Sec.  32.1220   Inventories.

   (a) This account shall include the cost of materials and supplies held in
   stock and inventories of goods held for resale or lease. The investment in
   inventories shall be maintained in the following subaccounts:

   1220.1 Material and supplies

   1220.2 Property held for sale or lease

   (b)  These  subaccounts shall not include items which are related to a
   nonregulated activity unless that activity involves joint or common use of
   assets and resources in the provision of regulated and nonregulated products
   and services.

   (c) 1220.1 Material and supplies. This subaccount shall include cost of
   material and supplies held in stock including plant supplies, motor vehicles
   supplies, tools, fuel, other supplies and material and articles of the
   company  in  process  of  manufacture  for  supply  stock.  (Note also
    Sec. 32.2000(c)(2)(iii) of this subpart.)

   (d) Transportation charges and sales and use taxes, so far as practicable,
   shall be included as a part of the cost of the particular material to which
   they relate. Transportation and sales and use taxes which are not included
   as part of the cost of particular material shall be equitably apportioned
   among the detail accounts to which material is charged.

   (e) So far as practicable, cash and other discount on material shall be
   deducted in determining cost of the particular material to which they relate
   or credited to the account to which the material is charged. When such
   deduction is not practicable, discounts shall be equitably apportioned among
   the detail accounts to which material is charged.

   (f) Material recovered in connection with construction, maintenance or
   retirement of property shall be charged to this account as follows:

   (1) Reusable items that, when installed or in service, were retirement units
   shall be included in this account at the original cost, estimated if not
   known. (Note also  Sec. 32.2000(d)(3) of this subpart.)

   (2)  Reusable minor items that, when installed or in service, were not
   retirement units shall be included in this account at current prices new.

   (3)  The  cost  of repairing reusable material shall be charged to the
   appropriate account in the Plant Specific Operations Expense accounts.

   (4) Scrap and nonusable material included in this account shall be carried
   at the estimated amount which will be received therefor. The difference
   between the amounts realized for scrap and nonusable material sold and the
   amounts at which it is carried in this account, so far as practicable, shall
   be adjusted in the accounts credited when the material was taken up in this
   account.

   (g) Interest paid on material bills, the payments of which are delayed,
   shall be charged to Account 7500, Interest and related items.

   (h) Inventories of material and supplies shall be taken periodically or
   frequently enough for reporting purposes, as appropriate, in accordance with
   generally accepted accounting principles. The adjustments to this account
   shall be charged or credited to Account 6512, Provisioning expense.

   (i) 1220.2  Property held for sale or lease. This subaccount shall include
   the cost of all items purchased for resale or lease. The cost shall include
   applicable transportation charges, sales and use taxes, and cash and other
   purchase discounts. Inventory shortage and overage shall be charged and
   credited, respectively, to Account 5280, Nonregulated operating revenue.

   [ 52 FR 39534 , Oct. 22, 1987, as amended at  53 FR 49322 , Dec. 7, 1988;  67 FR 5682 , Feb. 6, 2002]