, station supervisory control boards, generator and exciter signal stands, temperature-recording

devices, frequency control equipment, master clocks, watt-hour meter, station totalizing wattmeter, storage batteries, panels

and charging sets, instrument transformers

for supervisory metering, conductors and

conduit, special supports for conduit, switchboards, batteries, special housing for batteries, protective screens, and doors.

5. Station buses, including main, auxiliary,

transfer, synchronizing and fault ground

buses, including oil circuit breakers and accessories, disconnecting switches and accessories, operating mechanisms and interlocks,

reactors and accessories, voltage regulators

and accessories, compensators, resistors,

starting transformers, current transformers,

potential transformers, protective relays,

storage batteries and charging equipment,

isolated panels and equipment, conductors

and conduit, special supports, special

housings, concrete pads, general station

ground system, special fire-extinguishing

system, and test equipment.

NOTE A: Do not include in this account

transformers and other equipment used for

changing the voltage or frequency of electric

energy for the purpose of transmission or

distribution.

NOTE B: When any item of equipment listed herein is used wholly to furnish power to

equipment included in another account, its

cost shall be included in such other account.

346 Miscellaneous Power Plant Equipment

This account shall include the cost installed of miscellaneous equipment in and

about the other power generating plant, devoted to general station use, and not properly includible in any of the foregoing other

power production accounts.

Items

1. Compressed air and vacuum cleaning

systems, including tanks, compressors,

exhausters, air filters, and piping.

2. Cranes and hoisting equipment, including cranes, cars, crane rails, monorails, and

hoists with electric and mechanical connections.

3. Fire-extinguishing equipment for general station use.

4. Foundations and settings, specially constructed for and not expected to outlast the

apparatus for which provided.

5. Miscellaneous equipment, including atmospheric and weather indicating devices,

intrasite communication equipment, laboratory equipment, signal systems, callophones,

emergency whistles and sirens, fire alarms,

and other similar equipment.

6. Miscellaneous belts, pulleys, and

countershafts.

7. Refrigerating systems including compressors, pumps, and cooling coils.

8. Station maintenance equipment, including lathes, shapers, planters, drill presses,

hydraulic presses, and grinders with motors,

shafting, hangers, or pulleys.

9. Ventilating equipment, including items

wholly identified with apparatus listed herein.

NOTE: When any item of equipment, listed

herein is used wholly in connection with

equipment included in another account, its

cost shall be included in such other account.

TRANSMISSION PLANT

350 Land and Land Rights

This account shall include the cost of land

and land rights used in connection with

transmission operations. (See §1767.16 (g).)

351 [Reserved]

352 Structures and Improvements

This account shall include the cost, in

place, of structures and improvements used

in connection with transmission operations.

(See §1767.16 (h).)

353 Station Equipment

This account shall include the cost installed of transforming, conversion, and

switching equipment used for the purpose of

changing the characteristics of electricity in

connection with its transmission or for controlling transmission circuits.

754

§ 1767.20 7 CFR Ch. XVII (1–1–00 Edition)

Items

1. Bus compartments, concrete, brick, and

sectional steel, including items permanently

attached thereto.

2. Conduit, including concrete and iron

duct runs not a part of a building.

3. Control equipment, including batteries,

battery charging equipment, transformers,

remote relay boards, and connections.

4. Conversion equipment, including transformers, indoor and outdoor, frequency

changers, motor generator sets, rectifiers,

synchronous converters, motors, cooling

equipment, and associated connections.

5. Fences.

6. Fixed and synchronous condensers, including transformers, switching equipment,

blowers, motors and connections.

7. Foundations and settings, specially constructed for and not expected to outlast the

apparatus for which provided.

8. General station equipment, including air

compressors, motors, hoists, cranes, test

equipment, and ventilating equipment.

9. Platforms, railings, steps, and gratings

appurtenant to apparatus listed herein.

10. Primary and secondary voltage connections, including bus runs and supports,

insulators, potheads, lightning arresters,

cable and wire runs from and to outdoor connections or to manholes and the associated

regulators, reactors, resistors, surge arresters, and accessory equipment.

11. Switchboards, including meters, relays,

and control wiring.

12. Switching equipment, indoor and outdoor, including oil circuit breakers and operating mechanisms, truck switches, and disconnect switches.

13. Tools and appliances.

354 Towers and Fixtures

This account shall include the cost installed of towers and appurtenant fixtures

used for supporting overhead transmission

conductors.

Items

1. Anchors, guys, and braces.

2. Brackets.

3. Crossarms, including braces.

4. Excavation, backfill, and disposal of excess excavated material.

5. Foundations.

6. Guards.

7. Insulator pins and suspension bolts.

8. Ladder and steps.

9. Railings.

10. Towers.

355 Poles and Fixtures

This account shall include the cost installed of transmission line poles, wood,

steel, concrete, or other material, together

with appurtenant fixtures used for supporting overhead transmission conductors.

Items

1. Anchors, head arm and other guys, including guy guards, guy clamps, strain

insulators, and pole plates.

2. Brackets.

3. Crossarms and braces.

4. Excavation and backfill, including disposal of excess excavated material.

5. Extension arms.

6. Gaining, roofing, stenciling, and tagging.

7. Insulator pins and suspension belts.

8. Paving.

9. Pole steps.

10. Poles, wood, steel, concrete, or other

material.

11. Racks complete with insulators.

12. Reinforcing and stubbing.

13. Settings.

14. Shaving and painting.

356 Overhead Conductors and Devices

This account shall include the cost installed of overhead conductors and devices

used for transmission purposes.

Items

1. Circuit breakers.

2. Conductors, including insulated and bare

wires and cables.

3. Ground wires and ground clamps.

4. Insulators, including pin, suspension,

and other types.

5. Lightning arresters.

6. Switches.

7. Other line devices.

357 Underground Conduit

This account shall include the cost installed of underground conduit and tunnels

used for housing transmission cables or

wires. (See §1767.16 (n).)

Items

1. Conduit, concrete, brick or tile, including iron pipe, fiber pipe, Murray duct, and

standpipe on pole or tower.

2. Excavation, including shoring, bracing,

bridging, backfill, and disposal of excess excavated material.

3. Foundations and settings specially constructed for and not expected to outlast the

apparatus for which provided.

4. Lighting systems.

5. Manholes, concrete or brick, including

iron or steel, frames and covers, hatchways,

gratings, ladders, cable racks and hangers,

permanently attached to manholes.

6. Municipal inspection.

7. Pavement disturbed, including cutting

and replacing pavement, pavement base and

sidewalks.

8. Permits.

9. Protection of street openings.

10. Removal and relocation of subsurface

obstructions.

755

Rural Utilities Service, USDA § 1767.20

11. Sewer connections, including drains,

traps, tide valves, and check valves.

12. Sumps, including pumps.

13. Ventilating equipment.

358 Underground Conductors and Devices

This account shall include the cost installed of underground conductors and devices used for transmission purposes.

Items

1. Armored conductors, buried, including

insulators, insulating materials, splices, potheads, and trenching.

2. Armored conductors, submarine, including insulators, insulating materials, splices

in terminal chambers, and potheads.

3. Cables in standpipe, including pothead

and connection from terminal chamber of

manhole to insulators on pole.

4. Circuit breakers.

5. Fireproofing, in connection with any

items listed herein.

6. Hollow-core oil-filled cable, including

straight or stop joints, pressure tanks, auxiliary air tanks, feeding tanks, terminals, potheads and connections, and ventilating

equipment.

7. Lead and fabric covered conductors, including insulators, compound filled, oil

filled, or vacuum splices, and potheads.

8. Lightning arresters.

9. Municipal inspection.

10. Permits.

11. Protection of street openings.

12. Racking of cables.

13. Switches.

14. Other line devices.

359 Roads and Trails

This account shall include the cost of

roads, trails, and bridges used primarily as

transmission facilities.

Items

1. Bridges, including foundation piers, girders, trusses, and flooring.

2. Clearing land.

3. Roads, including grading, surfacing, and

culverts.

4. Structures, constructed and maintained

in connection with items included herein.

5. Trails, including grading, surfacing, and

culverts.

NOTE: The cost of temporary roads, and

bridges necessary during the period of construction but abandoned or dedicated to public use upon completion of the plant, shall be

charged to the accounts appropriate for the

construction.

DISTRIBUTION PLANT

360 Land and Land Rights

This account shall include the cost of land

and land rights used in connection with distribution operations. (See §1767.16 (g).)

NOTE: Do not include the cost of permits to

erect poles, or towers or to trim trees in this

account. (See Account 364, Poles, Towers and

Fixtures, and Account 365, Overhead Conductors and Devices.)

361 Structures and Improvements

This account shall include the cost, in

place, of structures and improvements used

in connection with distribution operations.

(See §1767.16 (h).)

362 Station Equipment

This account shall include the cost installed of station equipment, including

transformer banks, which are used for the

purpose of changing the characteristics of

electricity in connection with its distribution.

Items

1. Bus compartments, concrete, brick and

sectional steel, including items permanently

attached thereto.

2. Conduit, including concrete and iron

duct runs not part of building.

3. Control equipment, including batteries,

battery charging equipment, transformers,

remote relay boards, and connections.

4. Conversion equipment, indoor and outdoor, frequency changers, motor generator

sets, rectifiers, synchronous converters, motors, cooling equipment, and associated connections.

5. Fences.

6. Fixed and synchronous condensers, including transformers, switching equipment,

blowers, motors, and connections.

7. Foundations and settings, specially constructed for and not expected to outlast the

apparatus for which provided.

8. General station equipment, including air

compressors, motors, hoists, cranes, test

equipment, and ventilating equipment.

9. Platforms, railings, steps, and gratings

appurtenant to apparatus listed herein.

10. Primary and secondary voltage connections, including bus runs and supports,

insulators, potheads, lightning arresters,

cable and wire runs from and to outdoor connections or to manholes and the associated

regulators, reactors, resistors, surge arresters, and accessory equipment.

11. Switchboards, including meters, relays,

and control wiring.

12. Switching equipment, indoor and outdoor, including oil circuit breakers and operating mechanisms, truck switches, disconnect switches.

756

§ 1767.20 7 CFR Ch. XVII (1–1–00 Edition)

NOTE: The cost of rectifiers, series transformers, and other special station equipment

devoted exclusively to street lighting service

shall not be included in this account, but in

Account 373, Street Lighting and Signal Systems.

363 Storage Battery Equipmentis account

shall include the cost installed of storage

battery equipment used for the purpose of

supplying electricity to meet emergency or

peak demands.

Items

1. Batteries, including elements, tanks,

and tank insulators.

2. Battery room connections, including

cable or bus runs and connections.

3. Battery room flooring, when specially

laid for supporting batteries.

4. Charging equipment, including motor

generator sets and other charging equipment

and connections, and cable runs from generator or station bus to battery room connections.

5. Miscellaneous equipment, including instruments, and water stills.

6. Switching equipment, including endcell

switches and connections, boards and panels,

used exclusively for battery control, not part

of general station switchboard.

7. Ventilating equipment, including fans

and motors, louvers, and ducts not part of

building.

NOTE: Storage batteries used for control

and general station purposes shall not be included in this account but in the account appropriate for their use.

364 Poles, Towers and Fixtures

This account shall include the cost installed of poles, towers, and appurtenant fixtures used for supporting overhead distribution conductors and service wires.

Items

1. Anchors, head arm, and other guys, including guy guards, guy clamps, strain

insulators, and pole plates.

2. Brackets.

3. Crossarms and braces.

4. Excavation and backfill, including disposal of excess excavated material.

5. Extension arms.

6. Foundations.

7. Guards.

8. Insulator pins and suspension bolts.

9. Paving.

10. Permits for construction.

11. Pole steps and ladders.

12. Poles, wood, steel, concrete, or other

material.

13. Racks complete with insulators.

14. Railings.

15. Reinforcing and stubbing.

16. Settings.

17. Shaving, painting, gaining, roofing,

stenciling, and tagging.

18. Towers.

19. Transformer racks and platforms.

365 Overhead Conductors and Devices

This account shall include the cost installed of overhead conductors and devices

used for distribution purposes.

Items

1. Circuit breakers.

2. Conductors, including insulated and bare

wires and cables.

3. Ground wires and clamps.

4. Insulators, including pin, suspension,

and other types, and tie wire or clamps.

5. Lightning arresters.

6. Railroad and highway crossing guards.

7. Splices.

8. Switches.

9. Tree trimming, initial cost including the

cost of permits therefor.

10. Other line devices.

11. Oil circuit reclosers (OCR).

12. Sectionalizers.

13. Labor costs for installation of OCRs and

Sectionalizers, first only.

NOTE: The cost of conductors used solely

for street lighting or signal systems shall

not be included in this account but in Account 373, Street Lighting and Signal Systems.

366 Underground Conduit

This account shall include the cost installed of underground conduit and tunnels

used for housing distribution cables or wires.

Items

1. Conduit, concrete, brick and tile, including iron pipe, fiber pipe, Murray duct, and

standpipe on pole or tower.

2. Excavation, including shoring, bracing,

bridging, backfill, and disposal of excess excavated material.

3. Foundations and settings specially constructed for and not expected to outlast the

apparatus for which constructed.

4. Lighting systems.

5. Manholes, concrete or brick, including

iron or steel frames and covers, hatchways,

gratings, ladders, cable racks, and hangers

permanently attached to manholes.

6. Municipal inspection.

7. Pavement disturbed, including cutting

and replacing pavement, pavement base, and

sidewalks.

8. Permits.

9. Protection of street openings.

10. Removal and relocation of subsurface

obstructions.

11. Sewer connections, including drains,

traps, tide valves, and check valves.

12. Sumps, including pumps.

13. Ventilating equipment.

757

Rural Utilities Service, USDA § 1767.20

NOTE: The cost of underground conduit

used solely for street lighting or signal systems shall be included in Account 373, Street

Lighting and Signal Systems.

367 Underground Conductors and Devices

This account shall include the cost installed of underground conductors and devices used for distribution purposes.

Items

1. Armored conductors, buried, including

insulators, insulating materials, splices, potheads, and trenching.

2. Armored conductors, submarine, including insulators, insulating materials, splices

in terminal chamber, and potheads.

3. Cables in standpipe, including pothead

and connection from terminal chamber or

manhole to insulators on pole.

4. Circuit breakers.

5. Fireproofing, in connection with any

items listed herein.

6. Hollow-core oil-filled cable, including

straight or stop joints, pressure tanks, auxiliary air tanks, feeding tanks, terminals, potheads and connections.

7. Lead and fabric covered conductors, including insulators, compound-filled, oilfilled or vacuum splices, and potheads.

8. Lightning arresters.

9. Municipal inspection.

10. Permits.

11. Protection of street openings.

12. Racking of cables.

13. Switches.

14. Other line devices.

NOTE: The cost of underground conductors

and devices used solely for street lighting or

signal systems shall be included in Account

373, Street Lighting and Signal Systems.

368 Line Transformers

A. This account shall include the cost installed of overhead and underground distribution line transformers and pole-type

and underground voltage regulators owned

by the utility, for use in transforming electricity to the voltage at which it is to be

used by the customer, whether actually in

service or held in reserve.

B. When a transformer is permanently retired from service, the original installed cost

thereof shall be credited to this account.

C. The records covering line transformers

shall be so kept that the utility can furnish

the number of transformers of various capacities in service and those in reserve, and the

location and the use of each transfer.

Items

1. Installation, labor of (first installation

only).

2. Transformer cut-out boxes.

3. Transformer lightning arresters.

4. Transformers, line and network.

5. Capacitors.

6. Network protectors.

7. Voltage regulators.

NOTE: The cost of removing and resetting

line transformers shall not be charged to

this account but to Account 583, Overhead

Line Expenses, or Account 584, Underground

Line Expenses, as appropriate. The cost of

line transformers used solely for street lighting or signal systems shall be included in Account 373, Street Lighting and Signal Systems.

369 Services

This account shall include the cost installed of overhead and underground conductors leading from a point where wires leave

the last pole of the overhead system or the

distribution box or manhole, or the top of

the pole of the distribution line, to the point

of connection with the customer’s outlet or

wiring. Conduit used for underground service

conductors shall be included herein.

Items

1. Brackets.

2. Cables and wires.

3. Conduit.

4. Insulators.

5. Municipal inspection.

6. Overhead to underground, including conduit or standpipe and conductor from last

splice on pole to connection with customer’s

wiring.

7. Pavement disturbed, including cutting

and replacing pavement, pavement base, and

sidewalks.

8. Permits.

9. Protection of street openings.

10. Service switch.

11. Suspension wire.

370 Meters

A. This account shall include the cost installed of meters or devices and appurtenances thereto, for use in measuring the

electricity delivered to its users, whether actually in service or held in reserve.

B. When a meter is permanently retired

from service, the installed cost included

herein shall be credited to this account.

C. The records covering meters shall be so

kept that the utility can furnish information

as to the number of meters of various capacities in service and in reserve as well as the

location of each meter owned.

Items

1. Alternate current, watt-hour meters.

2. Current limiting devices.

3. Demand indicators.

4. Demand meters.

5. Direct current watt-hour meters.

6. Graphic demand meters.

7. Installation, labor of (first installation

only).

758

§ 1767.20 7 CFR Ch. XVII (1–1–00 Edition)

8. Instrument transformers.

9. Maximum demand meters.

10. Meter badges and their attachments.

11. Meter boards and boxes.

12. Meter fittings, connections, and shelves

(first set).

13. Meter switches and cut-outs.

14. Prepayment meters.

15. Protective devices.

16. Testing new meters.

NOTE A: This account shall not include meters for recording output of a generating station, or substation meters. It includes only

those meters used to record energy delivered

to customers.

NOTE B: The cost of removing and resetting

meters shall be charged to Account 586,

Meter Expenses.

371 Installations on Customers’ Premises

This account shall include the cost installed of equipment on the customer’s side

of a meter when the utility incurs such cost

and when the utility retains title to and assumes full responsibility for maintenance

and replacement of such property. This account shall not include leased equipment.

(See Account 372, Leased Property on Customers’ Premises.)

Items

1. Cable vaults.

2. Commercial lamp equipment.

3. Foundations and settings specially provided for equipment included herein.

4. Frequency changer sets.

5. Motor generator sets.

6. Motors.

7. Switchboard panels, high or low tension.

8. Wire and cable connections to incoming

cables.

NOTE: Do not include in this account any

costs incurred in connection with merchandising, jobbing, or contract work activities.

372 Leased Property on Customers’

Premises

This account shall include the cost of electric motors, transformers, and other equipment on customers’ premises (including municipal corporations), leased or loaned to

customers, but not including property held

for sale.

NOTE A: The cost of setting and connecting

such appliances or equipment on the premises of customers and the cost of resetting or

removal shall not be charged to this account

but to operating expenses, Account 587, Customer Installations Expenses.

NOTE B: Do not include in this account any

costs incurred in connection with merchandising, jobbing, or contract work activities.

373 Street Lighting and Signal Systems

This account shall include the cost installed of equipment used wholly for public

street and highway lighting or traffic, fire

alarm, police, and other signal systems.

Items

1. Armored conductors, buried or submarine, including insulators, insulating materials, splices, and trenching.

2. Automatic control equipment.

3. Conductors, overhead or underground,

including lead or fabric covered, parkway cables, including splices, and insulators.

4. Lamps, arc, incandescent, or other

types, including glassware, suspension fixtures, and brackets.

5. Municipal inspection.

6. Ornamental lamp posts.

7. Pavement disturbed, including cutting

and replacing pavement, pavement base, and

sidewalks.

8. Permits.

9. Posts and standards.

10. Protection of street openings.

11. Relays or time clocks.

12. Series contactors.

13. Switches.

14. Transformers, pole or underground.

GENERAL PLANT

389 Land and Land Rights

This account shall include the cost of land

and land rights used for utility purposes, the

cost of which is not properly includible in

other land and land rights accounts. (See

§1767.16 (g).)

390 Structures and Improvements

This account shall include the cost, in

place, of structures and improvements used

for utility purposes, the cost of which is not

properly includible in other structures and

improvements accounts. (See §1767.16 (h).)

391 Office Furniture and Equipment

This account shall include the cost of office furniture and equipment owned by the

utility and devoted to utility service, and

not permanently attached to buildings, except the cost of such furniture and equipment which the utility elects to assign to

other plant accounts on a functional basis.

Items

1. Bookcases and shelves.

2. Desks, chairs, and desk equipment.

3. Drafting-room equipment.

4. Filing, storage, and other cabinets.

5. Floor covering.

6. Library and library equipment.

7. Mechanical office equipment, such as accounting machines, and typewriters.

8. Safes.

9. Tables.

759

Rural Utilities Service, USDA § 1767.20

392 Transportation Equipment

This account shall include the cost of

transportation vehicles used for utility purposes.

Items

1. Airplanes.

2. Automobiles.

3. Bicycles.

4. Electrical vehicles.

5. Motor trucks.

6. Motorcycles.

7. Repair cars or trucks.

8. Tractors and trailers.

9. Other transportation vehicles.

393 Stores Equipment

This account shall include the cost of

equipment used for the receiving, shipping,

handling, and storage of materials and supplies.

Items

1. Chain falls.

2. Counters.

3. Cranes (portable).

4. Elevating and stacking equipment (portable).

5. Hoists.

6. Lockers.

7. Scales.

8. Shelving.

9. Storage bins.

10. Trucks, hand and power driven.

11. Wheelbarrows.

394 Tools, Shop and Garage Equipment

This account shall include the cost of

tools, implements, and equipment used in

construction, repair work, general shops and

garages and not specifically provided for or

includible in other accounts.

Items

1. Air compressors.

2. Anvils.

3. Automobile repair shop equipment.

4. Battery charging equipment.

5. Belts, shafts and countershafts.

6. Boilers.

7. Cable pulling equipment.

8. Concrete mixers.

9. Drill presses.

10. Derricks.

11. Electric equipment.

12. Engines.

13. Forges.

14. Furnaces.

15. Foundations and settings specially constructed for and not expected to outlast the

equipment for which provided.

16. Gas producers.

17. Gasoline pumps, oil pumps, and storage

tanks.

18. Greasing tools and equipment.

19. Hoists.

20. Ladders.

21. Lathes.

22. Machine tools.

23. Motor-driven tools.

24. Motors.

25. Pipe threading and cutting tools.

26. Pneumatic tools.

27. Pumps.

28. Riveters.

29. Smithing equipment.

30. Tool racks.

31. Vises.

32. Welding apparatus.

33. Work benches.

395 Laboratory Equipment

This account shall include the cost installed of laboratory equipment used for general laboratory purposes and not specifically

provided for or includible in other departmental or functional plant accounts.

Items

1. Ammeters.

2. Current batteries.

3. Frequency changers.

4. Galvanometers.

5. Inductometers.

6. Laboratory standard millivolt meters.

7. Laboratory standard volt meters.

8. Meter-testing equipment.

9. Millivolt meters.

10. Motor generator sets.

11. Panels.

12. Phantom loads.

13. Portable graphic ammeters, voltmeters,

and wattmeters.

14. Portable loading devices.

15. Potential batteries.

16. Potentiometers.

17. Rotating standards.

18. Standard cell, reactance, resistor, and

shunt.

19. Switchboards.

20. Synchronous timers.

21. Testing panels.

22. Testing resistors.

23. Transformers.

24. Voltmeters.

25. Other testing, laboratory, or research

equipment not provided for elsewhere.

396 Power Operated Equipment

This account shall include the cost of

power operated equipment used in construction or repair work exclusive of equipment

includible in other accounts. Include, also,

the tools and accessories acquired for use

with such equipment and the vehicle on

which such equipment is mounted.

Items

1. Air compressors, including driving unit

and vehicle.

2. Back filling machines.

760

§ 1767.21 7 CFR Ch. XVII (1–1–00 Edition)

3. Boring machines.

4. Bulldozers.

5. Cranes and hoists.

6. Diggers.

7. Engines.

8. Pile drivers.

9. Pipe cleaning machines.

10. Pipe coating or wrapping machines.

11. Tractors-Crawler type.

12. Trenchers.

13. Other power operated equipment.

NOTE: It is intended that this account include only such large units as are generally

self-propelled or mounted on movable equipment.

397 Communication Equipment

This account shall include the cost installed of telephone, telegraph, and wireless

equipment for general use in connection with

utility operations.

Items

1. Antennae.

2. Booths.

3. Cables.

4. Distributing boards.

5. Extension cords.

6. Gongs.

7. Hand sets, manual and dial.

8. Insulators.

9. Intercommunicating sets.

10. Loading coils.

11. Operators’ desks.

12. Poles and fixtures used wholly for telephone or telegraph wire.

13. Radio transmitting and receiving sets.

14. Remote control equipment and lines.

15. Sending keys.

16. Storage batteries.

17. Switchboards.

18. Telautograph circuit connections.

19. Telegraph receiving sets.

20. Telephone and telegraph circuits.

21. Testing instruments.

22. Towers.

23. Underground conduit used wholly for

telephone or telegraph wires and cable wires.

398 Miscellaneous Equipment

This account shall include the cost of

equipment, and apparatus used in the utility

operations, which is not includible in other

accounts.

Items

1. Hospital and infirmary equipment.

2. Kitchen equipment.

3. Employees’ recreation equipment.

4. Radios.

5. Restaurant equipment.

6. Soda fountains.

7. Operators’ cottage furnishings.

8. Other miscellaneous equipment.

NOTE: Miscellaneous equipment of the nature indicated above wherever practicable,

shall be included in the utility plant accounts on a functional basis.

399 Other Tangible Property

This account shall include the cost of tangible utility plant not provided for elsewhere.

§ 1767.21 Operating income.

The operating income accounts identified in this section shall be used by

all RUS borrowers.

UTILITY OPERATING INCOME

400 Operating Revenues

401 Operation Expense

402 Maintenance Expense

403 Depreciation Expense

403.1 Depreciation Expense—Steam Production Plant

403.2 Depreciation Expense—Nuclear Production Plant

403.3 Depreciation Expense—Hydraulic Production Plant

403.4 Depreciation Expense—Other Production Plant

403.5 Depreciation Expense—Transmission

Plant

403.6 Depreciation Expense—Distribution

Plant

403.7 Depreciation Expense—General Plant

404 Amortization of Limited-Term Electric

Plant

405 Amortization of Other Electric Plant

406 Amortization of Electric Plant Acquisition Adjustments

407 Amortization of Property Losses, Unrecovered Plant and Regulatory Study

Costs

407.3 Regulatory Debits

407.4 Regulatory Credits

408 Taxes Other than Income Taxes

408.1 Taxes—Property

408.2 Taxes—U.S. Social Security—Unemployment

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

408.4 Taxes—State Social Security—Unemployment

408.5 Taxes—State Sales—Consumers

408.6 Taxes—Gross Revenue or Gross Receipts Tax

408.7 Taxes—Other

409 [Reserved]

409.1 Income Taxes, Utility Operating Income

409.2 Income Taxes, Other Income and Deductions

409.3 Income Taxes, Extraordinary Items

410 [Reserved]

410.1 Provision for Deferred Income Taxes,

Utility Operating Income

410.2 Provision for Deferred Income Taxes,

Other Income and Deductions

411 [Reserved]

411.1 Provision for Deferred Income Taxes—

Credit, Utility Operating Income

761

Rural Utilities Service, USDA § 1767.21

411.2 Provision for Deferred Income Taxes—

Credit, Other Income and Deductions

411.3 [Reserved]

411.4 Investment Tax Credit Adjustments,

Utility Operations

411.5 Investment Tax Credit Adjustments,

Nonutility Operations

411.6 Gains from Disposition of Utility

Plant

411.7 Losses from Disposition of Utility

Plant

411.8 Gains from Disposition of Allowances

411.9 Losses from Disposition of Allowances

412 Revenues from Electric Plant Leased to

Others

413 Expenses of Electric Plant Leased to

Others

414 Other Utility Operating Income

UTILITY OPERATING INCOME

400 Operating Revenues

There shall be shown under this caption

the total amount included in the electric operating revenue accounts provided herein.

401 Operation Expense

There shall be shown under this caption

the total amount included in the electric operation expense accounts provided herein.

(See note to §1767.17 (c).)

402 Maintenance Expense

There shall be shown under this caption

the total amount included in the electric

maintenance expense accounts provided

herein.

403 Depreciation Expense

A. This account shall include the amount

of depreciation expense for all classes of depreciable electric plant in service except

such depreciation expense as is chargeable to

clearing accounts or to Account 416, Costs

and Expenses of Merchandising, Jobbing and

Contract Work.

B. The utility shall keep such records of

property and property retirements as will reflect the service life of property which has

been retired and aid in estimating probable

service life by mortality, turnover, or other

appropriate methods; and also such records

as will reflect the percentage of salvage and

costs of removal for property retired from

each account, or subdivision thereof, for depreciable electric plant.

NOTE A: Depreciation expense applicable to

property included in Account 104, Electric

Plant Leased to Others, shall be charged to

Account 413, Expenses of Electric Plant

Leased to Others.

NOTE B: Depreciation expenses applicable

to transportation equipment, shop equipment, tools, work equipment, power operated

equipment, and other general equipment

may be charged to clearing accounts as necessary in order to obtain a proper distribution of expenses between construction and

operation.

NOTE C: Depreciation expense applicable to

transportation equipment used for transportation of fuel from the point of acquisition

to the unloading point shall be charged to

Account 151, Fuel Stock.

C. Account 403 shall be subaccounted as

follows:

403.1 Depreciation Expense—Steam Production Plant

403.2 Depreciation Expense—Nuclear Production Plant

403.3 Depreciation Expense—Hydraulic Production Plant

403.4 Depreciation Expense—Other Production Plant

403.5 Depreciation Expense—Transmission

Plant

403.6 Depreciation Expense—Distribution

Plant

403.7 Depreciation Expense—General Plant

404 Amortization of Limited-Term Electric

Plant

This account shall include amortization

charges applicable to amounts included in

the electric plant accounts for limited-term

franchises, licenses, patent rights, limitedterm interests in land, and expenditures on

leased property where the service life of the

improvements is terminable by action of the

lease. The charges to this account shall be

such as to distribute the book cost of each

investment as evenly as may be over the period of its benefit to the utility. (See Account 111, Accumulated Provision for Amortization of Electric Utility Plant.)

405 Amortization of Other Electric Plant

A. When authorized by RUS, this account

shall include charges for amortization of intangible or other electric utility plant which

does not have a definite or terminable life

and which is not subject to charges for depreciation expense.

B. This account shall be supported in such

detail as to show the amortization applicable

to each investment being amortized, together with the book cost of the investment

and the period over which it is being written

off.

406 Amortization of Electric Plant

Acquisition Adjustments

This account shall be debited or credited,

as appropriate, with amounts includible in

operating expenses, pursuant to approval or

order of RUS, for the purpose of providing

for the extinguishment of the amount in Account 114, Electric Plant Acquisition Adjustments.

762

§ 1767.21 7 CFR Ch. XVII (1–1–00 Edition)

407 Amortization of Property Losses, Unrecovered Plant and Recovery Study Costs

This account shall be charged with

amounts credited to Account 182.1, Extraordinary Property Losses, when RUS has authorized the amount in the latter account to

be amortized by charges to electric operations.

407.3 Regulatory Debits

This account shall be debited, when appropriate, with the amounts credited to Account 254, Other Regulatory Liabilities, to

record regulatory liabilities imposed on the

utility by the ratemaking actions of regulatory agencies. This account shall also be

debited, when appropriate, with the amounts

credited to Account 182.3, Other Regulatory

Assets, concurrent with the recovery of such

amounts in rates.

407.4 Regulatory Credits

This account shall be credited, when appropriate, with the amounts debited to Account

182.3, Other Regulatory Assets, to establish

regulatory assets. This account shall also be

credited, when appropriate, with the

amounts debited to Account 254, Other Regulatory Liabilities, concurrent with the return of such amounts to customers through

rates.

408 Taxes Other Than Income Taxes

A. This account shall include the amounts

of ad valorem, gross revenue, or gross receipts taxes, state unemployment insurance,

franchise taxes, Federal excise taxes, social

security taxes, and all other taxes assessed

by Federal, state, county, municipal, or

other local governmental authorities, except

income taxes.

B. These accounts shall be charged in each

accounting period with the amounts of taxes

which are applicable thereto, with concurrent credits to Account 236, Taxes Accrued,

or Account 165, Prepayments, as appropriate.

When it is not possible to determine the

exact amounts of taxes, the amounts shall be

estimated and adjustments made in current

accruals as the actual tax levies become

known.

C. The charges to these accounts shall be

made or supported so as to show the amount

of each tax and the basis upon which each

charge is made. In the case of a utility rendering more than one utility service, taxes of

the kind includible in these accounts shall be

assigned directly to the utility department

the operation of which gave rise to the tax,

in so far as practicable. Where the tax is not

attributable to a specific utility department,

it shall be distributed among the utility departments or nonutility operations on an equitable basis after appropriate study to determine such basis.

NOTE A: Special assessments for street and

similar improvements shall be included in

the appropriate utility plant or nonutility

property account.

NOTE B: Taxes specifically applicable to

construction and retirement activities shall

be included in the cost of construction or the

retirement.

NOTE C: Gasoline and other sales taxes

shall be charged as far as practicable to the

same account as the materials on which the

tax is levied.

NOTE D: Social security and other forms of

payroll taxes shall be charged to nonutility

operations, the specific functional operations, maintenance, and administrative expense accounts, and to construction and retirement activities on a basis related to payroll either directly or by transfers from this

account.

NOTE E: Property taxes applicable to the

various utility functions shall be charged to

the specific functional operations and administrative expense accounts either directly or by transfers from this account.

NOTE F: Interest on tax refunds or deficiencies shall not be included in these accounts but in Account 419, Interest and Dividend Income, or Account 431, Other Interest

Expense, as appropriate.

D. Account 408 shall be subaccounted as

follows:

408.1 Taxes—Property

408.2 Taxes—U.S. Social Security—Unemployment

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

408.4 Taxes—State Social Security—Unemployment

408.5 Taxes—State Sales—Consumers

408.6 Taxes—Gross Revenue or Gross Receipts Tax

408.7 Taxes—Other

409 [Reserved]

SPECIAL INSTRUCTIONS

Accounts 409.1, 409.2, and 409.3

A. These accounts shall include the

amount of local, state, and Federal income

taxes on income properly accruable during

the period covered by the income statement

to meet the actual liability for such taxes.

Concurrent credits for the tax accruals shall

be made to Account 236, Taxes Accrued, and

as the exact amounts of taxes become

known, the current tax accruals shall be adjusted by charges or credits to these accounts.

B. The accruals for income taxes shall be

apportioned among utility departments and

to Other Income and Deductions so that, as

nearly as practicable, each tax shall be included in the expenses of the utility department or Other Income and Deductions, the

income from which gave rise to the tax. The

763

Rural Utilities Service, USDA § 1767.21

tax effects relating to interest charges shall

be allocated between utility and nonutility

operations. The basis for this allocation

shall be the ratio of net investment in utility plant to net investment in nonutility

plant.

NOTE A: Taxes assumed by the utility on

interest shall be charged to Account 431,

Other Interest Expense.

NOTE B: Interest on tax refunds or deficiencies shall not be included in these accounts but in Account 419, Interest and Dividend Income, or Account 431, Other Interest

Expense, as appropriate.

409.1 Income Taxes, Utility Operating

Income

This account shall include the amount of

those local, state, and Federal income taxes

which relate to utility operating income.

This account shall be maintained so as to

allow ready identification of tax effects

(both positive and negative) relating to Utility Operating Income (by department), Utility Plant Leased to Others, and Other Utility

Operating Income.

409.2 Income Taxes, Other Income and

Deductions

This account shall include the amount of

those local, state, and Federal income taxes

(both positive and negative), which relate to

Other Income and Deductions.

409.3 Income Taxes, Extraordinary Items

This account shall include the amount of

those local, state, and Federal income taxes

(both positive and negative), which relate to

Extraordinary Items.

410 [Reserved]

SPECIAL INSTRUCTIONS

Accounts 410.1, 410.2, 411.1, and 411.2

A. Accounts 410.1 and 410.2 shall be debited,

and Accumulated Deferred Income Taxes,

shall be credited, with amounts equal to any

current deferrals of taxes on income or any

allocations of deferred taxes originating in

prior periods, as provided by the texts of Accounts 190, 281, 282, and 283. There shall not

be netted against entries required to be made

to these accounts any credit amounts appropriately includible in Account 411.1 or Account 411.2.

B. Accounts 411.1 or 411.2 shall be credited,

and Accumulated Deferred Income Taxes,

shall be debited, with amounts equal to any

allocations of deferred taxes originating in

prior periods or any current deferrals of

taxes on income, as provided by the texts of

Accounts 190, 281, 282, and 283. There shall

not be netted against entries required to be

made to these accounts any debit amounts

appropriately includible in Account 410.1 or

Account 410.2.

410.1 Provision for Deferred Income Taxes,

Utility Operating Income

This account shall include the amounts of

those deferrals of taxes and allocations of deferred taxes which relate to Utility Operating Income (by department).

410.2 Provision for Deferred Income Taxes,

Other Income and Deductions

This account shall include the amounts of

those deferrals of taxes and allocations of deferred taxes which relate to Other Income

and Deductions.

411 [Reserved]

411.1 Provision for Deferred Income Taxes—

Credit, Utility Operating Income

This account shall include the amounts of

those allocations of deferred taxes and deferrals of taxes, credit, which relate to Utility

Operating Income (by department).

411.2 Provision for Deferred Income Taxes—

Credit, Other Income and Deductions

This account shall include the amounts of

those allocations of deferred taxes and deferrals of taxes, credit, which relate to Other

Income and Deductions.

411.3 [Reserved]

SPECIAL INSTRUCTIONS

Accounts 411.4 and 411.5

A. Account 411.4 shall be debited with the

amounts of investment tax credits related to

electric utility property that are credited to

Account 255, Accumulated Deferred Investment Tax Credits, by companies which do

not apply the entire amount of the benefits

of the investment credit as a reduction of

the overall income tax expense in the year in

which such credit is realized. (See Account

255).

B. Account 411.4 shall be credited with the

amounts debited to Account 255 for proportionate amounts of tax credit deferrals allocated over the average useful life of electric

utility property to which the tax credits relate or such lesser period of time as may be

adopted and consistently followed by the

company.

C. Account 411.5 shall be debited and credited as directed in paragraphs A and B, for

investment tax credits related to nonutility

property.

764

§ 1767.22 7 CFR Ch. XVII (1–1–00 Edition)

411.4 Investment Tax Credit Adjustments,

Utility Operations

This account shall include the amount of

those investment tax credit adjustments related to property used in Utility Operations

(by department).

411.5 Investment Tax Credit Adjustments,

Nonutility Operations

This account shall include the amount of

those investment tax credit adjustments related to property used in Nonutility Operations.

411.6 Gains from Disposition of Utility

Plant

This account shall include, as approved by

RUS, amounts relating to gains from the disposition of future use utility plant including

amounts which were previously recorded in

and transferred from Account 105, Electric

Plant Held for Future Use, under the Provisions of Paragraphs B, C, and D thereof. Income taxes relating to gains recorded in this

account shall be recorded in Account 409.1,

Income Taxes, Utility Operating Income.

411.7 Losses from Disposition of Utility

Plant

This account shall include, as approved by

RUS, amounts relating to losses from the

disposition of future use utility plant including amounts which were previously recorded

in and transferred from Account 105, Electric

Plant Held for Future Use, under the provisions of Paragraphs B, C, and D thereof. Income taxes relating to losses recorded in this

account shall be recorded in Account 409.1,

Income Taxes, Utility Operating Income.

411.8 Gains from Disposition of Allowances

This account shall be credited with the

gain on the sale, exchange, or other disposition of allowances in accordance with

§1767.15 (u)(8). Income taxes relating to gains

recorded in this account shall be recorded in

Account 409.1, Income Taxes, Utility Operating Income.

411.9 Losses from Disposition of Allowances

This account shall be debited with the loss

on the sale, exchange, or other disposition of

allowances in accordance with §1767.15 (u)(8).

Income taxes relating to losses recorded in

this account shall be recorded in Account

409.1, Income Taxes, Utility Operating Income.

412 Revenues from Electric Plant Leased to

Others

This account shall include revenues from

electric property constituting a distinct operating unit or system leased by the utility

to others, and which property is properly includible in Account 104, Electric Plant

Leased to Others.

NOTE: Related taxes shall be recorded in

Account 408, Taxes Other Than Income

Taxes, or Account 409.1, Income Taxes, Utility Operating Income, as appropriate.

413 Expenses of Electric Plant Leased to

Others

A. This account shall include expenses

from electric property constituting a distinct operating unit or system leased by the

utility to others, and which property is properly includible in Account 104, Electric Plant

Leased to Others.

B. The detail of expenses shall be kept or

supported so as to show separately the following:

1. Operation.

2. Maintenance.

3. Depreciation.

4. Amortization.

NOTE: Related taxes shall be recorded in

Account 408, Taxes Other Than Income

Taxes, or Account 409.1, Income Taxes, Utility Operating Income, as appropriate.

414 Other Utility Operating Income

A. This account shall include the revenues

received and expenses incurred in connection

with the operations of utility plant, the book

cost of which is included in Account 118,

Other Utility Plant.

B. The expenses shall include every element of cost incurred in such operations, including depreciation, rents, and insurance.

NOTE: Related taxes shall be recorded in

Account 408, Taxes Other Than Income

Taxes, or Account 409.1, Income Taxes, Utility Operating Income, as appropriate.

[58 FR 59825, Nov. 10, 1993, as amended at 62

FR 42290, Aug. 6, 1997]

§ 1767.22 Other income and deductions.

The other income and deductions accounts identified in this section shall

be used by all RUS borrowers.

OTHER INCOME AND DEDUCTIONS

415 Revenues from Merchandising, Jobbing,

and Contract Work

416 Costs and Expenses of Merchandising,

Jobbing, and Contract Work

417 Revenues from Nonutility Operations

417.1 Expenses of Nonutility Operations

418 Nonoperating Rental Income

418.1 Equity in Earnings of Subsidiary Companies

419 Interest and Dividend Income

419.1 Allowance for Funds Used During Construction

420 Investment Tax Credits

421 Miscellaneous Nonoperating Income

421.1 Gain on Disposition of Property

765

Rural Utilities Service, USDA § 1767.22

421.2 Loss on Disposition of Property

422 Nonoperating Taxes

423 Generation and Transmission Cooperative Capital Credits

424 Other Capital Credits and Patronage

Capital Allocations

425 Miscellaneous Amortization

426 [Reserved]

426.1 Donations

426.2 Life Insurance

426.3 Penalties

426.4 Expenditures for Certain Civic, Political, and Related Activities

426.5 Other Deductions

OTHER INCOME AND DEDUCTIONS

415 Revenues from Merchandising, Jobbing

and Contract Work

A. This account shall include all revenues

derived from the sale of merchandise and

jobbing or contract work, including any profit or commission accruing to the utility on

jobbing work performed by it as agent under

contracts whereby it does jobbing work for

another for a stipulated profit or commission. Interest related income from installment sales shall be recorded in Account 419,

Interest and Dividend Income.

