Code of Massachusetts Regulations › 220 CMR - DEPARTMENT OF PUBLIC UTILITIES › Title 220 CMR 50.00 - Uniform System Of Accounts For Gas Companies › BALANCE SHEET ACCOUNTS ASSETS AND OTHER DEBITS › 4 - DEFERRED DEBITS › Section 181 - Unamortized Debt Discount and Expense

Current through Register 1525, July 5, 2024
A.
		    This account shall include the total of the debit balances in the discount,
		    expense, and premium accounts for all classes of long-term debt, determined as
		    provided in the following paragraphs of this account.
B. A discount, expense, and premium account
		    shall be maintained for each class and series of long-term debt (including
		    receivers' certificates) issued or assumed by the utility, in which shall be
		    recorded the discount, expense, and premium associated with the issuance and
		    sale of each such class and series of debt. In stating the balance sheet, the
		    total of the debit balances remaining in those accounts having debit balances
		    shall be reported under this account and the total of credit balances remaining
		    in those accounts having credit balances shall be reported under account 251,
		    Unamortized Premium on Debt. Accounts with debit balances shall not be set off
		    against accounts with credit balances.
C. The discount, expense, and premium 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, and the amounts thereof shall be
		    charged to account 428, Amortization of Debt Discount and Expense, or credited
		    to account 429, Amortization of Premium on Debt -Cr., as may be appropriate.
		    The utility may, however, accelerate the writing off of discount and expense
		    where the amounts are insignificant.
D. When any 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, the difference
		    between the amount paid upon reacquirement and the face value plus the
		    unamortized premium or less the unamortized discount and expense, as the case
		    may be, applicable to the debt redeemed, retired and canceled, shall be
		    included in account 434, Miscellaneous Credits to Surplus, or account 434,
		    Miscellaneous Debits to Surplus, as appropriate.
E. 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, account 434, Miscellaneous Credits
		    to Surplus, or account 435, Miscellaneous Debits to Surplus, shall be credited
		    or debited, as appropriate, with any unamortized discount, expense, or premium
		    on the first issue and any premium paid or discount earned on the redemption.
		    If the utility desires to amortize any of the discount, expense, or premium
		    associated with the issuance or redemption of the first issue over a period
		    subsequent to the date of redemption, the permission of the Department must be
		    obtained; provided, however, that the special permission of the Department
		    shall not be necessary, if the utility proceeds with a plan of disposition of
		    the discount, expense, and redemption premiums associated with the refunded
		    bonds, as follows:
(1) A special charge is
		    recorded in the year of refunding in account 428, Amortization of Debt Discount
		    and Expense, equal to the saving in income taxes arising from the refunding
		    transactions;
(2) There is charged
		    to account 435, Miscellaneous Debits to Surplus, in the year of refunding, any
		    amounts of unamortized discount and expenses or redemption premiums relating to
		    bonds or other long-term obligations previously refunded by the refunded bonds
		    under immediate consideration, such amounts sometimes being referred to as
		    "grandfather items"; and,
(3) The
		    utility proceeds to amortize by equal monthly charges, from the date of
		    refunding, the remainder of the charges associated with the refunded bonds,
		    over a period not longer than that in which the saving in net annual interest
		    and amortization charges equals the remainder of charges to be amortized, after
		    taking into consideration the estimated additional taxes on income attributable
		    to the saving in net annual interest and amortization charges.