B. Records in support of this account shall

be so kept as to permit ready summarization

of revenues by such major items as are feasible.

NOTE: The classification of revenues of

merchandising, jobbing, and contract work

as nonoperating, and thus included in this

account, is for accounting purposes. It does

not preclude consideration of justification to

the contrary for ratemaking or other purposes.

Items

1. Revenues from sale of merchandise and

from jobbing and contract work.

2. Discounts and allowances made in settlement of bills for merchandise and jobbing

work.

416 Costs and Expenses of Merchandising,

Jobbing and Contract Work

A. This account shall include all expenses

derived from the sale of merchandise and

jobbing or contract work.

B. Records in support of this account shall

be so kept as to permit ready summarization

of costs and expenses by such major items as

are feasible.

NOTE: The classification of costs and expenses of merchandising, jobbing, and contract work as nonoperating, and thus included in this account, is for accounting purposes. It does not preclude consideration of

justification to the contrary for ratemaking

or other purposes.

Items

Labor:

1. Canvassing and demonstrating appliances in homes and other places for the purpose of selling appliances.

2. Demonstrating and selling activities in

sales rooms.

3. Installing appliances on customer premises where such work is done only for purchasers of appliances from the utility.

4. Installing wire, piping, or other property

work, on a jobbing or contract basis.

5. Preparing advertising materials for appliance sales purposes.

6. Receiving and handling customer orders

for merchandise or for jobbing services.

7. Cleaning and tidying sales rooms.

8. Maintaining display counters and other

equipment used in merchandising.

9. Arranging merchandise in sales rooms

and decorating display windows.

10. Reconditioning repossessed appliances.

11. Bookkeeping and other clerical work in

connection with merchandise and jobbing activities.

12. Supervising merchandise and jobbing

operations.

13. Advertising in newspapers, periodicals,

radio, and television.

14. Cost of merchandise sold and of materials used in jobbing work.

15. Stores expenses on merchandise and

jobbing stocks.

16. Fees and expenses of advertising and

commercial artists’ agencies.

17. Printing booklets, dodgers, and other

advertising data.

18. Premiums given as inducement to buy

appliances.

19. Light, heat, and power.

20. Depreciation on equipment used primarily for merchandise and jobbing operations.

21. Rent of sales rooms or of equipment.

22. Transportation expense in delivery and

pick-up of appliances by utility’s facilities or

by others.

23. Stationery and office supplies and expenses.

24. Losses from uncollectible merchandise

and jobbing accounts.

417 Revenues from Nonutility Operations

This account shall include revenues applicable to operations which are nonutility in

character but nevertheless constitute a distinct operating activity of the enterprise as

a whole, such as the operation of an ice department where applicable statutes do not

define such operation as a utility, or the operation of a servicing organization for furnishing supervision, management, engineering, and similar services to others.

NOTE: Related taxes shall be recorded in

Account 408, Taxes Other Than Income

766

§ 1767.22 7 CFR Ch. XVII (1–1–00 Edition)

Taxes, or Account 409.2, Income Taxes, Other

Income and Deductions, as appropriate.

417.1 Expenses of Nonutility Operations

A. This account shall include expenses applicable to operations which are nonutility

in character but nevertheless constitute a

distinct operating activity of the enterprise

as a whole, such as the operation of an ice

department where applicable statutes do not

define such operation as a utility, or the operation of a servicing organization for furnishing supervision, management, engineering, and similar services to others.

B. The expenses shall include all elements

of costs incurred in such operations, and the

accounts shall be maintained so as to permit

ready summarization as follows:

1. Operation.

2. Maintenance.

3. Rents.

4. Depreciation.

5. Amortization.

NOTE: Related taxes shall be recorded in

Account 408, Taxes Other Than Income

Taxes, or Account 409.2, Income Taxes, Other

Income and Deductions, as appropriate.

418 Nonoperating Rental Income

A. This account shall include all rent revenues and related expenses of land, buildings,

or other property included in Account 121,

Nonutility Property, which is not used in operations covered by Account 417 or Account

417.1.

B. The expenses shall include all elements

of costs incurred in the ownership and rental

of property and the accounts shall be maintained so as to permit ready summarization

as follows:

1. Operation.

2. Maintenance.

3. Rents.

4. Depreciation.

5. Amortization.

NOTE: Related taxes shall be recorded in

Account 408, Taxes Other Than Income

Taxes, or Account 409.2, Income Taxes, Other

Income and Deductions, as appropriate.

418.1 Equity in Earnings of Subsidiary

Companies

This account shall include the utility’s equity in the earnings or losses of subsidiary

companies for the year.

419 Interest and Dividend Income

A. This account shall include interest revenues on securities, loans, notes, advances,

special deposits, tax refunds, and all other

interest-bearing assets, and dividends on

stocks of other companies, whether the securities on which the interest and dividends

are received are carried as investments or included in sinking or other special fund accounts.

NOTE A: Related taxes shall be recorded in

Account 408, Taxes Other Than Income

Taxes, or Account 409.2, Income Taxes, Other

Income and Deductions, as appropriate.

NOTE B: Interest accrued, the payment of

which is not reasonably assured, dividends

receivable which have not been declared or

guaranteed, and interest or dividends upon

reacquired securities issued or assumed by

the utility shall not be credited to this account.

419.1 Allowance for Funds Used During

Construction

This account shall include concurrent

credits for allowance for funds other than

borrowed funds used for construction purposes during the period of construction,

based upon a reasonable rate. (See §1767.16

(c)(17).)

420 Investment Tax Credits

This account shall be credited as follows

with investment tax credit amounts not

passed on to customers:

1. By amounts equal to debits to Account

411.4, Investment Tax Credit Adjustments,

Utility Operations, and Account 411.5, Investment Tax Credit Adjustments, Nonutility Operations, for investment tax credits used in calculating income taxes for the

year when the company’s accounting provides for non-deferral of all or a portion of

such credits.

2. By amounts equal to debits to Account

255, Accumulated Deferred Investment Tax

Credits, for proportionate amounts of tax

credit deferrals allocated over the average

useful life of the property to which the tax

credits relate, or such lesser period of time

as may be adopted and consistently used by

the company.

421 Miscellaneous Nonoperating Income

This account shall include all revenue and

expense items, except taxes properly includible in the income account, not provided for

elsewhere. Related taxes shall be recorded in

Account 408, Taxes Other Than Income

Taxes, or Account 409.2, Income Taxes, Other

Income and Deductions, as appropriate.

Items

1. Profit on sale of timber. (See §1767.16

(g)(3).)

2. Profits from operations of others realized by the utility under contracts.

3. Gains on disposition of investments.

Also, gains on reacquisition and resale or retirement of the utility’s debt securities when

the gain is not amortized or used by a jurisdictional regulatory agency to reduce embedded debt cost in establishing rates. (See

§1767.15 (q).)

767

Rural Utilities Service, USDA § 1767.22

421.1 Gain on Disposition of Property

This account shall be credited with the

gain on the sale, conveyance, exchange, or

transfer of utility or other property to another. Amounts relating to gains on land and

land rights held for future use recorded in

Account 105, Electric Plant Held for Future

Use, will be accounted for as prescribed in

Paragraphs B, C, and D thereof. (See §1767.16

(e)(6), (g)(5), and (j)(5).) Income taxes on

gains recorded in this account shall be recorded in Account 409.2, Income Taxes, Other

Income and Deductions.

421.2 Loss on Disposition of Property

This account shall be charged with the loss

on the sale, conveyance, exchange, or transfer of utility or other property to another.

Amounts relating to losses on land and land

rights held for future use recorded in Account 105, Electric Plant Held for Future

Use, will be accounted for as prescribed in

Paragraphs B, C, and D thereof. (See §1767.16

(e)(6), (g)(5), and (j)(5).) The reduction in income taxes relating to losses recorded in this

account shall be recorded in Account 409.2,

Income Taxes, Other Income and Deductions.

422 Nonoperating Taxes

This account shall be charged with taxes

relating to nonoperating income.

423 Generation and Transmission

Cooperative Capital Credits

This account shall be credited with the annual capital furnished the power supply cooperative through payment of power bills.

The amount of capital furnished the power

supply cooperative should be recorded in the

applicable year even though, in most cases,

the power supplier’s notice of the allocation

will not have been received until after the

close of the year to which it relates.

424 Other Capital Credits and Patronage

Capital Allocations

This account shall be credited with the

capital furnished in connection with patronage of cooperative or mutual-type service organization such as CFC and other financing

cooperatives, and insurance, oil product,

telephone, and data processing cooperatives.

This account should be credited in the year

in which the notice of the capital credit or

patronage capital allocation is received.

425 Miscellaneous Amortization

This account shall include amortization

charges not includible in other accounts

which are properly deductible in determining

the income of the utility before interest

charges. Charges includible herein, if significant in amount, must be in accordance with

an orderly and systematic amortization program.

Items

1. Amortization of utility plant acquisition

adjustments, or of intangibles included in

utility plant in service when not authorized

to be included in utility operating expenses

by RUS.

2. Other miscellaneous amortization

charges allowed to be included in this account by RUS.

426 [Reserved]

SPECIAL INSTRUCTIONS

Accounts 426.1, 426.2, 426.3, 426.4, and 426.5

These accounts shall include miscellaneous

expense items which are nonoperating in nature but which are properly deductible before

determining total income before interest

charges.

NOTE: The classification of expenses as

nonoperating and their inclusion in these accounts is for accounting purposes. It does

not preclude RUS consideration of proof to

the contrary for ratemaking or other purposes.

426.1 Donations

This account shall include all payments or

donations for charitable, social, or community welfare purposes.

426.2 Life Insurance

This account shall include all payments for

life insurance of officers and employees

where the company is the beneficiary (net

premiums less the increase in the cash surrender value of policies.)

426.3 Penalties

This account shall include payments by

the company for penalties or fines for violation of any regulatory statutes by the company or its officials.

426.4 Expenditures for Certain Civic,

Political, and Related Activities

This account shall include expenditures for

the purpose of influencing public opinion

with respect to the election or appointment

of public officials, referenda, legislation, or

ordinances (either with respect to the possible adoption of new referenda, legislation

or ordinances or repeal or modification of existing referenda, legislation or ordinances)

or approval, modification, or revocation of

franchises; or for the purpose of influencing

the decisions of public officials, but shall not

include such expenditures which are directly

related to appearances before regulatory or

other governmental bodies in connection

with the reporting utility’s existing or proposed operations.

768

§ 1767.23 7 CFR Ch. XVII (1–1–00 Edition)

426.5 Other Deductions

This account shall include other miscellaneous expenses which are nonoperating in

nature, but which are properly deductible before determining total income before interest charges.

Items

1. Loss relating to investments in securities written-off or written-down.

2. Loss on sale of investments.

3. Loss on reacquisition, resale, or retirement of the utility’s debt securities, when

the loss is not amortized and used by a jurisdictional regulatory agency to increase embedded debt cost in establishing rates. (See

§1767.15 (q).)

4. Preliminary survey and investigation expenses related to abandoned projects, when

not written-off to the appropriate operating

expense account.

5. Costs of preliminary abandonment costs

recorded in Account 182.1, Extraordinary

Property Losses, and Account 182.2, Unrecovered Plant and Regulatory Study Costs,

not allowed to be amortized to Account 407,

Amortization of Property Losses, Unrecovered Plant and Regulatory Study Costs.

§ 1767.23 Interest charges.

The interest charges accounts identified in this section shall be used by all

RUS borrowers.

INTEREST CHARGES

427 Interest on Long-Term Debt

427.3 Interest Charged to Construction—

Credit

428 Amortization of Debt Discount and Expense

428.1 Amortization of Loss on Reacquired

Debt

429 Amortization of Premium on Debt—

Credit

429.1 Amortization of Gain on Reacquired

Debt—Credit

430 Interest on Debt to Associated Companies

431 Other Interest Expense

432 Allowance for Borrowed Funds Used

During Construction—Credit

INTEREST CHARGES

427 Interest on Long-Term Debt

A. This account shall include the amount

of interest on outstanding long-term debt

issued or assumed by the utility, the liability for which included in Account 221, Bonds,

or Account 224, Other Long-Term Debt.

B. This account shall be so kept or supported as to show the interest accruals on

each class and series of long-term debt.

NOTE: This account shall not include interest on nominally issued or nominally outstanding long-term debt, including securities

assumed.

427.3 Interest Charged to Construction—

Credit

This account shall include concurrent

credits for interest charged to construction

based upon the net cost for the period of construction of borrowed funds used for construction purposes.

428 Amortization of Debt Discount and

Expense

A. This account shall include the amortization of unamortized debt discount and expense on outstanding long-term debt.

Amounts charged to this account shall be

credited concurrently to Account 181,

Unamortized Debt Expense, and Account 226,

Unamortized Discount on Long-Term Debt—

Debit.

B. This account shall be so kept or supported as to show the debt discount and expense on each class and series of long-term

debt.

428.1 Amortization of Loss on Reacquired

Debt

A. This account shall include the amortization of the losses on reacquisition of debt.

Amounts charged to this account shall be

credited concurrently to Account 189,

Unamortized Loss on Reacquired Debt.

B. This account shall be maintained so as

to allow ready identification of the loss amortized applicable to each class and series of

long-term debt reacquired. (See §1767.15 (q).)

429 Amortization of Premium on Debt—

Credit

A. This account shall include the amortization of unamortized net premium on outstanding long-term debt. Amounts credited

to this account shall be charged concurrently to Account 225, Unamortized Premium on Long-Term Debt.

B. This account shall be so kept or supported as to show the premium on each class

and series of long-term debt.

429.1 Amortization of Gain on Reacquired

Debt—Credit

A. This account shall include the amortization of the gains realized from reacquisition

of debt. Amounts credited to this account

shall be charged concurrently to Account

257, Unamortized Gain on Reacquired Debt.

B. This account shall be maintained so as

to allow ready identification of the amortized gains applicable to each class and series of long-term debt reacquired. (See

§1767.15 (q).)

769

Rural Utilities Service, USDA § 1767.26

430 Interest on Debt to Associated

Companies

A. This account shall include the interest

accrued on amounts included in Account 223,

Advances from Associated Companies, and

on all other obligations to associated companies.

B. The records supporting the entries to

this account shall be so kept as to show to

whom the interest is to be paid, the period

covered by the accrual, the rate of interest,

and the principal amount of the advances or

other obligations on which the interest is accrued.

431 Other Interest Expense

This account shall include all interest

charges not provided for elsewhere.

Items

1. Interest on notes payable on demand or

maturing one year or less from date and on

open accounts, except notes and accounts

with associated companies.

2. Interest on customers’ deposits.

3. Interest on claims and judgments, tax

assessments, and assessments for public improvements past due.

4. Income and other taxes levied upon

bondholders of the utility and assumed by it.

432 Allowance for Borrowed Funds Used

During Construction—Credit

This account shall include concurrent

credits for allowance for borrowed funds used

during construction, not to exceed amounts

computed in accordance with the formula

prescribed in §1767.16 (c)(17).

§ 1767.24 Extraordinary items.

The extraordinary items accounts

identified in this section shall be used

by all RUS borrowers.

EXTRAORDINARY ITEMS

434 Extraordinary Income

435 Extraordinary Deductions

435.1 Cumulative Effect on Prior Years of a

Change in Accounting Principle

EXTRAORDINARY ITEMS

434 Extraordinary Income

This account shall be credited with nontypical, noncustomary, infrequently recurring gains which would significantly distort

the current year’s income computed before

extraordinary items, if reported other than

as extraordinary items. Income tax relating

to the amounts recorded in this account

shall be recorded in Account 409.3, Income

Taxes, Extraordinary Items. (See §1767.15

(g).)

435 Extraordinary Deductions

This account shall be debited with nontypical, noncustomary, infrequently recurring

losses which would significantly distort the

current year’s income computed before extraordinary items, if reported other than as

extraordinary items. Income tax relating to

the amounts recorded in this account shall

be recorded in Account 409.3, Income Taxes,

Extraordinary Items. (See §1767.15 (f).)

435.1 Cumulative Effect on Prior Years of a

Change in Accounting Principle

This account shall include the cumulative

effect on margins of prior periods as a result

of a change in accounting principle from one

that is no longer generally accepted to one

that is generally accepted.

§ 1767.25 Retained earnings.

The retained earnings accounts identified in this section shall be used by

all RUS borrowers.

RETAINED EARNINGS

433 [Reserved]

436 [Reserved]

437 [Reserved]

438 [Reserved]

439 [Reserved]

RETAINED EARNINGS

433 [Reserved]

436 [Reserved]

437 [Reserved]

438 [Reserved]

439 [Reserved]

§ 1767.26 Operating revenue.

The operating revenue accounts identified in this section shall be used by

all RUS borrowers.

OPERATING REVENUE

Sales of Electricity

440 Residential Sales

440.1 Residential Sales—Excluding Seasonal

440.2 Residential Sales—Seasonal

441 Irrigation Sales

442 Commercial and Industrial Sales

442.1 Commercial and Industrial Sales—1000

kVA or Less

442.2 Commercial and Industrial Sales—

Over 1000 kVA

444 Public Street and Highway Lighting

445 Other Sales to Public Authorities

446 Sales to Railroads and Railways

447 Sales for Resale

447.1 Sales for Resale—RUS Borrowers

447.2 Sales for Resale—Other

770

§ 1767.26 7 CFR Ch. XVII (1–1–00 Edition)

448 Interdepartmental Sales

449.1 Provision for Rate Refunds

Other Operating Revenues

450 Forfeited Discounts

451 Miscellaneous Service Revenues

453 Sales of Water and Water Power

454 Rent from Electric Property

455 Interdepartmental Rents

456 Other Electric Revenues

OPERATING REVENUE

Sales of Electricity

440 Residential Sales

A. This account shall include the net billing for electricity supplied for residential or

domestic purposes.

NOTE: When electricity supplied through a

single meter is used for both residential and

commercial purposes, the total revenue shall

be included in this account, or Account 442,

Commercial and Industrial Sales, according

to the rate schedule that is applied. If the

same rate schedules apply to residential and

commercial and industrial service, classification shall be made according to principal

use.

B. Account 440 shall be subaccounted as

follows:

440.1 Residential Sales—Excluding Seasonal

440.2 Residential Sales—Seasonal

440.1 Residential Sales—Excluding Seasonal

A. This account shall include the net billing for electricity supplied for residential

and domestic purposes.

B. This account shall also include net billings for single phase service to schools,

churches, lodges, and other public buildings.

C. Records shall be maintained so that the

quantity of electricity sold and the revenue

received under each rate schedule shall be

readily available.

NOTE: Net billings for multiphase service

to schools, churches, lodges, and other public

buildings shall be included in the appropriate subaccount of Account 442, Commercial and Industrial Sales.

440.2 Residential Sales—Seasonal

This account shall include the net billings

for electricity supplied for residential and

domestic purposes to seasonal consumers.

441 Irrigation Sales

This account shall include the net billings

for electricity supplied for irrigation pumping. It need not be used unless such service

is provided under a special irrigation rate.

442 Commercial and Industrial Sales

A. This account shall include the net billing for electricity supplied to customers for

commercial and industrial purposes.

NOTE A: If the utility classifies large commercial and industrial customers and related

revenues on a lesser basis than 1000 kilowatts of demand, or segregates industrial

customers and related revenues according to

a recognized definition of an industrial customer, such classifications are acceptable in

lieu of those otherwise required by the text

of this account on the basis of 1000 kilowatts

of demand.

NOTE B: When electricity supplied through

a single meter is used for both commercial

and residential purposes, the total revenue

shall be included in this account, or Account

440, Residential Sales, according to the rate

schedule that is applied. If the same rate

schedules apply to residential and commercial and industrial service, classification

shall be made according to principal use.

B. Account 442 shall be subaccounted as

follows:

442.1 Commercial and Industrial Sales—1000

kVA or Less

442.2 Commercial and Industrial Sales—

Over 1000 kVA

442.1 Commercial and Industrial Sales—1000

kVA or Less

A. This account shall include the net billing for electricity supplied to consumers for

commercial and industrial purposes requiring transformer capacity of 1000 kVA or less.

B. Records shall be maintained so that the

quantity of electricity sold and the revenue

received under each rate schedule shall be

readily available.

NOTE: When electricity supplied through a

single meter is used for both commercial and

residential purposes, the total revenue shall

be included in this account or in Account

440, Residential Sales, based upon primary

use.

442.2 Commercial and Industrial Sales—

Over 1000 kVA

A. This account shall include the net billing for electricity supplied to consumers for

commercial and industrial purposes requiring transformer capacity in excess of 1000

kVA.

B. Records shall be maintained so that the

quantity of electricity sold and the revenue

received under each rate schedule shall be

readily available.

444 Public Street and Highway Lighting

A. This account shall include the net billing for electricity supplied and services rendered for the purposes of lighting streets,

highways, parks, and other public places or

for traffic or signal system service, for municipalities or other divisions or agencies of

state of Federal Governments.

B. Records shall be maintained so that the

quantity of electricity sold and the revenue

received from each customer shall be readily

771

Rural Utilities Service, USDA § 1767.26

available. In addition, the records shall be

maintained so as to show the revenues from

(1) contracts which include both electricity

and services, and (2) contracts which include

sales of electricity only.

445 Other Sales to Public Authorities

A. This account shall include the net billing for electricity supplied to municipalities

or divisions or agencies of Federal or state

governments, under special contracts or

agreements or service classifications applicable only to public authorities, except such

revenues as are includible in Account 444 and

Account 447.

B. Records shall be maintained so as to

show the quantity of electricity sold and the

revenues received from each customer.

446 Sales to Railroads and Railways

A. This account shall include the net billing for electricity supplied to railroads and

interurban and street railways, for general

railroad use, including the propulsion of cars

or locomotives, where such electricity is

supplied under separate and distinct rate

schedules.

B. Records shall be maintained so that the

quantity of electricity sold and the revenue

received from each customer shall be readily

available.

NOTE: Revenues from incidental use of

electricity furnished under a contract for

propulsion of cars or locomotives shall be included herein.

447 Sales for Resale

A. This account shall include the net billing for electricity supplied to other electric

utilities or to public authorities for resale

purposes.

NOTE: Revenues from electricity supplied

to other utilities for use by them and not for

distribution, shall be included in Account

442, Commercial and Industrial Sales, unless

supplied under the same contracts as and not

readily separable from revenues includible in

this account.

B. Account 447 shall be subaccounted as

follows:

447.1 Sales for Resale—RUS Borrowers

447.2 Sales for Resale—Other

447.1 Sales for Resale—RUS Borrowers

A. This account shall include the net billing for electricity supplied to RUS borrowers

for resale.

B. Records shall be maintained so as to

show the quantity of electricity sold and the

revenue received from each customer.

NOTE: Revenues from electricity supplied

to other utilities for use by them and not for

distribution, shall be included in Account

442, Commercial and Industrial Sales, unless

supplied under the same contract as and not

readily separable from revenues includible in

this account.

447.2 Sales for Resale—Other

A. This account shall include the net billing for electricity supplied for resale to utilities not financed by RUS.

B. Records shall be maintained so as to

show the quantity of electricity sold and the

revenue received from each customer.

NOTE: Revenues from electricity supplied

to other utilities for use by them and not for

distribution, shall be included in Account

442, Commercial and Industrial Sales, unless

supplied under the same contract as and not

readily separable from revenues includible in

this account.

448 Interdepartmental Sales

A. This account shall include amounts

charged by the electric department at tariff

or other specified rates for electricity supplied by it to other utility departments.

B. Records shall be maintained so that the

quantity of electricity supplied each other

department and the charges therefor shall be

readily available.

449.1 Provision for Rate Refunds

A. This account shall be charged with provisions for the estimated pretax effects on

net income of the portions of amounts being

collected subject to refund which are estimated to be required to be refunded. Such

provisions shall be credited to Account 229,

Accumulated Provision for Rate Refunds.

B. This account shall also be charged with

amounts refunded when such amounts had

not been previously accrued.

C. Income tax effects relating to the

amounts recorded in this account shall be recorded in Account 410.1, Provision for Deferred Income Taxes, Utility Operating Income, or Account 411.1, Provision for Deferred Income Taxes—Credit, Utility Operating Income, as appropriate.

Other Operating Revenues

450 Forfeited Discounts

This account shall include the amount of

discounts forfeited or additional charges imposed because of the failure of customers to

pay their electric bills on or before a specified date.

451 Miscellaneous Service Revenues

This account shall include revenues for all

miscellaneous services and charges billed to

customers which are not specifically provided for in other accounts.

Items

1. Fees for changing, connecting, or disconnecting service.

772

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

2. Profit on maintenance of appliances,

wiring, piping, or other installations on customers’ premises.

3. Net credit or debit (cost less net salvage

and less payment from customers) on closing

of work orders for plant installed for temporary service of less than one year. (See Account 185, Temporary Facilities.)

4. Recovery of expenses in connection with

current diversion cases (billing for the electricity consumed shall be included in the appropriate electric revenue account).

453 Sales of Water and Water Power

A. This account shall include revenues derived from the sale of water for irrigation,

domestic, industrial, or other uses or for the

development by others of water power or for

headwater benefits; also, revenues derived

from furnishing water power for mechanical

purposes when the investment in the property used in supplying such water or water

power is carried as electric plant in service.

B. The records for this account shall be

kept in such manner as to permit an analysis

of the rates charged and the purposes for

which the water was used.

454 Rent from Electric Property

A. This account shall include rents received for the use by others of land, buildings, and other property devoted to electric

operations by the utility.

B. When property owned by the utility is

operated jointly with others under a definite

arrangement for apportioning the actual expenses among the parties to the arrangement, any amount received by the utility for

interest or return or in reimbursement of

taxes or depreciation on the property shall

be credited to this account.

NOTE: Do not include in this account rents

from property constituting an operating unit

or system. (See Account 412, Revenues from

Electric Plant Leased to Others.)

455 Interdepartmental Rents

This account shall include rents credited

to the electric department on account of

rental charges made against other departments (gas, water, etc.) of the utility. In the

case of property operated under a definite arrangement to allocate the costs among the

departments using the property, any reimbursement to the electric department for interest or return and depreciation and taxes

shall be credited to this account.

456 Other Electric Revenues

This account shall include revenues derived from electric operations not includible

in any of the foregoing accounts. It shall

also include, in a separate subaccount, revenues received from operation of fish and

wildlife and recreation facilities whether operated by the company or by contract concessionaires, such as revenues from leases or

rentals of land for cottages, homes, or campsites.

Items

1. Commission on sale or distribution of

electricity of others when sold under rates

filed by such others.

2. Compensation for minor or incidental

services provided for others such as customer

billing, and engineering.

3. Profit or loss on the sale of material and

supplies not ordinarily purchased for resale

and not handled through merchandising and

jobbing accounts.

4. Sale of steam, but not including sales

made by a steamheating department or

transfers of steam under joint facility operations.

5. Revenues from transmission of electricity of others over transmission facilities

of the utility.

6. Include in a separate subaccount, revenues in payment for rights and/or benefits

received from others which are realized

through research, development, and demonstration ventures. In the event the

amounts received are so large as to distort

revenues for the year in which received (5

percent of net income before application of

the benefit), the amounts shall be credited to

Account 253, Other Deferred Credits, and amortized by credits to this account over a period not to exceed 5 years.

§ 1767.27 Operation and maintenance

expenses.

The operation and maintenance expense accounts identified in this section shall be used by all RUS borrowers.

OPERATION AND MAINTENANCE EXPENSE

ACCOUNTS

POWER PRODUCTION EXPENSES

Steam Power Generation

(Operation)

500 Operation Supervision and Engineering

501 Fuel

502 Steam Expenses

503 Steam from Other Sources

504 Steam Transferred—Credit

505 Electric Expenses

506 Miscellaneous Steam Power Expenses

507 Rents

509 Allowances

(Maintenance)

510 Maintenance Supervision and Engineering

511 Maintenance of Structures

512 Maintenance of Boiler Plant

513 Maintenance of Electric Plant

773

Rural Utilities Service, USDA § 1767.27

514 Maintenance of Miscellaneous Steam

Plant

Nuclear Power Generation

(Operation)

517 Operation Supervision and Engineering

518 Nuclear Fuel Expense

519 Coolants and Water

520 Steam Expenses

521 Steam from Other Sources

522 Steam Transferred—Credit

523 Electric Expenses

524 Miscellaneous Nuclear Power Expenses

525 Rents

(Maintenance)

528 Maintenance Supervision and Engineering

529 Maintenance of Structures

530 Maintenance of Reactor Plant Equipment

531 Maintenance of Electric Plant

532 Maintenance of Miscellaneous Nuclear

Plant

Hydraulic Power Generation

(Operation)

535 Operation Supervision and Engineering

536 Water for Power

537 Hydraulic Expenses

538 Electric Expenses

539 Miscellaneous Hydraulic Power Generation Expenses

540 Rents

(Maintenance)

541 Maintenance Supervision and Engineering

542 Maintenance of Structures

543 Maintenance of Reservoirs, Dams, and

Waterways

544 Maintenance of Electric Plant

545 Maintenance of Miscellaneous Hydraulic Plant

Other Power Generation

(Operation)

546 Operation Supervision and Engineering

547 Fuel

548 Generation Expenses

549 Miscellaneous Other Power Generation

Expenses

550 Rents

(Maintenance)

551 Maintenance Supervision and Engineering

552 Maintenance of Structures

553 Maintenance of Generating and Electric

Equipment

554 Maintenance of Miscellaneous Other

Power Generation Plant

OTHER POWER SUPPLY EXPENSES

555 Purchased Power

556 System Control and Load Dispatching

557 Other Expenses

TRANSMISSION EXPENSES

(Operation)

560 Operation Supervision and Engineering

561 Load Dispatching

562 Station Expenses

563 Overhead Line Expenses

564 Underground Line Expenses

565 Transmission of Electricity by Others

566 Miscellaneous Transmission Expenses

567 Rents

(Maintenance)

568 Maintenance Supervision and Engineering

569 Maintenance of Structures

570 Maintenance of Station Equipment

571 Maintenance of Overhead Lines

572 Maintenance of Underground Lines

573 Maintenance of Miscellaneous Transmission Plant

DISTRIBUTION EXPENSES

(Operation)

580 Operation Supervision and Engineering

581 Load Dispatching

582 Station Expenses

583 Overhead Line Expenses

584 Underground Line Expenses

585 Street Lighting and Signal System Expenses

586 Meter Expenses

587 Customer Installations Expenses

588 Miscellaneous Distribution Expenses

589 Rents

(Maintenance)

590 Maintenance Supervision and Engineering

591 Maintenance of Structures

592 Maintenance of Station Equipment

593 Maintenance of Overhead Lines

594 Maintenance of Underground Lines

595 Maintenance of Line Transformers

596 Maintenance of Street Lighting and Signal Systems

597 Maintenance of Meters

598 Maintenance of Miscellaneous Distribution Plant

774

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

OPERATION AND MAINTENANCE EXPENSE

ACCOUNTS

POWER PRODUCTION EXPENSES

Steam Power Generation

(Operation)

500 Operation Supervision and Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of the operation of steam power generating stations.

Direct supervision of specific activities, such

as fuel handling, boiler-room operations, and

generator operations shall be charged to the

appropriate account. (See §1767.17(a).)

501 Fuel

A. This account shall include the cost of

fuel used in the production of steam for the

generation of electricity, including expenses

in unloading fuel from the shipping media

and handling thereof up to the point where

the fuel enters the first boiler plant bunker,

hopper, bucket, tank, or holder of the boilerhouse structure. Records shall be maintained

to show the quantity, B.t.u. content and cost

of each type of fuel used.

B. The cost of fuel shall be charged initially to Account 151, Fuel Stock, and

cleared to this account on the basis of the

fuel used. Fuel handling expenses may be

charged to this account as incurred or

charged initially to Account 152, Fuel Stock

Expenses Undistributed. In the latter event,

they shall be cleared to this account on the

basis of the fuel used. Respective amounts of

fuel stock and fuel stock expenses shall be

readily available.

Items

Labor:

1. Supervising, purchasing, and handling of

fuel.

2. All routine fuel analyses.

3. Unloading from shipping facility and

placing in storage.

4. Moving of fuel in storage and transferring fuel from one station to another.

5. Handling from storage or shipping facility to first bunker, hopper, bucket, tank, or

holder of boiler-house structure.

6. Operation of mechanical equipment,

such as locomotives, trucks, cars, boats,

barges, and cranes.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

775

Rural Utilities Service, USDA § 1767.27

1. Operating, maintenance, and depreciation expenses and ad valorem taxes on utility-owned transportation equipment used to

transport fuel from the point of acquisition

to the unloading point.

2. Lease or rental costs of transportation

equipment used to transport fuel from the

point of acquisition to the unloading point.

3. Cost of fuel including freight, switching,

demurrage, and other transportation

charges.

4. Excise taxes, insurance, purchasing commissions, and similar items.

5. Stores expenses to extent applicable to

fuel.

6. Transportation and other expenses in

moving fuel in storage.

7. Tools, lubricants, and other supplies.

8. Operating supplies for mechanical equipment.

9. Residual disposal expenses less any proceeds from sale of residuals.

NOTE: Abnormal fuel handling expenses occasioned by emergency conditions shall be

charged to expense as incurred.

502 Steam Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in production of steam for electric generation.

This includes all expenses of handling and

preparing fuel beginning at the point where

the fuel enters the first boiler plant bunker,

hopper, tank, or holder of the boiler-house

structure.

Items

Labor:

1. Supervising steam production.

2. Operating fuel conveying, storage,

weighing, and processing equipment within

boiler plant.

3. Operating boiler and boiler auxiliary

equipment.

4. Operating boiler feed water purification

and treatment equipment.

5. Operating ash-collecting and disposal

equipment located inside the plant.

6. Operating boiler plant electrical equipment.

7. Keeping boiler plant log and records and

preparing reports on boiler plant operations.

8. Testing boiler water.

9. Testing, checking, and adjusting meters,

gauges, and other instruments and equipment in boiler plant.

10. Cleaning boiler plant equipment when

not incidental to maintenance work.

11. Repacking glands and replacing gauge

glasses where the work involved is of a

minor nature and is performed by regular operating crews. Where the work is of a major

character, such as that performed on highpressure boilers, the item should be considered as maintenance.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

776

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Chemicals and boiler inspection fees.

2. Lubricants.

3. Boiler feed water purchased and pumping

supplies.

503 Steam from Other Sources

This account shall include the cost of

steam purchased or transferred from another

department of the utility or from others

under a joint facility operating arrangement

for use in prime movers devoted to the production of electricity.

NOTE: The records shall be so kept as to

show separately for each company from

which stem is purchased, the point of delivery, the quantity, the price, and the total

charge. When steam is transferred from another department or from others under a

joint operating arrangement, the utility

shall be prepared to show full details of the

cost of producing such steam, the basis of

the charge to electric generation, and the extent and manner of use by each department

or party involved.

504 Steam Transferred—Credit

A. This account shall include credits for

expenses of producing steam which are

charged to others or to other utility departments under a joint operating arrangement.

Include also credits for steam expenses

chargeable to other electric accounts outside

of the steam generation group. Full details

of the basis of determination of the cost of

steam transferred shall be maintained.

B. If the charges to others or to other departments of the utility include an amount

for depreciation, taxes, and return on the

joint steam facilities, such portion of the

charge shall be credited, in the case of others, to Account 454, Rent from Electric Property, and in the case of other departments of

the utility, to Account 455, Interdepartmental Rents.

505 Electric Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

and materials used, and expenses incurred in

operating prime movers, generators, and

their auxiliary apparatus, switch gear, and

other electric equipment to the points where

electricity leaves for conversion for transmission or distribution.

Items

Labor:

1. Supervising electric production.

2. Operating turbines, engines, generators,

and exciters.

3. Operating condensers, circulating water

systems, and other auxiliary apparatus.

4. Operating generator cooling system.

5. Operating lubrication and oil control

system, including oil purification.

6. Operating switchboards, switch gear and

electric control, and protective equipment.

7. Keeping electric plant log and records

and preparing reports on electric plant operations.

8. Testing, checking, and adjusting meters,

gauges, and other instruments, relays, controls, and other equipment in the electric

plant.

9. Cleaning electric plant equipment when

not incidental to maintenance work.

10. Repacking glands and replacing gauge

glasses.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Taxes.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

777

Rural Utilities Service, USDA § 1767.27

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Lubricants and control system oils.

2. Generator cooling gases.

3. Circulating water purification supplies.

4. Cooling water purchased.

5. Motor and generator brushes.

506 Miscellaneous Steam Power Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and materials used and expenses

incurred which are not specifically provided

for or not readily assignable to other steam

generation operation expense accounts.

Items

Labor:

1. General clerical and stenographic work.

2. Guarding and patrolling plant and yard.

3. Building service.

4. Care of grounds including snow removal,

and grass cutting.

5. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. General operating supplies, such as

tools, gaskets, packing waste, gauge glasses,

hose, indicating lamps, record and report

forms.

2. First-aid supplies and safety equipment.

3. Employees’ service facilities expenses.

4. Building service supplies.

5. Communication service.

6. Miscellaneous office supplies and expenses, printing, and stationery.

7. Transportation expenses.

8. Meals, traveling, and incidental expenses.

9. Research, development, and demonstration expenses.

778

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

507 Rents

This account shall include all rents of

property of others used, occupied or operated

in connection with steam power generation.

(See §1767.17 (c).)

509 Allowances

This account shall include the cost of allowances expensed concurrent with the

monthly emission of sulfur dioxide. (See

§1767.15 (u).)

(Maintenance)

510 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of maintenance of steam generation facilities. Direct

field supervision of specific jobs shall be

charged to the appropriate maintenance account. (See §1767.17(a).)

511 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and materials used and expenses

incurred in the maintenance of steam structures, the book cost of which is includible in

Account 311, Structures and Improvements.

(See §1767.17(b).)

512 Maintenance of Boiler Plant

A. This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and materials used and expenses

incurred in the maintenance of steam plant,

the book cost of which is includible in Account 312, Boiler Plant Equipment. (See

§1767.17(b).)

B. For the purpose of making charges hereto and to Account 513, Maintenance of Electric Plant, the point at which steam plant is

distinguished from electric plant is defined

as follows:

1. Inlet flange of throttle valve on prime

mover.

2. Flange of all steam extraction lines on

prime mover.

3. Hotwell pump outlet on condensate

lines.

4. Inlet flange of all turbine-room auxiliaries.

5. Connection to line side of motor starter

for all boiler-plant equipment.

513 Maintenance of Electric Plant

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and materials used and expenses

incurred in the maintenance of electric

plant, the book cost of which is includible in

Account 313, Engines and Engine-Driven

Generators; Account 314, Turbogenerator

Units; and Account 315, Accessory Electric

Equipment. (See §1767.17(b) and Paragraph B

of Account 512.)

514 Maintenance of Miscellaneous Steam

Plant

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and materials used and expenses

incurred in maintenance of miscellaneous

steam generation plant, the book cost of

which is includible in Account 316, Miscellaneous Power Plant Equipment. (See

§1767.17(b).)

Nuclear Power Generation

(Operation)

517 Operation Supervision and Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of the operation of nuclear power generating stations.

Direct supervision of specific activities, such

as fuel handling, reactor operations, and generator operations shall be charged to the appropriate account. (See §1767.17(a).)

518 Nuclear Fuel Expense

A. This account shall be debited and Account 120.5, Accumulated Provision for Amortization of Nuclear Fuel Assemblies, credited for the amortization of the net cost of

nuclear fuel assemblies used in the production of energy. The net cost of nuclear fuel

assemblies subject to amortization shall be

the cost of nuclear fuel assemblies plus or

less the expected net salvage of uranium,

plutonium, and other byproducts and unburned fuel. The utility shall adopt the necessary procedures to assure that charges to

this account are distributed according to the

thermal energy produced in such periods.

B. This account shall also include the costs

involved when fuel is leased.

C. This account shall also include the cost

of other fuels, used for ancillary steam facilities, including superheat.

D. This account shall be debited or credited as appropriate for significant changes in

the amounts estimated as the net salvage

value of uranium, plutonium, and other byproducts contained in Account 157, Nuclear

Materials Held for Sale, and the amount realized upon the final disposition of the materials. Significant declines in the estimated

realizable value of items carried in Account

157 may be recognized at the time of market

779

Rural Utilities Service, USDA § 1767.27

price declines by charging this account and

crediting Account 157. When the declining

change occurs while the fuel is recorded in

Account 120.3, Nuclear Fuel Assemblies in

Reactor, the effect shall be amortized over

the remaining life of the fuel.

519 Coolants and Water

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

and materials used and expenses incurred for

heat transfer materials and water used for

steam and cooling purposes.

Items

Labor:

1. Operation of water supply facilities.

2. Handling of coolants and heat transfer

materials.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Taxes.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Chemicals.

2. Additions to or refining of fluids used in

reactor systems.

3. Lubricants.

4. Pumping supplies and expenses.

5. Miscellaneous supplies and expenses.

6. Purchased water.

NOTE: Do not include in this account water

for general station use or the initial charge

for coolants, heat transfer, or moderator

fluids, chemicals, or other supplies capitalized.

520 Steam Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

and materials used and expenses incurred in

production of steam through nuclear processes, and similar expenses for operation of

any auxiliary superheat facilities.

Items

Labor:

1. Supervising steam production.

2. Fuel handling including removal, insertion, disassembly, and preparation for cooling operations and shipment.

3. Testing instruments and gauges.

4. Health, safety, monitoring, and decontamination activities.

5. Waste disposal.

6. Operating steam boilers and auxiliary

steam, superheat facilities.

Taxes:

780

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Chemical supplies.

2. Charts and logs.

3. Health, safety, monitoring, and decontamination supplies.

4. Boiler inspection fees.

5. Lubricants.

521 Steam from Other Sources

This account shall include the cost of

steam purchased or transferred from another

department of the utility or from others

under a joint facility operating arrangement

for use in prime movers devoted to the production of electricity.

NOTE: The records shall be so kept as to

show separately for each company from

which steam is purchased, the point of delivery, the quantity, the price, and the total

charge. When steam is transferred from another operating department, the utility shall

be prepared to show full details of the cost of

producing such steam, the basis of the

charges to electric generation, and the extent and manner of use by each department

involved.

522 Steam Transferred—Credit

A. This account shall include credits for

expenses of producing steam which are

charged to others or to other utility departments under a joint operating arrangement.

Include also credits for steam expenses

chargeable to other electric accounts outside

of the steam generation group. Full details

of the basis of determination of the cost of

steam transferred shall be maintained.

B. If the charges to others or to other departments of the utility include an amount

for depreciation, taxes, and return on the

joint steam facilities, such portion of the

charge shall be credited in the case of others,

to Account 454, Rent from Electric Property,

and in the case of other departments of the

utility, to Account 455, Interdepartmental

Rents.

523 Electric Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in operating turbogenerators, steam turbines and

their auxiliary apparatus, switch gear, and

other electric equipment to the points where

electricity leaves for conversion for transmission or distribution.

781

Rural Utilities Service, USDA § 1767.27

Items

Labor:

1. Supervising electric production.

2. Operating turbines, engines, generators,

and exciters.

3. Operating condensers, circulating water

systems, and other auxiliary apparatus.

4. Operating generator cooling system.

5. Operating lubrication and oil control

system, including oil purification.

6. Operating switchboards, switch gear, and

electric control and protective equipment.

7. Keeping plant log and records and preparing reports on electric plant operations.

8. Testing, checking and adjusting meters,

gauges, and other instruments, relays, controls, and other equipment in the electric

plant.

9. Cleaning electric plant equipment when

not incidental to maintenance.

10. Repacking glands and replacing gauge

glasses.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Lubricants and control system oils.

2. Generator cooling gases.

3. Log sheets and charts.

4. Motor and generator brushes.

524 Miscellaneous Nuclear Power Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred which are not specifically provided

for or are not readily assignable to other nuclear generation operation accounts.

Items

Labor:

1. General clerical and stenographic work.

2. Plant security.

3. Building service.

4. Care of grounds, including snow removal,

and grass cutting

5. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

782

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. General operating supplies, such as

tools, gaskets, hose, indicating lamps,

records and reports forms.

2. First-aid supplies and safety equipment.

3. Employees’ service facilities expenses.

4. Building service supplies.

5. Communication service.

6. Miscellaneous office supplies and expenses, printing and stationery.

7. Transportation expenses.

8. Meals, traveling, and incidental expenses.

9. Research, development, and demonstration expenses.

525 Rents

This account shall include all rents of

property of others used, occupied, or operated in connection with nuclear generation.

(See §1767.17 (c).)

(Maintenance)

528 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of maintenance of nuclear generation facilities. Direct

field supervision of specific jobs shall be

charged to the appropriate maintenance account. (See §1767.17(a).)

529 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in the maintenance of structures, the

book cost of which is includible in Account

321, Structures and Improvements. (See

§1767.17(b).)

530 Maintenance of Reactor Plant

Equipment

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in the maintenance of reactor plant,

the book cost of which is includible in Account 322, Reactor Plant Equipment. (See

§1767.17(b).)

531 Maintenance of Electric Plant

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in the maintenance of electric plant,

the book cost of which is includible in Account 323, Turbogenerator Units, and Account 324, Accessory Electric Equipment.

(See §1767.17(b).)

532 Maintenance of Miscellaneous Nuclear

Plant

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of miscellaneous nuclear generating plant, the book cost of

which is includible in Account 325, Miscellaneous Power Plant Equipment. (See

§1767.17(b).)

Hydraulic Power Generation

(Operation)

535 Operation Supervision and Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

783

Rural Utilities Service, USDA § 1767.27

damages, and expenses incurred in the general supervision and direction of the operation of hydraulic power generating stations.

Direct supervision of specific activities, such

as hydraulic operation, and generator operation shall be charged to the appropriate account. (See §1767.17(a).)

536 Water for Power

This account shall include the cost of

water used for hydraulic power generation.

Items

1. Cost of water purchased from others, including water tolls paid reservoir companies.

2. Periodic payments for licenses or permits from any governmental agency for

water rights, or payments based on the use

of the water.

3. Periodic payments for riparian rights.

4. Periodic payments for headwater benefits or for detriments to others.

5. Cloud seeding.

537 Hydraulic Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in operating hydraulic works including reservoirs,

dams, and waterways, and in activities directly relating to the hydroelectric development outside the generating station. It shall

also include the cost of labor, materials

used, and other expenses incurred in connection with the operation of (1) fish and wildlife, and (2) recreation facilities. Separate

subaccounts shall be maintained for each of

the above.

Items

Labor:

1. Supervising hydraulic operation.

2. Removing debris and ice from trash

racks, reservoirs, and waterways.

3. Patrolling reservoirs and waterways.

4. Operating intakes, spillways, sluiceways,

and outlet works.

5. Operating bubbler, heater, or other deicing systems.

6. Ice and log jam work.

7. Operating navigation facilities.

8. Operations relating to conservation of

game, fish, and forests.

9. Insect control activities.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Insect control materials.

784

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

2. Lubricants, packing, and other supplies

used in the operation of hydraulic equipment.

3. Transportation expense.

538 Electric Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in operating prime movers, generators, and their

auxiliary apparatus, switchgear, and other

electric equipment, to the point where electricity leaves for conversion for transmission

or distribution.

Items

Labor:

1. Supervising electric production.

2. Operating prime movers, generators, and

auxiliary equipment.

3. Operating generator cooling system.

4. Operating lubrication and oil control

systems, including oil purification.

5. Operating switchboards, switchgear, and

electric control and protection equipment.

6. Keeping plant log and records and preparing reports on plant operations.

7. Testing, checking and adjusting meters,

gauges, and other instruments, relays, controls, and other equipment in the plant.

8. Cleaning plant equipment when not incidental to maintenance work.

9. Repacking glands.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Lubricants and control system oils.

2. Motor and generator brushes.

539 Miscellaneous Hydraulic Power

Generation Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred which are not specifically provided

for or are not readily assignable to other hydraulic generation operation expense accounts.

Items

Labor:

1. General clerical and stenographic work.

2. Guarding and patrolling plant and yard.

3. Building service.

4. Care of grounds including snow removal,

and grass cutting.

5. Snow removal from roads and bridges.

785

Rural Utilities Service, USDA § 1767.27

6. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. General operating supplies, such as

tools, gaskets, packing, waste, hose, indicating lamps, record and report forms.

2. First-aid supplies and safety equipment.

3. Employees’ service facilities expenses.

4. Building service supplies.

5. Communication service.

6. Office supplies, printing and stationery.

7. Transportation expenses.

8. Fuel.

9. Meals, traveling, and incidental expenses.

10. Research, development, and demonstration expenses.

540 Rents

This account shall include all rents of

property of others used, occupied, or operated in connection with hydraulic power generation, including amounts payable to the

United States for the occupancy of public

lands and reservations for reservoirs, dams,

flumes, forebays, penstocks, and power

houses but not including transmission rightof-way. (See §1767.17 (c).)

(Maintenance)

541 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of the maintenance of hydraulic power generating stations. Direct field supervision of specific jobs

shall be charged to the appropriate maintenance account. (See §1767.17(a).)

542 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of hydraulic structures, the book cost of which is includible in

Account 331, Structures and Improvements.

(See §1767.17 (b).) However, the cost of labor,

materials used, and expenses incurred in the

maintenance of fish and wildlife and recreation facilities, the book cost of which is includible in Account 331, Structures and Improvements, shall be charged to Account 545,

Maintenance of Miscellaneous Hydraulic

Plant.

543 Maintenance of Reservoirs, Dams, and

Waterways

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of plant includible in

Account 332, Reservoirs, Dams, and Waterways. (See §1767.17(b).) However, the cost of

labor, materials used, and expenses incurred

in the maintenance of fish and wildlife and

recreation facilities, the book cost of which

is includible in Account 332, Reservoirs,

Dams, and Waterways, shall be charged to

786

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

Account 545, Maintenance of Miscellaneous

Hydraulic Plant.

544 Maintenance of Electric Plant

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of plant includible in

Account 333, Water Wheels, Turbines and

Generators, and Account 334, Accessory Electric Equipment, (See §1767.17(b).)

545 Maintenance of Miscellaneous

Hydraulic Plant

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of plant, the book

cost of which is includible in Account 335,

Miscellaneous Power Plant Equipment, and

Account 336, Roads Railroads and Bridges.

(See §1767.17(b).) It shall also include the

cost of labor, materials used, and other expenses incurred in the maintenance of (1)

fish and wildlife, and (2) recreation facilities.

Separate subaccounts shall be maintained

for each of the above.

Other Power Generation

(Operation)

546 Operation Supervision and Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of the operation of other power generating stations. Direct supervision of specific activities, such

as fuel handling and engine and generator

operation shall be charged to the appropriate

account. (See §1767.17(a).)

547 Fuel

This account shall include the cost delivered at the station (See Account 151, Fuel

Stock) of all fuel, such as gas, oil, kerosene,

and gasoline used in other power generation.

548 Generation Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in operating prime movers, generators, and electric equipment in other power generating

stations, to the point where electricity

leaves for conversion for transmission or distribution.

Items

Labor:

1. Supervising other power generation operation.

2. Operating prime movers, generators, and

auxiliary apparatus and switching and other

electric equipment.

3. Keeping plant log and records and preparing reports on plant operations.

4. Testing, checking, cleaning, oiling, and

adjusting equipment.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

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Rural Utilities Service, USDA § 1767.27

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Dynamo, motor, and generator brushes.

2. Lubricants and control system oils.

3. Water for cooling engines and generators.

549 Miscellaneous Other Power Generation

Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in the operation of other power generating stations which are not specifically provided for or are not readily assignable to

other generation expense accounts.

Items

Labor:

1. General clerical and stenographic work.

2. Guarding and patrolling plant and yard.

3. Building service.

4. Care of grounds, including snow removal,

and grass cutting.

5. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Building service supplies.

2. First-aid supplies and safety equipment.

3. Communication service.

4. Employees’ service facilities expenses.

5. Office supplies, printing and stationery.

6. Transportation expense.

7. Meals, traveling, and incidental expenses.

8. Fuel for heating.

9. Water for fire protection or general use.

10. Miscellaneous supplies, such as hand

tools, drills, saw blades, and files.

11. Research, development, and demonstration expenses.

550 Rents

This account shall include all rents of

property of others used, occupied, or operated in connection with other power generation. (See §1767.17 (c).)

(Maintenance)

551 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of the maintenance of other power generating stations. Direct field supervision of specific jobs shall be

788

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

charged to the appropriate maintenance account. (See §1767.17(a).)

552 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of facilities used and

expenses incurred in maintenance of facilities used in other power generation, the book

cost of which is includible in Account 341,

Structures and Improvements, and Account

342, Fuel Holders, Producers and Accessories.

(See §1767.17(b).)

553 Maintenance of Generating and Electric

Equipment

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of plant, the book

cost of which is includible in Account 343,

Prime Movers; Account 344, Generators; and

Account 345, Accessory Electric Equipment.

(See §1767.17(b).)

554 Maintenance of Miscellaneous Other

Power Generation Plant

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of other power generation plant, the book cost of which is includible in Account 346, Miscellaneous Power

Plant Equipment. (See §1767.17(b).)

OTHER POWER SUPPLY EXPENSES

555 Purchased Power

A. This account shall include the cost at

point of receipt by the utility of electricity

purchased for resale. It shall also include,

net settlements for exchange of electricity

or power, such as economy energy, off-peak

energy for on-peak energy, and spinning reserve capacity. In addition, the account shall

include the net settlements for transactions

under pooling or interconnection agreements

wherein there is a balancing of debits and

credits for energy, or capacity. Distinct purchases and sales shall not be recorded as exchanges and net amounts only recorded

merely because debit and credit amounts are

combined in the voucher settlement.

B. The records supporting this account

shall show, by months, the demands and demand charges, kilowatt-hours and prices

thereof under each purchase contract and

the charges and credits under each exchange

or power pooling contract.

556 System Control and Load Dispatching

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

and expenses incurred in load dispatching activities for system control. Utilities having

an interconnected electric system or operating under a central authority which controls the production and dispatching of electricity may apportion these costs to this account and Account 561, Load Dispatching,

and Account 581, Load Dispatching.

Items

Labor:

1. Allocating loads to plants and interconnections with others.

2. Directing switching.

3. Arranging and controlling clearances for

construction, maintenance, test, and emergency purposes.

4. Controlling system voltages.

5. Recording loadings, and water conditions.

6. Preparing operating reports and data for

billing and budget purposes.

7. Obtaining reports on the weather and

special events.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

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Rural Utilities Service, USDA § 1767.27

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Expenses:

1. Communication service provided for system control purposes.

2. System record and report forms.

3. Meals, traveling, and incidental expenses.

4. Obtaining weather and special events reports.

557 Other Expenses

A. This account shall be charged with any

production expenses including expenses incurred directly in connection with the purchase of electricity, which are not specifically provided for in other production expense accounts. Charges to this account

shall be supported so that a description of

each type of charge will be readily available.

B. Recoveries from insurance companies,

under use and occupancy provisions of policies, of amounts in reimbursement of excessive or added productions costs for which the

insurance company is liable under the terms

of the policy shall be credited to this account.

TRANSMISSION EXPENSES

(Operation)

560 Operation Supervision and Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of the operation of the transmission system as a whole.

Direct supervision of specific activities, such

as station operation and line operation shall

be charged to the appropriate account. (See

§1767.17(a).)

561 Load Dispatching

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in load

dispatching operations pertaining to the

transmission of electricity.

Items

Labor:

1. Direct switching.

2. Arranging and controlling clearances for

construction, maintenance, test, and emergency purposes.

3. Controlling system voltages.

4. Obtaining reports on the weather and

special events.

5. Preparing operating reports and data for

billing and budget purposes.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

790

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Expenses:

1. Communication service provided for system control purposes.

2. System record and report forms.

3. Meals, traveling, and incidental expenses.

4. Obtaining weather and special events reports.

562 Station Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in operating transmission substations and switching stations. If transmission station equipment is located in or adjacent to a generating station, the expenses applicable to

transmission station operations shall nevertheless be charged to this account.

Items

Labor:

1. Supervising station operation.

2. Adjusting station equipment where such

adjustment primarily affects performance,

such as regulating the flow of cooling water,

adjusting current in fields of a machine or

changing voltage of regulators, changing station transformer taps.

3. Inspecting, testing, and calibrating station equipment for the purpose of checking

its performance.

4. Keeping station log and records and preparing records on station operation.

5. Operating switching and other station

equipment.

6. Standing watch, guarding, and patrolling station and station yard.

7. Sweeping, mopping, and tidying station.

8. Care of grounds, including snow removal,

and grass cutting.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

791

Rural Utilities Service, USDA § 1767.27

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Building service expenses.

2. Operating supplies, such as lubricants,

commutator brushes, water, and rubber

goods.

3. Station meter and instrument supplies,

such as ink and charts.

4. Station record and report forms.

5. Tool expense.

6. Transportation expenses.

7. Meals, traveling, and incidental expenses.

563 Overhead Line Expenses

564 Underground Line Expenses

A. These accounts shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in the

operation of transmission lines.

B. If the expenses are not substantial for

both overhead and underground lines, these

accounts may be combined.

Items

Labor:

1. Supervising line operation.

2. Inspecting and testing lightning arresters, circuit breakers, switches, and grounds.

3. Load tests of circuits.

4. Routine line patrolling.

5. Routine voltage surveys made to determine the condition or efficiency of transmission system.

6. Transferring loads, switching and reconnecting circuits and equipment for operating

purposes. (Switching for construction or

maintenance purposes is not includible in

this account.)

7. Routine inspection and cleaning of manholes, conduit, network, and transformer

vaults.

8. Electrolysis surveys.

9. Inspecting and adjusting line-testing

equipment, such as voltmeters, ammeters,

and wattmeters.

10. Regulation and addition of oil or gas in

high-voltage cable systems.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

792

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Transportation expenses.

2. Meals, traveling, and incidental expenses.

3. Tool expenses.

4. Operating supplies, such as instrument

charts, and rubber goods.

565 Transmission of Electricity by Others

This account shall include amounts payable to others for the transmission of the

utility’s electricity over transmission facilities owned by others.

566 Miscellaneous Transmission Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damage, materials used, and expenses incurred in transmission map and record work,

transmission office expenses, and other

transmission expenses not provided for elsewhere.

Items

Labor:

1. General records of physical characteristics of lines and stations, such as capacities.

2. Ground resistance records.

3. Janitor work at transmission office

buildings, including care of grounds, snow removal, and grass cutting.

4. Joint pole maps and records.

5. Line load and voltage records.

6. Preparing maps and prints.

7. General clerical and stenographic work.

8. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Communication service.

2. Building service supplies.

3. Map and record supplies.

4. Transmission office supplies and expenses, printing and stationery.

5. First-aid supplies.

6. Research, development, and demonstration expenses.

567 Rents

This account shall include rents of property of others used, occupied, or operated in

connection with the transmission system, including payments to the United States and

others for use of public or private lands and

reservations for transmission line rights-ofway. (See §1767.17 (c).)

793

Rural Utilities Service, USDA § 1767.27

(Maintenance)

568 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of maintenance of the transmission system. Direct

field supervision of specific jobs shall be

charged to the appropriate maintenance account. (See §1767.17(a).)

569 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in the maintenance of structures, the

book cost of which is includible in Account

352, Structures and Improvements. (See

§1767.17(b).)

570 Maintenance of Station Equipment

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of station equipment,

the book cost of which is includible in Account 353, Station Equipment. (See

§1767.17(b).)

571 Maintenance of Overhead Lines

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of transmission plant,

the book cost of which is includible in Accounts 354, Towers and Fixtures; 355, Poles

and Fixtures; 356, Overhead Conductors and

Devices; and 359, Roads and Trails. (See

§1767.17(b).)

Items

1. Work of the following character on

poles, towers, and fixtures:

a. Installing or removing additional

clamps or strain insulators on guys in place.

b. Moving line or guy pole in relocation of

the same pole or section of line.

c. Painting poles, towers, crossarms, or

pole extensions.

d. Readjusting and changing position of

guys or braces.

e. Realigning and straightening poles,

crossarms braces, and other pole fixtures.

f. Reconditioning reclaimed pole fixtures.

g. Relocating crossarms, racks, brackets,

and other fixtures on poles.

h. Repairing or realigning pins, racks, or

brackets.

i. Repairing pole supported platform.

j. Repairs by others to jointly owned poles.

k. Shaving, cutting rot, or testing poles or

crossarms in use or salvaged for reuse.

l. Stubbing poles already in service.

m. Supporting fixtures and conductors and

transferring them to new poles during pole

replacements.

n. Maintenance of pole signs, stencils, and

tags.

2. Work of the following character on overhead conductors and devices:

a. Overhauling and repairing line cutouts,

line switches, and line breakers.

b. Cleaning insulators and bushings.

c. Refusing cutouts.

d. Repairing line oil circuit breakers and

associated relays and control wiring.

e. Repairing grounds.

f. Resagging, retyping, or rearranging position or spacing of conductors.

g. Standing by phones, going to calls, cutting faulty lines clear, or similar activities

at times of emergencies.

h. Sampling, testing, changing, purifying,

and replenishing insulating oil.

i. Repairing line testing equipment.

j. Transferring loads, switching and reconnecting circuits and equipment for maintenance purposes.

k. Trimming trees and clearing brush.

l. Chemical treatment of right of way areas

when occurring subsequent to construction

of line.

3. Work of the following character on roads

and trails:

a. Repairing roadways and bridges.

b. Trimming trees and brush to maintain

previous roadway clearance.

c. Snow removal from roads and trails.

d. Maintenance work on publicly owned

roads and trails when done by utility at its

expense.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

794

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital services and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

572 Maintenance of Underground Lines

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of transmission plant,

the book cost of which is includible in Accounts 357, Underground Conduit, and Account 358, Underground Conductors and Devices. (See §1767.17(b).)

Items

1. Work of the following character on underground conduit:

a. Cleaning ducts, manholes, and sewer

connections.

b. Minor alterations of handholes, manholes, or vaults.

c. Refastening, repairing, or moving racks,

ladders, hangers in manholes, or vaults.

d. Plugging and shelving or replugging

ducts.

e. Repairs to sewers and drains, walls and

floors, rings and covers.

2. Work of the following character on underground conductors and devices:

a. Repairing oil circuit breakers, switches,

cutouts, and control wiring.

b. Repairing grounds.

c. Retraining and reconnecting cables in

manholes, including transfer of cables from

one duct to another.

d. Repairing conductors and splices.

e. Repairing or moving junction boxes and

potheads.

f. Refireproofing of cables and repairing

supports.

g. Repairing electrolysis preventive devices for cables.

h. Repairing cable bonding systems.

i. Sampling, testing, changing, purifying,

and replenishing insulating oil.

j. Transferring loads, switching and reconnecting circuits, and equipment for maintenance purposes.

k. Repairing line testing equipment.

l. Repairs to oil or gas equipment in highvoltage cable system and replacement of oil

or gas.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance: 

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

795

Rural Utilities Service, USDA § 1767.27

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

573 Maintenance of Miscellaneous

Transmission Plant

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of owned or leased

plant which is assignable to transmission operations and is not provided for elsewhere.

(See §1767.17(b).)

DISTRIBUTION EXPENSES

(Operation)

580 Operation Supervision and Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of the operation of the distribution system. Direct supervision of specific activities, such as station operation, line operation, and meter department operation shall be charged to the

appropriate account. (See §1767.17(a).)

581 Load Dispatching

This account (the keeping of which is optional with the utility) shall include the cost

of labor, employee pensions and benefits, social security and other payroll taxes, injuries and damages, property insurance, property taxes, materials used, and expenses incurred in load dispatching operations pertaining to the distribution of electricity.

Items

Labor: 

1. Direct switching.

2. Arranging and controlling clearances for

construction, maintenance, test, and emergency purposes.

3. Controlling system voltages.

4. Preparing operating reports.

5. Obtaining reports on the weather and

special events.

Taxes: 

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance: 

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Expenses: 

796

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

1. Communication service provided for system control purposes.

2. System record and report forms.

3. Meals, traveling, and incidental expenses.

582 Station Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in the

operation of distribution substations.

Items

Labor: 

1. Supervising station operation.

2. Adjusting station equipment where such

adjustment primarily affects performance,

such as regulating the flow of cooling water,

adjusting current in fields of a machine,

changing voltage of regulators, or changing

station transformer taps.

3. Keeping station log and records and preparing reports on station operation.

4. Inspecting, testing, and calibrating station equipment for the purpose of checking

its performance.

5. Operating switching and other station

equipment.

6. Standing watch, guarding, and patrolling station and station yard.

7. Sweeping, mopping, and tidying station.

8. Care of grounds, including snow removal,

and grass cutting.

Taxes: 

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Building service expenses.

2. Operating, supplies, such as lubricants,

commutator brushes, water, and rubber

goods.

3. Station meter and instrument supplies,

such as ink and charts.

4. Station record and report forms.

5. Tool expense.

6. Transportation expense.

7. Meals, traveling, and incidental expenses.

NOTE: If the utility owns storage battery

equipment used for supplying electricity to

customers in periods of emergency, the cost

of operating labor and of supplies, such as

acid, gloves, hydrometers, thermometers,

soda, automatic cell fillers, and acid proof

shoes shall be included in this account. If

significant in amount, a separate subdivision

shall be maintained for such expenses.

797

Rural Utilities Service, USDA § 1767.27

583 Overhead Line Expenses

584 Underground Line Expenses

These accounts shall include, respectively,

the cost of labor, employee pensions and benefits, social security and other payroll taxes,

injuries and damages, property insurance,

property taxes, materials used, and expenses

incurred in the operation of overhead and

underground distribution lines.

Items

Labor:

1. Supervising line operation.

2. Changing line transformer taps.

3. Inspecting and testing lightning arresters, line circuit breakers, switches, and

grounds.

4. Inspecting and testing line transformers

for the purpose of determining load, temperature, or operation performance.

5. Patrolling lines.

6. Load tests and voltage surveys of feeders, circuits, and line transformers.

7. Removing line transformers and voltage

regulators with or without replacement.

8. Installing line transformers or voltage

regulators with or without change in capacity provided that the cost of first installation of these items is included in Account

368, Line Transformers.

9. Voltage surveys, either routine or upon

request of customers, including voltage tests

at customer’s main switch.

10. Transferring loads, switching and reconnecting circuits and equipment for operation purpose.

11. Electrolysis surveys.

12. Inspecting and adjusting line testing

equipment.

Taxes: 

1. Federal and State unemployment.

2. F.I.C.A,

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Tool expense.

2. Transportation expense.

3. Meals, traveling, and incidental expenses.

4. Operating supplies, such as instrument

charts, and rubber goods.

585 Street Lighting and Signal System

Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in: (1)

The operation of street lighting and signal

system plant which is owned or leased by the

utility; and (2) the operation and maintenance of such plant owned by customers

where such work is done regularly as a part

798

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

of the street lighting and signal system service.

Items

Labor: 

1. Supervising street lighting and signal

systems operation.

2. Replacing lamps and incidental cleaning

of glassware and fixtures in connection

therewith.

3. Routine patrolling for lamp outages, extraneous nuisances, or encroachments.

4. Testing lines and equipment including

voltage and current measurement.

5. Winding and inspection of time switch

and other controls.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses: 

1. Street lamp renewals.

2. Transportation and tool expense.

3. Meals, traveling, and incidental expenses.

586 Meter Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in the

operation of customer meters and associated

equipment.

Items

Labor:

1. Supervising meter operation.

2. Clerical work on meter history and associated equipment record cards, test cards,

and reports.

3. Disconnecting and reconnecting, removing and reinstalling, sealing and unsealing

meters and other metering equipment in

connection with initiating or terminating

services including the cost of obtaining

meter readings, if incidental to such operation.

4. Consolidating meter installations due to

elimination of separate meters for different

rates of service.

5. Changing or relocating meters, instrument transformers, time switches, and other

metering equipment.

6. Resetting time controls, checking operation of demand meters and other metering

equipment, when done as an independent operation.

7. Inspecting and adjusting meter testing

equipment.

8. Inspecting and testing meters, instrument transformers, time switches, and other

metering equipment on premises or in shops

799

Rural Utilities Service, USDA § 1767.27

excluding inspecting and testing incidental

to maintenance.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses

1. Meter seals and miscellaneous meter

supplies.

2. Transportation expenses.

3. Meals, traveling, and incidental expenses.

4. Tool expenses.

NOTE: The cost of the first setting and testing of a meter is chargeable to utility plant,

Account 370, Meters.

587 Customer Installations Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in

work on customer installations in inspecting

premises and in rendering services to customers of the nature of those indicated by

the list of items hereunder.

Items

Labor:

1. Supervising customer installations

work.

2. Inspecting premises, including the check

of wiring for code compliance.

3. Investigating, locating, and clearing

grounds on customers’ wiring.

4. Investigating service complaints, including load tests of motors and lighting and

power circuits on customers’ premises; field

investigations of complaints on bills or of

voltage.

5. Installing, removing, renewing, and

changing lamps and fuses.

6. Radio, television, and similar interference work including erection of new

aerials on customers’ premises and patrolling of lines, testing of lightning arresters,

inspection of pole hardware, and examination on or off premises of customers’ appliances, wiring, or equipment to locate cause

of interference.

7. Installing, connecting, reinstalling, or

removing leased property on customers’

premises.

8. Testing, adjusting, and repairing customers’ fixtures and appliances in the shop

or on premises.

9. Cost of changing customers’ equipment

due to changes in service characteristics.

10. Investigation of current diversion including setting and removal of check meters

and securing special readings thereon; special calls by employees in connection with

800

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

discovery and settlement of current diversion; changes in customer wiring; and any

other labor cost identifiable as caused by

current diversion.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance: 

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Lamp and fuse renewals.

2. Materials used in servicing customers’

fixtures, appliances, and equipment.

3. Power, light, heat, telephone, and other

expenses of the appliance repair department.

4. Tool expense.

5. Transportation expense, including pickup and delivery charges.

6. Meals, traveling, and incidental expenses.

7. Rewards paid for discovery of current diversion.

NOTE A: Amounts billed customers for any

work, the cost of which is charged to this account, shall be credited to this account. Any

excess over costs resulting therefrom, shall

be transferred to Account 451, Miscellaneous

Service Revenues.

NOTE B: Do not include in this account expenses incurred in connection with merchandising, jobbing, and contract work.

588 Miscellaneous Distribution Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in distribution system operation not

provided for elsewhere.

Items

Labor:

1. General records of physical characteristics of lines and substations, such as capacities.

2. Ground resistance records.

3. Joint pole maps and records.

4. Distribution system voltage and load

records.

5. Preparing maps and prints.

6. Service interruption and trouble records.

7. General clerical and stenographic work

except that chargeable to Account 586, Meter

Expenses.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

801

Rural Utilities Service, USDA § 1767.27

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Expenses:

1. Operating records covering poles, transformers, manholes, cables, and other distribution facilities. Exclude meter records

chargeable to Account 586, Meter Expenses,

and station records chargeable to Account

582, Station Expenses, and stores records

chargeable to Account 163, Stores Expense

Undistributed.

2. Janitor work at distribution office buildings including snow removal and grass cutting.

3. Communication service.

4. Building service expenses.

5. Miscellaneous office supplies and expenses, printing and stationery, maps and

records, and first-aid supplies.

6. Research, development, and demonstration expenses.

589 Rents

This account shall include rents of property of others used, occupied, or operated in

connection with the distribution system, including payments to the United States and

others for the use and occupancy of public

lands and reservations for distribution line

rights of way. (See §1767.17 (c).)

(Maintenance)

590 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general supervision and direction of maintenance of the distribution system. Direct field

supervision of specific jobs shall be charged

to the appropriate maintenance account.

(See §1767.17(a).)

591 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of structures, the

book cost of which is includible in Account

361, Structures and Improvements. (See

§1767.17(b).)

592 Maintenance of Station Equipment

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of plant, the book

cost of which is includible in Account 362,

Station Equipment, and Account 363, Storage Battery Equipment. (See §1767.17(b).)

593 Maintenance of Overhead Lines

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in the maintenance of overhead distribution line facilities, the book cost of

which is includible in Account 364, Poles,

Towers and Fixtures; Account 365, Overhead

Conductors and Devices; and Account 369,

Services. (See §1767.17(b).)

Items

1. Work of the following character on

poles, towers, and fixtures:

a. Installing additional clamps or removing clamps or strain insulators on guys in

place.

b. Moving line or guy pole in relocation of

pole or section of line.

802

§ 1767.27 7 CFR Ch. XVII (1–1–00 Edition)

c. Painting poles, towers, crossarms, or

pole extensions.

d. Readjusting and changing position of

guys or braces.

e. Realigning and straightening poles,

crossarms, braces, pins, racks, brackets, and

other pole fixtures.

f. Reconditioning reclaimed pole fixtures.

g. Relocating crossarms, racks, brackets,

and other fixtures on poles.

h. Repairing pole supported platform.

i. Repairs by others to jointly owned poles.

j. Shaving, cutting rot, or treating poles or

crossarms in use or salvaged for reuse.

k. Stubbing poles already in service.

l. Supporting conductors, transformers,

and other fixtures and transferring them to

new poles during pole replacements.

m. Maintaining pole signs, stencils, and

tags.

2. Work of the following character on overhead conductors and devices:

a. Overhauling and repairing line cutouts,

line switches, line breakers, and capacitor

installations.

b. Cleaning insulators and bushings.

c. Refusing line cutouts.

d. Repairing line oil circuit breakers and

associated relays and control wiring.

e. Repairing grounds.

f. Resagging, retying, or rearranging position or spacing of conductors.

g. Standing by phones, going to calls, cutting faulty lines clear, or similar activities

at times of emergency.

h. Sampling, testing, changing, purifying,

and replenishing insulating oil.

i. Transferring loads, switching, and reconnecting circuits and equipment for maintenance purposes.

j. Repairing line testing equipment.

k. Trimming trees and clearing brush.

l. Chemical treatment of right-of-way area

when occurring subsequent to construction

of line.

3. Work of the following character on overhead services:

a. Moving position of service either on pole

or on customers’ premises.

b. Pulling slack in service wire.

c. Retying service wire.

d. Refastening or tightening service bracket.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

594 Maintenance of Underground Lines

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in the maintenance of underground

distribution line facilities, the book cost of

which is includible in Account 366, Underground Conduit; Account 367, Underground

Conductors and Devices; and Account 369,

Services. (See §1767.17(b).)

Items

1. Work of the following character on underground conduit:

a. Cleaning ducts, manholes, and sewer

connections.

b. Moving or changing position of conduit

or pipe.

803

Rural Utilities Service, USDA § 1767.27

c. Minor alterations of handholes, manholes, or vaults.

d. Refastening, repairing, or moving racks,

ladders, or hangers in manholes or vaults.

e. Plugging and shelving ducts.

f. Repairs to sewers, drains, walls, and

floors, rings, and covers.

2. Work of the following character on underground conductors and devices:

a. Repairing circuit breakers, switches,

cutouts, network protectors, and associated

relays and control wiring.

b. Repairing grounds.

c. Retraining and reconnecting cables in

manholes including transfer of cables from

one duct to another.

d. Repairing conductors and splices.

e. Repairing or moving junction boxes and

potheads.

f. Refireproofing cables and repairing supports.

g. Repairing electrolysis preventive devices for cables.

h. Repairing cable bonding systems.

i. Sampling, testing, changing, purifying,

and replenishing insulating oil.

j. Transferring loads, switching and reconnecting circuits and equipment for maintenance purposes.

k. Repairing line testing equipment.

l. Repairing oil or gas equipment in high

voltage cable systems and replacement of oil

or gas.

3. Work of the following character on underground services:

a. Cleaning ducts.

b. Repairing any underground service

plant.

Taxes: 

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance: 

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

595 Maintenance of Line Transformers

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of distribution line

transformers, the book cost of which is includible in Account 368, Line Transformers.

(See §1767.17(b).)

596 Maintenance of Street Lighting and

Signal Systems

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of plant, the book

cost of which is includible in Account 373,

Street Lighting and Signal Systems. (See

§1767.17(b).)

597 Maintenance of Meters

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in the maintenance of meters and

meter testing equipment, the book cost of

which is includible in Account 370, Meters,

and Account 395, Laboratory Equipment, respectively. (See §1767.17(b).)

804

§ 1767.28 7 CFR Ch. XVII (1–1–00 Edition)

598 Maintenance of Miscellaneous

Distribution Plant

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in maintenance of plant, the book

cost of which is includible in Accounts 371,

Installations on Customers’ Premises, and

Account 372, Leased Property on Customers’

Premises, and any other plant the maintenance of which is assignable to the distribution function and is not provided for elsewhere. (See §1767.17(b).)

Items

1. Work of similar nature to that listed in

other distribution maintenance accounts.

2. Maintenance of office furniture and

equipment used by distribution system department.

Taxes: 

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance: 

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

[58 FR 59825, Nov. 10, 1993, as amended at 62

FR 42291, Aug. 6, 1997]

§ 1767.28 Customer accounts expenses.

The customer accounts expense accounts identified in this section shall

be used by all RUS borrowers.

CUSTOMER ACCOUNTS EXPENSES

(Operation)

901 Supervision

902 Meter Reading Expenses

903 Customer Records and Collection Expenses

904 Uncollectible Accounts

905 Miscellaneous Customer Accounts Expenses

CUSTOMER ACCOUNTS EXPENSES

(Operation)

901 Supervision

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general direction and supervision of customer

accounting and collecting activities. Direct

supervision of a specific activity shall be

charged to Account 902, Meter Reading Expenses, or Account 903, Customer Records

and Collection Expenses, as appropriate. (See

§1767.17(a).)

902 Meter Reading Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in reading customer meters, and determining consumption when performed by

employees engaged in reading meters.

Items

Labor:

1. Addressing forms for obtaining meter

readings by mail.

2. Changing and collecting meter charts

used for billing purposes.

805

Rural Utilities Service, USDA § 1767.28

3. Inspecting time clocks and checking

seals when performed by meter readers and

the work represents a minor activity incidental to regular meter reading routine.

4. Reading meters, including demand meters, and obtaining load information for billing purposes. Exclude and charge to Account

586, Meter Expenses, or to Account 903, Customer Records and Collection Expenses, as

applicable, the cost of obtaining meter readings, first and final, if incidental to the operation of removing or resetting, sealing or

locking, and disconnecting or reconnecting

meters.

5. Computing consumption from meter

reader’s book or from reports by mail when

done by employees engaged in reading meters.

6. Collecting from prepayment meters

when incidental to meter reading.

7. Maintaining record of customers’ keys.

8. Computing estimated or average consumption when performed by employees engaged in reading meters.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Badges, lamps, and uniforms.

2. Demand charts, meter books and binders

and forms for recording readings, but not the

cost of preparation.

3. Postage and supplies used in obtaining

meter readings by mail.

4. Transportation, meals, and incidental

expenses.

903 Customer Records and Collection

Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in work on customer applications,

contracts, orders, credit investigations, billing and accounting, collections and complaints.

Items

Labor:

1. Receiving, preparing, recording, and

handling routine orders for service, disconnections, transfers or meter tests initiated by the customer, excluding the cost of

carrying out such orders, which is chargeable to the account appropriate for the work

called for by such orders.

2. Investigations of customers’ credit and

keeping of records pertaining thereto, including records of uncollectible accounts

written off.

3. Receiving, refunding, or applying customer deposits and maintaining customer

deposit, line extension, and other miscellaneous records.

4. Checking consumption shown by meter

readers’ reports where incidental to preparation of billing date.

5. Preparing address plates and addressing

bills and delinquent notices.

6. Preparing billing data.

7. Operating billing and bookkeeping machines.

8. Verifying billing records with contracts

or rate schedules.

9. Preparing bills for delivery and mailing

or delivering bills.

806

§ 1767.28 7 CFR Ch. XVII (1–1–00 Edition)

10. Collecting revenues, including collection from prepayment meters, unless incidental to meter-reading operations.

11. Balancing collections, preparing collections for deposit, and preparing cash reports.

12. Posting collections and other credits or

charges to customer accounts and extending

unpaid balances.

13. Balancing customer accounts and controls.

14. Preparing, mailing, or delivering delinquent notices and preparing reports of delinquent accounts.

15. Final meter reading of delinquent accounts when done by collectors incidental to

regular activities.

16. Disconnecting and reconnecting service

because of nonpayment bills.

17. Receiving, recording, and handling of

inquiries, complaints, and requests for investigations from customers, including preparation of necessary orders, but excluding the

cost of carrying out such orders, which is

chargeable to the account appropriate for

the work called for by such orders.

18. Statistical and tabulating work on customer accounts and revenues, but not including special analyses for sales department,

rate department, or other general purposes,

unless incidental to regular customer accounting routines.

19. Preparing and periodically rewriting

meter reading sheets.

20. Determining consumption and computing estimated or average consumption

when performed by employees other than

those engaged in reading meters.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Address plates and supplies.

2. Cash overages and shortages.

3. Commissions or fees to others for collecting.

4. Payments to credit organizations for investigations and reports.

5. Postage.

6. Transportation expenses, including

transportation of customer bills and meter

books under centralized billing procedures.

7. Transportation, meals expenses, and incidental expenses.

8. Bank charges, exchange, and other fees

for cashing and depositing customers’

checks.

9. Forms for recording orders for services,

or removals.

10. Rent of mechanical equipment.

NOTE: The cost of work on meter history

and meter location records in chargeable to

Account 586, Meter Expenses.

904 Uncollectible Accounts

This amount shall be charged with

amounts sufficient to provide for losses from

uncollectible utility revenues. Concurrent

credits shall be made to Account 144, Accumulated Provision for Uncollectible Accounts—Credit. Losses from uncollectible accounts shall be charged to Account 144.

807

Rural Utilities Service, USDA § 1767.29

905 Miscellaneous Customer Accounts

Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred not

provided for in other accounts.

Items

Labor:

1. General clerical and stenographic work.

2. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein, or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Communication service.

2. Miscellaneous office supplies and expenses and stationery and printing other

than those specifically provided for in Account 902 and Account 903.

[58 FR 59825, Nov. 10, 1993, as amended at 62

FR 42311, Aug. 6, 1997; 62 FR 43201, Aug. 12,

1997]

§ 1767.29 Customer service and informational expenses.

The customer service and informational expense accounts identified in

this section shall be used by all RUS

borrowers.

CUSTOMER SERVICE AND INFORMATIONAL

EXPENSES

(Operation)

907 Supervision

908 Customer Assistance Expenses

909 Informational and Instructional Advertising Expenses

910 Miscellaneous Customer Service and Informational Expenses

CUSTOMER SERVICE AND INFORMATIONAL

EXPENSES

(Operation)

907 Supervision

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general direction and supervision of customer

service activities, the object of which is to

encourage safe, efficient, and economical use

of the utility’s service. Direct supervision of

a specific activity within customer service

and informational expense classification

shall be charged to the account wherein the

808

§ 1767.29 7 CFR Ch. XVII (1–1–00 Edition)

costs of such activity are included. (See

§1767.17(a).)

908 Customer Assistance Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in providing instructions or assistance to customers, the object of which is to

encourage safe, efficient, and economical use

of the utility’s service.

Items

Labor:

1. Direct supervision of department.

2. Processing customer inquiries relating

to the proper use of electric equipment, the

replacement of such equipment, and information related to such equipment.

3. Advice directed to customers as to how

they may achieve the most efficient and

safest use of electric equipment.

4. Demonstrations, exhibits, lectures, and

other programs designed to instruct customers in the safe, economical, or efficient

use of electric service, and/or oriented toward conservation of energy.

5. Engineering and technical advice to customers, the object of which is to promote

safe, efficient, and economical use of the

utility’s service.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Supplies and expenses pertaining to demonstrations, exhibits, lectures, and other

programs.

2. Loss in value on equipment and appliances used for customer assistance programs.

3. Office supplies and expenses.

4. Transportation, meals, and incidental

expenses.

NOTE: Do not include in this account expenses that are provided for elsewhere, such

as Accounts 416, Costs and Expenses of Merchandising, Jobbing, and Contract Work; 587,

Customer Installations Expenses; and 912,

Demonstrating and Selling Expenses.

909 Informational and Instructional

Advertising Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in activities which primarily convey

information as to what the utility urges or

suggests customers should do in utilizing

electric service to protect health and safety,

to encourage environmental protection, to

utilize their electric equipment safely and

economically, or to conserve electric energy.

Items

Labor:

1. Direct supervision of information activities.

2. Preparing informational materials for

newspapers, periodicals, and billboards and

preparing and conducting informational motion pictures, radio and television programs.

809

Rural Utilities Service, USDA § 1767.29

3. Preparing informational booklets and

bulletins used in direct mailings.

4. Preparing informational window and

other displays.

5. Employing agencies, selecting media,

and conducting negotiations in connection

with the placement and subject matter of information programs.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance: 

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Use of newspapers, periodicals, billboards, and radio for informational purposes.

2. Postage on direct mailings to customers

exclusive of postage related to billings.

3. Printing of informational booklets,

dodgers, and bulletins.

4. Supplies and expenses in preparing informational materials by the utility.

5. Office supplies and expenses.

NOTE A: Exclude from this account and

charge to Account 930.2, Miscellaneous General Expenses, the cost of publication of

stockholder reports, dividend notices, bond

redemption notices, financial statements,

and other notices of a general corporate

character. Also exclude all expenses of a promotional, institutional, goodwill, or political nature, which are includible in such accounts as 913, Advertising Expenses; 930.1,

General Advertising Expenses; and 426.4, Expenditures for Certain Civic, Political and

Related Activities.

NOTE B: Entries relating to informational

advertising included in this account shall

contain or refer to supporting documents

which identify the specific advertising message. If references are used, copies of the advertising message shall be readily available.

910 Miscellaneous Customer Service and

Informational Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in connection with customer service and informational activities which are not includible in

other customer information expense accounts.

Items

Labor:

1. General clerical and stenographic work

not assigned to specific customer service and

informational programs.

2. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

810

§ 1767.30 7 CFR Ch. XVII (1–1–00 Edition)

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Communication service.

2. Printing, postage, and office supplies expenses.

[58 FR 59825, Nov. 10, 1993, as amended at 62

FR 42313, Aug. 6, 1997]

§ 1767.30 Sales expenses.

The sales expense accounts identified

in this section shall be used by all RUS

borrowers.

SALES EXPENSES

(Operation)

911 Supervision

912 Demonstrating and Selling Expenses

913 Advertising Expenses

916 Miscellaneous Sales Expenses

SALES EXPENSES

(Operation)

911 Supervision

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, and expenses incurred in the general direction and supervision of sales activities, except merchandising. Direct supervision of a specific activity, such as demonstrating, selling, or advertising shall be

charged to the account wherein the costs of

such activity are included. (See §1767.17(a).)

912 Demonstrating and Selling Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in promotional, demonstrating, and

selling activities, except by merchandising,

the object of which is to promote or retain

the use of utility services by present and

prospective customers.

Items

Labor:

1. Demonstrating uses of utility services.

2. Conducting cooking schools, preparing

recipes, and related home service activities.

3. Exhibitions, displays, lectures, and other

programs designed to promote use of utility

services.

4. Experimental and development work in

connection with new and improved appliances and equipment, prior to general public

acceptance.

5. Solicitation of new customers or of additional business from old customers, including commissions paid employees.

6. Engineering and technical advice to

present or prospective customers in connection with promoting or retaining the use of

utility services.

7. Special customer canvasses when their

primary purpose is the retention of business

or the promotion of new business.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

811

Rural Utilities Service, USDA § 1767.30

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Supplies and expenses pertaining to demonstration, experimental, and development

activities.

2. Booth and temporary space rental.

3. Loss in value on equipment and appliances used for demonstration purposes.

4. Transportation, meals, and incidental

expenses.

913 Advertising Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in advertising designed to promote or

retain the use of utility service, except advertising the sale of merchandise by the utility.

Items

Labor:

1. Direct supervision of department.

2. Preparing advertising material for newspapers, periodicals, and billboards, and preparing and conducting motion pictures,

radio, and television programs.

3. Preparing booklets and bulletins used in

direct mail advertising.

4. Preparing window and other displays.

5. Clerical and stenographic work.

6. Investigating advertising agencies and

media and conducting negotiations in connection with the placement and subject matter of sales advertising.

Taxes: 

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance: 

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

812

§ 1767.30 7 CFR Ch. XVII (1–1–00 Edition)

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Advertising in newspapers, periodicals,

billboards, and radio for sales promotion purposes, but not including institutional or

goodwill advertising includible in Account

930.1, General Advertising Expenses.

2. Materials and services given as prizes or

otherwise in connection with civic lighting

contests, canning, or cooking contests, and

bazaars in order to publicize and promote the

use of utility services.

3. Fees and expenses of advertising agencies and commercial artists.

4. Novelties for general distribution.

5. Postage on direct mail advertising.

6. Premiums distributed generally, such as

recipe books when not offered as inducement

to purchase appliances.

7. Printing booklets, dodgers, and bulletins.

8. Supplies and expenses in preparing advertising material.

9. Office supplies and expenses.

NOTE A: The cost of advertisements which

set forth the value or advantages of utility

service without reference to specific appliances, or, if reference is made to appliances,

invites the reader to purchase appliances

from his dealer or refer to appliances not

carried for sale by the utility, shall be considered sales promotion advertising and

charged to this account. However, advertisements which are limited to specific makes of

appliances sold by the utility and price and

terms, thereof, without referring to the

value or advantages of utility service, shall

be considered as merchandise advertising

and the cost shall be charged to Costs and

Expenses of Merchandising, Jobbing and

Contract Work, Account 416.

NOTE B: Advertisements which substantially mention or refer to the value or advantages of utility service, together with specific reference to makes of appliance sold by

the utility and the price, and terms, thereof,

and designed for the joint purpose of increasing the use of utility service and the sales of

appliances, shall be considered as a combination advertisement and the costs shall be

distributed between this account and Account 416 on the basis of space, time, or

other proportional factors.

NOTE C: Exclude from this account and

charge to Account 930.2, Miscellaneous General Expenses, the cost of publication of

stockholder reports, dividend notices, bond

redemption notices, financial statements,

and other notices of a general corporate

character. Also exclude all institutional or

goodwill advertising. (See Account 930.1,

General Advertising Expenses.)

916 Miscellaneous Sales Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

materials used, and expenses incurred in connection with sales activities, except merchandising, which are not includible in other

sales expense accounts.

Items

Labor:

1. General clerical and stenographic work

not assigned to specific functions.

2. Special analysis of customer accounts

and other statistical work for sales purposes

not a part of the regular customer accounting and billing routine.

3. Miscellaneous labor.

Taxes: 

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance: 

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

813

Rural Utilities Service, USDA § 1767.31

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses: 

1. Communication service.

2. Printing, postage, office supplies, and expenses applicable to sales activities, except

those chargeable to Account 913, Advertising

Expenses.

[58 FR 59825, Nov. 10, 1993, as amended at 62

FR 42315, Aug. 6, 1997]

§ 1767.31 Administrative and general

expenses.

The administrative and general expense accounts identified in this section shall be used by all RUS borrowers.

ADMINISTRATIVE AND GENERAL

(Operation)

920 Administrative and General Salaries

921 Office Supplies and Expenses

922 Administrative Expenses Transferred—

Credit

923 Outside Services Employed

924 Property Insurance

925 Injuries and Damages

926 Employee Pensions and Benefits

927 Franchise Requirements

928 Regulatory Commission Expenses

929 Duplicate Charges—Credit

930.1 General Advertising Expenses

930.2 Miscellaneous General Expenses

931 Rents

(Maintenance)

935 Maintenance of General Plant

ADMINISTRATIVE AND GENERAL

(Operation)

920 Administrative and General Salaries

A. This account shall include the compensation (salaries, bonuses, employee pensions and benefits, social security and other

payroll taxes, injuries and damages, and

other consideration for services, but not including directors’ fees) of officers, executives, and other employees of the utility

properly chargeable to utility operations and

not chargeable directly to a particular operating function.

B. This account may be subdivided in accordance with a classification appropriate to

the departmental or other functional organization of the utility.

921 Office Supplies and Expenses

A. This account shall include office supplies and expenses incurred in connection

with the general administration of the utility’s operations which are assignable to specific administrative or general departments

and are not specifically provided for in other

accounts. This includes the expenses of the

various administrative and general departments, the salaries and wages of which are

includible in Account 920.

B. This account may be subdivided in accordance with a classification appropriate to

the departmental or other functional organization of the utility.

NOTE: Office expenses which are clearly applicable to any category of operating expenses other than the administrative and

general category shall be included in the appropriate account in such category. Further,

general expenses which apply to the utility

as a whole rather than to a particular administrative function, shall be included in

Account 930.2, Miscellaneous General Expenses.

Items

1. Automobile service, including charges

through clearing account.

2. Bank messenger and service charges.

3. Books, periodicals, bulletins, and subscriptions to newspapers, newsletters, and

tax services.

4. Building service expenses for customer

accounts, sales, and administrative and general purposes.

5. Communication service expenses.

6. Cost of individual items of office equipment used by general departments which are

of small value or short life.

814

§ 1767.31 7 CFR Ch. XVII (1–1–00 Edition)

7. Membership fees and dues in trade, technical, and professional associations paid by a

utility for employees. (Company memberships are includible in Account 930.2.)

8. Office supplies and expenses.

9. Payment of court costs, witness fees, and

other expenses of legal department.

10. Postage, printing, and stationery.

11. Meals, traveling, and incidental expenses.

922 Administrative Expenses Transferred—

Credit

This account shall be credited with administrative expenses recorded in Account 920

and Account 921 which are transferred to

construction costs or to nonutility accounts.

(See §1767.16 (d).)

923 Outside Services Employed

A. This account shall include the fees and

expenses of professional consultants and others for general services which are not applicable to a particular operating function or

other accounts. It shall include also the pay

and expenses of persons engaged for a special

or temporary administrative or general purpose in circumstances where the person so

engaged is not considered as an employee of

the utility.

B. This account shall be so maintained as

to permit ready summarization according to

the nature of service and the person furnishing the same.

Items

1. Fees, pay, and expenses of accountants

and auditors, actuaries, appraisers, attorneys, engineering consultants, management

consultants, negotiators, public relations

counsel, and tax consultants.

2. Supervision fees and expenses paid under

contracts for general management services.

NOTE: Do not include inspection and brokerage fees and commissions chargeable to

other accounts or fees and expenses in connection with security issues which are includible in the expenses of issuing securities.

924 Property Insurance

A. This account shall include the cost of

insurance or reserve accruals to protect the

utility against losses and damages to owned

or leased property used in its utility operations. It shall also include the cost of labor,

employee pensions and benefits, social security and other payroll taxes, injuries and

damages, and the related supplies and expenses incurred in property insurance activities.

B. Recoveries from insurance companies or

others for property damages shall be credited

to the account charged with the cost of the

damage. If the damaged property has been

retired, the credit shall be to the appropriate

account for accumulated provision for depreciation.

C. Records shall be kept so as to show the

amount of coverage for each class of insurance carried, the property covered, and the

applicable premiums. Any dividends distributed by mutual insurance companies shall be

credited to the accounts to which the insurance premiums were charged.

Items

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

NOTE A: The cost of insurance or reserve

accruals capitalized, shall be charged to construction and retirement either directly or

by transfers to construction and retirement

work orders from this account.

NOTE B: The cost of insurance or reserve

accruals for the following classes of property

shall be charged as indicated:

1. Materials, supplies, and stores equipment to Account 163, Stores Expense Undistributed, or appropriate materials account.

2. Transportation and other general equipment to appropriate clearing accounts that

may be maintained.

3. Electric plant leased to others to Account 413, Expenses of Electric Plant Leased

to Others.

4. Nonutility property to the appropriate

nonutility income account.

5. Merchandise and jobbing property to Account 416, Costs and Expenses of Merchandising, Jobbing and Contract Work.

NOTE C: The cost of labor, employee pensions and benefits, social security and other

payroll taxes, and the related supplies and

expenses of administrative and general employees who are only incidentally engaged in

property insurance work may be included in

Account 920 and Account 921, as appropriate.

NOTE D: The cost of insurance or reserve

accruals applicable to the various utility

functions shall be charged to the specific

functional operations and the appropropriate

miscellaneous administrative expense accounts either directly or by transfers from

this account.

925 Injuries and Damages

A. This account shall include the cost of

insurance or reserve accruals to protect the

utility against injuries and damages claims

of employees or others, losses of such character not covered by insurance, and expenses

815

Rural Utilities Service, USDA § 1767.31

incurred in settlement of injuries and damages claims. It shall also include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, related supplies, and expenses incurred in injuries and damages activities.

B. Reimbursements from insurance companies or others for expenses charged hereto on

account of injuries, damages, and insurance

dividends or refunds shall be credited to this

account.

Items

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

NOTE A: Payments to or in behalf of employees for accident or death benefits, hospital expenses, medical expenses, or for salaries while incapacitated for service or on

leave of absence beyond periods normally allowed, when not the result of occupational

injuries, shall be charged to Account 926,

Employee Pensions and Benefits. (See also

Note B of Account 926.)

NOTE B: The cost of injuries and damages

or reserve accruals capitalized shall be

charged to construction and retirement activities either directly or by transfers from

this account to the applicable construction

and retirement work orders.

NOTE C: The cost of insurance or reserve

accruals applicable to the various utility

functions shall be charged to the specific

functional operations and the appropropriate

miscellaneous administrative expense accounts either directly or by transfers from

this account.

NOTE D: Exclude herefrom the time and expenses of employees (except those engaged in

injuries and damages activities) spent in attendance at safety and accident prevention

educational meetings, if occurring during

the regular work period.

NOTE E: The cost of labor, employee pensions and benefits, social security and other

payroll taxes, and the related supplies and

expenses of administrative and general employees who are only incidentally engaged in

injuries and damages activities, may be included in Account 920 and Account 921, as appropriate.

926 Employee Pensions and Benefits

A. This account shall include pensions paid

to or on behalf of retired employees or accruals to provide for pensions or payments for

the purchase of annuities for this purpose,

when the utility has definitely, by contract,

committed itself to a pension plan under

which the pension funds are irrevocably devoted to pension purposes and payments for

employee accident, sickness, hospital, and

death benefits, or insurance therefor. Include, also, expenses incurred in medical,

educational, or recreational activities for

the benefit of employees and administrative

expenses in connection with employee pensions and benefits.

B. The utility shall maintain a complete

record of accruals or payments for pensions

and be prepared to furnish full information

to RUS of the plan under which it has created or proposes to create a pension fund and

a copy of the declaration of trust or resolution under which the pension plan is established.

C. There shall be credited to this account,

the portion of pensions and benefits expenses

which is applicable to nonutility operations,

the specific functional operations, maintenance, and administrative expense accounts,

and to construction and retirement activities unless such amounts are distributed directly to the accounts involved and are not

included herein in the first instance.

D. Records in support of this account shall

be so kept that the total pensions expense,

the total benefits expense, the administrative expenses included herein, and the

amounts of pensions and benefits expenses

transferred to the operations, maintenance,

administrative, construction or retirement

accounts will be readily available.

Items

1. Payment of pensions to retirees on a

nonaccrual basis.

2. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

3. Group and life insurance premiums

(credit dividends received).

4. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

5. Payments for accident, sickness, hospital, and death benefits or insurance.

816

§ 1767.31 7 CFR Ch. XVII (1–1–00 Edition)

6. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

7. Expenses in connection with educational

and recreational activities for the benefit of

employees.

NOTE A: The cost of labor, employee pensions and benefits, social security and other

payroll taxes, injuries and damages, and the

related supplies and expenses of administrative and general employees who are only incidentally engaged in employee pension and

benefit activities may be included in Account 920 and Account 921, as appropriate.

NOTE B: Salaries paid to employees during

periods of nonoccupational sickness may be

charged to the appropriate labor account

rather than to employee benefits.

927 Franchise Requirements

A. This account shall include payments to

municipal or other governmental authorities

and the cost of materials, supplies, and services furnished such authorities without reimbursement in compliance with franchise, ordinance, or similar requirements; provided,

however, that the utility may charge to this

account at regular tariff rates, instead of

cost, utility service furnished without

charge under provisions of franchises.

B. When no direct outlay is involved, concurrent credit for such charges shall be made

to Account 929, Duplicate Charges—Credit.

C. The account shall be maintained so as

to readily reflect the amounts of cash outlays, utility service supplied without charge,

and other items furnished without charge.

NOTE A: Franchise taxes shall not be

charged to this account, but to Account

408.1, Taxes Other Than Income Taxes, Utility Operating Income.

NOTE B: Any amount paid as initial consideration for a franchise running for more than

one year shall be charged to Account 302,

Franchises and Consents.

928 Regulatory Commission Expenses

A. This account shall include all expense

(except pay of regular employees only incidentally engaged in such work) properly includible in utility operating expenses, incurred by the utility in connection with formal cases before regulatory commissions or

other regulatory bodies or cases in which

such a body is a party, including payments

made to a regulatory commission for fees assessed against the utility for pay and expenses of such commission, its officers,

agents, and employees, and also including

payments made to the United States for the

administration of the Federal Power Act.

B. Amounts of regulatory commission expenses which, by approval or direction of

RUS, are to be spread over future periods

shall be charged to Account 182.3, Other Regulatory Assets, and amortized by charges to

this account.

C. The utility shall be prepared to show

the cost of each formal case.

Items

1. Salaries, fees, retainers, and expenses of

counsel, solicitors, attorneys, accountants,

engineers, clerks, attendants, witnesses, and

others engaged in the prosecution of or

defence against petitions or complaints presented to regulatory bodies or in the valuation of property owned or used by the utility in connection with such cases.

2. Office supplies and expenses, payments

to public service or other regulatory commissions, stationery and printing, traveling

expenses, and other expenses incurred directly in connection with formal cases before

regulatory commissions.

NOTE A: Exclude from this account and include in other appropriate operating expense

accounts, expenses incurred in the improvement of service, additional inspection, or

rendering reports which are made necessary

by the rules and regulations, or orders, of

regulatory bodies.

NOTE B:Do not include in this account

amounts includible in Account 302, Franchises and Consents; Account 181,

Unamortized Debt Expense; or Account 214,

Capital Stock Expense.

929 Duplicate Charges—Credit

This account shall include concurrent

credits for charges which may be made to operating expenses or to other accounts for the

use of utility service from its own supply. Include, also, offsetting credits for any other

charges made to operating expenses for

which there is no direct money outlay.

930.1 General Advertising Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, materials used, and expenses incurred in advertising and related activities,

the cost of which by their content and purpose are not provided for elsewhere.

Items

Labor:

1. Supervision.

2. Preparing advertising material for newspapers, periodicals, and billboards and preparing or conducting motion pictures, radio,

and television programs.

3. Preparing booklets and bulletins used in

direct mail advertising.

4. Preparing window and other displays.

5. Clerical and stenographic work.

6. Investigating and employing advertising

agencies, selecting media, and conducting

817

Rural Utilities Service, USDA § 1767.31

negotiations in connection with the placement and subject matter of advertising.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

2. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

3. Fees and expenses of claim investigators.

4. Payment of awards to claimants for

court costs and attorneys’ services.

5. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

6. Compensation payments under workmen’s compensation laws.

7. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

8. Cost of safety, accident prevention, and

similar educational activities.

Materials and Expenses:

1. Advertising in newspapers, periodicals,

billboards, and radios.

2. Advertising matter such as posters, bulletins, booklets, and related items.

3. Fees and expenses of advertising agencies and commercial artists.

4. Postage and direct mail advertising.

5. Printing of booklets, dodgers, and bulletins.

6. Supplies and expenses in preparing advertising materials.

7. Office supplies and expenses.

NOTE A: Properly includible in this account is the cost of advertising activities on

a local or national basis of a goodwill or institutional nature, which is primarily designed to improve the image of the utility or

the industry, including advertisements

which inform the public concerning matters

affecting the company’s operations, such as,

the cost of providing service, the company’s

efforts to improve the quality of service, and

the company’s efforts to improve and protect

the environment. Entries relating to advertising included in this account shall contain

or refer to supporting documents which identify the specific advertising message. If references are used, copies of the advertising

message shall be readily available.

NOTE B: Exclude from this account and include in Account 426.4, Expenditures for Certain Civic, Political and Related Activities,

expenses for advertising activities, which are

designed to solicit public support or the support of public officials in matters of a political nature.

930.2 Miscellaneous General Expenses

This account shall include the cost of

labor, employee pensions and benefits, social

security and other payroll taxes, injuries and

damages, property insurance, property taxes,

and expenses incurred in connection with the

general management of the utility not provided for elsewhere.

Items

Labor:

1. Miscellaneous labor not elsewhere provided for.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The portion

of employee pensions and benefits specifically identifiable with employees’ labor

costs charged herein or, in the absence of

specific employee identification, the portion

of employee pensions and benefits, allocated

on the more equitable basis of either direct

labor dollars or direct labor hours, applicable to the labor items detailed above, including:

1. Accruals for or payments to pension

funds or to insurance companies for pension

purposes.

2. Group and life insurance premiums

(credit dividends received).

818

§§ 1767.32–1767.40 7 CFR Ch. XVII (1–1–00 Edition)

3. Payments for medical and hospital services and expenses of employees when not the

result of occupational injuries.

4. Payments for accident, sickness, hospital, and death benefits or insurance.

5. Payments to employees incapacitated

for service or on leave of absence beyond periods normally allowed when not the result

of occupational injuries or in excess of statutory awards.

6. Expenses in connection with educational

and recreational activities for the benefit of

employees.

Insurance:

1. Premiums payable to insurance companies for fire, storm, burglary, boiler explosion, lightning, fidelity, riot, and similar insurance.

2. Amounts credited to Account 228.1, Accumulated Provision for Property Insurance,

for similar protection.

3. Special costs incurred in procuring insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees, and

expenses.

6. Premiums payable to insurance companies for protection against claims from injuries and damages by employees or others,

such as public liability, property damages,

casualty, employee liability, etc., and

amounts credited to Account 228.2, Accumulated Provision for Injuries and Damage, for

similar protection.

7. Losses not covered by insurance or reserve accruals on account of injuries or

deaths to employees or others and damages

to the property of others.

8. Fees and expenses of claim investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and expenses for employees as the result of occupational injuries or resulting from claims of

others.

11. Compensation payments under workmen’s compensation laws.

12. Compensation paid while incapacitated

as the result of occupational injuries. (See

Account 924, Note A.)

13. Cost of safety, accident prevention, and

similar educational activities.

Expenses:

1. Industry association dues for company

memberships.

2. Contributions for conventions and meetings of the industry.

3. Research, development, and demonstration expenses not charged to other operation

and maintenance expense accounts on a

functional basis.

4. Communication service not chargeable

to other accounts.

5. Trustee, registrar, and transfer agent

fees and expenses.

6. Stockholders meeting expenses.

7. Dividend and other financial notices.

8. Printing and mailing dividend checks.

9. Directors’ fees and expenses.

10. Publishing and distributing annual reports to stockholders.

11. Public notices of financial, operating,

and other data required by regulatory statutes, not including, however, notices required in connection with security issues or

acquisitions of property.

931 Rents

This account shall include rents properly

includible in utility operating expenses for

the property of others used, occupied, or operated in connection with the customer accounts, customer service and informational,

sales, general, and administrative functions

of the utility. (See §1767.17 (c).)

(Maintenance)

935 Maintenance of General Plant

A. This account shall include the cost assignable to customer accounts, sales, administrative, and general functions of labor, employee pensions and benefits, social security

and other payroll taxes, injuries and damages, materials used, and expenses incurred

in the maintenance of property, the book

cost of which is includible in Account 390,

Structures and Improvements; Account 391,

Office Furniture and Equipment; Account

397, Communication Equipment; and Account 398, Miscellaneous Equipment. (See

§1767.17(b).)

B. Maintenance expenses on office furniture and equipment used elsewhere than in

general, commercial, and sales offices shall

be charged to the following accounts:

1. Steam Power Generation, Account 514.

2. Nuclear Power Generation, Account 532.

3. Hydraulic Power Generation, Account

545.

4. Other Power Generation, Account 554.

5. Transmission, Account 573.

6. Distribution, Account 598.

7. Merchandise and Jobbing, Account 416.

8. Garages, Shops, etc., Appropriate clearing account, if used.

NOTE: Maintenance of plant included in

other general equipment accounts shall be

included herein unless charged to clearing

accounts or to the particular functional

maintenance expense account indicated by

the use of the equipment.

[58 FR 59825, Nov. 10, 1993, as amended at 62

FR 42317, Aug. 6, 1997]

§§ 1767.32–1767.40 [Reserved]

§ 1767.41 Accounting methods and procedures required of all RUS borrowers.

All RUS borrowers shall maintain

and keep their books of accounts and

819

Rural Utilities Service, USDA § 1767.41

all other books and records which support the entries in such books of accounts in accordance with the accounting principles prescribed in this section. Interpretations Nos. 133, 134, 137,

403, 404, 602, 606, 618, 627, 628, and 629

adopt and implement the provisions of

standards issued by the Financial Accounting Standards Board (FASB).

Each interpretation includes a synopsis

of the requirements of the standard as

well as specific accounting requirements and interpretations required by

RUS. The synopsis provides general information to assist borrowers in determining whether the standard applies to

an individual cooperative’s operations.

The synopsis is not intended to change

the requirements of the FASB standards unless it is set forth in the section

entitled RUS Accounting Requirements in each interpretation. If a particular borrower believes a conflict exists between the FASB standard and an

RUS interpretation, the borrower shall

contact the Director, PASD, to seek

resolution of the issue.

Numerical Index

Number Title

101 Work Order Procedures

102 Line Conversion

103 Sacrificial Anodes and the Replacement of a Neutral

104 Terminal Facilities

105 Pole Top Disconnect Switch

106 Steel Pole Reinforcers

107 Mobile Substations

108 Security Lights

109 Joint Use

110 First Clearing and Grading of Land

and Rights of Way

111 Engineering Contracts for System

Planning

112 Determination of Availability of

Service

113 Temporary Facilities (Services)

114 Construction Work-in-Progress

Damaged or Destroyed by Storm

115 Liquidated Damages

116 Nonrefundable Payments for Construction

117 Refunds of Overpayments for Materials and Equipment

118 Load Control Equipment

119 Special Equipment

120 Meter Sockets and Meters

121 Minimum—Maximum Voltmeters

122 Retrofitting Demand Meters

123 Transformer Conversions

Numerical Index—Continued

Number Title

124 Transclosures

125 Retirement Units

126 Establishment of Continuing Property Records

127 Continuing Property Records for

Buildings

128 Sale of Property

129 Gain or Loss on the Sale of an Office

Building

130 Salvage and Obsolete Material

131 Plant Acquisition Adjustments

132 General Plant

133 Plant Abandonments and Disallowances of Plant Cost

134 Utility Plant Phase-in Plans

135 Accounting for Removal or Relocation of Electric Facilities Resulting from the Action of Others

136 Storm Damage

137 Impairment of Long-Lived Assets.

138 Automatic Meter Reading SystemsTurtles.

139 Global Positioning Systems.

140 Radio-Based Automatic Meter Reading Systems.

201 Supplemental Financing

301 Forfeited Customers’ Deposits

401 Computer Software Costs

402 Legal Expenses

403 Leases

404 Consolidated Financial Statements

501 Patronage Capital Assignments

502 Patronage Capital Retirements

503 Operating and Nonoperating Margins

504 Patronage Capital from G&T Cooperatives

505 Patronage Capital Furnished by

Other Cooperative Service Organizations

506 Forfeited Membership Fees

601 Employee Benefits

602 Compensated Absences

603 Employee Retirement and Group Insurance

604 Deferred Compensation

605 Life Insurance Premium on Life of a

Borrower Employee

606 Pension Costs

607 Unproductive Time

608 Training Costs, Attendance at Meetings, etc.

609 Maintenance and Operations

610 Financial Forecast

611 Advertising Expense

612 Special Power Cost Study

613 Mapping Costs

614 Member Relations Costs

615 Statewide Fees

616 Power Supply/Distribution Cooperative Borrowings

820

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

Numerical Index—Continued

Number Title

617 Rate Discount Allowed by the

Power Cooperative to Distribution

Cooperative Owning Connecting

Transmission Lines

618 Theft Losses not Covered by Insurance

619 Self Billing

620 Purchase Rebates

621 Integrity Fund

622 In-Substance Defeasance

623 Satellite or Cable Television Services

624 Pollution Control Bonds

625 Prepayment of Debt

626 Rural Economic Development Loan

and Grant Program

627 Postretirement Benefits

628 Postemployment Benefits

629 Investments in Debt and Equity Securities

630 Split Dollar Life Insurance.

631 Special Early Retirement Plan.

Subject Matter Index

Number

A

Abandonments—Plant ....................... 133

Acquisition Adjustments—Plant ...... 131

Advertising Expenses ........................ 611

Assignments—Patronage Capital ...... 501

Attendance at Meetings .................... 608

Automatic Meter Reading Systems—

Radio-Based ................................... 140

Automatic Meter Reading Systems—

Turtles ........................................... 138

Availability of Service—Determination of ............................................ 112

B

Benefits—Employee .......................... 601

Bonds—Pollution Control ................. 624

Borrowing—Power Supply Cooperative/Distribution Cooperative ........ 616

Buildings—Continuing Property

Records .......................................... 127

Buildings, Office—Gain or Loss on

Sale of ............................................ 129

C

Cable Television Services ................. 623

Capital Credits—Assignment ............ 501

Capital Credits—G&T Cooperative .... 504

Capital Credits—Other Service Cooperatives ....................................... 505

Capital Credits—Retirement ............. 502

Compensated Absences ...................... 602

Computer Software Costs .................. 401

Consolidated Financial Statements .. 404

Subject Matter Index—Continued

Number

Construction Work in Progress Damaged or Destroyed by Storm .......... 114

Continuing Property Records—Buildings ................................................ 127

Continuing Property Records—Establishment of ................................ 126

Contributions—Nonrefundable .......... 116

Conversion—Line .............................. 102

Conversion—Transformer ................. 123

Customers’ Deposits—Forfeited ........ 301

D

Damaged or Destroyed Construction

Work in Progress ............................ 114

Damages—Liquidated ....................... 115

Debt—Prepayment of ........................ 625

Debt Securities—Investments in ....... 629

Deferred Compensation ..................... 604

Demand Meters—Retrofitting ........... 122

Determination of Availability of

Service ........................................... 113

Disallowances of Plant Costs ............ 133

Disconnect Switch—Pole Top ........... 105

Discounts Allowed by Power Cooperative to Distribution Cooperative

Owning Transmission Lines ........... 617

Distribution Cooperative/Power Supply Cooperative Borrowing ............ 616

E

Early Retirement Plan ..................... 631.

Economic Development Loan and

Grant Program ............................... 626

Employee Benefits ............................ 601

Equity Securities—Investments in ... 629

F

Fees—Statewide ................................ 615

Financial Forecast ............................ 610

Financial Statements—Consolidated 404

Financing—Supplemental ................. 201

First Clearing and Grading of Land

and Rights of Way .......................... 110

Forfeited Customer Deposits ............ 301

Forfeited Membership Fees ............... 506

G

Gain or Loss on Sale of Office Building .................................................. 129

General Plant .................................... 132

Generation and Transmission (G&T)

Capital Credits ............................... 504

Global Positioning Systems .............. 139

I

Impairment of Long-Lived Assets ..... 137

In-substance Defeasance ................... 622

Insurance—Employee Retirement

and Group ....................................... 603

Insurance—Premium on Life of a

Borrower Employee ........................ 605

Insurance—Split Dollar .................... 630

Integrity Fund .................................. 621

Investments in Debt and Equity Securities ........................................... 629

821

Rural Utilities Service, USDA § 1767.41

Subject Matter Index—Continued

Number

J

Joint Use ........................................... 109

L

Land—First Clearing and Grading .... 110

Leases ............................................... 403

Legal Expenses .................................. 402

Life Insurance Premiums on Life of a

Borrower Employee ........................ 605

Life Insurance—Split Dollar ............. 630

Line Conversion ................................ 102

Line Relocations ............................... 135

Liquidated Damages ......................... 115

Load Control Equipment ................... 118

Long-Lived Assets-Impairment ......... 137

M

Maintenance and Operations ............. 609

Mapping Costs ................................... 613

Margins—Operating and Nonoperating ........................................... 503

Material—Salvage and Obsolete ....... 130

Materials and Supplies—Refund for

Overpayments ................................ 117

Member Relation Costs ..................... 614

Membership Fees—Forfeited ............. 506

Meter Reading Systems—RadioBased .............................................. 140

Meter Reading Systems—Turtles ...... 138

Meter Sockets and Meters ................ 120

Minimum—Maximum Voltmeters ..... 121

Mobile Substations ........................... 107

N

Neutral—Replacement of .................. 103

Nonoperating Margins ...................... 503

Nonrefundable Payments for Construction ........................................ 116

O

Obsolete Material .............................. 130

Operating and Nonoperating Margins 503

Operations Costs ............................... 609

P

Patronage Capital Assignments ........ 501

Patronage Capital Furnished by

Other Cooperative Service Organizations ............................................ 505

Patronage Capital from G&T Cooperatives ....................................... 504

Patronage Capital Retirements ........ 502

Payments for Construction—Nonrefundable ...................................... 116

Pension Costs .................................... 606

Phase-in Plans .................................. 134

Plant Abandonments ......................... 133

Plant Acquisition Adjustments ........ 131

Plant Costs—Disallowances .............. 133

Plant—General .................................. 132

Pole Reinforcers—Steel .................... 106

Pole Top Disconnect Switch ............. 105

Pollution Control Bonds ................... 624

Postemployment Benefits ................. 628

Subject Matter Index—Continued

Number

Postretirement Benefits ................... 627

Power Cost Study .............................. 612

Power Supply/Distribution Cooperative Borrowing ............................... 616

Prepayment of Debt .......................... 625

Property—Sale of .............................. 128

Purchase Rebates .............................. 620

R

Radio-Based Automatic Meter Reading Systems .................................... 140

Rate Discount Allowed by Power Cooperative to a Distribution Cooperative Owning Transmission Lines .. 617

Rebates—Purchase ............................ 620

Refunds for Overpayments for Materials and Supplies ........................... 117

Reimbursement for Line Relocations 135

Relocations of Lines ......................... 135

Replacement of a Neutral ................. 103

Retirement Units .............................. 125

Retirements—Patronage Capital ...... 502

Retrofitting Demand Meters ............. 122

Rights of Way—First Clearing and

Grading .......................................... 110

Rural Economic Development Loan

and Grant Program ........................ 626

S

Sacrificial Anodes and the Replacement of a Neutral ........................... 103

Sale of an Office Building ................. 129

Sale of Property ................................ 128

Salvage and Obsolete Material ......... 130

Satellite Television Services ............ 623

Securities—Investments in Debt and

Equity ............................................ 136

Security Lights ................................. 108

Self Billing ........................................ 619

Software Costs .................................. 401

Special Early Retirement Plan ......... 631

Special Equipment ............................ 119

Special Power Cost Study ................. 612

Split Dollar Life Insurance ............... 630

Statewide Fees .................................. 615

Steel Pole Reinforcers ...................... 106

Storm Damage .................................. 136

Substation—Mobile ........................... 107

Supplemental Financing ................... 201

System Planning—Engineering Contracts ............................................. 111

T

Temporary Facilities (Services) ....... 113

Terminal Facilities ........................... 104

Theft Losses not Covered by Insurance ................................................ 618

Training Costs, Attendance at Meetings, etc. ......................................... 608

Transclosures .................................... 124

Transformer Conversions .................. 123

Turtles—Automatic Meter Reading

Systems .......................................... 138

822

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

Subject Matter Index—Continued

Number

U

Unproductive Time ........................... 607

V

Voltmeters—Minimum/Maximum ..... 121

W

Work Order Procedures ..................... 101

101 Work Order Procedures

When a minor item of property is removed from service and not replaced, a

retirement work order is not required

except in the case of a conductor. The

cost of the minor item shall remain in

the appropriate plant account until the

retirement unit, of which it is a part, is

retired. However, as conductor is recorded in feet and is not part of any

specific retirement unit, conductor

shall be retired even though the

amount taken down and not replaced is

less than a retirement unit (two spans).

When minor items of plant are removed and not replaced, material

salvaged shall be recorded on a material salvage ticket. Items of material

recorded on this ticket shall be charged

to the materials and supplies account

and credited in the miscellaneous columns of the Materials Register to the

Accumulated Provision for Depreciation. In this example, it is assumed

that the cost of removal is nil. If, however, costs are incurred during the removal of minor items of plant, these

costs shall reduce the credit to the Accumulated Provision for Depreciation.

When a staking sheet supporting a

single work order reflects a combination of new construction and replacements, or system improvements, the

predominant cost shall be the governing factor in determining the

amount of cost RUS will finance. To illustrate, assume that a service is to be

run to a new home near the end of an

existing line. On inspection, the pole

from which the service is to be run is

found to be in very poor physical condition and must be replaced. In addition,

a single span of wire and a service are

presently connected to this pole which

serve no purpose. The home originally

served has been demolished and the existing span, pole, and service were retired. In other words, what started out

to be simply the installation of a new

service now includes the retirement of

a span of wire, a pole, and a service;

the replacement of a pole; and the running of a new service. Assuming the replacement of the pole is the costliest

part of this project, the construction

and retirement activity shall be classified as an ordinary replacement even

though the work includes new construction and retirements without replacement.

102 Line Conversion

If it is necessary to move a conductor

from one location to another on a pole

assembly during the conversion of a

line from one phase to another phase,

the cost of moving the conductor is

capitalizable as a system improvement.

103 Sacrificial Anodes and the

Replacement of a Neutral

Many utilities conduct studies to determine whether sacrificial anodes are

needed to protect underground cable

against corrosion. The following procedures shall be followed to account for

sacrificial anodes and the replacement

of a neutral:

1. If the study results in the installation of sacrificial anodes, the cost of

the study shall be capitalized to Account 367, Underground Conductors and

Devices. If the study does not result in

the installation of anodes, the cost

shall be charged to Account 594, Maintenance of Underground Lines.

2. Costs incurred in the first installation are capitalizable even though anodes are considered minor items of

property. However, only the first costs

of installation shall be capitalized. All

subsequent replacements of anodes

shall be expensed.

3. Sacrificial anodes do not constitute a record unit; therefore, the

cost of anodes shall be added to the

cost of the underground cable unit.

4. Because a neutral is part of an underground cable record unit, and is not,

in and of itself, a record unit, the cost

to replace a corroded neutral shall be

charged to Account 594, Maintenance of

Underground Lines.

823

Rural Utilities Service, USDA § 1767.41

104 Terminal Facilities

Borrowers are sometimes required to

construct terminal facilities in the

transmission line of another utility in

order to receive power from their

power supplier. The document executed

between the borrower and the utility is

normally referred to as a ‘‘License

Agreement’’. The license agreement

may stipulate that certain items of the

terminal facilities are to be transferred

to, and become the property of, the

other utility upon completion of the

construction. The accounting for this

type of transaction shall be as follows:

1. All construction costs incurred

shall be charged to a work order. Upon

completion of the construction and accumulation of all costs, the cost of the

facilities that become the property of

another utility shall be transferred

from construction work-in-progress to

Account 303, Miscellaneous Intangible

Plant. The cost of the plant for which

the borrower retains title shall be

charged to the appropriate plant accounts.

2. The cost of the facilities recorded

in Account 303 shall be amortized to

Account 405, Amortization of Other

Electric Plant, over the contract term

or the estimated useful service life of

the plant, whichever is shorter. If the

related contract or contracts for this

power supply are terminated, the

unamortized balance shall be expensed,

in the current period, in Account 557.

105 Pole Top Disconnect Switch

The installation of pole top service

disconnect switches, where title is retained by the utility, shall be capitalized in Account 371, Installations on

Customers’ Premises. If a switch cabinet is purchased with a current transformer included as an integral part of

the cabinet, the entire cost of the

switch shall be charged to Account 371.

If the current transformer is installed

outside of the switch cabinet, the

transformer, meter, and meter base, together with the first installation costs,

shall be capitalized, upon purchase, in

Account 370, Meters.

Payments received from the customer toward construction costs shall

be credited to Account 371, Installations on Customers’ Premises. Such

payments, together with any amount

not financed by RUS, shall be entered

in column 9 of the RUS Form 219, Inventory of Work Orders. The associated

maintenance costs shall be charged to

Account 587, Customer Installations

Expenses, or to Account 597, Maintenance of Meters, as appropriate.

When pole top disconnect switches

are installed and title is held by the

customer, the cost of the material

shall be charged to Account 456, Other

Electric Revenues and the receipts

from the sale of line material shall be

credited to Account 456. The portion of

the receipts for resale material as well

as that for installation shall be credited to Account 415, Revenues from

Merchandising, Jobbing, and Contract

Work. The cost of resale material sold

and the cost of installation shall be

charged to Account 416, Costs and Expenses of Merchandising, Jobbing and

Contract Work.

Future maintenance costs incurred

by the cooperative that are not billed

to the customer shall be charged to Account 587, Customer Installations Expenses.

106 Steel Pole Reinforcers

The cost associated with the purchase and installation of steel pole

reinforcers shall be charged to Account

593, Maintenance of Overhead Lines.

107 Mobile Substations

Mobile substations shall be accounted for in a manner similar to that

for a spare and are, therefore, included

as part of transmission or distribution

station equipment, depending upon the

use of the mobile substation. The mobile substation, together with the trailer on which it is permanently mounted,

shall be capitalized upon purchase. A

general purpose truck or tractor used

to relocate a mobile substation and

trailer shall be classified as transportation equipment.

The composite depreciation rate used

for transmission plant or distribution

plant, as appropriate, shall be applied

to the mobile substation.

108 Security Lights

Where a pole supports both a secondary wire and a security light, the

824

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

cost of the pole shall be charged to Account 364, Poles, Towers, and Fixtures,

even though the plant investment in

security lights is recorded in Account

371, Installations on Customers’ Premises.

109 Joint Use

There are many cases in which an

electric utility and a communications

utility enter into an agreement that

provides for joint use of poles. Under

the terms of these agreements, either

utility may occupy the poles of the

other upon payment of a stipulated annual rental. If such joint occupancy necessitates the use of a higher than

standard pole, the new pole shall be

provided at the expense of the utility

having the need for the higher pole.

When an electric utility replaces, at

its own expense, a standard pole belonging to the communications utility

with a higher pole, the cost of the higher pole, less net salvage (if any) of the

pole replaced, shall be charged to the

account in which the pole rental is included.

Contributions made to an electric

utility by a communications utility for

the costs incurred in stubbing joint use

electric poles shall be credited to Account 593, Maintenance of Overhead

Lines. The cost of pole stubbing on

electric plant distribution facilities

shall be charged to Account 593.

An investment in outside plant that

is held in joint ownership shall be recorded in the appropriate plant accounts at its cost to the utility. For

continuing property record purposes,

jointly owned property units shall be

priced at their cost to the utility and

shall be appropriately segregated in

the CPRs to indicate joint ownership.

110 First Clearing and Grading of

Land and Rights of Way

Utility accounting practice requires

the costs associated with the first

clearing and grading of land and rights

of way and any resulting damage thereto, to be included in the accounts for

structures and improvements or equipment to which such costs relate. Since

the first clearing, as well as clearing

which is ‘‘directly occasioned by the

building of a structure,’’ is done, not

for the purpose of enhancing the value

of the land or the rights of way, but for

the purpose of constructing plant,

these costs are more directly related to

the construction of plant than to the

purchase of land or rights of way. The

accounts shall be charged as follows:

1. For overhead transmission pole

lines, Account 356, Overhead Conductors and Devices;

2. For overhead distribution lines,

Account 365, Overhead Conductors and

Devices; and

3. For underground distribution lines,

Account 366, Underground Conduit, for

a conduit installation; or Account 367,

Underground Conductors and Devices,

for a direct burial installation.

111 Engineering Contracts for System

Planning

Engineering costs for long-range system plans shall be charged to Account

183, Preliminary Survey and Investigation Charges, as incurred. The cost of

engineering services incurred in preparing a long-range system plan represents a legitimate component of the

total cost of construction of all system

improvements detailed in the plan. The

amount of engineering costs to be associated with any specific system improvement is the annual costs incurred

up to the time of the allocation (not

previously allocated), plus that portion

of the initial cost which relates to the

particular construction in question. If

any major system improvement included in the engineering plan is not

constructed, or if the study is superseded by another complete study, the

cost of that portion of the original

study not resulting in construction

shall be charged to Account 182.2, Unrecovered Plant and Regulatory Study

Costs, if the costs are to be recovered

through future rates. Costs recorded in

Account 182.2 shall be amortized to Account 407, Amortization of Property

Losses, Unrecovered Plant and Regulatory Study Costs, as the costs are recovered through the rates. Any costs

included in Account 182.2 that are disallowed for rate-making purposes shall

be charged to Account 426.5, Other Deductions.

The allocation of engineering services to the various construction

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Rural Utilities Service, USDA § 1767.41

projects requires the exercise of judgment. In some cases, system improvements are continuous over a period of

months or years, thus permitting the

engineering cost to be spread monthly

as overhead in relation to the direct

costs incurred in construction. (If a

substantial amount of retirement work

is performed in connection with system

improvements, a proportionate share of

the engineering cost shall be allocated

on the basis of direct retirement labor.)

If the system improvements detailed in

the plan are not performed in a continuous manner, the engineering cost

shall be allocated on the basis of the

estimated costs of the various larger

system improvement projects which result from the long-range plan.

If construction is performed by contract, the engineering cost applicable

thereto shall be transferred from Account 183 to Account 107, Construction

Work-in-Progress—Electric, and thereby spread to the appropriate plant accounts on the basis of contract costs.

In the case of system improvement

construction performed on the basis of

work orders, engineering costs shall be

transferred to Account 107, Construction Work-in-Progress—Electric, and

included in total work order costs as

either overhead or special services. If

engineering services are not readily

identifiable with individual work orders, they shall be capitalized as overhead. If engineering costs for each

work order are readily separable from

the engineering costs for all other

work orders, they shall be capitalized

as special services.

In summarizing system improvement

work orders on the RUS Form 219, Inventory of Work Orders, the amount of

engineering costs previously approved

for advance on the long range plan, if

any, shall be deducted to determine the

balance of loan funds subject to advance by RUS.

112 Determination of Availability of

Service

Costs relating to the determination

of availability of service, rates, and

similar items for individual applicants

shall be charged to Account 912, Demonstrating and Selling Expenses. If it is

expected that construction will result,

the costs incurred to provide service,

including staking, shall be charged to

Account 107, Construction Work-inProgress—Electric. If construction

does not result, Account 107 shall be

credited and Account 426.5, Other Deductions, shall be charged.

113 Temporary Facilities (Services)

Plant installed for temporary use, a

period of less than 1.ar, shall be recorded in Account 185, Temporary Facilities, net of any payments received

from customers. Upon retirement, this

net cost plus cost of removal, less any

salvage value, shall be cleared to Account 451, Miscellaneous Service Revenues.

When a temporary service is installed

at the site of a building under construction, the location of the permanent service entrance and the load and

its characteristics are usually known.

The temporary service is of the proper

capacity and is so located or has sufficient slack, that it can be relocated to

serve the new building as a permanent

service. Under these conditions, the

service shall be charged to Account 369,

Services, when first installed. The cost

of moving and attaching the service to

the permanent service entrance shall

be charged to Account 593, Maintenance of Overhead Lines or Account

594, Maintenance of Underground

Lines, as appropriate.

114 Construction Work-in-Progress

Damaged or Destroyed by Storm

When installed plant, not yet completed or completed but not yet placed

in service, has been damaged or destroyed by storm, the cost of the repair

and restoration shall be added to the

cost of construction and capitalized if

the plant was constructed under force

account or work order construction,

and the utility paid for the cost of the

repairs. If the plant was constructed

under contract, the contractor is required to deliver the plant in new condition. Therefore, any repairs required

prior to the completion of construction

and acceptance by the utility, are ordinarily borne by the contractor.

115 Liquidated Damages

Liquidated damages are amounts

paid by or assessed against contractors

826

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

for the completion of construction

after an agreed upon date. Liquidated

damages shall be credited to Account

107, Construction Work-in-Progress—

Electric. Since these damages accrue

during the construction period, they

become one of the components of construction cost. Even though a portion

of these damages may compensate the

utility for costs which are not ‘‘identifiable,’’ no portion of the damages shall

be credited to revenue or expense.

When a contractor has been paid in

full from loan funds or from funds to be

reimbursed by loan funds without a deduction for liquidated damages, the

amount of liquidated damages received

shall be deposited in the Construction

Fund. This amount shall be reflected

by a decrease in column 5, ‘‘Total Expenditures to Date,’’ of the RUS Form

595, Financial Requirement and Expenditure Statement, and as an increase in column 6, ‘‘Cash Balance.’’ If

liquidated damages are obtained by

withholding an equivalent amount

from the contractor’s payment, the net

result will be the same.

116 Nonrefundable Payments for

Construction

Nonrefundable payments (contributions) from customers and developers

for underground construction shall

first be credited to Account 107.2, Construction Work-in-Progress—Force Account. When the constructed plant is

unitized and distributed to the individual plant accounts, the contributions shall be credited to those plant

accounts which gave rise to the contribution.

When a customer or developer furnishes a trench or other service in connection with buried plant, the cooperative shall debit Account 107.2 with the

actual or estimated cost of the service

performed, and account for the credit

as set forth above.

117 Refunds of Overpayments for

Materials and Equipment

Refunds of overpayments for materials and equipment previously purchased are occasionally received as the

result of legal action brought against

electrical suppliers for price fixing in

violation of antitrust laws. Such refunds shall be accounted for as follows:

1. The refund shall first be applied to

any litigation costs that were incurred.

2. Refunds for special equipment

items shall be accounted for, in detail,

on the Summary of Special Equipment

Costs and credited against the appropriate plant accounts.

3. Other material or equipment items

that were installed through work orders or a materials furnished contract

shall be adjusted on an amended work

order. The amended work order shall

include full details of the refund.

4. Continuing property records shall

be adjusted to reflect the above transactions.

5. Amounts approved for advance on

the RUS Form 595, Financial Requirement and Expenditure Statement, and

on the loan budget records, shall be adjusted. For special equipment items,

the adjustment shall be requested in a

letter to RUS. For materials installed

by work order or contract, the adjustments shall be made through credits

shown on the RUS Form 219, Inventory

of Work Orders.

6. Refunds for material currently in

stock shall be credited to Account 154,

Plant Materials and Operating Supplies.

7. If the material was used in maintenance activities or operations, the refund shall be credited to the appropriate maintenance or operations expense account.

8. Refunds for materials or equipment financed from loan funds shall be

deposited in the Construction Fund—

Trustee Account or remitted to RUS as

a special payment on a note. Other refunds shall be deposited in the general

funds.

118 Load Control Equipment

The primary purpose of a Load Management System is to optimize load

dispatch and to reduce or minimize

system peaks in order to reduce purchases of power or to delay or eliminate the need for construction of new

plant. A Load Management System

may be used on integrated systems, or

on generation, transmission, or distribution systems separately. The telemetry equipment used for data acquisition and interpretation may be included at various points on a system,

such as generation, transmission, or

827

Rural Utilities Service, USDA § 1767.41

distribution substation, switchyards or

on consumers’ premises.

An effective load control program

should be coordinated with the G&T

and requires full participation of all

member distribution systems. The G&T

monitors the power load of the total

member distribution system to predict

the time of the system’s peak load. An

optimal load control strategy is developed by the G&T and is passed on from

the G&T computer system to the load

control computer systems of the member distribution cooperatives.

The equipment at the member distribution system level is the type actually being used by an integrated power

system to operate a load control program. The equipment used may vary

from one integrated power system to

another. The selection of equipment

used is determined by the information

needs of the integrated power system,

and the method selected to operate the

load control system.

Some equipment performs only

SCADA-type functions. This equipment

is included with the equipment that

performs only load control functions

because SCADA-type equipment is an

integral part of a load control program.

An effective load control strategy requires current information on loads so

that member distribution systems can

determine the actual loads to be shed

and the duration of the load control.

The function and location of the load

control equipment are the primary factors in determining the account in

which the equipment shall be recorded.

The following example depicts a common load control system and the associated accounting. Equipment type

may vary, thereby necessitating the

use of accounts not prescribed below.

In all instances, however, the function

and location of the equipment shall

dictate the appropriate account classification.

G&T Borrower

1. Coordinating System Equipment

Coordinating System Equipment is

the data acquisition, processing and

control hardware and software used to

coordinate the load control efforts of

the member distribution system. Generally, this equipment is dedicated to

load control use and is not shared with

other electric utility activities.

The purpose of the G&T load control

computer system is to reduce or minimize the peak power requirements of

the entire member distribution system.

This involves load dispatching to control transmission circuits and breakers. The computer system for load control shall, therefore, be recorded in Account 353, Station Equipment, with the

associated operating expenses recorded

in Account 561, Load Dispatching, and

maintenance expenses recorded in Account 570, Maintenance of Station

Equipment.

2. Coordinating System Communications

Link

The G&T load control computer system is usually linked to the load control computer system for each member

distribution system by a radio or telephone link that is dedicated to that

purpose and is not shared with other

communication activities. Under such

circumstances, communications equipment shall be classified in Account 353,

Station Equipment. If the communications equipment is shared with general

use or voice communications equipment, however, the equipment shall be

classified in Account 397, Communication Equipment.

3. Depreciation

Load control equipment shall be recorded in separate subaccounts of the

primary plant accounts detailed above

and shall be depreciated based upon the

owner’s estimate of the equipment’s

useful service life.

Distribution Borrower

1. Member System Equipment

Member system equipment is the

data acquisition, processing and control hardware and software used as a

subset to the overall load control efforts by the integrated power system.

The member system computer for

each distribution member system accepts the control strategy from the

G&T coordinating system and develops

the tables that determine the control

loads that are to be shed and the duration of the load control. The member

system computer for each distribution

system monitors the usage at each of

its delivery points. This usage data is

828

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

then transmitted to the G&T coordinating system for use in developing

load projects and evaluating control

strategies for the integrated power system. The member system computer is

generally dedicated to load control use

and is not shared with other electric

utility operations.

The member computer system shall

be recorded in Account 362, Station

Equipment. The associated operating

expenses shall be recorded in Account

581, Load Dispatching, and maintenance expenses shall be recorded in Account 592, Maintenance of Station

Equipment.

2. Substation Remote Controllers

Substation Remote Controllers are

located at the distribution substation.

They accept control signals from the

member system computer and couple

the signal to the portion of the distribution system to which it is connected. Substation Remote Controllers

also serve as a receiver of inbound signals from transponders located in the

distribution system. They also send

data back to the member system computer.

Substation Remote Controllers shall

be recorded in Account 362, Station

Equipment. The associated operating

expenses shall be recorded in Account

582, Station Expenses, and maintenance expenses shall be recorded in Account 592, Maintenance of Station

Equipment.

3. Substation Injection Units

Substation Injection Units are used

only in power line based systems and

are located in distribution substations.

A major function of the Substation Injection Unit is to receive load control

signals from the member system computer and inject them into the power

line based system to be transmitted to

the Load Control Receivers. Substation

Injection Units can also perform control and SCADA functions similar to

those performed by Substation Remote

Controllers.

Substation Injection Units shall be

recorded in Account 362, Station Equipment. The associated operating expenses shall be recorded in Account 582,

Station Expenses, and maintenance expenses shall be recorded in Account 592,

Maintenance of Station Equipment.

4. Remote Terminal Units

Remote Terminal Units perform electric utility SCADA functions in a distribution substation or delivery point.

These functions include monitoring

equipment for abnormal operating conditions, monitoring analog quantities

such as conductor voltage or substation load, and controlling of certain

equipment within the substation.

Remote Terminal Units shall be recorded in Account 362, Station Equipment. The associated operating expenses shall be recorded in Account 582,

Station Expenses, and maintenance expenses shall be recorded in Account 592,

Maintenance of Station Equipment.

5. Line Device Transponder

A Line Device Transponder directly

controls a piece of distribution apparatus, such as a voltage regulator or a

power factor correction capacitor, located on a distribution feeder and not

accessible to a Remote Terminal Unit.

The Line Device Transponder actuates

the control functions and reports back

to the member system computer upon

completion of the requested action.

This transponder is located at the site

of the distribution apparatus being

controlled.

Line Device Transponders shall be recorded in Account 368, Line Transformers. The associated operating expense shall be recorded in Account 583,

Overhead Line Expenses, or Account

584, Underground Line Expenses, as appropriate, and maintenance expenses

shall be recorded in Account 595, Maintenance of Line Transformers.

6. Communications Verification Transponders

Communication Verification Transponders are used to respond to inquiries from Substation Remote Controllers. In power line based systems, these

transponders are used to verify the performance of the communications system. They are also used during adverse

system operations to isolate sections of

the distribution system that are experiencing an outage.

Communication Verification Transponders shall be recorded in Account

362, Station Equipment. The associated

operating expenses shall be recorded in

Account 582, Station Expenses, and

829

Rural Utilities Service, USDA § 1767.41

maintenance expenses shall be recorded in Account 592, Maintenance of

Station Equipment.

7. Load Control Receivers

The Load Control Receiver, also

known as a load control switch, is located at the site of the consumer’s

load. These receivers directly control

the electric supply to an end-use appliance, such as an electric water heater,

central air conditioning compressor, or

irrigation pump. The amount of time

that an appliance will be turned off by

the load control receiver is preset.

When the member system computer determines that load shedding is necessary, it sends a signal to the communication link which then sends signals

directly to the Load Control Receivers.

In a power line based system, the signal from the communications link is

sent by radio or telephone line to the

Substation Injection Units, which then

signals the Load Control Receivers to

shut down the appliances for the

present time. In nonpower line based

systems, the signal from the communications link is sent by radio directly

to the Load Control Receivers.

Load Control Receivers are located

on the consumer’s side of the meter.

When the member distribution system

retains title to the Load Control Receivers and assumes full responsibility

for maintenance and replacement of

the equipment, it shall be classified in

Account 371, Installations on Customer’s Premises. Load Control Receivers that are donated or given to

consumers shall be charged to Account

908, Customer Assistance Expenses.

Operating and maintenance expenses

applicable to Load Control Receivers

recorded in Account 371 shall be

charged to Account 587, Customer Installations Expenses, and Account 598,

Maintenance of Miscellaneous Distribution Plant, respectively. Expenses

applicable to Load Control Receivers

donated or given to consumers shall be

recorded in Account 908, Customer Assistance Expenses.

Load Control Receivers may be

moved on a continual basis from one

customer location to another and are,

therefore, considered to be special

equipment items. When ownership is

maintained by the member distribution

cooperative, Load Control Receivers

shall be accounted for in accordance

with the special equipment procedures

outlined in Accounting Interpretation

No. 119 of this section.

8. Communication Links

The communication link in the member distribution systems between the

Member System Computer, the Substation Remote Controllers or Substation Injection Units, Remote Terminal Units, Line Device Transponders, Communication Verification

Transponders, and Load Control Receivers is usually accomplished by

radio, telephone line, or power line

based system. The communication

links are normally dedicated to the

SCADA and load control functions

being served. Under such circumstances, communications equipment shall be recorded in Account 362,

Station Equipment. If, however, the

communication equipment used is

shared with general use or voice communications equipment, the equipment

shall be charged to Account 397, Communication Equipment.

9. Depreciation

Load control equipment shall be recorded in separate subaccounts of the

primary plant accounts detailed above

and shall be depreciated based upon the

manufacturer’s estimate of the equipment’s useful service life.

119 Special Equipment

Special Equipment items are classified as such because they are continually being moved from one location to

another due to load changes and maintenance practices. The USoA provides

accounting that differs from that used

for other types of materials. The cost,

new, of special equipment items shall

be capitalized at the time of purchase;

it shall not be charged to Account 154

as is the case with other materials. The

first installation cost, as well as all incidental costs necessary to prepare the

equipment for use, shall be capitalized

with the material upon purchase. All

subsequent costs of removing, resetting, changing, renewing oil, and repairing constitute operations and

maintenance expenses. The capitalized

cost of special equipment items, including the first installation, shall be

830

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

removed from the electric plant accounts only when the items are abandoned or retired from the system.

Meters, line-type transformers, oil

circuit reclosers, sectionalizers, current and potential transformers, meter

sockets, and other metering equipment

listed in Account 370, Meters, as well as

pole-type and underground voltage regulators in Account 368, Line Transformers, are considered to be special

equipment items. Similarly, load control receivers (load control switches)

recorded in Account 371, Installations

on Customers’ Premises, are considered

to be items of special equipment. (See

Interpretation No. 118.) Transformers,

voltage regulators, metering equipment, and current and potential transformers for substations are not.

Special equipment items which are

classified as nonusable shall be segregated in the warehouse and retired

from service. The Summary of Special

Equipment Costs shall be retitled Summary of Special Equipment Costs Retired and used for this purpose. A journal entry reflecting this information

shall be prepared and posted to the

books. Since loan funds for special

equipment, including first installation

costs, are approved for advance by RUS

upon receipt of the borrower’s written

estimate of funds required, and not on

the basis of an Inventory of Work Orders, it is improper to take a credit for

any salvage involved in the retirement

of special equipment on the Inventory

of Work Orders.

120 Meter Sockets and Meters

When a utility furnishes meter sockets, ownership by the utility of the

meter socket or base, as well as the

meter itself, is established by virtue of

them being furnished without cost to

the consumer by the cooperative. While

no agreement as to ownership between

the cooperative and the property owner

exists, cooperative ownership is implied by long standing practice and tradition in the electric utility industry.

121 Minimum—Maximum Voltmeters

A minimum—maximum voltmeter is

used to record the minimum and maximum voltages at a specific line location over a period of time. It is normally installed on a pole in connection

with a 11⁄2 kVA transformer, a meter

base and connecting wires, and other

small items of materials. Meter bases

are ordinarily set for these voltmeters

throughout the system, and a lesser

number of voltmeters are rotated

among them periodically to obtain

voltage readings. An average system

may have one voltmeter to two installations, with a maximum of 20 or 25

voltmeters for the whole system.

Minimum—maximum voltmeters

shall be recorded, through work orders,

in Account 370, Meters, when installed.

The cost of the transformers shall remain in Account 368, Line Transformers, with the cost of the meter

bases remaining in Account 370, Meters. The miscellaneous material used

in installing the transformer and the

meter base shall be charged to Account

370, Meters.

Maintenance expense shall be

charged to either Account 595, Maintenance of Line Transformers, or Account 597, Maintenance of Meters, as

appropriate. Costs associated with

reading the voltmeters shall be charged

to Account 583, Overhead Line Expenses, and the cost of relocating or

changing the complete installation or

any part thereof, other than retirement of the meter base, shall be

charged to Account 583, Overhead Line

Expenses, or Account 586, Meter Expenses.

122 Retrofitting Demand Meters

A demand meter measures the

amount of electricity used over a period of time in kilowatt-hours (kWh)

and indicates the maximum kilowatts

(kW) required at any one time by

means of a pointer.

Electronic or solid state demand meters have a direct readout which reads

kilowatt demand to two decimal

places. The use of a direct readout demand meter may result in increased

revenues as pointer readings tend to

register lower than actual usages.

The process of retrofitting a demand

meter replaces the pointer with a direct readout. The cost of such a replacement is usually expensed as a

minor item of property; however, since

the use of a direct readout results in a

substantial betterment, the excess cost

of the replacement over the estimated

831

Rural Utilities Service, USDA § 1767.41

cost, at current prices, of replacing the

pointer without the betterment is capitalized.

123 Transformer Conversions

The conversion of an overhead transformer to an underground transformer

constitutes a betterment and shall,

therefore, be capitalized.

124 Transclosures

Transclosures are enclosures or cabinets in which line transformers are

mounted. The cost of transclosures

that are purchased separately from the

transformer shall be charged to Account 154, Plant Materials and Operating Supplies, when received, and capitalized, upon installation, to Account

368, Line Transformers, as a separate

unit of property. If the case and the

transformer are inseparable, the unit is

considered a transformer and shall be

capitalized upon purchase.

125 Retirement Units

Services

A retirement unit shall consist of a

complete service rather than the individual wires comprising that service. If

each separate wire of a service were

treated as a retirement unit, the retirement unit would represent a comparatively small cost. Such a small

unit of property would substantially

increase the number of retirement

work orders. The complete service

shall, therefore, be considered a retirement unit.

Minor Items

When minor items of property are

added separately from complete retirement units, the costs of these items

shall be included in work orders, and

by unitizing all costs of completed construction for a month, these minor

items shall be spread to the retirement

units of which they normally form a

part. For example, to convert a twophase line to a three-phase line requires the addition of a conductor, an

insulator and a pole-top pin. A pole-top

pin is typically capitalized as a component of the cost of the pole to which it

is attached. Assuming this is the only

work order for the month, the cost of

this pin shall be charged to the conductor, so that its cost is included in

the total cost of the project. In actual

practice, however, this does not happen

as it is normal to have a number of

work orders for a given month, which

include the setting of poles. In allocating the cost of all construction

projects for the month, part of the cost

of pole-top pins shall be allocated to

poles even though the work orders on

which they were capitalized did not include poles.

The retirement and replacement of

isolated single retirement units cannot

be charged to maintenance; a retirement and construction work order

shall be used.

126 Establishment of Continuing

Property Records

The costs of installing a system of

continuing property records shall be

charged to Account 930.2, Miscellaneous General Expenses, and may include:

1. Labor and expenses incurred in developing an inventory of property;

2. Labor and material costs incurred

in connection with developing pole

records including map preparation and

pole cards; and

3. Labor and material costs (ledger

sheets, etc.) incurred in connection

with the installation of the record system.

127 Continuing Property Records for

Buildings

When establishing continuing property records for a building where there

is no detailed breakdown of contract

costs, it is necessary to estimate the

cost of the each component part. It

should be noted that the establishment

of continuing property records is not

required for buildings; however, if

CPRs are not maintained, all repairs

including the replacement of major

component parts shall be expensed in

the period incurred.

128 Sale of Property

All proceeds deposited in the Construction Fund account from the sale

of property, regardless of materiality,

shall be reflected on the RUS Form 595,

832

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

Financial Requirement and Expenditure Statement. Proceeds from the sale

of property shall be reported on the

Form 595, by budget purpose, as a reduction in total expenditures to date,

column 5; and an increase in the cash

balance, column 6.

Proceeds from the sale of property

shall not be used to maintain an ‘‘Employee Fund.’’ A utility may, pursuant

to board policy, use general funds for

employee welfare equivalent in amount

to proceeds received from the sale of

scrap property. If general funds, in an

amount equivalent to proceeds received from the sale of scrap property,

are used for employee welfare, Account

926, Employee Pensions and Benefits,

shall be charged.

129 Gain or Loss on the Sale of an

Office Building

A gain on the sale of an office building shall be recorded in Account 421.1,

Gain on the Disposition of Property,

with a loss recorded in Account 421.2,

Loss on the Disposition of Property. If

the gain or loss will materially distort

current year’s net margins, such gain

or loss is reportable as an extraordinary item in Account 434, Extraordinary Income, or Account 435, Extraordinary Deductions.

130 Salvage and Obsolete Material

The value of material salvaged from

the retirement of units of property reduces the loss on the retirement and

shall be so applied. The value assigned

to salvage shall be credited to Account

108.8, Retirement Work-in-Progress,

which results in reducing net charges

to the provision for depreciation when

the work order is completed and

cleared.

If salvage is sold, any difference between the realized value and the estimated value of the salvaged material

shall be charged or credited to the appropriate provision for depreciation.

Salvage resulting from maintenance

where no retirement units are involved

shall be debited to the materials and

supplies account, and credited to the

appropriate maintenance account.

Occasionally a utility will have a loss

due to obsolescence of materials on

hand. If the loss is due to obsolescence

of new material, the loss shall be

charged to Account 426.5, Other Deductions. If the loss is due to obsolescence

of used material, the loss shall be

charged to the appropriate subaccount

of Account 108, Accumulated Provision

for Depreciation.

131 Plant Acquisition Adjustments

Plant acquisition adjustments shall

be amortized to the operating expense

accounts. These adjustments are recorded in Account 114, Electric Plant

Acquisition Adjustments, and amortized to Account 406, Amortization of

Electric Plant Acquisition Adjustments, or Account 425, Miscellaneous

Amortization, as required by the regulatory commission having jurisdiction.

Accounts 406 and 425 shall be closed to

operating margins.

132 General Plant

When the unit method of depreciation is used for general plant items,

gains and losses on sales, trades or disposals of equipment shall be recorded

as such. If the composite method of depreciation is used, gains or losses on

the disposal of general plant items

shall be recorded in the appropriate depreciation reserve account.

A truck which is used only for transporting power operated equipment

mounted thereon shall be charged, together with the installed equipment, to

Account 396, Power Operated Equipment. If the same type of truck is used

for transporting materials and supplies, tools and work equipment, personnel, or other items, the cost of the

truck shall be charged to Account 392,

Transportation Equipment.

Depreciation and other expenses relating to power operated equipment

shall be accumulated in a subaccount

of Account 184, Clearing Accounts, and

distributed monthly on an equitable

basis to the accounts properly chargeable.

Depreciation expense on vehicles and

other work equipment, furniture and

office equipment, and other such plant

used in the construction of utility

plant, is a proper component of construction cost. To avoid a duplicate advance of funds, however, the amount of

depreciation on such items that has

previously been financed from loan

833

Rural Utilities Service, USDA § 1767.41

funds shall be deducted from Inventories of Work Orders submitted to

RUS. This amount shall be specifically

identified, and shown either monthly

or annually as a single item in column

9 on the RUS Form 219, Inventory of

Work Orders.

133 Plant Abandonments and

Disallowances of Plant Costs

In December 1986, the Financial Accounting Standards Board issued

Statement of Financial Accounting

Standards No. 90, Regulated Enterprises—Accounting for Abandonments

(Statement No. 90) and Disallowances

of Plant Costs. This section provides an

overview of the requirements outlined

in Statement No. 90 together with the

specific accounts that shall be used to

record a plant abandonment or a disallowance of plant costs.

Plant Abandonments

When an abandonment becomes probable, the cost of the abandoned asset

shall be removed from Construction

Work-in-Progress or Plant-in-Service,

as applicable. Before making this

transfer, however, a determination

must be made as to whether recovery

of the allowed cost is likely to be provided with a full return on the investment during the period from the time

the abandonment becomes probable, to

the time when recovery is completed,

or with a partial or no return on the investment. This determination shall be

made based upon the facts and circumstances of the specific abandonment, and past practices and current

policies of regulatory jurisdiction.

If a full return on the investment is

likely to be provided, any disallowance

of all or part of the cost of abandoned

plant that is both probable and reasonably estimated shall be recognized as a

loss in the current year with the carrying basis of the asset reduced by an

equal amount. The remaining cost of

abandoned plant shall be recorded as a

separate new asset.

If partial or no return on the investment is likely to be provided, any disallowance of abandoned plant costs

that is both probable and reasonably

estimated shall be recognized as a loss.

The present value of the future revenues expected to be provided to recover

the allowable cost of the abandoned

plant and return on the investment, if

any, shall be reported as a separate

new asset. The discount rate used to

compute the present value shall be the

borrower’s incremental borrowing rate,

which is the rate that the borrower

would have to pay to borrow an equivalent amount for a period equal to the

expected recovery period. In determining the value of expected future

revenues, the borrower shall consider

the probable time period before the recovery is expected to begin and the

probable time period over which recovery is expected to be provided.

The amount of the new asset shall be

adjusted from time to time, as necessary, if new information indicates

that the estimates used to record the

new asset have changed. The carrying

value of the new asset, however, shall

not be adjusted for changes in the incremental borrowing rate. The amount

of any adjustments shall be recorded as

a gain or loss.

During the period between the date

on which a new asset is recognized and

the date on which recovery begins, the

carrying amount shall be increased by

accruing a carrying charge. The rate

used to accrue the carrying charge

shall be:

1. If a full return on the investment

is likely, a rate equal to the allowed

overall cost of capital in the jurisdiction in which recovery is expected to

be provided shall be used.

2. If partial or no return is likely, the

asset shall be amortized in a manner

that will produce a constant return on

the unamortized investment in the new

asset equal to the rate at which the expected revenues were discounted.

Due to the nonprofit environment in

which electric cooperatives operate,

full recovery of interest expense on

plant related long-term debt equates to

full recovery of the rate of return for

an investor-owned utility. Therefore, if

a cooperative is permitted full recovery of the interest expense incurred on

the long-term debt borrowed to finance

construction of an abandoned plant, no

discounting of the asset is required nor

is accrual of the carrying charge permitted.

If, at the time the provisions of

Statement No. 90 are first applied, the

834

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

borrower elects to restate the financial

statements, the financial statements

for all periods presented shall be restated and the financial statements

shall disclose the nature of the restatement and its effect on margins before

extraordinary items, net margins, and

patronage capital at the beginning of

the earliest period presented. If the

borrower elects not to restate the financial statements, the effect of applying Statement No. 90 shall be reported

as a change in accounting principle and

the financial statements shall disclose

the nature of the change and the effect

of applying Statement No. 90 on margins before extraordinary items and

net margins.

The specific accounts that shall be

used to record transactions involving

plant abandonments are as follows:

1. In the year of the abandonment,

the unrecoverable portion of the cost of

abandoned plant included in construction work-in-progress shall be recognized as a loss by a charge to Account

426.5, Other Deductions, and a credit to

Account 107, Construction Work-inProgress.

2. The balance of the cost remaining

in the construction work-in-progress

account shall be credited to Account

107 and charged to Account 182.2, Unrecovered Plant and Regulatory Study

Costs.

3. The difference between the charge

to Account 182.2 and the present value

of expected future revenues for recovery of the new asset, shall be recorded

as a credit to Account 182.2 and a debit

to Account 426.5. The credit to Account

182.2 shall be segregated from the

amount charged to Account 182.2 by

the use of a separate subaccount.

Statement No. 90 does not require this

segregation; however, it is necessary

under the USoA to provide for the appropriate segregation of operating and

nonoperating income.

4. During the waiting period for recovery of the new asset to begin, carrying charges shall be accrued by a

debit toAccount 182.2 with a concurrent credit to Account 421, Miscellaneous Nonoperating Income. Debits to

Account 182.2 shall be treated as reductions to the credit subaccount of Account 182.2.

5. The borrower shall amortize the

amount debited to Account 182.2 by

charges to operating income, consistent with the way the amortized

amounts are recovered through rates.

These charges to income shall be recorded in Account 407, Amortization of

Property Losses, Unrecovered Plant

and Regulatory Study Costs.

6. As the recoverable amount recorded in Account 182.2 is recovered

through rates, the borrower shall accrue income by charges to Account

182.2 and credits to Account 421, Miscellaneous Nonoperating Income. Accruals shall be computed by applying

the same rate used to derive the

present value of the asset established

in Account 182.2, to the unamortized

balance in that account. Accrued

amounts charged to Account 182.2 shall

be treated as reductions to the credit

subaccount withinAccount 182.2.

Prior to implementing the accounting prescribed above, the borrower

shall submit the details of each plant

abandonment to RUS for approval.

Disallowances of Costs of Recently

Completed Plant

When it becomes probable that a portion of the cost of recently completed

plant will be disallowed for rate making purposes and a reasonable estimate

of the amount of the disallowance can

be made, the estimated amount of the

probable disallowance shall be deducted from the reported cost of the

plant and recognized as a loss. If a portion of the costs is explicitly, but indirectly disallowed, the equivalent

amount of the cost shall be deducted

from the reported cost of the plant and

recognized as a loss.The specific accounts that shall be used to record

transactions involving the disallowance of plant costs are as follows:

1. Estimated disallowed plant costs

which the borrower records as a credit

to Account 101, Electric Plant-in-Service, shall be charged to Account 426.5,

Other Deductions.

2. If the loss qualifies as an extraordinary item under the criteria set forth

in General Instruction No. 7 of the

USoA, the borrower shall record the

loss in Account 435, Extraordinary Deductions. To be considered extraordinary, an item shall be more than five

835

Rural Utilities Service, USDA § 1767.41

percent of income computed before extraordinary items. If a borrower believes that a loss of less than five percent should be treated as an extraordinary item; the borrower shall, with

commission approval, record the loss in

Account 435 and report the loss as an

extraordinary item. If the borrower is

not subject to state commission jurisdiction, RUS approval is required.

134 Utility Plant Phase-in Plans

In August 1987, the Financial Accounting Standards Board issued

Statement of Financial Accounting

Standards No. 92, Regulated Enterprises—Accounting for Phase-in Plans

(Statement No. 92). This section provides an overview of the requirements

outlined in Statement No. 92.

The term phase-in plan is used to

refer to any method of recognition of

allowable costs in rates that meets all

of the following criteria:

1. The method was adopted by the

regulator in connection with a major,

newly completed plant of the regulated

enterprise or one of its suppliers or a

major plant scheduled for completion

in the near future.

2. The method defers the rates intended to recover allowable costs beyond the period in which those allowable costs would be charged to expense

under generally accepted accounting

principles applicable to enterprises in

general.

3. The method defers the rates intended to recover allowable costs beyond the period in which those rates

would have been ordered under the

rate-making methods routinely used

prior to 1982 by that regulator for similar allowable costs of that regulated

enterprise.

If a phase-in plan is ordered by a regulator in connection with a plant on

which no substantial physical construction had been performed before

January 1, 1988, none of the allowable

costs that are deferred for future recovery by the regulator under the plan for

rate-making purposes, shall be capitalized for general-purpose financial reporting purposes (financial reporting).

If a phase-in plan is ordered by a regulator in connection with a plant completed before January 1, 1988, or a plant

on which substantial physical construction had been performed before

January 1, 1988, the criteria specified

below shall be applied to that plan. If

the phase-in plan meets all of those criteria, all allowable costs that are deferred for future recovery by the regulator under the plan shall be capitalized for financial reporting purposes as

a separate asset (a deferred charge). If

any one of those criteria is not met,

none of the allowable costs that are deferred for future recovery by the regulator under the plan shall be capitalized for financial reporting. The criteria for determining whether capitalization is appropriate are:

1. The allowable costs in question are

deferred pursuant to a formal plan that

has been agreed to by the regulator;

2. The plan specifies the timing of recovery of all allowable costs that will

be deferred under the plan;

3. All allowable costs deferred under

the plan are scheduled for recovery

within 10 years of the date when the

deferral began; and

4. The percentage increase in rates

scheduled under the plan for each future year is no greater than the percentage increase in rates scheduled

under the plan for each immediately

preceding year. That is, the scheduled

percentage increase in year two is no

greater than the percentage increase

granted in year one, the scheduled percentage increase in year three is no

greater than the percentage increase in

year two, etc.

By definition, a phase-in plan approved prior to 1982 that contains provisions contrary to those detailed

above is not subject to the provisions

of Statement No. 92. This exemption,

however, only relates to a specific utility and a specific regulator. For example, a utility cannot use a phase-in

plan approved by its regulator for a different utility as justification for its

phase-in plan exceeding the 10-year

limit imposed by Statement No. 92.

A phase-in plan is a method of rate

making intended to moderate a sudden

increase in rates while providing the

regulated enterprise with recovery of

its investment and a return on that investment during the recovery period. A

disallowance is a rate-making action

that prevents the regulated enterprise

836

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

from recovering either some amount of

its investment or some amount of return on its investment. Statement No.

90 specifies the accounting for disallowances of plant costs (see item 133

of this regulation). If a method of rate

making that meets the criteria for a

phase-in plan includes an indirect disallowance of plant costs, that disallowance shall be accounted for in accordance with Statement No. 90. Cumulative amounts capitalized under

phase-in plans shall be reported as a

separate asset in the balance sheet.

The net amount capitalized in each period or the net amount of previously

capitalized allowable costs recovered

during each period shall be reported as

a separate item of other income or expense in the income statement. Allowable costs capitalized shall not be reported as reductions of other expenses.

The terms of any phase-in plan in effect during the year or ordered for future years shall be disclosed in the financial statements. Statement No. 92

does not permit capitalization for financial reporting of allowable costs deferred for future recovery by the regulator pursuant to a phase-in plan that

does not meet the criteria or a phasein plan related to plant on which substantial physical construction was not

completed before January 1, 1988. Nevertheless, the financial statements

shall include disclosures of the net

amount deferred at the balance sheet

date for rate-making purposes, and the

net change in deferrals for rate-making

purposes during the year for those

plans.

If the provisions of Statement No. 92

are applied retroactively, the financial

statements of all periods presented

shall be restated. In addition, the restated financial statements shall, in

the year that Statement No. 92 is first

applied, disclose the nature of any restatement and its effect on margins before extraordinary items, net margins,

and on patronage capital at the beginning of the earliest period presented. If

the financial statements for prior years

are not restated, the effects of applying

Statement No. 92 to existing phase-in

plans shall be reported as a change in

accounting principle and the financial

statements shall disclose the effect of

adopting Statement No. 92 on margins

before extraordinary items and net

margins.

The application of Statement No. 92

to an existing phase-in plan shall be delayed if both of the following conditions are met:

1. The enterprise has filed a rate application to have the plan amended to

meet the criteria of Statement No. 92

or intends to do so as soon as practicable; and

2. It is reasonably possible that the

regulator will change the terms of the

phase-in plan so that it will meet the

criteria of Statement No. 92.

If the above conditions are met, the

provisions of Statement No. 92 shall be

applied to the existing phase-in plan on

the earlier of the date when one of the

conditions ceases to be met or the date

when the final rate order is received,

amending or refusing to amend the

phase-in plan. However, if the enterprise delays filing its application for

the amendment or the regulator does

not process the application in the normal period of time, the application of

Statement No. 92 shall not be further

delayed.

In applying the criteria of Statement

No. 92 to a plan that was in existence

prior to the first fiscal year beginning

after December 15, 1987, and that was

revised to meet that criteria, the 10-

year criterion and the requirement

concerning the percentage increase

shall be measured from the date of the

amendment rather than from the date

of the first scheduled deferrals under

the original plan. All phase-in plans

must receive RUS approval prior to implementation.

135 Accounting for Removal or Relocation of Electric Facilities Resulting from the Action of Others

Under arrangements with another

party, a borrower agrees, or is obliged,

to remove, relocate, rearrange, or otherwise make changes in utility property, other than for the purpose of rendering utility service to the other

party, for which the utility is reimbursed for all or a portion of the costs

incurred.

837

Rural Utilities Service, USDA § 1767.41

Plant Accounting

The relocation of the line shall be accounted for as follows:

1. If all of the assemblies in the line

are retired or completely removed and

later reinstalled or if the line is constructed in a new location before the

old line is removed, construction and

retirement work orders shall be prepared except for the costs relating to

special equipment items (transformers,

oil circuit reclosers, etc.) which shall

be charged to operations expense.

2. If a line is moved in its entirety to

a new location except for isolated retirement units (such as at the end of

the line) or poles not suitable for resetting, the cost of moving the portion of

line that is moved intact shall be

charged to maintenance expense while

the cost related to the change in isolated retirement units or the replacement of poles not suitable for resetting

shall be accounted for through use of

construction and retirement work orders.

3. If a line is moved intact without

any change in assemblies, the cost

shall be charged to maintenance expense.

Reimbursement

If the borrower receives reimbursement for the costs related to the relocation of the line, the reimbursement

shall be accounted for by crediting operation and maintenance expenses to

the extent of actual expenses occasioned by the plant changes and crediting the remainder to the accumulated

provision for depreciation, unless contractual terms definitely characterize

residual or specific amounts as applicable to the cost of replacement. In the

latter event, appropriate credits shall

be entered in the plant accounts.

Reimbursement received from a telephone company for adding a pole or replacing a present pole with a taller

pole under joint use contracts falls

within this latter category. In this instance, appropriate credits are charged

against the plant accounts.

Financing

The total reimbursement, less any

portion for operations and maintenance costs, shall be entered in the

‘‘Contributions in Aid of Construction’’

section at the bottom of the Construction Work Order. When the Inventory

of Work Orders (RUS Form 219) is prepared, enter only enough of the contribution in column 9 to reduce to zero

the amount in column 10, ‘‘Loan Funds

Subject to Advance by RUS.’’ This

entry is made although none of the reimbursement received is recorded in

the accounting records as a contribution in aid of construction.

136 Storm Damage

As a result of recent hurricane, flood,

and ice storm damage, the Rural Utilities Service (RUS) has received several

inquiries concerning the proper accounting for storm damage costs and

the associated funds received from the

Federal Emergency Management Administration (FEMA).

Storm damage costs should be accounted for under the work order procedure. Units of property destroyed or

otherwise removed from service must

be reflected on retirement work orders

and units of property installed must be

shown on construction work orders. To

ensure that the accounting for construction and retirement costs is as accurate as possible, an effort should be

made to accurately accumulate material, labor, and overhead costs. Even

when extreme care has been exercised,

however, it may still be necessary to

use estimates to develop the appropriate cost figures.

When a storm occurs, a utility typically incurs a large retirement loss, all

or a part of which should be charged to

the accumulated provision for depreciation. Storm damage costs over and

above construction and retirement

costs represent maintenance expense.

Maintenance costs include the costs of

resagging lines, straightening poles,

and replacing minor items of property.

When extensive damage has occurred,

the need to restore the property to an

operating condition without delay usually results in excessive costs being incurred. Standard property unit costs

may be used as a guide in determining

the amount to be capitalized. It should

be noted, however, that when standard

property unit costs are used, all excess

costs are charged to maintenance expense.

838

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

Because of the storm’s destruction,

property is retired prematurely and as

a result, extraordinary retirement

losses occur. When such extraordinary

losses occur, they should be recorded in

the year in which the losses are incurred. If the recording of such losses

will materially distort the income

statement, such losses may be charged

to Account 435, Extraordinary Deductions. These costs may be deferred and

amortized to future periods only if the

provisions of Statement of Financial

Accounting Standards No. 71, Accounting for the Effects of Certain Types of

Regulation (Statement No. 71), are applied. Under the provisions of Statement No. 71, a utility may defer certain costs, provided such costs are included in the utility’s rate base and recovered through future rates. If an

RUS borrower elects to apply the provisions of Statement No. 71, RUS approval is required. To obtain RUS approval, a borrower must submit:

a. A detailed description of the plan

including the nature of the expense

item, the amount of the deferral, the

specific time period for rate recovery,

and justifying support for the time period selected;

b. The accounting journal entries

being used by the cooperative to record

the expense deferral and amortization

of the deferred costs;

c. A copy of the state Commission

order authorizing recovery of the deferred costs through future rates, or in

the absence of commission jurisdiction,

a resolution from the cooperative’s

board of directors authorizing such recovery; and

d. A statement from the borrower’s

certified public accountant (CPA) or

CPA firm indicating that the deferral

and amortization of these costs is in

accordance with generally accepted accounting principles.

To assist in the restoration of the

damaged facilities, the Federal government often provides assistance through

FEMA. Under current FEMA procedures, FEMA provides funds for the

restoration of facilities based upon the

cost estimates submitted by the entity

requesting assistance. If the FEMA

grant is for less than 100 percent of the

cost estimates, FEMA does not specify

which costs are to be reimbursed. When

the funds are received, therefore, they

should be accounted for by crediting

construction, retirement, maintenance

expense, and administrative expense in

direct proportion to the total costs incurred. For example, if total storm

damage costs are $1,000,000 with $450,000

incurred for maintenance, $300,000 for

retirement, $200,000 for construction,

and $50,000 for administrative costs,

the FEMA reimbursement should be

accounted for by applying 45 percent of

the funds received as a credit to maintenance expense, 30 percent as a credit

to retirement costs, 20 percent as a

credit to construction, and 5 percent as

a credit to administrative and general

costs.

ACCOUNTING JOURNAL ENTRIES

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. $1,015.17

Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $1,015.17

To transfer the removal costs recorded in Column 11 of Retirement Work Order #4401X to Account 108.8X.

Dr. 107.4, Construction Work in Progress—Storm Damage .............. $4,141.55

Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $4,141.55

To remove material salvaged in the llllllllll rebuild from Account 107.4. The

original entry debited Account 154, Plant Materials and Operating Supplies, and credited

Account 107.4. (See Column 12 of Retirement Work Order #4401X.)

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. $312,230.41

Cr. 364, Poles Towers and Fixtures ............................................. .................. $133,377.55

Cr. 365, Overhead Conductors and Devices ................................. .................. 59,683.08

Cr. 368, Lines Transformers ........................................................ .................. 19,704.60

Cr. 369, Services .......................................................................... .................. 97,651.23

Cr. 373, Street Lighting and Signal Systems .............................. .................. 1,813.95

To remove the original cost of property destroyed and retired from the classified plant accounts. This retirement is recorded, in detail, on Retirement Work Order #4401X. It is understood that this retirement covers all distribution property retired or destroyed in the

llllllllll area exclusive of substations and special equipment items (meters,

meter sockets, current and potential transformers, transformers, voltage regulators, oil

circuit reclosers (OCR), and sectionalizers).

839

Rural Utilities Service, USDA § 1767.41

ACCOUNTING JOURNAL ENTRIES—Continued

Dr. 108.6, Accumulated Provision for Depreciation of Distribution

Plant ............................................................................................. $309,104.03

Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $309,104.03

To record the net loss due to the retirement of distribution lines in the llllllllll

area. (See Retirement Work Order #4401X.)

Dr. 364, Poles, Towers and Fixtures ................................................. $99,075.40

Dr. 365, Overhead Conductors and Devices ....................................... 104,142.22

Dr. 368, Line Transformers ............................................................... 25,036.07

Dr. 369, Services ............................................................................... 28,865.08

Dr. 373, Street Lighting and Signal Systems ................................... 2,101.60

Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $259,220.37

To record, in the proper classified plant accounts, Construction Work Order #4401 covering

the llllllllll rebuild.

This entry includes:

Material Issued .......................................................................... $150,336.49

Less: Materials Returned ........................................................... 15,631.39

Net Material Used ...................................................................... 134,705.10

Labor and overhead estimated by using standard record unit

costs ........................................................................................ 124,515.27

Total ....................................................................................... 259,220.37

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. 2,384.00

Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $2,384.00

To transfer the removal costs associated with the retirement of old transmission lines

($1,966) and substations ($418) to Account 107.4. This cost is shown in Column 11 of Retirement Work Order #4400X).

Dr. 107.4, Construction Work in Progress—Storm Damage .............. $1,939.74

Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $1,939.74

To remove material salvaged from transmission lines ($1,545.74) and substations ($394.00)

from Account 107.4. The original entry debited Account 154 and credited Account 107.4.

(See Column 12 of Retirement Work Order #4400X.)

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. $162,172.06

Cr. 355, Poles and Fixtures ......................................................... .................. $47,738.45

Cr. 356, Overhead Conductors & Devices ..................................... .................. 80,304.11

Cr. 362, Station Equipment ........................................................ .................. 34,129.50

To remove the original cost of transmission lines and substations destroyed and retired

from the classified plant accounts. (See Retirement Work Order #4400X.) (New substations

were built and separately accounted for on Work Order #4406.)

Dr. 108.5, Accumulated Provision for Depreciation of Transmission

Plant ............................................................................................. $128,462.82

Dr. 108.6, Accumulated Provision for Depreciation of Distribution

Plant ............................................................................................. 34,153.50

Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $162,616.32

To record the net loss due to the retirement of transmission lines ($128,462.82) and substations ($34,153.50). (See Retirement Work Order #4400X):

Substations

Transmission

plant

Original Cost .................................................................................... $34,129.50 $128,042.56

Add: Cost of Removal ....................................................................... 418.00 1,966.00

34,547.50 130,008.56

Less: Material Salvaged ................................................................... 394.00 1,545.74

Total ....................................................................................... 34,153.50 128,462.82

Dr. 355, Poles and Fixtures ............................................................... $161,784.05

Dr. 356, Overhead Conductors and Devices ....................................... 124,704.77

Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $286,488.82

To record, in the proper classified plant accounts, the costs of a 69 kV transmission line

(llllllllll) as detailed in Work Order #4400. This work order includes construction costs as follows:

840

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

Material Used (Net) .......................................................................... $171,665.62

Labor and overhead estimated by using standard record unit

costs ........................................................................................ 114,823.20

Total ....................................................................................... 286,488.82

Dr. 107.4, Construction Work in Progress—Storm Damage .............. $329.40

Cr. 108.8X, Retirement Work in Progress—Storm Damage ........ .................. $329.40

To correct the journal entry for cash received from the sale of scrapped meters and transformers. The original entry credited Account 107.4 at the time of receipt.

Transformers .............................................................................. $318.00

Meters ........................................................................................ 11.40

Net Materials Used ..................................................................... 329.40

Dr. 108.8X, Retirement Work in Progress—Storm Damage .............. .................. $137,671.22

Cr. 365, Overhead Conductors and Devices ................................. .................. $4,557.00

Cr. 368, Line Transformers ......................................................... .................. 112,815.22

Cr. 370, Meters ............................................................................ .................. 20,299.00

To remove the cost of meters, transformers, and OCRs lost or destroyed from the primary

plant accounts. (See Retirement Work Order #4402X.)

737 Transformers ........................................................................ $112,815.22

31 OCRs ....................................................................................... 4,557.00

1,532 Meters ................................................................................ 20,299.00

Total ....................................................................................... 137,671.22

Dr. 108.6, Accumulated Provision for Depreciation of Distribution

Plant ............................................................................................. $137,341.82

Cr. 108.8X, Retirement Work in Progress ................................... .................. $137,341.82

To record the net loss due to the retirement of meters, transformers, and OCRs. (See Retirement Work Order #4402X.)

Original Cost .............................................................................. $137,671.22

Salvaged Realized ...................................................................... 329.40

Total ....................................................................................... 137,341.82

Dr. 186, Miscellaneous Deferred Debits ............................................ $1,319.85

Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $1,319.85

To record the engineering costs associated with future construction work in the

llllllllll area.

Dr. 593, Maintenance of Overhead Lines ........................................... $607.24

Dr. 595, Maintenance of Line Transformers ..................................... 19,365.86

Dr. 597, Maintenance of Meters ........................................................ 6,595.56

Cr. 107.4, Construction Work in Progress—Storm Damage ........ .................. $26,568.66

To charge the costs of repairing damaged meters, transformers, voltage regulators, and

OCRs to the appropriate expense accounts. Repair costs were originally charged to Account 107.4.

593 595 597

Meters ......................................................................... .................. .................. $6,595.56

Transformers .............................................................. .................. $18,869.95 ..................

Voltage Regulators ..................................................... .................. 495.91 ..................

Oil Circuit Reclosers .................................................. $607.24 .................. ..................

Total .................................................................. 607.24 19,365.86 6,595.56

Dr. 920, Administrative and General Salaries ................................................. $32,000.00

Dr. 921, Office Supplies and Expenses ........................................................... 4,421.69

Cr. 107.4, Construction Work in Progress—Storm Damage .................... ........................ $36,421.69

To charge the administrative costs incurred to obtain the FEMA grant to the appropriate expense accounts.

Administrative costs were originally charged to Account 107.4.

Salaries ..................................................................................................... $32,000.00

Office Supplies .......................................................................................... 4,421.69

Total ...................................................................................................... $36,421.69

841

Rural Utilities Service, USDA § 1767.41

Dr. 571, Maintenance of Overhead Lines ........................................................ $3,675.60

Dr. 593, Maintenance of Overhead Lines ........................................................ 33,080.40

Cr. 107.4, Construction Work in Progress Storm Damage ...................... ........................ $36,756.00

To allocate expenses remaining in Account 107.4 to distribution and transmission maintenance expense. It

was estimated that only 10 percent is applicable to transmission.

Dr. 426.5, Other Deductions ............................................................................ $275,000.00

Dr. 435, Extraordinary Deductions

Dr. 182.1, Extraordinary Property Losses

Cr. 108.5, Accumulated Provision for Depreciation of Transmission

Plant ...................................................................................................... ........................ $35,000.00

Cr. 108.6, Accumulated Provision for Depreciation of Distribution Plant ........................ 240,000.00

To restore the accumulated provisions for depreciation to their appropriate levels based upon a study of plant

currently in service.

NOTE: Account 426.5, Other Deductions, should be used to record the retirement loss as a

current period expense. Account 435, Extraordinary Deductions, may be used when the loss

will materially distort the income statement. Account 182.1, Extraordinary Property Losses,

should be used when such costs are being deferred under the provisions of Statement No. 71.

Costs recorded in this account should be amortized to Account 407, Amortization of Property

Losses, as the costs are recovered through rates.

Dr. 131.1, Cash—General ................................................................... $1,000,000.00

Cr. 253, Other Deferred Credits ................................................... .................. $1,000,000.00

To record the receipt of funds from the Federal Emergency Management Administration

(FEMA).

Dr. 253, Other Deferred Credits ......................................................... $1,000,000.00

Cr. 108.5, Accumulated Provision for Depreciation of Transmission Plant .......................................................................... .................. $74,205.00

Cr. 108.6, Accumulated Provision for Depreciation of Distribution Plant ................................................................................ .................. 191,575.00

Cr. 186, Miscellaneous Deferred Debits ....................................... .................. 872.00

Cr. 355, Poles and Fixtures ......................................................... .................. 129,056.00

Cr. 356, Overhead Conductors and Devices ................................. .................. 99,408.00

Cr. 364, Poles, Towers and Fixtures ............................................ .................. 78,916.00

Cr. 365, Overhead Conductors and Devices ................................. .................. 82,840.00

Cr. 368, Line Transformers ......................................................... .................. 20,056.00

Cr. 369, Services .......................................................................... .................. 23,108.00

Cr. 373, Street Lighting and Signal Systems .............................. .................. 1,744.00

Cr. 426.5, Other Deductions ......................................................... .................. 219,220.00

Cr. 571, Maintenance of Overhead Lines ..................................... .................. 2,900.00

Cr. 593, Maintenance of Overhead Lines ..................................... .................. 26,600.00

Cr. 595, Maintenance of Line Transformers ................................ .................. 15,300.00

Cr. 597, Maintenance of Meters ................................................... .................. 5,200.00

Cr. 920, Administrative and General Salaries ............................. .................. 25,491.00

Cr. 921, Office Supplies and Expenses ......................................... .................. 3,509.00

To allocate FEMA funds to the proper accounts..

Summary of Costs

Maintenance:

Account 571, Maintenance of Overhead Lines .................................................. $3,675.60

Account 593, Maintenance of Overhead Lines .................................................. 33,687.24

Account 595, Maintenance of Line Transformers ............................................ 19,365.86

Account 597, Maintenance of Meters ............................................................... 6,595.56

Total Maintenance Costs .............................................................................. 63,324.26

Retirement Loss:

Account 108.5, Accumulated Provision for Depreciation of Transmission

Plant ............................................................................................................. 93,462.82

Account 108.6, Accumulated Provision for Depreciation of Distribution

Plant ............................................................................................................. 240,599.35

Account 426.5, Other Deductions ..................................................................... 275,000.00

Total Retirement Loss ................................................................................. 609,062.17

Construction:

Account 186, Miscellaneous Deferred Debits ................................................... 1,319.85

Account 355, Poles and Fixtures ...................................................................... 161,784.05

Account 356, Overhead Conductors and Devices .............................................. 124,704.77

842

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

Account 364, Poles, Towers and Fixtures ........................................................ 99,075.40

Account 365, Overhead Conductor and Devices ................................................ 104,142.22

Account 368, Line Transformers ...................................................................... 25,036.07

Account 369, Services ...................................................................................... 28,865.08

Account 373, Street Lighting and Signal Systems .......................................... 2,101.60

Total Construction Cost ............................................................................... 547,029.04

Administrative:

Account 920, Administrative and General Salaries ......................................... $32,000.00

Account 921, Office Supplies and Expenses ...................................................... 4,421.69

Total Administrative Cost ........................................................................... 36,421.69

Maintenance .................................................................................................... 63,324.26

Retirement Loss .............................................................................................. 609,062.17

Construction .................................................................................................... 547,029.04

Administrative ................................................................................................ 36,421.69

Total Costs ................................................................................................... 1,255,837.16

Distribution of FEMA Funds

Maintenance: 63,324.26÷1,255,837.16=.0504=5.0%

Retirement: 609,062.17÷1,255,837.16=.4850=48.5%

Construction: 547,029.04÷1,255,837.16=.4356 = 43.6%

Administrative: 36,421.69÷1,255,837.16=.0290=2.9%

Maintenance: $1,000,000.00×5.0%= ........................................................................... $50,000.00

Retirement: $1,000,000.00×48.5%= ............................................................................ 485,000.00

Construction: $1,000,000.00×43.6%= ......................................................................... 436,000.00

Administrative: $1,000,000.00×2.9%= ....................................................................... 29,000.00

Total ............................................................................................................. 1,000,000.00

Distribution of FEMA Funds—Maintenance

Account 571: 3,675.60÷63,324.26=.0580=5.8%

Account 593: 33,687.24÷63,324.26=.5320=53.2%

Account 595: 19,365.86÷63,324.26=.3058=30.6%

Account 597: 6,595.56÷63,324.26=.1041=10.4%

Account 571: $50,000.00×5.8%= ................................................................................. $2,900.00

Account 593: $50,000.00×53.2%= ................................................................................ 26,600.00

Account 595: $50,000.00×30.6%= ................................................................................ 15,300.00

Account 597: $50,000.00×10.4%= ................................................................................ 5,200.00

Total ............................................................................................................. 50,000.00

Distribution of FEMA Funds—Retirement Loss

Account 108.5: 93,462.82÷609,062.17=.1535=15.3%

Account 108.6: 240,599.35÷609,062.17=.3950=39.5%

Account 426.5: 275,000.00÷609,062.17=.4515=45.2%

Account 108.5: $485,000.00×15.3%= ............................................................................ $74,205.00

Account 108.6: $485,000.00×39.5%= ............................................................................ 191,575.00

Account 426.5: $485,000.00×45.2%= ............................................................................ 219,220.00

Total ............................................................................................................. 485,000.00

Distribution of FEMA Funds—Construction

Account 186: 1,319.85÷547,029.04=.0024=.2%

Account 355: 161,784.05÷547,029.04=.2958=29.6%

Account 356: 124,704.77÷547,029.04=.2280=22.8%

Account 364: 99,075.40÷547,029.04=.1811=18.1%

Account 365: 104,142.22÷547,029.04=.1904=19.0%

Account 368: 25,036.07÷547,029.04=.0457=4.6%

Account 369: 28,865.08÷547,029.04=.0528=5.3%

Account 373: 2,101.67÷547,029.04=.0038=.4%

Account 186: $436,000.00×.2%= ................................................................................. $872.00

Account 355: $436,000.00×29.6%= .............................................................................. 129,056.00

Account 356: $436,000.00×22.8%= .............................................................................. 99,408.00

Account 364: $436,000.00×18.1%= .............................................................................. 78,916.00

843

Rural Utilities Service, USDA § 1767.41

Account 365: $436,000.00×19.0%= .............................................................................. 82,840.00

Account 368: $436,000.00×4.6%= ................................................................................ 20,056.00

Account 369: $436,000.00×5.3%= ................................................................................ 23,108.00

Account 373: $436,000.00×.4%= ................................................................................. 1,744.00

Total ............................................................................................................. 436,000.00

Distribution of FEMA Funds—Administrative

Account 920: 32,000.00÷36,421.69=.8786=87.9%

Account 921: 4,421.69÷36,421.69=.1213=12.1%

Account 920: $29,000.00×87.9%= ................................................................................ $25,491.00

Account 921: $29,000.00×12.1%= ................................................................................ 3,509.00

Total ............................................................................................................. 29,000.00

137 Impairment of Long-Lived Assets

Statement of Financial Accounting

Standards No. 121, Accounting for the

Impairment of Long-Lived Assets and

for Long-Lived Assets to be Disposed of

(Statement No. 121), requires reporting

entities to review all long-lived assets

and certain identifiable intangibles

that are to be held, used, or disposed of

by that entity for impairment whenever events and changes in circumstances indicate that the carrying

amount of the asset may not be recoverable. If the sum of the expected future cash flows (undiscounted and

without interest charges) is less than

the carrying value of the asset, the entity must recognize an impairment

loss. The impairment loss is measured

as the amount by which the carrying

amount of the asset exceeds the fair

value of the asset. The impairment loss

is reported as a component of income

from continuing operations before income taxes for entities presenting an

income statement and in the statement

of activities of not-for-profit organizations. Statement No. 121 does not apply

to assets included in the scope of

Statement of Financial Accounting

Standards No. 90, Regulated Enterprises—Accounting for Abandonments

and Disallowances of Plant Costs.

Assets To Be Held or Used

Entities are required to review longlived assets and certain identifiable intangibles whenever events or changes

in circumstances indicate that the carrying value of the asset may not be recoverable. For example:

1. A significant decrease in the market value of an asset;

2. A significant change in the extent

or manner in which an asset is used;

3. A significant physical change in an

asset;

4. A significant adverse change in

legal factors or in the business climate

that could affect the value of an asset;

5. An adverse action or assessment by

a regulator;

6. An accumulation of costs significantly in excess of the amount originally expected to acquire or construct

an asset; and

7. A current period operating or cash

flow loss combined with a history of

operating or cash flow losses or a projection or forecast that demonstrates

continued losses associated with an

asset used for the purpose of producing

revenue.

The impairment of the asset is measured by estimating the future cash

flows expected to result from the use of

the asset and its disposition. Assets are

grouped at the lowest level for which

there are identifiable cash flows that

are largely independent of the cash

flows of other groups of assets. Future

cash flows are those cash inflows that

are expected to be generated by the

asset less the cash outflows expected to

be necessary to maintain those inflows.

If the future cash flows (undiscounted

and without interest charges) are less

than the carrying value of the asset, an

impairment loss must be recognized. If

the expected future cash flows are

greater than the carrying value of the

asset, no impairment loss exists.

The impairment loss is the amount

by which the carrying amount (acquisition cost less accumulated depreciation) of the asset exceeds the fair value

of the asset. The fair value of the asset

844

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

is the amount for which the asset could

be bought or sold in an arms-length

transaction between willing parties. A

quoted market price is the best evidence of fair value. If this information

is not available, the fair value should

be based upon the best information

available. Consideration should be

given to the price of similar assets and

valuation techniques such as the

present value of the expected future

cash flows discounted at a rate representative of the risk involved, option-pricing models, matrix pricing,

option-adjusted spread models, and

fundamental analysis. All available information should be considered when

using the above pricing techniques.

If an impairment is recognized, the

carrying value of the asset is reduced

to the lower of its fair value or its carrying value and, if depreciable, depreciated over the remaining useful life.

Previously recognized impairment

losses cannot be restored. If the asset

was acquired in a business combination

and there is goodwill resulting from

the transaction, the goodwill is included in the asset grouping and reduced or eliminated before any adjustment is made to the carrying value of

the asset.

The following financial statement

disclosures are required in the period

in which the impairment is recognized:

1. A description of the impaired assets and the facts and circumstances

surrounding the impairment;

2. The amount of the impairment and

how fair value was determined;

3. The caption in the income statement or the statement of activities in

which the impairment loss is aggregated if that loss has not been presented as a separate caption or reported parenthetically on the face of

the statement; and

4. If applicable, the business segment(s) affected.

Assets To Be Disposed

Statement No. 121 also applies to all

long-lived assets and certain identifiable intangibles for which management, having the authority to approve

the action, has committed to a plan of

disposal except those assets covered by

APB No. 30, Reporting the Results of

Operations—Reporting the Effects of

Disposal of a Segment of a Business,

and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. An asset to be disposed of is

carried at the lower of its carrying

amount (acquisition cost less accumulated depreciation) or its fair value less

cost to sell.

The fair value of the asset to be disposed of is computed in the same manner as that for an asset to be held or

used by the entity. Selling costs include the incremental direct cost to

transact the sale—broker commissions,

legal fees, title transfer, and other

closing costs that must be incurred before legal title can be transferred.

Costs such as insurance, security service, and utilities are generally excluded

unless these costs are part of a contractual agreement that obligates the

entity to incur such costs in the future.

If the asset’s fair value is based upon

current market price or the current

selling price for a similar asset, the

fair value is considered a current

amount and is not discounted. If, however, the fair value is based upon discounted expected future cash flows and

if the sale is to occur beyond one year,

the cost to sell must also be discounted. Assets covered by this statement are not depreciated (amortized)

while being held for disposal.

Subsequent revisions in estimates of

fair value less cost to sell are reported

as adjustments to the carrying amount

of the asset to be disposed of as long as

the carrying amount of the asset does

not exceed the original carrying

amount.

The following financial statement

disclosures are required in the period

in which the impairment is recognized:

1. A description of the assets to be

disposed of including the facts and circumstances leading to the expected

disposal, the expected disposal date,

and the carrying amount of those assets;

2. If applicable, the business segment(s) in which the assets to be disposed of are held;

3. The amount, if any, of the impairment loss resulting from the adoption

of this statement;

4. The gain or loss, if any, resulting

from subsequent revisions in the estimates of fair value less cost to sell;

845

Rural Utilities Service, USDA § 1767.41

5. The caption in the income statement or statement of activities in

which the gains or losses are aggregated if those gains or losses have not

been presented as a separate caption or

reported parenthetically on the face of

the statement; and

6. The results of operations for assets

to be disposed of to the extent that

those results are included in the entity’s results of operations for the period

and can be identified.

Accounting Requirements

All borrowers must adopt the accounting prescribed by Statement No.

121.

Effective Date and Implementation

Statement No. 121 is effective for financial statements for fiscal years beginning after December 15, 1995. Impairment losses resulting from the application of this statement to assets

that are held or used by the entity

must be reported in the period in which

the recognition criteria are first applied and met. Impairment losses attributable to assets to be disposed of

must be reported as the cumulative effect of a change in accounting principle

as prescribed in Accounting Principles

Board Opinion No. 20, Accounting

Changes.

Accounting Journal Entries—

Implementation Date

If a borrower has impaired assets

that are held or used at the implementation date, the following entry should

be recorded:

Dr. 426.5, Other Deductions

Cr. 300 Series of Accounts, Plant Accounts

To record the adoption of Statement

No. 121 for the impairment of assets

that are held or used.

If a borrower has impaired assets to

be disposed of at the implementation

date, the following entry should be recorded:

Dr. 435.1, Cumulative Effect on Prior

Years of a Change in Accounting

Principle

Cr. 300 Series—Plant Accounts

To record the adoption of Statement

No. 121 for assets that are to be disposed.

Accounting Journal Entries—Subsequent

to Implementation Date

If an asset that is either held, used or

to be disposed of becomes impaired, the

following entry should be recorded:

Dr. 426.5, Other Deductions

Cr. 300 Series—Plant Accounts

To record the impairment of a plant

asset.

If a borrower makes a subsequent revision in the estimate of the fair value

less the cost to sell of an asset to be

disposed of, the following entry should

be recorded:

Dr. 300 Series—Plant Accounts

Cr. 421, Miscellaneous Nonoperating Income

To revise the fair value of an asset to

be disposed.

138 Automatic Meter Reading

Systems—Turtles

Automatic meter reading systems

were developed from technology called

power line carrier communication systems. One such system, developed by

Hunt Technologies, Inc., is called by its

brand name, the Turtle system. In addition to its function as an automated

reading device, the Turtle can provide

outage detection, power failure counts,

and other potential applications. The

current Turtle system does not have

the capability for applications such as

collection of load survey or interval

data. A Turtle system consists of:

1. A meter reader mounted (retrofitted) inside the meter;

2. A receiver located in each substation; and

3. Monitoring and programming

equipment (software and personal computer) usually located in the headquarters building.

The system transmits continuous information one way from the meter to a

receiver located in the substation. The

receiver constantly monitors every

Turtle meter served by the substation.

The substation receiver can be sized to

monitor up to 3,000 Turtle meter readers at the same time. The data is then

846

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

transmitted to the headquarters monitoring equipment via telephone line or

an equivalent communication system.

The technical literature and other information provided by the manufacturer indicates that this system can

only be used for remote meter reading,

outage detection, power failure counts,

and phase identification. At this time,

there is no indication that the system

supports other functions such as home

security. Therefore, the accounting

prescribed for the Turtle meter reading

devices and support equipment relates

only to electric utility operations.

Accounting Requirements

The function of the equipment is the

primary factor in determining the account in which the equipment shall be

recorded. The components of the Turtle

automatic meter reading system shall

be recorded in Account 370, Meters. The

cost of the meter reader encoding device and retrofitting the meter with

the meter reader unit shall be capitalized to the cost of the existing meter.

Any associated operating expenses

shall be charged to Account 586, Meter

Expenses, with maintenance expenses

charged to Account 597, Maintenance of

Meters.

Separate continuing property records

shall be established for the meters, either fitted or retrofitted with the device; the receiver; the personal computer; and the system software. The

meters, receivers, and personal computer shall be depreciated over the

manufacturer’s estimated useful service life. The system software shall be

depreciated over the estimated useful

service life of the program not to exceed 5 years.

139 Global Positioning Systems

The Global Positioning System

(GPS) is a worldwide radio-navigation

system formed from a network of 24

satellites and their ground stations.

Utilities are using this advanced technology geographic data collection system to update and modernize their system maps. GPS uses a system of satellites orbiting the earth to establish

plant locations with pinpoint accuracy.

By triangulating from three satellites

and using radio signals to measure distances and locate items, system-wide

maps can be created of the utility’s

service area. A field inventory is then

taken of the utility’s plant and plotted

onto the map. The GPS consists of base

station equipment, remote station

equipment, the GPS program, and mapping conversion software.

All equipment associated with GPS is

dedicated to the mapping effort. The

base station is installed at a fixed location and ties satellite measurements

into a solid local reference. The remote

station is a portable receiver that is

taken into the field to determine locations and is moved from site to site.

The GPS program is the application

software that operates the station

equipment and is used by layout technicians to gather information of existing and new facilities in the field. The

conversion software is used for converting the GPS and inventory information gathered in the field into a

form usable by the mapping program.

Accounting Requirements

The function and location of the

equipment are the primary factors in

determining the account in which the

equipment shall be recorded. The components of the GPS shall be accounted

for as follows:

1. Remote and Base Station Equipment.

The cost of the equipment, both remote

and fixed, shall be capitalized in a subaccount of Account 391, Office Furniture and Equipment.

2. GPS Program and Conversion Software for Mapping. The cost of GPS program and conversion software shall be

capitalized in a subaccount of Account

391, Office Furniture and Equipment.

3. GPS/GIS Field Inventory of System.

The cost of performing a GPS/GIS survey and field inventory of the existing

system, by either a consultant or the

utility’s own forces, shall be charged to

Account 588, Miscellaneous Distribution Expenses.

140 Radio-Based Automatic Meter

Reading Systems

Radio-based automatic meter reading

technology allows meters equipped

with a low-power radio device called an

ERT (Encoder, Receiver, Transmitter)

to be read from a remote location. The

ERT device can either be retrofitted to

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Rural Utilities Service, USDA § 1767.41

an existing meter or purchased installed in a new meter. The ERT device

‘‘encodes’’ energy consumption and

transmits this information to a radio

transceiver equipped handheld computer. The data collected and stored in

the handheld computer is then

uploaded to a billing computer using

specialized software for that purpose.

Accounting Requirements

The function of the equipment is the

primary factor in determining the account in which the equipment shall be

recorded. The components of the radiobased automatic meter reading system

shall be recorded in Account 370, Meters. The cost of the meter reader encoding device and retrofitting the

meter with the meter reader unit shall

be capitalized to the cost of the existing meter. Any associated operating

expenses shall be charged to Account

586, Meter Expenses, with maintenance

expenses charged to Account 597, Maintenance of Meters.

Separate continuing property records

shall be established for the meters, either fitted or retrofitted with the device; the handheld computer; and the

upload software. The meters and

handheld computer shall be depreciated over the manufacturer’s estimated useful service life. The upload

software shall be depreciated over the

estimated useful service life of the program not to exceed 5 years.

201 Supplemental Financing

Many borrowers secure additional financing from sources other than RUS.

CFC was established to provide a

source of supplemental financing. Although the accounting provided in this

section refers to CFC, it is applicable

to other sources of supplemental financing as well.

1. Membership Fees

When a membership fee is paid to

CFC, the payment shall be recorded as

a debit to Account 123.23, Other Investments in Associated Organizations.

2. Subscriptions

The subscription agreement to purchase Capital Term Certificates (CTCs)

is a binding obligation to pay an initial

subscription in equal annual payments

over the first three years and an additional annual subscription payable in

the fourth through fifteenth years.

The annual subscriptions to CFC for

the fourth through fifteenth years is

2.0 percent of total operating revenues

after deducting the cost of power.

Using the best data available, each borrower shall estimate the amount of

CTCs that are required to be purchased. Estimates are not expected to

be precise and adjustments shall be

made when future projections indicate

a change is needed. When the agreement to purchase CTCs is made, an

entry shall be recorded debiting Account 123.21, Subscriptions to Capital

Term Certificates—Supplemental Financing, and crediting Account 224.11,

Other Long-Term Debit—Subscriptions. When the CTCs are actually purchased, the following entries shall be

recorded:

Dr. 224.11, Other Long-Term Debt—

Subscriptions

Cr. 131.1, Cash—General

Dr. 123.22, Investments in Capital Term

Certificates—Supplemental Financing

Cr. 123.21, Subscriptions to Capital

Term Certificates—Supplemental

Financing

3. Interest Receipts

Interest accrues monthly to the holder of CTCs at a rate in accordance with

the terms of the CFC Invitation to

Subscribe. The accrual of interest and

the receipt of interest proceeds shall be

recorded as follows:

Dr. 171, Interest and Dividends Receivable

Cr. 419, Interest and Dividend Income

To record the monthly accrual of interest.

Dr. 131.1, Cash—General

Cr. 171, Interest and Dividends Receivable

To record the receipt of interest proceeds from the investment in CTCs.

NOTE: Any amounts received in excess of

the previous accruals shall be credited to Account 419.

Interest penalties may be charged by

CFC for late payments on any subscription from the date that the payment

was due to the date that the payment

was actually received. Such charges

shall be expensed to Account 431, Other

Interest Expense.

4. Notes

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§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

If a note is due more than one year

after the date of the note, the appropriate subaccount of Account 224,

Other Long-Term Debt, shall be credited. If the note is due less than one

year from the date of the note, Account 231, Notes Payable, shall be credited.

When a loan from CFC has been consummated and a note is executed, Account 224.13, Supplemental Financing

Notes Executed—Debit, shall be debited; and Account 224.12, Other LongTerm Debt—Supplemental Financing,

credited. When a loan from another

source has been consummated, Account

224.15, Notes Executed—Other—Debit,

shall be debited; and Account 224.14,

Other Long-Term Debt—Miscellaneous,

credited.

5. Loan Proceeds

Cash proceeds from unsecured shortterm loans shall be deposited into the

General Fund Account. Cash proceeds

from all secured loans shall be deposited into the Construction Fund Trustee Account.

From two to seven percent, depending upon the class of borrower and its

debt-equity ratio, of each CFC loan is

applied to the purchase of Capital

Term Certificates. At the time of a borrower’s first requisition under the CFC

loan, the following entry shall be recorded:

Dr. 131.2, Cash—Construction Fund—

Trustee

Dr. 123.22, Investments in Capital Term

Certificates—Supplemental Financing

Cr. 224.13, Supplemental Financing

Notes Executed—Debit

To record the requisition of funds from

CFC.

6. Capital Credits

As a result of borrowing from CFC or

other lenders organized on a cooperative basis, a borrower may receive capital credit allocations. These allocations are usually based upon the borrower’s participation in the lending

program with participation measured

by the amount of interest expense and

conversion costs incurred.

To account for patronage capital allocations from cooperative lenders, the

following journal entries shall be recorded:

Dr. 123.1, Patronage Capital from Associated Cooperatives

Cr. 424, Other Capital Credits and Patronage Capital Allocations

To record the allocation of capital

credits from a cooperative lender.

NOTE: If any portion of the interest expense was capitalized as a component of construction cost, a similar portion of the capital credit allocation shall be credited to

construction rather than to Account 424. The

portion credited to construction shall be determined by applying the percentage of interest expense charged to construction for

that particular lender to the interest expense incurred for that lender.

Dr. 131.1, Cash—General

Cr. 123.1, Patronage Capital from Associated Cooperatives

To record the cash receipt of patronage

capital credits from cooperative

lenders.

301 Forfeited Customers’ Deposits

Customers may be required to make

deposits to guarantee payment of

amounts billed for electric service.

When a customer discontinues service,

the customer’s deposit shall first be applied to unpaid energy bills, with the

balance remitted by check to the customer. If the check is returned, it shall

be voided and the original entry that

was made when the check was issued

shall be reversed.

Unclaimed balances of customer deposits shall remain in Account 235,

Customer Deposits, until the legal liability of the cooperative to make such

a refund has elapsed. When there is no

further legal liability to refund the deposit and if it does not escheat to the

state, it shall be transferred to Account 144, Accumulated Provision for

Uncollectible Customer Accounts—

Credit, retaining full information of all

particulars.

401 Computer Software Costs

Computer software consists of programs and routines (sets of computer

instructions) which direct the operation of the computer. Software may

refer to generalized routines useful in

computer operations or to programs for

specific applications such as payroll.

The distinction between generalized

software and application software is

important. Generalized software provides operating support for individual

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Rural Utilities Service, USDA § 1767.41

applications. This would include programs for such tasks as making printouts of machine-readable records, sorting records, organizing and maintaining files, translating programs written

in a symbolic language into machinelanguage instructions, and scheduling

jobs through the computer. These programs are generally furnished by the

manufacturer.

Application software consists of a set

of instructions for performing a particular data processing task. Application programs are generally written by

the user installation, but are frequently obtained as prewritten packages from software vendors. Application software includes programs such

as payroll, billing, general ledger, as

well as engineering or managerial applications.

Costs incurred with the purchase or

development of computer software

shall be accounted for as follows:

1. Capitalize in a subaccount of Account 391, Office Furniture and Equipment, all costs for generalized software. Depreciate the cost over the

service life (or remaining life) of the

main hardware (i.e., containing central

processor). If the purchase invoice does

not break out or assign a cost to the

‘‘generalized software,’’ it is appropriate to include the full amount in

hardware costs. Capitalize in a separate subaccount of Account 391, all

costs for applications software determined to have a service life of over one

year. Depreciate the cost over the estimated useful service life of the program. This depreciation period shall

not exceed five (5) years. RUS realizes,

however, that there may be circumstances that justify a useful life

longer than 5 years. When this is the

case and it is management’s intent to

utilize these programs over an extended period, written justification

shall be submitted to RUS for approval.

2. Expense in Account 921, Office Supplies and Expenses, in the period incurred, all costs associated with the

maintenance, updating, and conversion

of files or revision of all software, and

all costs for software with a useful life

of less than 1 year. Also expense in Account 921, the unamortized cost of all

software determined, during the year,

to be no longer used by or useful to the

cooperative. Such costs that are clearly applicable to any category of operating expenses other than the administrative and general category, however,

shall be included in the appropriate account in such category. In accordance

with the USoA, no portion of such

costs shall be capitalized to construction or retirement activities.

In determining the total cost of purchased or internally developed software, the following items shall be included:

a. Costs incurred for feasibility studies if they result in the purchase or development of software;

b. All costs related to the actual purchase or development of the software.

These costs must be specifically identifiable with the software and properly

supported by time cards, invoices, or

other documents; and

c. All costs incurred in ‘‘testing and

debugging’’ the software.

Computer software costs are properly

chargeable to Account 107, Construction Work in Progress, provided that

the following criteria are met:

1. The computer program is specifically dedicated to performing a construction related activity, and

2. The cost of the software is

itemized separate and apart from other

hardware and software costs.

The cost of software programs meeting the above requirements and having

an estimated useful service life in excess of 1 year shall be recorded in Account 186, Miscellaneous Deferred Debits, and amortized to Account 107, Construction Work in Progress, over the

estimated service life of the program

not to exceed 5 years.

All costs related to training personnel in the use of software shall be

expensed as incurred.

The accounting in this section is not

intended to apply to immaterial

amounts. When it is deemed that the

costs of the recordkeeping necessary to

amortize these costs outweigh the benefits to the members, software costs

shall be expensed in the year incurred.

For computer costs relating to load

control equipment, refer to Item 118 of

this section.

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§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

402 Legal Expenses

Utilities may incur legal expenses

which pertain to construction activities, loan activities, or general services. The proper accounting treatment

for legal expenses is as follows:

1. Legal fees incurred in connection

with a construction project, including

the court costs directly related thereto, which can be identified and supported as such, shall be capitalized in

Account 107, Construction Work-inProgress, as a cost of construction.

2. Legal fees specifically identified

and properly supported as resulting

from activities designed to obtain longterm debt, shall be deferred in Account

181, Unamortized Debt Expense.

3. Legal fees for all other services and

fees which cannot be properly identified will require expensing to either

Account 417.1, Expenses of Nonutility

Operations, or Account 923, Outside

Services Employed, as appropriate.

To properly support the capitalization or deferral of legal fees, the attorney shall provide an itemization of

services performed and the corresponding costs. Only those costs specifically identified by the attorney as

being related to construction or loan

activities shall be capitalized or deferred as described above.

403 Leases

Lease transactions shall be accounted for as either a capital lease or

an operating lease depending upon

whether or not the lease meets the criteria for classification as a capital

lease. The definitions for capital and

operating leases and the criteria used

to determine which method shall be

used are as follows:

Definitions

1. Capital Lease: A lease that transfers substantially all of the benefits

and risks inherent in the ownership of

the property to the lessee, who accounts for the lease as an acquisition

of an asset and the incurrence of a liability.

2. Operating Lease: An operating lease

is a simple rental agreement which

does not meet the criteria for a capital

lease. Under the terms of an operating

lease, the lessee records the rental payments due over the term of the lease as

rent expense.

Criteria

A lease agreement shall be classified

as a capital lease if one or more of the

following criteria is met:

1. Ownership of the property is transferred to the lessee by the end of the

lease term;

2. The lease contains a bargain purchase option;

3. The lease term is equal to 75 percent or more of the estimated useful

life of the leased property; or

4. The present value of the lease payments at the inception of the lease

equals or exceeds 90 percent of the fair

market value of the leased property.

A lease agreement qualifying as a

capital lease shall be recorded in either

Account 101.1, Property Under Capital

Leases;Account 120.6, Nuclear Fuel

Under Capital Leases; or Account 121,

Nonutility Property, as appropriate, at

the present value (at the beginning of

the lease term) of the minimum lease

payments. If, however, this amount exceeds the fair value of the leased property at the inception of the lease, the

asset shall be recorded at its fair market value. An offsetting credit shall be

recorded in Account 227, Obligations

Under Capital Leases—Noncurrent,

with the current portion recorded in

Account 243, Obligations Under Capital

Leases—Current. Assets recorded in

Account 101.1 shall be classified separately according to the detailed accounts (301–399) provided for electric

plant in service.

Monthly payments made under the

lease obligation shall be charged to

rent expense, fuel expense, or construction work-in-progress as they become

payable. Similarly, the leased asset

and the associated obligation shall be

reduced by the current amount due.

The following journal entries shall be

used by the lessee to record capital

lease transactions:

Dr. 101.1, Property Under Capital

Leases

Cr. 243, Obligations Under Capital

Leases—Current

Cr. 227, Obligations Under Capital

Leases—Noncurrent

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Rural Utilities Service, USDA § 1767.41

To record the capital lease agreement.

Dr. 550, Rents

Cr. 232, Accounts Payable

Dr. 243, Obligations Under Capital

Leases—Current

Cr. 101.1, Property Under Capital

Leases

To record the monthly rental payment

due.

Dr. 232, Accounts Payable

Cr. 131.1, Cash—General

To record the monthly lease payment.

Operating leases which are simple

rental agreements do not require the

recording of an asset or a liability. The

entries that are required to record an

operating lease by the lessee are as follows:

Dr. 550, Rents

Cr. 232, Accounts Payable

To record the monthly rental payment

due.

Dr. 232, Accounts Payable

Cr. 131.1, Cash—General

To record the monthly lease payment.

For purposes of illustration, the journal entries presented in this interpretation debit Account 550, Rents. However, Account 507, Rents (steam power

generation); Account 525, Rents (nuclear power generation); Account 540,

Rents (hydraulic power generation);

Account 550, Rents (other power production); Account 567, Rents (transmission expense); Account 589, Rents

(distribution expense); and Account

931, Rents (general and administrative), should be charged, as appropriate, depending upon the function of

the equipment being leased.

404 Consolidated Financial

Statements

In October 1987, the Financial Accounting Standards Board issued

Statement of Financial Accounting

Standards No. 94, Consolidation of All

Majority-Owned Subsidiaries (Statement No. 94). For purposes of reporting

to RUS, Statement No. 94 shall be applied as follows:

1. An RUS borrower that is a subsidiary of another entity shall prepare

and submit to RUS separate financial

statements even though this financial

information is presented in the parent’s consolidated statements.

2. In those cases in which an RUS

borrower has a majority-ownership in a

subsidiary, the borrower must prepare

consolidated financial statements in

accordance with the requirements of

Statement No. 94. These consolidated

statements must also include supplementary schedules presenting a Balance Sheet and Income Statement for

each majority-owned subsidiary included in the consolidated statements.

Although Statement No. 94 requires

the consolidation of majority-owned

subsidiaries, RUS Forms 7 and 12 must

be prepared on an unconsolidated basis.

501 Patronage Capital Assignments

Accounting for patronage capital and

margins may vary depending upon the

individual cooperative’s bylaws. The

comments contained in this section relate to the application of the standard

bylaw provisions.

The entries required, at year’s end,

to record patronage capital transactions where there is no major merchandising program are as follows:

Dr. 219.1, Operating Margins

Dr. 219.2, Nonoperating margins

Cr. 201.2, Patronage Capital Assignable

To record the amount of patronage

capital assignable.

Dr. 201.2, Patronage Capital Assignable

Cr. 201.1, Patronage Capital Credits

To record the allocation of patronage

capital to the patrons’ accounts.

The procedure for determining the

amount of patronage capital assignable

to the individual patron on a total dollar basis is as follows:

1. Determine the total amount to be

assigned for the year (Account 201.2).

2. Determine patronage from electric

service, the total of consumers’ billings

(Accounts 440–447).

3. Determine the percentage factor to

be used in calculating patronage capital to be credited to each consumer

account. Divide ‘‘1’’ by ‘‘2’’.

4. Determine the amount of capital

to be credited to each consumer. Multiply the individual consumer’s billings

for the year by the percentage factor

obtained in ‘‘3’’ above.

The procedure for determining the

amount of patronage capital assignable

to the individual patron on a dollar

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§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

basis, less the cost of power, is as follows:

1. Determine the total amount to be

assigned for the year.

2. Determine the total amount of revenue received from each classification

of customers.

3. Determine the total cost of power

for each classification of customers.

(For example, use cost per kWh sold).

4. For each classification of customers subtract the amount obtained

in ‘‘3’’ from the amount obtained in

‘‘2,’’ to obtain the total amount received, less cost of power, by classification of customers.

5. Add the amounts obtained in ‘‘4’’

to obtain the total amount of revenue,

less cost of power.

6. Divide the total amount received,

less cost of power for each classification of customers (amounts obtained in

‘‘4’’), by the total amount received, less

cost of power for all customers

(amount obtained in ‘‘5’’) to obtain the

prorata percentage for each classification of customers.

7. Multiply the total amount to be allocated (amount obtained in ‘‘1’’) by

the prorata percentage for each classification of customers (obtained in ‘‘6’’)

to obtain the amount to be assigned

each classification of customers.

8. Divide the amount to be assigned

each classification of customers

(amount obtained in ‘‘7’’) by the total

amount received from the classification of customers (amount obtain in

‘‘2’’) to obtain the percentage factor for

each classification of customers.

9. Determine the total amount received from each individual customer.

10. Multiply the total amount received from each individual customer

(amount obtained in ‘‘9’’) by the percentage factor for his classification

(amount obtained in ‘‘8’’) to obtain the

amount of capital to be assigned each

individual customer.

After calculating the patronage capital to be credited to each customer,

there is usually a small balance remaining. This small balance shall remain in Account 201.2, Patronage Capital Assignable, and shall be added to

the amount to be assigned in the following year.

Proper records shall be maintained to

support all capital credit transactions.

As a minimum, these records shall

show, for each patron, the amount of

capital credited for each year as well

as the amount and date retired for each

year.

The process of transferring capital

credits from the Patronage Capital Assignable accounts to the Patrons’ Capital Credits Assigned accounts or to

the Patrons’ Capital Credits accounts

and the making of entries to individual

patron’s records constitutes an assignment of capital credits. This holds true

for recordkeeping purposes as well as

from a legal point of view. This assignment shall be followed by formal notification to patrons within a reasonable

period of time.

In the event that a distribution cooperative incurs a net loss, that loss shall

not be allocated to its members (patrons). The loss shall be accumulated

and offset by future nonoperating margins.

502 Patronage Capital Retirements

As the board of directors has the responsibility for determining whether

the financial condition of the cooperative will permit retirement of capital

credits and whether the proposed retirement complies with mortgage and

bylaw provisions, the authorization for

the retirement shall be set forth in the

board minutes. The entries to record

the general retirement of capital credits shall be as follows:

Dr. 201.1, Patronage Capital Credits

Cr. 238.1, Patronage Capital Payable

To record the board of directors’ authorization to make payments of

capital credits.

Dr. 238.1, Patronage Capital Payable

Cr. 131.1, Cash—General.

To record actual cash payments of capital credits.

NOTE: To provide better control over the

payment of patronage capital credits, a special checking account should be established

in an amount equal to the authorized general

retirement. Special prenumbered checks

shall be used for each general retirement of

patronage capital.

To strengthen internal control and to

facilitate the settlement of estates, the

board should adopt a policy specifying

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Rural Utilities Service, USDA § 1767.41

exactly how payments of capital credits shall be made to the estates of deceased patrons. Payments made to estates shall be recorded as follows:

Dr. 201.1, Patronage Capital Credits

Cr. 131.1, Cash—General

To record the payment of capital credits when an estate is settled by refunding 100 cents on the dollar.

Dr. 201.1, Patronage Capital Credits

Cr. 131.1, Cash—General

Cr. 217, Retired Capital Credits—Gain

To record the payment of capital credits when an estate is settled for less

than the full amount of capital

credited to the deceased customer’s

account.

Dr. 217, Retired Capital Credits—Gain

Cr. 201.2, Patronage Capital Assignable

To record the reallocation to current

patrons of the amount of the discount, if provided for in the bylaws.

If a capital credit check is returned

due to an inability to locate the patron, it shall be held pending a recheck

of available records to ascertain the

correct address of the patron. If it is

determined that the patron cannot be

located, the check shall be cancelled

and the amount of the check debited to

Account 131.1, Cash—General, and credited to Account 217, Retired Capital

Credits—Gain. If the state, however,

has unclaimed property laws to which

the amount is subject, the amount

shall be credited to Account 253, Other

Deferred Credits, until final disposition

has been made. A notation shall be

made in the records of the former patron to facilitate payment if his or her

whereabouts is subsequently determined.

If the records show that a number of

former patrons have moved and left no

forwarding address, it is not necessary

to prepare a capital credit retirement

check for these patrons when a general

retirement of capital credits is made.

When setting funds aside to make a

general retirement, however, appropriate amounts shall be included to

cover payments due these patrons. The

cooperative shall then make a reasonable effort to locate these patrons

through publication of their names in

the newsletter or local newspaper. If

the patrons are not located, the

amounts set aside and the credits to

their accounts shall be handled in a

manner similar to those for whom payment checks are returned.

Under the standard bylaw provisions

recommended by RUS, it is not proper

to use capital credits that were assigned to former patrons to liquidate

their delinquent bills. When the standard bylaws are in effect and collection

efforts have failed, the balance of an

uncollectible bill, after application of

customers deposits and membership

fees, shall be charged against the accumulated provision for uncollectible accounts. If the patron has capital credits assigned to him or her, these remain untouched except for a notation

to indicate the amount of the unpaid

bill. When a general retirement of capital credits is made at some future

date, amounts which would otherwise

be due the patron may be applied to

satisfy the unpaid bill with the balance

refunded to him or her.

503 Operating and Nonoperating

Margins

Occasionally questions arise concerning the accounting for the balances

in Accounts 218, Capital Gains and

Losses; 219.3, Other Margins; 219.4,

Other Margins and Equities-Prior Periods; 434, Extraordinary Income; and

435, Extraordinary Deductions. The

balance in these accounts shall be accounted for as follows:

1. The balance in Account 219.4, Other

Margins and Equities—Prior Periods,

shall be transferred, at year’s end, to

Account 219.1 or 219.2, as appropriate.

Accounts 219.1 and 219.2 are then closed

to Account 201.2, Patronage Capital Assignable, unless otherwise provided for

in the bylaws.

2. The balances in Account 434, Extraordinary Income, and Account 435,

Extraordinary Deductions, shall be

cleared to Account 219.2 at year’s end.

3. The balances in Account 219.3,

Other Margins, and Account 218, Capital Gains and Losses, shall remain in

these accounts unless they are allocated to patrons or used to absorb future losses as provided for in the bylaws of the cooperative.

When a cooperative is engaged in a

major merchandising activity, all costs

854

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

properly chargeable to the merchandising activity shall be allocated as

such to offset the associated revenue.

Nonoperating margins generated from

this source shall be prorated annually

on a patronage basis and credited to

those patrons accounts from whom

such amounts were obtained. Merchandising activities of this nature may require a bylaw provision allowing for

the allocation of margins generated by

a major merchandising activity separate from other operating or nonoperating margins.

If, at the time of the adoption of the

bylaw provisions for the allocation of

nonoperating margins, there are prior

years’ losses resulting in debit balances

in Accounts 218, Capital Gains and

Losses; 219.1, Operating Margins; 219.2,

Nonoperating Margins; or 219.3, Other

Margins; the credit balances in Accounts 218, 219.2, or 219.3 resulting from

prior years’ operations shall be transferred, to the extent necessary, to offset such deficits. If the board determines that amounts shall be allocated

to prior years’ patrons, the credit balances remaining in these accounts

shall be transferred to Account 201.2,

Patronage Capital Assignable.

If there are current year’s losses resulting in debit balances in either Account 219.1 or 219.2, credit balances in

Accounts 219.2, 219.3, and 218 shall be

transferred, to the extent necessary, to

offset such deficits. Remaining credit

balances allocable to patrons shall be

transferred to Account 1.2.

504 Patronage Capital from G&T

Cooperatives

When a cooperative receives capital

credits from a G&T cooperative, the

transaction shall be recorded by a debit

to Account 123.1, Patronage Capital

from Associated Cooperatives, and a

credit to Account 423, Generation and

Transmission Cooperative Capital

Credits. This entry shall be made

priorto the closing of the cooperative’s

books even though, in most cases, the

notice of the G&T allocation is not received until after the close of the year

to which it relates. If precise information cannot be obtained from the G&T

within a reasonable time, capital credits shall be recorded on an estimated

basis. The difference between the estimated amount and the actual shall be

recognized in the following year unless

the difference is material.

A distribution cooperative shall not

recognize its proportionate share of

losses incurred by the G&T. G&T losses

shall be accumulated and offset as provided for in the bylaws. Unlike distribution cooperatives, a G&T has the

option to offset accumulated losses

with future operating and/or nonoperating margins.

505 Patronage Capital Furnished by

Other Cooperative Service Organizations

Utilities may obtain long-term and

short-term loans, telephone or data

processing services, or may purchase

oil, gasoline, materials, insurance, and

various items from cooperative or mutual enterprises. These enterprises

often make patronage refunds or provide evidence that an amount equal to

such a refund has been credited to the

utility as an investment of capital. The

refund may be in the form of cash in

the year following the purchase or it

may be deducted from the next invoice.

The notice of patronage credited to the

borrower’s account may indicate that

such capital may be retired at some future date upon certain conditions having been met. The following provides

the accounting journal entries for

these types of transactions:

1. Insurance policy refunds from mutual companies, in cash or as credits

against subsequent purchases, shall be

credited to the appropriate expense account. If sufficient information is not

available to credit the refunds to the

appropriate expense accounts, they

shall be credited to Account 165, Prepayments, and reduce premiums for the

current year.

2. Patronage capital allocations from

cooperatives, other than mutual insurance companies, shall be credited, in

the year that the allocation notice is

received, to Account 424, Other Capital

Credits and Patronage Allocations, or

to construction work-in-progress, as

appropriate. The allocation of patronage capital credits between Account 424

and construction work-in-progress

shall be made on an equitable basis.

For example, patronage capital allocations received from a cooperative

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Rural Utilities Service, USDA § 1767.41

money lender are allocated between

Account 424 and construction work-inprogress based upon the ratio of interest charged to construction for that

particular lender to total interest expense incurred for that lender. Patronage capital allocations received from a

material supplier are allocated based

upon the ratio of materials charged to

construction to total materials purchased.

3. The face amount of patronage capital certificates received by the cooperative from the purchase of goods or

services from cooperative money lenders (CFC), oil dealers, material suppliers, pole treating plants, communications services, and others shall be

charged to either Account 123.1, Patronage Capital from Associated Cooperatives, or Account 124, Other Investments, as appropriate. Account

123.1 shall include investments in only

those cooperatives, or enterprises, that

are directly related to the electric utility industry and controlled by the electric cooperatives. These include statewide cooperatives, power cooperatives,

and NRECA. Other investments in oil

cooperatives and insurance companies

shall be charged to Account 124.

506 Forfeited Membership Fees

The bylaws of each cooperative prescribe certain rules and regulations

concerning membership in the cooperative. Among these are provisions for

forfeiture of membership fees. Some

bylaws provide for application of membership fees against any unpaid accounts at the time of termination of

service. Any remaining balance may be

refunded to the member. Balances that

cannot be refunded to the member due

to an inability to locate the member or

due to bylaw restriction, shall be credited to Account 208, Donated Capital,

provided they do not escheat to the

state. If disposition of the fees cannot

be determined immediately, the

amount involved shall be transferred to

Account 253, Other Deferred Credits,

until the determination is made.

601 Employee Benefits

The costs of employees’ fringe benefits (hospitalization, retirement, holiday, sick and vacation pay, etc.) shall

be accumulated in an appropriate

clearing account and allocated monthly on the basis of payroll. Vacation

costs shall be accrued monthly by appropriate credits to an accrual account. These monthly accruals shall be

allocated on the basis of direct payroll

costs to construction, retirement, and

the applicable operations, maintenance, and administrative expense accounts.

Sick leave costs are not normally accrued unless the employee is entitled

to be paid for accumulated sick leave

at the termination of employment.

Salary payments and the associated

employee pensions and benefits and social security and other payroll taxes

for an employee who is actually sick

shall be charged to the same account

or accounts to which his or her salary

is normally charged.

602 Compensated Absences

Statement of Financial Accounting

Standards No. 43, Accounting for Compensated Absences (Statement No. 43),

requires employers to accrue a liability

as an employee earns the right to be

paid for future absences. Four criteria

were established for this accrual:

1. The employer’s obligation for payment for future absences is attributable to employees’ services already

performed.

2. The obligation relates to employee

rights which vest or accumulate. Vested rights are considered those for

which the employer is obligated to

make payment even if the employee

terminates. Rights which accumulate

are those earned but unused rights to

compensated absences which may be

carried forward to one or more periods,

subsequent to the period in which they

are earned.

3. Payment of the compensation is

probable.

4. The amount can be reasonably estimated.

A company’s liability shall be estimated based upon payments it expects

to make as a result of employees’ work

already performed. If a reasonable estimate cannot be made, the company

shall disclose that fact in the financial

statements.

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§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

Statement No. 43 does not apply to

severance or termination pay, postretirement benefits, deferred compensation, stock or stock options,

group insurance, or other long-term

fringe benefits.

The entries required to account for

the accrual of compensated absences

are as follows:

Dr. 435.1, Cumulative Effect on Prior

Years of a Change in Accounting

Principle

Cr. 242.3, Accrued Employees’ Vacation

and Holidays

To record the liability for benefits

earned in prior years.

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Cr. 242.3, Accrued Employees Vacation

and Holidays

To record the liability for benefits

earned in the current period.

603 Employee Retirement and Group

Insurance

Some borrowers have group insurance or retirement plans or both for

their employees. As a general rule the

cost of these programs is borne partially by the cooperative and partially

by its employees. The cooperative may

pay the full cost in advance and recover the employee’s share through

payroll deductions. The accounting for

these transactions is as follows:

1. The cooperative’s advanced payment of premiums on insurance and retirement agreements shall be charged

to Account 165, Prepayments, for the

employers portion, and Account 143,

Other Accounts Receivable, for the employee’s portion.

2. The cost of the employer’s portion

of a retirement and group insurance

program shall be charged to construction and retirement activities and the

applicable operations, maintenance,

and administrative expense accounts

based upon a specific identification

with employees’ labor costs charged

therein or, in the absence of specific

employee identification, based upon direct labor dollars or direct labor hours

depending upon which allocation technique provides the most equitable distribution of costs.

604 Deferred Compensation

Many utilities participate in the

NRECA Deferred Compensation Program. Based upon the provisions of the

program, the following accounting entries shall be made:

Dr. 186.XX, Miscellaneous Deferred

Debits—Deferred Compensation

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To increase the deferred compensation

provision by the amount of the annual deposit to NRECA’s Deferred

Compensation Fund.

Dr. 128, Other Special Funds—Deferred

Compensation

Cr. 131.1, Cash—General

To record the annual deposit to

NRECA’s Deferred Compensation

Fund.

Dr. Construction Work in Progress, Retirement Work in Progress, or the

Various Operations, Maintenance,

and Administrative Expense Accounts, as appropriate.

Cr. 186.XX, Miscellaneous Deferred

Debits—Deferred Compensation

To record monthly accrual of deferred

compensation.

NOTE: If an employee joins the deferred

compensation program during the year, use

entry #1 to record the additional deposit to

the NRECA Deferred Compensation Fund

and increase the monthly accrual in entry #2

to reflect this deposit.

NRECA provides borrowers that participate in the deferred compensation

program with an annual account statement disclosing the activity for each

Homestead Fund investment including

the number of shares owned, interest

income, dividend income, capital gains/

losses, and the value of the shares

owned at statement date. Funds may

be invested in the Short-term Bond

Fund, the Value Fund, the Short-term

Government Securities Fund, and the

Daily Income Fund. Depending upon

the Homestead Fund selected, invested

funds may earn interest and dividend

income and may experience unrealized

holding gains or losses. Based upon the

information provided on the annual

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Rural Utilities Service, USDA § 1767.41

statement, the following journal entries shall be recorded to recognize the

increase or decrease in the fund assets:

Dr. 128, Other Special Funds—Deferred

Compensation

Cr. 419, Interest and Dividend Income

Cr. 421, Miscellaneous Nonoperating Income

To record an increase in the fund value

as of December 31, 19xx, resulting

from interest and dividend income

and from unrecognized holding gains

on trading securities.

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record an increase in the liability to

the employee resulting from an increase in the investment account.

Dr. 426.5, Other Deductions

Cr. 128, Other Special Funds—Deferred

Compensation

To record a decrease in fund value as of

December 31, 19xx, resulting from unrecognized holding losses on trading

securities.

Dr. 228.3, Accumulated Provision for

Pensions and Benefits

Cr. Various Operations, Maintenance,

and Administrative Expense Accounts

To record a decrease in the liability to

the employee resulting from a decrease in the investment account.

Payments made to participating employees because of retirement or separation for other reasons shall be recorded using the following entries:

Dr. 131.1, Cash—General

Cr. 128, Other Special Funds—Deferred

Compensation

To record the receipt of funds from

NRECA.

and

Dr. 228.3, Accumulated Provision for

Pensions and Benefits

Cr. 131.1, Cash—General

To record payment to employee for deferred compensation.

If the borrower has elected to bear

the market risk of the funds which

guarantee that the amount of money

an employee receives will not be less

than the amount of salary deferred, the

following entry shall be recorded if

total payment(s) from NRECA are less

than the amount of salary deferred:

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Cr. 131.1, Cash—General

To record payment to employee for deferred compensation. Payment was

made because amount returned did

not equal salary deferred.

Appropriate disclosure of the terms

of the program shall be made in the

notes to the financial statements.

605 Life Insurance Premium on Life of

a Borrower Employee

Some borrowers insure the life of the

manager and/or key employees with

the borrower being named as the beneficiary. Such arrangements shall be accounted for as follows:

1. Charge Account 426.2, Life Insurance, for the net amount of the premium paid each year on the insurance

policy.

2. At the anniversary date of the policy each year, charge Account 124,

Other Investments, and credit Account

426.2, Life Insurance, with the amount

of the annual increase in the cash surrender value of the policy; provided

such increase is less than the net premium paid for that year. If the annual

increase in the surrender value exceeds

the net premium paid for the same

year, only that portion of the surrender value increase equal to the net

premium paid shall be credited to Account 426.2. The remainder is to be

credited to Account 419, Interest and

Dividend Income.

3. Upon retirement of the insured employee and surrender of the insurance

policy, charge Account 131.1, Cash—

General, and credit Account 124, Other

Investments, for the amount received

from the insurance company. If it is decided to grant to the retiring insured

employee all, or any portion, of the

cash received upon surrender of the

policy, Account 926, Employee Pensions and Benefits, shall be charged

and Account 131.1 credited for the

amount paid to the retiring employee.

4. If the insured employee dies within

his term of service, charge Account

131.1, Cash—General, for the face

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§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

amount of the policy paid by the insurance company. Credit Account 124,

Other Investments, for the cash surrender value previously charged thereto, and credit the remainder to Account 421, Miscellaneous Nonoperating

Income.

606 Pension Costs

With the issuance of Statement of Financial Accounting Standards No. 87,

Employers’ Accounting for Pensions

(Statement No. 87), there have been

significant changes in the accounting

and reporting requirements relating to

pension costs. This section will highlight the accounting and reporting requirements for the major types of pension plans. It should be noted, however,

that the definitions and accounting

procedures outlined in this section relate to financial accounting and they

may differ from those used for tax accounting.

Defined Benefit Pension Plans

A defined benefit pension plan is a

plan that defines an amount of pension

benefit to be provided, usually as a

function of one or more factors such as

age, years of service, or compensation.

In a defined benefit plan, the employer

promises to provide, in addition to current wages, retirement income payments in future years after the employee retires or terminates service.

Generally, the amount of benefit to be

paid depends upon a number of future

events that are incorporated into the

plan’s benefit formula, after including

how long the employee and any survivors live, how many years of service

the employee renders, and the employee’s compensation in the years immediately before retirement or termination.

Under a defined benefit plan, the determination of pension costs, assets, liabilities, and the disclosures in the financial statements require many calculations and assumptions to be made.

This section provides a general overview of the accounting and reporting

requirements associated with a defined

benefit pension plan. Consult Statement No. 87 for guidance in making the

necessary calculations and assumption.

The accounting and reporting requirements related to a defined benefit

pension plan are as follows:

1. The following components shall be

included in the periodic recognition of

net pension cost by an employer sponsoring a defined benefit pension plan:

a. The service cost component recognized in a period shall be determined as

the actuarial present value of benefits

attributed by the pension plan formula

to employee service during that period.

The measurement of the service cost

component requires use of an attribution method and assumptions.

b. The interest cost component recognized in a period shall be determined

as the increase in the projected benefit

obligation due to the passage of time.

Measuring the projected benefit obligation as a present value requires accrual

of an interest cost at rates equal to the

assumed discount rates.

c. For a funded plan, the actual return on plan assets, if any, shall be determined based upon the fair value of

plan assets at the beginning and the

end of the period, adjusted for contributions and benefit payments.

d. Plan amendments (including initiation of a plan) often include provisions that grant increased benefits

based upon services rendered in prior

period. Because plan amendments are

granted with the expectation that the

employer will realize economic benefits

in future period, Statement No. 87 does

not require the cost of providing such

retroactive benefits (prior service cost)

to be included in net periodic pension

cost entirely in the year of the amendment but provides for recognition during the future service periods of those

employees active at the date of the

amendment who are expected to receive benefits under the plan.

The cost of retroactive benefits (including benefits that are granted to retirees) is the increase in the projected

benefit obligation at the date of the

amendment. Except as noted below,

prior service cost shall be amortized by

assigning an equal amount to each future period of service of each employee

active at the date of the amendments

who is expected to receive benefits

under the plan. If all or almost all of

the plan’s participants are inactive,

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Rural Utilities Service, USDA § 1767.41

the cost of retroactive plan amendments affecting benefits of inactive

participants shall be amortized based

upon the remaining life expectancy of

those participants rather than the remaining service period.

To reduce the complexity and detail

of the computations required, consistent use of an alternative amortization approach that more rapidly reduces the unrecognized cost of retroactive amendments is acceptable. For

example, a straight-line amortization

of the cost over the average remaining

service period of employees expected to

receive benefits under the plan is acceptable. The alternative method used

shall be disclosed.

In some situations, a history of regular plan amendments and other evidence may indicate that the period

during which the employee expects to

realize economic benefits from an

amendment granting retroactive benefits is shorter than the entire remaining service period of the active employees. Identification of such situations

requires an assessment of the individual circumstances and the substance of the particular plan situation.

In those circumstances, the amortization of prior service cost shall be accelerated to reflect the more rapid expiration of the employer’s economic benefits and to recognize the cost in the periods benefited.

A plan amendment can reduce rather

than increase the projected benefit obligation. Such a reduction shall be used

to reduce an existing unrecognized

prior service cost, and the excess, if

any, shall be amortized on the same

basis as the cost of benefit increases.

e. Gains and losses are changes in the

amount of either the projected benefit

obligation or plan assets resulting from

experience different from that assumed

and changes in assumptions. Gains and

losses include amounts that have been

realized. Because gains and losses may

reflect refinements in estimates as well

as real changes in economic values, and

because some gains in one period may

be offset by losses in another or vice

versa, the recognition of gains and

losses as components of net pension

cost of the period in which they arise is

not required.

The expected return on plan assets

shall be determined based upon the expected long-term rate of return on plan

assets and the market-related value of

plan assets. The market-related value

of plan assets shall be either fair value

or a calculated value that recognizes

changes in fair value in a systematic

and rational manner over not more

than 5 years. Different ways of calculating market-related value may be

used for different classes of assets but

the manner of determining market-related value shall be applied consistently from year to year for each asset

class.

Asset gains and losses are the differences between the actual return on

assets during a period and the expected

return on assets for that period. Assets

gains and losses include both changes

reflected in the market-related value

of assets and changes not yet reflected

in the market-related value (that is,

the difference between the fair value of

assets and the market-related value).

Asset gains and losses not yet reflected

in market-related values are not required to be amortized.

As a minimum, amortization of an

unrecognized gain or loss (excluding

asset gains and losses not yet reflected

in market-related value) shall be included as a component of net pension

cost for a year if, as of the beginning of

the year, that unrecognized net gain or

loss exceeds 10 percent of the greater of

the projected benefit obligation or the

market-related value of plan assets. If

amortization is required, the minimum

amortization shall be that excess divided by the average remaining service

period of active employees expected to

receive benefits under the plan. If all or

almost all of a plan’s participants are

inactive, the average remaining life expectancy of the inactive participants

shall be used instead of average remaining service life.

Any systematic method of amortization of gains and losses may be used in

lieu of the minimum specified in the

previous paragraph provided that the

minimum is used in any period in

which the minimum is greater (i.e., reduces the net balance by more), the

method is applied consistently, the

method is applied similarly to both

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§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

gains and losses, and the method is disclosed.

The gain or loss component of net

periodic pension cost shall consist of

the difference between the actual return on plan assets and the expected

return on plan assets and amortization

of the unrecognized net gain or loss

from previous periods.

2. A liability (unfunded accrued pension cost) shall be recognized if the net

periodic pension cost recognized pursuant to Statement No. 87 exceeds

amounts the employer has contributed

to the plan. An asset (prepaid pension

cost) shall be recognized if the net periodic pension cost is less than the

amounts the employer has contributed

to the plan.

If the accumulated benefit obligation

exceeds the fair value of plan assets,

the employer shall recognize a liability

(including unfunded accrued pension

cost) that is at least equal to the unfunded accumulated benefit obligation.

Recognition of an additional minimum

liability is required if an unfunded accumulated benefit obligation exists

and an asset has been recognized as a

prepaid pension cost, the liability already recognized as unfunded accrued

pension cost is less than the unfunded

accumulated benefit obligation, or no

accrued or prepaid pension cost has

been recognized.

If an additional minimum liability is

recognized, an equal amount shall be

recognized as an intangible asset, provided that the asset does not exceed

the amount of unrecognized prior service cost. If an additional liability required to be recognized exceeds unrecognized prior service cost, the excess

(which represents a net loss not yet

recognized as a net periodic pension

cost) shall be reported as a separate

component (reduction) of equity.

When a new determination of the

amount of additional liability is made

to prepare a balance sheet, the related

intangible asset and separate component of equity shall be eliminated or

adjusted, as necessary.

3. An employer sponsoring a defined

benefit pension plan shall disclose the

following information:

a. A description of the plan including

employee groups covered, type of benefit formula, funding policy, types of

assets held and significant nonbenefit

liabilities, if any, and the nature and

effect of significant matters affecting

comparability of information for all

period presented.

b. The amount of net periodic pension cost for the period showing separately the service cost component, the

interest cost component, the actual return on assets for the period, and the

net total of other components.

c. A schedule reconciling the funded

status of the plan with amounts reported in the employer’s balance sheet,

showing separately, the fair value of

plan assets, the projected benefit obligation identifying the accumulated

benefit obligation and the vested benefit obligation, the amount of unrecognized prior service cost, the amount of

unrecognized net gain or loss including

asset gains and losses not yet reflected

in market-related value), the amount

of any remaining unrecognized net obligation or net asset existing at the

date of initial application of Statement

No. 87, the amount of any additional liability recognized, and the amount of

net pension asset or liability recognized in the balance sheet (which is the

net result of combining the previous

six items).

d. The weighted-average assumed discount rate and rate of compensation

increase (if applicable) used to measure

the projected benefit obligation and

the weighted-average expected longterm rate of return on plan assets.

e. If applicable, the amount and type

of securities of the employer and related parties included in plan assets,

and the approximate amount of annual

benefits of employees and retirees covered by annuity contracts issued by the

employer and related parties. Also, if

applicable, the alternative amortization periods used.

f. An employer that sponsors two or

more separate defined benefit pension

plans shall determine net periodic pension cost, liabilities, and assets by separately applying the provisions of

Statement No. 87 to each plan. In particular, unless an employer clearly has

a right to use the assets of one plan to

pay benefits of another, a liability required to be recognized for one plan

shall not be reduced or eliminated because another plan has assets in excess

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Rural Utilities Service, USDA § 1767.41

of its accumulated benefit obligation

or because the employer has prepaid

pension cost related to another plan.

The required disclosures may be aggregated for all of an employer’s single-employer defined benefit plans, or

plans may be disaggregated into groups

so as to provide the most useful information. Plans with assets in excess of

the accumulated benefit obligation,

however, shall not be aggregated with

plans that have accumulated benefit

obligations that exceed plan assets.

Annuity Contracts

An annuity contract is a contract in

which an insurance company unconditionally undertakes a legal obligation

to provide specified benefits to specific

individuals in return for a fixed consideration or premium. An annuity contract is irrevocable and involves the

transfer of significant risk from the

employer to the insurance company.

Some annuity contracts (participating

annuity contracts) provide that the

purchaser (either the plan or the employer) may participate in the experience of the insurance company. Under

these contracts, the insurance company ordinarily pays dividends to the

purchaser. If the substance of a participating contract is such that the employer remains subject to all or most of

the risks and rewards associated with

the benefit obligation covered and the

assets transferred to the insurance

company, that contract is not an annuity contract for purposes of Statement

No. 87.

To the extent that benefits currently

earned are covered by annuity contracts, the cost of these benefits shall

be the cost of purchasing the contracts,

except as noted below. That is, if all

benefits attributed by the plan’s benefits formula to service in the current

period are covered by nonparticipating

annuity contracts, the cost of the contracts determines the service cost component of net pension cost for that period.

Benefits provided by the pension benefit formula beyond benefits provided

by annuity contracts (for example, benefits related to future compensation

levels) shall be accounted for according

to the provisions applicable to plans

not involving insurance contracts.

Benefits covered by annuity contracts shall be excluded from the projected benefit obligation and the accumulated benefit obligation. Except as

noted below, annuity contracts shall be

excluded from plan assets.

Some annuity contracts provide that

the purchaser (either the plan or the

employer) may participate in the experience of the insurance company.

Under these contracts, the insurance

company ordinarily pays dividends to

the purchaser, the effect of which is to

reduce the cost of the plan. The purchase price of a participating annuity

contract ordinarily is higher than the

price of an equivalent contract without

participation rights. The cost of the

participation right shall be recognized,

at the date of purchase, as an asset. In

subsequent periods, the participation

right shall be measured at its fair

value if the contract is such that the

fair value is reasonably estimable. Otherwise, the participation right shall be

measured at its amortized cost (not in

excess of its net realizable value), and

the cost shall be amortized systematically over the expected dividend period

under the contract.

Other Contracts with Insurance

Companies

Insurance contracts that are, in substance, equivalent to the purchase of

annuities shall be accounted for as

such. Other contracts with insurance

companies shall be accounted for as investments and measured at fair value.

For some contracts, the best available

evidence of fair value may be contract

value. If a contract has a determinable

cash surrender value or conversion

value, that is presumed to be its fair

value.

Defined Contribution Plans

A defined contribution pension plan

is a plan that provides pension benefits

in return for services rendered, provides an individual account for each

participant, and has terms that specify

how contributions to the individual’s

accounts are to be determined rather

than the amount of pension benefits

the individual is to receive. Under a defined contribution plan, the pension

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§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

benefits a participant will receive depend only upon the amount contributed to the participant’s account, the

returns earned on investments of those

contributions, and forfeitures of other

participants’ benefits that may be allocated to the participant’s account.

To the extent that a plan’s defined

contributions to an individual’s account are to be made for periods in

which that individual renders services,

the net pension cost for a period shall

be the contribution called for in that

period. If a plan calls for contributions

for periods after an individual retires

or terminates, the estimated cost shall

be accrued during the employee’s service period.

An employer that sponsors one or

more defined contribution plans shall

disclose the following separately from

its defined benefit plan disclosures:

1. A description of the plan(s) including employee groups covered, the basis

for determining contributions, and the

nature and effect of significant matters

affecting comparability of information

for all periods presented.

2. The amount of cost recognized during the period.

A pension plan having characteristics

of both a defined benefit plan and a defined contribution plan requires careful

analysis. If the substance of the plan is

to provide a defined benefit, as may be

the case with some ‘‘target benefit’’

plans, the accounting and disclosure

requirements shall be determined in

accordance with the provisions applicable to a defined benefit plan.

Multiemployer Plans

A multiemployer plan is a pension

plan to which two or more unrelated

employers contribute, usually pursuant

to one or more collective-bargaining

agreements. A characteristic of multiemployer plans is that assets contributed by one participating employer

may be used to provide benefits to employees of other participating employers since assets contributed by an employer are not segregated in a separate

account or restricted to provide benefits only to employees of that employer.

An employer participating in a multiemployer plan shall recognize as net

pension cost, the required contribution

for the period and shall recognize as a

liability, any contributions due and unpaid. The required contribution includes both current costs and prior

service costs. If an employer elects to

fund prior service cost in full at the inception of the plan, the total payment

becomes the employer’s required contribution, and accordingly, its pension

cost for the period.

The following provisions are applicable to RUS borrowers participating in a

multiemployer pension plan:

1. An electric utility participating in

a multiemployer plan may defer current period pension expenses if the provisions of Statement of Financial Accounting Standards No. 71 (Statement

No. 71), Accounting for the Effects of

Certain Types of Regulation, are applied.

Under the provisions of Statement

No. 71, pension costs may be deferred

provided such costs are recovered

through future rates.

2. An electric utility instituting an

amendment to the NRECA Retirement

and Security plan enters into a contractual agreement to pay the costs incurred (prior service pension costs) for

the amendment. In such cases, the

agreement is noncancelable and payable regardless of continued participation in the plan.

Since the utility is unconditionally

committed to making these payments

and such payments are not contingent

upon the utility’s continued participation in the plan, the recognition of

that liability is appropriate. The costs

associated with this liability shall be

expensed, in their entirety, when the

liability is recognized.

The accounting journal entries required to record the transactions associated with a multiemployer pension

plan are as follows:

Sample 1—Current Pension Expense

The journal entry required to record

the normal costs associated with the

NRECA Retirement and Security Program is as follows:

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 131.1, Cash—General

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Rural Utilities Service, USDA § 1767.41

To record the payment of pension costs

to NRECA.

NOTE: This entry shall not be recorded during the moratorium.

Sample 2—Prior Service Pension Expense

The journal entries required to

record the prior service costs associated with the NRECA Retirement and

Security Program are as follows:

1. If the RUS borrower elects to pay

the prior service pension costs in full,

and there is no deferral of costs under

the provision of Statement No. 71, the

following entry shall be recorded:

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 131.1, Cash—General

To record the payment of prior service

pension costs to NRECA.

2. If the RUS borrower elects to finance prior service pension costs over a

period of years and there is no deferral

of costs under the provisions of Statement No. 71, the following entries shall

be recorded:

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 224, Other Long-Term Debt

To record the liability to NRECA for

prior service pension costs.

Dr. 224, Other Long-Term Debt

Dr. 427, Interest on Long-Term Debt

Cr. 131.1, Cash—General

To record the annual payment to

NRECA for prior service pension

costs.

3. If the RUS borrower elects to finance prior service pension costs over a

period of years and such costs are being

deferred and amortized in accordance

with the provisions of Statement No.

71, the following entries shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 224, Other Long-Term Debt

To record the liability to NRECA for

prior service pension costs.

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of deferred

prior service pension costs.

Dr. 224, Other Long-Term Debt

Dr. 427, Interest on Long-Term Debt

Cr. 131.1, Cash—General

To record the annual payment to

NRECA for prior service pension

costs.

4. If the RUS borrower elects to pay

the prior service pension costs in full

and such costs are being deferred and

amortized in accordance with the provisions of Statement No. 71, the following entries shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 131.1, Cash—General

To record the payment to NRECA for

prior service pension costs.

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of deferred

prior service pension costs.

It should be noted that although the

above entries relate specifically to the

NRECA Retirement and Security Program, they are applicable to all multiemployer pension plans.

An employer that participates in one

or more multiemployer plans shall disclose the following separately from disclosures for a single-employer plan:

1. A description of the multiemployer

plan(s) including the employee groups

covered, the type of benefits provided

(defined benefit or defined contribution), and the nature and effect of significant matters affecting comparability of information for all periods presented.

2. The amount of cost recognized during the period.

Multiple-Employer Plans

A multiple-employer plan is, in substance, aggregations of single-employer plans combined to pool their assets for investment purposes to reduce

the cost of plan administration. Under

a multiple-employer plan, assets are

segregated and specifically identified

to an employer. In addition, such plans

864

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

may have features that allow participating employers to have different benefit formulas. Such plans shall be considered single-employer plans for financial accounting purposes and each employer’s accounting shall be based upon

its respective interest in the plan.

607 Unproductive Time

Lost time relating to construction,

operations and maintenance shall be

allocated on the basis of direct payroll

costs to the appropriate construction,

operations or maintenance accounts in

the month incurred. Lost time is defined as time on duty during which productive work is not performed due to

inclement weather conditions, material shortages, machine repairs, or

other reasons.

If lost time attributable to construction has a material effect on the construction accounts in any one month,

these costs shall be deferred and distributed over a reasonable period of

time by means of a predetermined percentage based upon direct labor.

608 Training Costs, Attendance at

Meetings, Etc.

Utilities engage in many types of

training programs. Seminars are conducted for directors, managers, office

managers, attorneys, engineers, and

others. Bookkeepers and office managers attend accountants’ meetings.

Safety engineers attend safety schools

and subsequently conduct regular safety meetings at the cooperative. Costs

incurred for the various types of training activities shall be accounted for as

follows:

1. Managers’ and directors’ expenses

to attend the NRECA national and

state conventions shall be charged to

Account 930.2, Miscellaneous General

Expenses.

2. Management or engineering seminar fees, salary time attending such

seminars including the associated pensions and benefits expense and payroll

taxes, and the related per diem and expenses shall be charged to the functional expense accounts. Salaries paid

to employees shall also be charged to

the appropriate functional expense account. Fees and expenses for directors’

attendance shall be charged to Account

930.2, Miscellaneous General Expenses.

3. When the office manager, bookkeeper, or work order clerk attends a

state or regional accounting meeting,

their salary time and the associated

employee pensions and benefits and social security and other payroll taxes

shall be charged to the account to

which the employees’ time is ordinarily charged.

4. Employees’ salary time employee

and the associated pensions and benefits and social security and other payroll taxes spent attending regular safety meetings conducted by the cooperative shall be charged to the account to

which the employees’ time is ordinarily charged.

5. A safety engineer’s salary time and

the associated employee pensions and

benefits and social security and other

payroll taxes spent attending a statewide safety school shall be charged to

Account 925, Injuries and Damages.

6. The salary time and the associated

employee pensions and benefits and social security and other payroll taxes

spent by a manager or line foreman

conducting weekly safely meetings

shall be charged to the appropriate

functional expense accounts including

Account 590, Maintenance, Supervision

and Engineering, and Account 920, Administrative and General Services.

609 Maintenance and Operations

‘‘Operations’’ is the general term

used to describe activities involved in

the delivery of electric service, by

means of a distribution system, to the

end user. It pertains to the use of the

utility’s electric plant facilities and

does not include activities intended to

prevent or remedy an impending or actual breakdown of those facilities.

These activities are classified as maintenance.

‘‘Maintenance’’ is the general term

used to describe the activities involved

in the upkeep and repair, but not the

enlargement or improvement, of property owned or leased and operated by

the company. It does not include the

replacement of retirement units.

610 Financial Forecast

Costs incurred and salaries paid to

perform a 10-year financial forecast

865

Rural Utilities Service, USDA § 1767.41

shall be charged to Account 920, Administrative and General Salaries. Related office supplies and expenses shall

be charged to Account 921, Office Supplies and Expenses. When a forecast is

performed by an outside consultant,

the cost shall be charged to Account

923, Outside Services Employed.

611 Advertising Expense

The cost of advertising and the cost

of informing the public about the electric cooperative’s activities shall be

charged to Account 930.2, Miscellaneous General Expenses.

Most of a cooperative’s advertising is

instructional in nature and relates the

cooperative’s history and current activities. This type of advertising activity should not be confused with that directed towards the enactment of a specific law or laws directed toward obtaining a specific decision from a regulatory body. Political advertising of

the type defined above shall be charged

to Account 426.4, Expenditures for Certain Civic, Political, and Related Activities.

612 Special Power Cost Study

A special power cost study is defined

as a study to determine whether sufficient power will be available in the future. If additional power or power

sources are needed, the study determines whether generation or purchase

will supply the lesser cost. The study

also indicates when additional power

will be needed. As costs are incurred,

they shall be charged to a subaccount

of Account 186, Miscellaneous Deferred

Debits. Upon completion of the study,

the costs shall be charged to Account

557, Other Expenses, or amortized to

Account 557 over a period of time not

to exceed 5 years.

613 Mapping Costs

The purpose of posting completed

work orders to system maps is to improve the operation of the system.

These costs shall, therefore, be charged

to Account 588, Miscellaneous Distribution Expenses. However, the cost of

system mapping in the planning stage

of construction is an acceptable overhead cost of the resulting construction.

614 Member Relations Costs

Many electric cooperatives hire employees whose duties concern a mixture

of power use and member relations activities. The salaries for these employees shall be charged to Account 930.2,

Miscellaneous General Expenses, except as provided below:

1. Account 912, Demonstrating and

Selling Expenses, shall be charged with

all labor, material, advertising, and

other expenses incurred in promotional, demonstrating, and selling

activities; the objective of which is to

promote or retain the use of utility

services by present or prospective customers.

2. Account 930.1, General Advertising

Expenses, shall be charged with labor,

material, and other expenses incurred

in advertising and related activities,

the cost of which by their content and

purpose, are not provided for elsewhere.

3. Account 416, Costs and Expenses of

Merchandising, Jobbing, and Contract

Work, shall be charged with all costs

specifically related to merchandising

activities when the utility is engaged

in a major merchandising program.

4. Account 426.4, Expenditures for

Certain Civic, Political, and Related

Activities, shall be charged with expenditures for the purpose of influencing public opinion with respect to

the election or appointment of public

officials, referenda, legislation, or ordinances (either with respect to the possible adoption of new referenda, legislation or ordinances or repeal or modification of existing referenda, legislation or ordinances); or approval, modification, or revocation of franchises; or

for the purpose of influencing the decisions of public officials. Account 426.4

shall not include expenditures which

are directly related to appearances before regulatory or other governmental

bodies in connection with the borrower’s existing or proposed operations.

615 Statewide Fees

Additional fees collected by a statewide association from its members for

construction of a statewide building

shall be charged to Account 930.2, Miscellaneous General Expenses. Any

866

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

amounts that are to be repaid by the

state association shall be charged to

Account 143, Other Accounts Receivable, or Account 123.23, Other Investments in Associated Organizations, depending upon the terms of the repayment.

616 Power Supply/Distribution

Cooperative Borrowings

When a power supply cooperative

borrows money from a distribution cooperative as the result of a long-term

loan agreement, the money shall be recorded on the books of the power supply cooperative as general funds unless

restricted to a specific purpose. If restricted, the funds shall be recorded in

Account 128, Other Special Funds. The

resulting liability shall be recorded in

Account 224, Other Long-Term Debt.

The transaction shall be charged to

Account 123.23, Other Investments in

Associated Organizations, on the books

of the distribution cooperative.

617 Rate Discount Allowed by the

Power Cooperative to Distribution

Cooperatives Owning Connecting

Transmission Lines

A distribution cooperative purchases

power from a power cooperative. The

distribution cooperative owns and operates the transmission line between

the power cooperative’s facilities and

the distribution facilities. Because of

this, power is sold at the standard rate

at which the power cooperative sells to

other distribution cooperatives who do

not own their transmission lines, less a

discount. The discount or reduction in

rate is based upon the distribution cooperative’s expense in operating and

maintaining its transmission facilities.

The contract between the power cooperative and the distribution cooperative must specifically state that the

member shall receive a reduced rate or

discount from the seller’s rate to other

member cooperatives.

Under this type of arrangement, the

distribution cooperative shall record

the cost of purchased power by charging the net amount to Account 555,

Purchased Power.

618 Theft Losses not Covered by

Insurance

Utilities may suffer losses as a result

of thefts of cash, materials and supplies, equipment, or electric plant-inservice that is not covered by insurance. The charges for nominal uninsured losses shall be recorded in the

following accounts:

1. Cash—Account 924, Property Insurance, shall be charged.

2. Plant materials and operating supplies—Account 163, Stores Expense Undistributed, shall be charged.

3. Equipment—Account 163, Stores

Expense Undistributed, shall be

charged for stores equipment; and Account 184, Transportation Expense—

Clearing, for transportation and garage

equipment. The appropriate miscellaneous operations or administrative expense account (Account 506, 524, 539,

549, 566, 588, 905, 910, 916, or 930.2, as appropriate) shall be charged for all other

equipment.

4. Electric Plant-in-Service—A retirement work order shall be prepared

for electric plant constituting a unit of

property. The loss due to retirement

shall be charged to Account 108.6, Accumulated Provision for Depreciation

of Distribution Plant. If the plant does

not constitute a retirement unit, the

loss shall be charged to the appropriate

maintenance expense account.

619 Self Billing

To maintain the books of accounts

on an accrual basis, bills for customers

who self bill and have not sent in a

reading or remittance, shall be estimated. A journal entry shall be made

to record the estimated revenue and

kWh sold by debiting accounts receivable and crediting the appropriate revenue accounts. The estimated bill shall

be posted to the customer’s account

and identified by an appropriate symbol indicating that it is an estimate.

Reconciliation with the general ledger

control is made in the usual manner.

620 Purchase Rebates

Some vendors from which electric cooperatives purchase plant materials

and supplies and merchandise for resale

are making purchase rebates based

upon the quantity or dollar volume of

867

Rural Utilities Service, USDA § 1767.41

purchases. These ‘‘quantity discounts’’

may be in the form of cash or credit

memoranda, in the form of prepaid

package travel arrangements, or a

combination of such methods. The rebate shall be accounted for as a reduction in the cost of the material or appliances upon which it was based.

In some instances, the rebate may be

for material or appliances that are no

longer in stock or cannot be identified.

If the rebate is based upon the purchase of plant materials and operating

supplies that are normally charged to

Account 154, Plant Materials and Operating Supplies, a credit shall be made

to Account 163, Stores Expense Undistributed. If the rebate is based upon appliances and equipment held for merchandising or contract work, the credit

shall be spread over the items in Account 155, Merchandise. To avoid materially distorting the cost of the remaining appliances, if a portion of the

items upon which the rebate was based

are no longer in stock, a portion of the

credit shall be prorated to Account 416,

Cost and Expenses of Merchandising,

Jobbing, and Contract Work, on the

basis of the number of items sold to the

quantity remaining in stock.

If the rebate is in the form of a travel

package or travel arrangements, the

value of the rebate shall be estimated

and recorded as a reduction of the cost

of the material or appliances upon

which it was based in a manner similar

to that of the cash rebates discussed

above. The beneficiary of the travel or

travel allowance shall be designated by

or in accordance with policy established by the board of directors. The

contra charge to the reduction in cost

shall be to an appropriate account depending upon the relationship of the

recipient to the cooperative. For employees, this shall be Account 926, Employee Pensions and Benefits; for directors or patrons, Account 930.2, Miscellaneous General Expenses.

621 Integrity Fund

The CFC Integrity Fund was established to assist borrowers in their attempts to stop takeover bids by investor-owned utilities. A borrower makes

a contribution to the Integrity Fund in

the form of cash or patronage capital

refunds. CFC retains the contribution

for a 5-year period during which time

the borrower earns interest on the balance in its account. Each year, the borrower receives a statement indicating

(both for the total fund and the individual borrower’s share) the amount

contributed, interest earned, disbursements made, and the ending balance.

The disbursements from the fund are

allocated to each contributing borrower’s account based upon their individual account balances. At the end of

the 5-year period, the balance in the

account, if any, is refunded to the contributing borrower.

Since the contributing borrower will

receive a refund only if its funds are

not totally disbursed, the contribution

shall be charged to expense in Account

426.1, Donations. If any part of the contribution is returned at the end of the

5-year period, the refund shall be credited to Account 421, Miscellaneous

Nonoperating Income.

622 In-Substance Defeasance

An in-substance defeasance has been

defined as the process whereby a debtor

irrevocably places cash or other assets

in a trust to be used solely for the purpose of satisfying scheduled payments

of both principal and interest related

to a specific debt obligation. Under the

structural arrangements of an in-substance defeasance, the probability that

the debtor will be required to make additional future debt payments is remote. In these specific circumstances,

debt has been determined to be extinguished even though the debtor has not

been legally released from his obligations under the debt instrument.

The trust established in a defeasance

transaction is restricted as to the nature of the assets held. The trust must

be funded with monetary assets that

are essentially risk free as to the

amount, timing, and collection of interest and principal. For debt denominated in United States dollars, ‘‘risk

free’’ assets are limited to:

1. Direct obligations of the United

States government;

2. Obligations guaranteed by the

United States government; and

3. Securities that are backed by

United States government obligations

as collateral under an arrangement by

868

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

which the interest and principal payments on the collateral, flow immediately through to the holder of the security.

The monetary assets of the trust

must provide cash flows sufficient to

coincide with the scheduled interest

and principal payments on the defeased

debt. If the trust is expected to pay the

costs associated with the defeasance,

such as trustee fees, these costs must

be considered in determining the

amount of funds required by the trust.

The principles of in-substance defeasance apply only to debt with specific

maturities and fixed payment schedules and, as such, do not apply to debt

with variable terms in which advance

determination of debt service requirements is not possible.

Generally accepted accounting principles (GAAP) address the extinguishment of debt in Accounting Principles

Board Opinion No. 26, and Statement of

Financial Accounting Standard No. 76,

Extinguishment of Debt. In accordance

with these two statements, debt which

has been defeased remains recorded in

the regulated books of account as do

the assets placed in the irrevocable

trust. They are not, however, recognized as an asset and liability for financial reporting purposes. The transaction, including the total amount of

debt outstanding and the total amount

of debt that is considered extinguished

at the end of the period, must be disclosed in the footnotes to the financial

statements as long as the debt remains

outstanding.

Debt is frequently extinguished before its scheduled maturity. Debt may

be extinguished by the use of the borrower’s general funds, or by the reacquisition of another debt issue at a different interest rate or varying terms.

As these assets are expected to be revenue producing during those years,

both the assets and the revenue they

generate may be utilized to meet maturing debt payments. Therefore, in

most instances, the dollar value of the

assets initially placed in the trust do

not equal the dollar value of the outstanding principal balance. The difference represents an ‘‘economic ’’ gain

or loss to the borrower.

To provide consistency in reporting

among all RUS borrowers, any gain or

loss that is recognized for financial

statement purposes should be reported

in accordance with the provisions of

General Instruction No. 17 of this part.

Therefore, the gain or loss should be

amortized (for reporting purposes) in

equal monthly amounts over the remaining life of the original debt issue

or the remaining life of the new issue.

The gain or loss may be reported in the

current period only in those instances

in which it is immaterial to the financial statements.

The RUS Form 7, Financial and Statistical Report, and the RUS Form 12,

Operating Report—Financial, must,

however, reflect the actual amounts recorded in the books and records of the

borrower.

623 Satellite or Cable Television

Services

Many electric borrowers have become

involved in either providing satellite or

cable television services or obtaining

satellite or cable television services for

their own use. This section outlines the

accounting to be followed when recording transactions involving satellite or

cable television services.

1. Separate Subsidiary

If a borrower provides satellite or

cable television services through a separate subsidiary, the investment in the

subsidiary shall be recorded in Account

123.11, Investment in Subsidiary Companies. The net income or loss of the

subsidiary shall be debited or credited

to Account 123.11, as appropriate, with

an offsetting entry to Account 418.1,

Equity in Earnings of Subsidiary Companies.

2. Segment of Current Operations

If a borrower provides satellite or

cable television services as part of its

normal operations, the investment in

satellite or cable television equipment

shall be recorded in Account 121, Nonutility Property. All income associated

with these services shall be recorded in

Account 417, Revenues from Nonutility

Operations, and the associated expenses shall be charged to Account

417.1, Expenses of Nonutility Operations.

3. Sale and Installation of Satellite or

Cable Television Equipment

869

Rural Utilities Service, USDA § 1767.41

If a borrower sells or installs satellite or cable television equipment,

the equipment purchased for resale

shall be recorded in Account 156, Other

Materials and Supplies, until sold. The

revenues generated from such sales or

installations shall be recorded in Account 415, Revenues from Merchandising, Jobbing, and Contract Work,

and the associated expenses shall be

charged to Account 416, Costs and Expenses of Merchandising, Jobbing, and

Contract Work.

4. Equipment Purchased for Own Use

If a borrower purchases satellite or

cable television equipment for its own

use, the investment in the equipment

shall be recorded in Account 397, Communication Equipment.

624 Pollution Control Bonds

The construction and installation of

pollution control facilities are often financed by issuing tax exempt municipal securities. The funds generated

from the sale of these securities are deposited into an account that is controlled by a designated trustee. The

funds under the control of the trustee

are usually invested, earning interest,

until they are needed.

Interest expense accrued on the pollution control bonds during the construction period shall be capitalized in

Account 107, Construction Work-inProgress. After construction is complete, all subsequent accruals of interest expense shall be charged to Account 427, Interest on Long-Term Debt.

Interest income earned during the

construction period shall be recorded

as a debit to Account 171, Interest and

Dividends Receivable, and a credit to

Account 107, Construction Work-inProgress. Upon notification of receipt

of the interest in the trustee account,

Account 221.XX, Long-Term Debt—Pollution Control Bonds, shall be debited

and Account 171, Interest and Dividends Receivable shall be credited.

Upon completion of construction, Account 419, Interest and Dividend Income, shall be credited for the amount

of interest income earned during the

period.

The entries required to account for

the transactions associated with the

issuance of pollution control bonds are

as follows:

Dr. 221.XX, Long-Term Debt—Pollution

Control Bonds—Trustee

Cr. Account 221.X1, Long-Term

Debt—Pollution Control Bonds

To record the sale of pollution control

bonds.

Dr. 107, Construction Work-in-Progress

Cr. 232, Accounts Payable

To record costs incurred in construction of pollution control facilities.

Dr. 131.1, Cash—General Funds

Cr. 221.XX, Long-Term Debt—Pollution Control Bonds—Trustee

To record the transfer of funds from

the trustee.

Dr. 107, Construction Work-in-Progress

Cr. 221.XX, Long-Term Debt—Pollution Control Bonds—Trustee

To record interest expense on pollution

control bonds.

Dr. 171, Interest and Dividends Receivable

Cr. 107, Construction Work-inProgress

To record earnings from investments

made by the trustee.

Dr. 221.XX, Long-Term Debt—Pollution

Control Bonds—Trustee

Cr. 171, Interest and Dividends Receivable

To record receipt of interest income by

the trustee account.

Dr. XXX, Various Plant Accounts

Cr. 107, Construction Work-inProgress

To close completed construction to the

primary plant accounts.

625 Prepayment of Debt

Many RUS borrowers have decided to

redeem (prepay) their issues of longterm debt. As a result of this redemption, the borrower may incur a gain

(discount) or a loss (penalty) on the

early extinguishment of debt. The accounting for this gain or loss is highlighted in this section.

If debt is redeemed without refunding

(paid with general funds), the gain or

loss incurred shall be recorded in Account 189, Unamortized Loss on Reacquired Debt, or Account 257,

Unamortized Gain on Reacquired Debt,

as appropriate. The borrower shall amortize the recorded deferral on a

monthly basis over the remaining life

870

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

of the old debt issue. Amounts so amortized shall be charged to Account 428.1,

Amortization of Loss on Reacquired

Debt, or credited to Account 429.1, Amortization of Gain on Reacquired

Debt—Credit, as appropriate.

If the debt is redeemed with refunding (refinanced), the gain or loss incurred shall be recorded in Account 189

or Account 257, as appropriate. The

borrower may elect to account for the

deferrals as follows:

1. Write them off immediately when

the amounts are insignificant;

2. Amortize them by equal monthly

amounts over the remaining life of the

old debt issue; or

3. Amortize them by equal monthly

amounts over the life of the new debt

issue.

Once an election has been made, it

shall be applied on a consistent basis.

Regardless of the option selected, the

amortization shall be charged to either

Account 428.1 or 429.1, as appropriate.

Where a regulatory authority having

jurisdiction over the borrower specifically disallows the rate principle of

amortizing gains or losses on the redemption of long-term debt without refunding, and does not apply the gain or

loss to interest charges in computing

the borrower’s rates, the alternative

method may be used to account for

gains or losses relating to the redemption of long-term debt with or without

refunding. The alternative method requires that gains or losses be recorded

in Account 421, Miscellaneous Nonoperating Income, or Account 426.5, Other

Deductions, as incurred. When the alternative method is used, the borrower

shall include a footnote to the financial statements stating the reason for

using this method and its treatment

for rate making purposes.

626 Rural Economic Development

Loan and Grant Program

On December 21, 1987, Section 313,

Cushion of Credits Payments Program,

was added to the Rural Electrification

Act. Section 313 establishes a Rural

Economic Development Subaccount

and authorizes the Administrator of

the Rural Utilities Service to provide

zero interest loans or grants to RE Act

borrowers for the purpose of promoting

rural economic development and job

creation projects.

Subpart B, Rural Economic Development Loan and Grant Program, 7 CFR

Part 1703, sets forth the policies and

procedures relating to the zero interest

loan program and for approving and administering grants.

The accounting journal entries required to record the transactions associated with a rural economic development loan are as follows:

Dr. 224.17, RUS Notes Executed—Economic Development—Debit

Cr. 224.16, Long-Term Debt—RUS

Economic Development Notes Executed

To record the contractual obligation

to RUS for the Economic Development

Notes.

Dr. 131.12, Cash—General—Economic

Development Funds

Cr. 224.17, RUS Notes Executed—Economic Development—Debit

To record the receipt of the economic

development loan funds.

Dr. 123, Investment in Associated Organizations or

Dr. 124, Other Investments

Cr. 131.12, Cash—General—Economic

Development Funds

To record the disbursement of Economic development loan funds to the

project.

Dr. 131.1, Cash—General Funds

Cr. 421, Miscellaneous Nonoperating

Income

To record payment received from the

project for loan servicing charges.

Dr. 171, Interest and Dividends Receivable

Cr. 419, Interest and Dividend Income

To record the interest earned on the

investment of rural economic development loan funds.

Dr. 426.1, Donations or

Dr. 426.5, Other Deductions

Cr. 131.1, Cash—General Funds

To record the payment of interest

earned in excess of $500.00 on the investment of rural economic development loan funds.

NOTE: Interest earned in excess of $500.00

must be used for the rural economic development project for which the loan funds were

received or returned to RUS.

871

Rural Utilities Service, USDA § 1767.41

Dr. 131.12, Cash—General—Economic

Development Funds

Cr. 123, Investment in Associated Organizations or

Cr. 124, Other Investments

To record receipt of the repayment,

by the project, of economic development loan funds.

Dr. 224.16, Long-Term Debt—RUS Economic Development Notes Executed

Cr. 131.12, Cash—General—Economic

Development Funds

To record the repayment, to RUS, of

the economic development loan funds.

The accounting journal entries required to record the transactions associated with a rural economic development grant are as follows:

Dr. 131.13, Cash—General—Economic

Development Grant Funds

Cr. 224.18, Other Long-Term Debt—

Grant Funds;

Cr. 208, Donated Capital; or

Cr. 421, Miscellaneous Nonoperating

Income

To record grant funds disbursed by

RUS. If the grant agreement requires

repayment of the funds upon termination of the revolving loan program,

Account 224.18 should be credited. If

the grant agreement states that there

is absolutely no obligation for repayment upon termination of the revolving loan program, the funds should be

accounted for as a permanent infusion

of capital by crediting Account 208. If,

however, the grant agreement is silent

as to the final disposition of the grant

funds, Account 421 should be credited.

Dr. 123.3, Investment in Associated Organizations—Federal Economic Development Loans

Cr. 131.13, Cash—General—Economic

Development Grant Funds

To record advances of Federal funds

to associated organizations for authorized rural economic development

projects.

Dr. 124.1, Other Investments—Federal

Economic Development Loans

Cr. 131.13, Cash—General—Economic

Development Grant Funds

To record advances of Federal funds

to nonassociated organizations for authorized rural economic development

projects.

Dr. 171, Interest and Dividends Receivable

Cr. 419, Interest and Dividend Income

To record the accrual of interest on

loans made to associated and nonassociated organizations with Federal

funds for authorized rural economic development projects.

Dr. 131.14, Cash—General—Economic

Development Non-Federal Revolving Funds

Cr. 123.3, Investment in Associated

Organizations—Federal Economic

Development Loans or

Cr. 124.1, Other Investments—Federal

Economic Development Loans

To record repayment of loans made

with Federal funds.

Dr. 123.4, Investment in Associated Organizations—Non-Federal Economic Development Loans

Cr. 131.14, Cash—General—Economic

Development Non-Federal Revolving Funds

To record advances of non-Federal

funds to associated organizations for

authorized rural economic development projects.

Dr. 124.2, Other Investments—Non-Federal Economic Development Loans

Cr. 131.14, Cash—General—Economic

Development Non-Federal Revolving Funds

To record advances of non-Federal

funds to nonassociated organizations

for authorized rural economic development projects.

Dr. 171, Interest and Dividends Receivable

Cr. 419, Interest and Dividend Income

To record the accrual of interest on

loans made to associated and nonassociated organizations with non-Federal

funds for authorized rural economic development projects.

Dr. 131.14, Cash—General—Economic

Development Non-Federal Revolving Funds

Cr. 123.4, Investment in Associated

Organizations—Non-Federal Economic Development Loans or

Cr. 124.2, Other Investments—NonFederal Economic Development

Loans

To record repayment of loans made

with non-Federal funds.

872

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

627 Postretirement Benefits

Statement of Financial Accounting

Standards No. 106, Employers’ Accounting for Postretirement Benefits

Other than Pensions (Statement No.

106), requires reporting entities to accrue the expected cost of postretirement benefits during the years the employee provides service to the entity.

For purposes of applying the provisions

of Statement No. 106, members of the

board of directors are considered to be

employees of the cooperative. Prior to

the issuance of Statement No. 106,

most reporting entities accounted for

postretirement benefit costs on a ‘‘payas-you-go’’ basis; that is, costs were

recognized when paid, not when the

employee provided service to the entity in exchange for the benefits.

As defined in Statement No. 106, a

postretirement benefit plan is a deferred compensation arrangement in

which an employer promises to exchange future benefits for an employee’s current services. Postretirement

benefit plans may be funded or unfunded. Postretirement benefits include, but are not limited to, health

care, life insurance, tuition assistance,

day care, legal services, and housing

subsidies provided outside of a pension

plan.

This statement applies to both written plans and to plans whose existence

is implied from a practice of paying

postretirement benefits. An employer’s

practice of providing postretirement

benefits to selected employees under

individual contracts with specified

terms determined on an employee-byemployee basis does not, however, constitute a postretirement benefit plan

under the provisions of this statement.

Postretirement benefit plans generally fall into three categories: singleemployer defined benefit plans, multiemployer plans, and multiple-employer

plans.

The accounting requirements set

forth in this interpretation focus on

single-and multiple-employer plans.

The accounting requirements set forth

in Statement No. 106 for multiemployer plans or defined contribution

plans shall be adopted for borrowers

electing those types of plans.

Under the provisions of Statement

No. 106, there are two components of

the postretirement benefit cost: the

current period cost and the transition

obligation. The transition obligation is

a one-time accrual of the costs resulting from services already provided.

Statement No. 106 allows the transition obligation to be deferred and amortized on a straight-line basis over the

average remaining service period of the

active employees. If the average remaining service life of the employees is

less than 20 years, a 20-year amortization period may be used.

Accounting Requirements

All RUS borrowers must adopt the

accrual accounting provisions and reporting requirements set forth in

Statement No. 106. The transition obligation and accrual of the current period cost must be based upon an actuarial study. This study must be updated to allow the borrower to comply

with the measurement date requirements of Statement No. 106; however,

the study must, at a minimum, be updated every five years. RUS will not

allow electric borrowers to account for

postretirement benefits on a ‘‘pay-asyou-go’’ basis.

The deferral and amortization of the

transition obligation does not require

RUS approval provided that it complies

with the provisions of Statement No.

106. If, however, a borrower elects to

expense the transition obligation in

the current period and subsequently

defer this expense in accordance with

Statement of Financial Accounting

Standards No. 71, Accounting for the

Effects of Certain Types of Regulation,

the deferral must be approved by RUS.

In those states in which the commission will not allow the recovery of the

transition obligation through future

rates, the transition obligation must

be expensed, in its entirety, in the year

in which Statement No. 106 is adopted.

A portion of the transition obligation

may be charged to construction and retirement activities provided such

charges are properly supported.

Effective Date and Implementation

For plans outside the United States

and for defined benefit plans of employers that (a) are nonpublic enterprises

and (b) sponsor defined benefit postretirement plans with no more than 500

873

Rural Utilities Service, USDA § 1767.41

plan participants in the aggregate,

Statement No. 106 is effective for fiscal

years beginning after December 15,

1994. For all other plans, Statement

No. 106 is effective for fiscal years beginning after December 15, 1992.

RUS borrowers must comply with the

implementation dates set forth in

Statement No. 106. At the time of the

adoption of Statement No. 106, rates

must be in place sufficient to recover

the current period expense and any amortization of the transition obligation.

A copy of a board resolution or commission order, as appropriate, indicating that the transition obligation

and current period expense have been

included in the borrower’s rates must

be submitted to RUS.

Accounting Journal Entries—Transition

Obligation

The journal entries required to

record the transition obligation are as

follows:

1. If the borrower elects to expense

the transition obligation in the current

period and there is no deferral of costs,

the following entry shall be recorded:

Dr. 435.1, Cumulative Effect on Prior

Years of a Change in Accounting

Principle

or

Dr. 926, Employee Pensions and Benefits

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record the current period recognition of the transition obligation for

postretirement benefits. Note: A portion of the transition obligation may

be charged to construction and retirement activities provided such

charges are properly supported.

2. If the borrower elects to defer and

amortize the transition obligation in

accordance with the provisions of

Statement No. 71, the following entry

shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record the deferral of the transition

obligation under the provisions of

Statement No. 71.

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of postretirement benefits expenses as they

are recovered through rates in accordance with Statement No. 71.

3. The deferral and amortization of

the transition obligation under the

provisions of Statement No. 106 is considered to be an off balance sheet item.

If, therefore, the borrower elects to

defer and amortize the transition obligation on a straight-line basis over the

average remaining service period of the

active employees or 20 years in accordance with Statement No. 106, no entry

is required. Instead, the transition obligation is recognized as a component

of postretirement benefit cost as it is

amortized. It should be noted, however,

that the amount of the unamortized

transition obligation must be disclosed

in the notes to the financial statements.

Accounting Journal Entries—Current

Period Expense

The current period postretirement

expense should be recorded by the following entry:

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record current period postretirement benefit expense.

Dr. 228.3X, Accumulated Provision for

Pensions and Benefits—Funded

Cr. 131.1, Cash—General

To record cash payments on a ‘‘pay-asyou-go’’ basis for postretirement benefits.

Accounting Journal Entry—Funding

If a borrower elects to voluntarily

fund its postretirement benefits obligation in an external, irrevocable trust,

the following entry shall be recorded:

Dr. 228.3X, Accumulated Provision for

Pensions and Benefits—Funded

874

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

Cr. 131.1, Cash—General

To record the funding of postretirement benefits expense into an external, irrevocable trust.

If a borrower elects to voluntarily

fund its postretirement benefits obligation in an investment vehicle other

than an external, irrevocable trust, the

following entry shall be recorded:

Dr. 128, Other Special Funds

Cr. 131.1, Cash—General

To record the funding of postretirement benefits expense into an investment vehicle other than an external,

irrevocable trust.

628 Postemployment Benefits

Statement of Financial Accounting

Standards No. 112, Employers’ Accounting for Postemployment Benefits

(Statement No. 112) establishes the

standards of financial accounting and

reporting for employers who provide

benefits to former or inactive employees after employment but before retirement. Inactive employees are those

who are not currently rendering service to the employer but who have not

been terminated, including employees

who are on disability leave, regardless

of whether they are expected to return

to active service. For purposes of applying the provisions of Statement No.

112, former members of the board of directors are considered to be employees

of the cooperative.

Postemployment benefits include

benefits provided to former or inactive

employees, their beneficiaries, and covered dependents. They include, but are

not limited to, salary continuation,

supplemental benefits (including workmen’s compensation), health care, job

training and counseling, and life insurance coverage. Benefits may be provided in cash or in kind and may be

paid upon cessation of active employment or over a specified period of time.

The cost of providing

postemployment benefits is considered

to be a part of the compensation provided to an employee in exchange for

current service and should, therefore,

be accrued as the employee earns the

right to be paid for future

postemployment benefits. Applying the

criteria set forth in Statement of Financial Accounting Standards No. 43,

Accounting for Compensated Absences,

a postemployment benefit obligation is

accrued when all of the following conditions are met:

1. The employer’s obligation for payment for future absences is attributable to employees’ services already

performed;

2. The obligation relates to employee

rights that vest or accumulate. Vested

rights are considered those rights for

which the employer is obligated to

make payment even if the employee

terminates. Rights that accumulate

are those earned, but unused rights to

compensated absences that may be carried forward to one or more periods

subsequent to the period in which they

are earned;

3. Payment of the compensation is

probable; and

4. The amount can be reasonably estimated.

If all of these conditions are not met,

the employer must account for its

postemployment benefit obligation in

accordance with Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (Statement

No. 5) when it becomes probable that a

liability has been incurred and the

amount of that liability can be reasonably estimated.

If an obligation for postemployment

benefits is not accrued in accordance

with the provisions of Statement No. 5

or Statement No. 43 only because the

amount cannot be reasonably estimated, the financial statements should

disclose that fact.

Accounting Requirements

All RUS borrowers must adopt the

accrual accounting provisions and reporting requirements set forth in

Statement No. 112 as of the statement’s implementation date. A portion

of the cumulative effect may be

charged to construction and retirement

activities provided such charges are

properly supported. If a borrower elects

to defer the cumulative effect of implementing Statement No. 112 in accordance with the provisions of Statement

of Financial Accounting Standards No.

71, Accounting for the Effects of Certain Types of Regulation, the deferral

must be approved by RUS.

875

Rural Utilities Service, USDA § 1767.41

Effective Date and Implementation

Statement No. 112 is effective for fiscal years beginning after December 15,

1993. Previously issued financial statements should not be restated.

RUS borrowers must comply with the

implementation date set forth in

Statement No. 112. At the time of the

adoption of Statement No. 112, rates

must be in place sufficient to recover

the current period expense.

Accounting Journal Entries

The journal entries required to account for postemployment benefits are

as follows:

Dr. 435.1, Cumulative Effect on Prior

Years of a Change in Accounting

Principle

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record the cumulative effect of implementing Statement No. 112.

NOTE: A portion of the cumulative effect

may be charged to construction and retirement activities provided such charges are

properly supported. Account 435.1 is closed to

Account 219.2, Nonoperating Margins.

If the borrower elects to defer and

amortize the cumulative effect in accordance with the provisions of Statement No. 71, the following entry shall

be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record the deferral of the cumulative effect of implementing Statement No. 112 in accordance with the

provisions of Statement No. 71.

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of the cumulative effect of implementing

Statement No. 112 as it is recovered

through rates in accordance with

Statement No. 71.

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record current period

postemployment benefit expense.

NOTE: If postemployment benefits are accrued under the criteria set forth in Statement No. 43, this journal entry is made on a

monthly basis. If, however, the accrual is

based upon the provisions of Statement No.

5, this is a one-time entry unless the liability is reevaluated and subsequently adjusted.

629 Investments in Debt and Equity

Securities

Statement of Financial Accounting

Standards No. 115, Accounting for Certain Investments in Debt and Equity

Securities (Statement No. 115), establishes the standards of financial accounting and reporting for investments

in debt securities and for investments

in equity securities that have readily

determinable fair values. Statement

No. 115 does not apply to investments

in equity securities accounted for

under the equity method nor to investments in consolidated subsidiaries.

At the time of acquisition, an entity

must classify debt and equity securities into one of three categories: heldto-maturity, available-for-sale, or trading. At the balance sheet date, the appropriateness of the classifications

must be reassessed.

Investments in debt securities are

classified as held-to-maturity and are

measured at amortized cost in the balance sheet only if the reporting entity

has the positive intent and ability to

hold these securities to maturity. Debt

securities are not classified as held-tomaturity if the entity has the intent to

hold the security only for an indefinite

period; for example, if the security

would become available for sale in response to changes in market interest

rates and related changes in the security’s prepayment risk, needs for liquidity, changes in the availability of

and the yield on alternative investments, changes in funding sources and

terms, and changes in foreign currency

risk.

Investments in debt securities that

are not classified as held-to-maturity

and equity securities that have readily

determinable fair values are classified

876

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

as either trading securities or available-for-sale securities and are measured at fair value in the balance sheet.

Trading securities are those securities

that are bought and held principally

for the purpose of selling them in the

near future. Trading generally reflects

active and frequent buying and selling

and trading securities are generally

used with the objective of generating

profits on short-term differences in

prices. Available-for-sale securities are

those investments not classified as either trading securities or held-to-maturity securities.

Statement No. 115 requires unrealized holding gains and losses for trading securities to be included in earnings in the current period. Unrealized

holding gains and losses for availablefor-sale securities are excluded from

earnings; however, they are reported as

a net amount in a separate component

of shareholders’ equity until realized.

For individual securities classified as

either available-for sale or held-to-maturity, an entity must determine

whether a decline in the security’s fair

value below the amortized cost is other

than temporary. If the decline in fair

value is determined to be permanent,

that is, it is probable that the entity

will not be able to collect all amounts

due under the contractual terms of the

security, the realized loss is accounted

for in earnings of the current period.

The new cost basis is not adjusted upward for subsequent recoveries in the

fair value. Subsequent increases in the

fair value of available-for-sale securities are included in the separate component of equity. Subsequent decreases

are also included in the separate component of equity.

All trading securities are reported as

current assets in the balance sheet and

individual held-to-maturity and available-for-sale securities are classified as

either current or noncurrent, as appropriate. Cash flows from the purchase,

sale, or maturity of available-for-sale

securities and held-to-maturity securities are classified in the statement of

cash flows as cash flows from investing

activities and reported gross for each

security classification.

Accounting Requirements

All RUS borrowers must adopt the

accounting, reporting, and disclosure

requirements set forth in Statement

No. 115 as of the statement’s implementation date. Unrealized holding gains

or losses for trading securities shall be

recorded in either Account 421, Miscellaneous Nonoperating Income, or

Account 426.5, Other Deductions, as appropriate. Unrealized holding gains or

losses for available-for-sale securities

held by the corporate entity are recognized as a component of stockholder’s

equity in Account 215.1, Unrealized

Gains and Losses—Debt and Equity Securities. A contra account of the investment account shall be debited or

credited accordingly. Unrealized gains

and losses for available-for-sale securities held in a decommissioning fund

shall increase or decrease, as appropriate, the reported value of the fund.

Effective Date and Implementation

Statement No. 115 is effective for fiscal years beginning after December 15,

1993. At the beginning of the entity’s

fiscal year, the entity must classify its

debt and equity securities on the basis

of the entity’s current intent. This

statement may not be applied retroactively to prior years’ financial statements. For fiscal years beginning prior

to December 16, 1993, reporting entities

are permitted to apply Statement No.

115 as of the end of a fiscal year for

which annual financial statements

have not previously been issued.

630 Split Dollar Life Insurance

The National Rural Electric Cooperative Association Split Dollar Life Insurance provides life insurance benefits

to cooperative employees. The benefits

provided under this policy consist of

two components, the face value of the

insurance policy and the accumulated

cash surrender value. While the employee is the owner of the policy, the

employee must sign a collateral assignment giving the cooperative absolute

right to the cash surrender value of the

policy. Under the terms of this collateral assignment, the employee must reimburse the cooperative for the premiums paid upon the employee’s termination of employment or attainment of

877

Rural Utilities Service, USDA § 1767.41

the age of 62 if the employee wishes to

maintain the insurance coverage. If

death occurs prior to either of these

events, the premiums paid to date by

the cooperative are deducted from the

death benefits payable to the policy

beneficiary.

Accounting Requirements

Financial Accounting Standards

Board Technical Bulletin 85–4, Accounting for Purchase of Life Insurance (Bulletin 85–4), states that the

amount that could be realized under an

insurance contract as of the date of the

financial statements should be reported as an asset. The change in the

cash surrender or contract value of

that asset during the period should be

reported as an adjustment to the premiums paid in determining the expense

or income to be recognized for the period. The cooperative shall, therefore,

record the cash surrender value of the

policy as an asset because of its absolute right to receive that value based

upon the employee’s collateral assignment. Any receivable that may occur

as a result of the employee reimbursement for the premiums paid is contingent upon the employee electing to

maintain the insurance coverage after

termination of employment or reaching the age of 62 and is not recorded as

an asset on the cooperative’s records.

Accounting Journal Entries

The journal entries required to account for the NRECA Split Dollar Life

Insurance Program are as follows:

Dr. 124, Other Investments

Cr. Various Operations, Maintenance,

and Administrative Expense Accounts

To record an increase in the cash surrender value of the insurance contract.

or

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Cr. 124, Other Investments

To record a decrease in the cash surrender value of the insurance contract.

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 131.1, Cash—General

To record the premium cost of the insurance contract.

631 Special Early Retirement Plan

The Special Early Retirement Plan

(SERP) being offered through the National Rural Electric Cooperative Association (NRECA) constitutes an amendment to its Retirement and Security

(R&S) program. The SERP is often chosen as a vehicle through which the cooperative may reduce the size of its

workforce or replace more highly paid

employees with lower paid entry level

employees. If an employee covered by

an NRECA retirement plan chose to retire before his/her normal retirement

date, that employee would receive an

actuarially reduced benefit. However,

when a cooperative elects to offer a

SERP, no such reduction is required.

The cooperative selects the criteria

under which an employee will be eligible to participate such as age, years of

service, or a combination of age and

benefit service requirements. As with

other amendments to the R&S program, NRECA calculates the cost of

the plan based upon the criteria selected by the cooperative and allows

the cooperative to pay the cost immediately or on an installment basis.

Under this plan, the employee receives full retirement benefits in the

form of either an immediate lump-sum

settlement or annuity payments. It is

not unusual for the cooperative to add

an incentive to encourage participation such as medical or life insurance,

either in whole or in part, until age 65.

The actuarial analysis provided by

NRECA includes the cost of the SERP

and the estimated reduction and/or increase in costs associated with Statement of Financial Accounting Standards No. 106, Employer’s Accounting

for Postretirement Benefits Other

Than Pensions (Statement No. 106).

878

§ 1767.41 7 CFR Ch. XVII (1–1–00 Edition)

Statement of Financial Accounting Standards No. 87, Employer’s Accounting for

Pensions (Statement No. 87)

In accordance with the provisions of

Statement No. 87, the costs associated

with an amendment to a multiemployer plan are recognized when they

become due and payable. Since NRECA

calculates the amount due and payable

at the time of the amendment, the entire amount due, whether paid immediately or financed through NRECA or

any other institution, must be recognized as an expense at that time. This

cost may, however, be deferred in accordance with the provisions of Statement of Financial Accounting Standards No. 71, Accounting for the Effects

of Certain Types of Regulation (Statement No. 71).

Accounting Journal Entries

The journal entry required to record

the additional pension costs associated

with the SERP is as follows:

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 131.1, Cash—General

or

Cr. 224, Other Long-Term Debt

To record the prior service pension

costs incurred as a result of adopting

the SERP.

If the borrower elects to defer and

amortize the cost in accordance with

Statement No. 71, the following entries

shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 131.1, Cash—General

or

Cr. 224, Other Long-Term Debt

To record, under the provisions of

Statement No. 71, the deferral of the

prior service pension costs incurred

as a result of adopting the SERP.

Dr. Various Operations, Maintenance,

and Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of deferred

prior service pension costs as they

are recovered through rates in accordance with Statement No. 71.

Statement No. 106

In the event that net reductions in

postretirement benefits result from

this plan amendment, the reductions

are recognized as follows:

1. The amount of the reduction shall

first reduce any existing unrecognized

prior service cost;

2. Any remaining reductions shall

next reduce any unrecognized transition obligation; and

3. Any remaining reduction shall be

recognized in a manner consistent with

the accounting for prior service postretirement benefit costs.

In accordance with Statement No.

106, prior service postretirement benefit costs are recognized in equal

amounts in each remaining year of

service for active plan participants. Because it is an off-balance sheet item,

only a memorandum entry is required

to reduce the amount of unrecognized

prior service cost.

At adoption, Statement No. 106 permitted the recognition of the transition obligation in one of two ways. The

transition obligation was recognized

over the longer of the average remaining service period of current plan participants or 20 years, or it may have

been recognized immediately. If the delayed recognition option was chosen

under Statement No. 106, this, too, was

an off-balance sheet item that requires

only a memorandum entry to reduce

the amount of unrecognized transition

obligation. However, if the immediate

recognition option was chosen, the cooperative either recorded the expense

in that year or, with RUS approval, deferred the expense under the provisions

of Statement No. 71. If the expense

were recorded, in total, in the year of

adoption, no unrecognized transition

obligation remains to reduce. If, however, the transition obligation was deferred in accordance with Statement

No. 71, the journal entry required to effect the reduction in Statement No. 106

expense is as follows:

Dr. 228.3, Accumulated Provision for

Pensions and Benefits

Cr. 182.3, Other Regulatory Assets

879

Rural Utilities Service, USDA § 1770.11

To record a reduction in the deferred

Statement No. 106 transition obligation resulting from the adoption of

the SERP.

NOTE: The dollar value of this entry must

not exceed the deferral shown on the balance

sheet.

If, after the two previous reductions

have been made, any net credit remains, it shall be recognized in a manner consistent with prior service costs;

that is, as an off balance sheet item

that is amortized over the remaining

service lives (to full eligibility) of the

active plan participants. The annual

amortization reduces amounts normally charged to the various operations, maintenance, and administrative expense accounts and Account

228.3 as postretirement benefit expenses.

[58 FR 59825, Nov. 10, 1993, as amended at 59

FR 27436, May 27, 1994; 60 FR 55430, 55435–

55438, Nov. 1, 1995; 62 FR 42319–42321, 42323,

42330, Aug. 6, 1997]

§§ 1767.42–1767.45 [Reserved]

Subpart C—Depreciation Rates

and Procedures [Reserved]

§§ 1767.46–1767.65 [Reserved]

Subpart D—Preservation of

Records [Reserved]

§§ 1767.66–1767.85 [Reserved]

PART 1770—ACCOUNTING REQUIREMENTS FOR RUS TELEPHONE BORROWERS

Subpart A—General Provisions

Sec.

1770.1—1770.9 [Reserved]

Subpart B—Uniform System of Accounts

1770.10 General.

1770.11 Accounting system requirements.

1770.12 Supplementary accounts.

1770.13 Accounting requirements.

1770.14 Continuing property records.

1770.15 Supplementary accounts required of

all borrowers.

1770.16 Supplementary accounts required of

nonprofit organizations.

1770.17—1770.25 [Reserved]

Subpart C—Accounting Interpretations

1770.26 General.

1770.27 Definitions.

1770.28–1770.45 [Reserved]

APPENDIX TO SUBPART C TO PART 1770—ACCOUNTING METHODS AND PROCEDURES REQUIRED OF ALL BORROWERS

AUTHORITY: 7 U.S.C. 901 et seq.; 7 U.S.C. 1921

et seq.; Pub. L. 103–354, 108 Stat. 3178 (7 U.S.C.

6941 et seq.).

SOURCE: 55 FR 3388, Feb. 1, 1990, unless otherwise noted.

Subpart A—General Provisions

§§ 1770.1—1770.9 [Reserved]

Subpart B—Uniform System of

Accounts

§ 1770.10 General.

This subpart implements provisions

of the standard RUS loan documents

with respect to the accounting system

accounts to be maintained by telecommunications borrowers of the

Rural Utilities Service.

§ 1770.11 Accounting system requirements.

(a) Each RUS borrower subject to the

jurisdiction of the Federal Communications Commission (FCC) or a State regulatory body shall maintain its accounts and records in accordance with

the rules and regulations prescribed by

that regulatory body.

(b) Each RUS borrower not subject to

regulatory control as specified in

§1770.11(a) shall maintain its accounts

and records in accordance with the

FCC Uniform System of Accounts as

set forth in part 32 of the Commission’s

Rules and Regulations.

(1) RUS borrowers having annual revenues derived from regulated telecommunications operations of

$100,000,000 or more shall maintain the

accounts prescribed in part 32 for Class

A companies.

(2) RUS borrowers having annual revenues derived from regulated telecommunications operations of less

than $100,000,000 shall maintain the accounts prescribed in part 32 for Class B

companies.