FCC 32.2000 as of October 1, 2008

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FCC 32.2000
Revised as of October 1, 2008
Goto Year:2007 | 2009

Sec. 32.2000 Instructions for telecommunications plant accounts.

(a) Purpose of telecommunications plant accounts. (1) The telecommunications
plant accounts (2001 to 2007 inclusive) are designed to show the investment
in the company's tangible and intangible telecommunications plant which
ordinarily has a service life of more than one year, including such plant
whether used by the company or others in providing telecommunications
service.

(2) The telecommunications plant accounts shall not include the cost or
other value of telecommunications plant contributed to the company.
Contributions in the form of money or its equivalent toward the construction
of telecommunications plant shall be credited to the accounts charged with
the cost of such construction. Amounts of non-recurring reimbursements based
on the cost of plant or equipment furnished in rendering service to a
customer shall be credited to the accounts charged with the cost of the
plant or equipment. Amounts received for construction which are ultimately
to be repaid wholly or in part, shall be credited to Account 4300, Other
long-term liabilities and deferred credits; when final determination has
been made as to the amount to be returned, any unrefunded amounts shall be
credited to the accounts charged with the cost of such construction. Amounts
received for the construction of plant, the ownership of which rests with or
will revert to others, shall be credited to the accounts charged with the
cost of such construction. (Note also Account 7100, Other operating income
and expense.)

(3) When telecommunications plant ordinarily having a service life of more
than one year is installed for temporary use in providing telecommunications
service, it shall be accounted for in the same manner as plant having a
service life of more than one year. This includes temporary installations of
plant (such as poles, wire and cable) installed to maintain service during
the progress of highway reconstruction or during interruptions due to storms
or other casualties, equipment used for the training of operators, equipment
used to provide intercepting positions in central offices to handle traffic
for a short period following extensive system changes and similar
installations of property used to provide telecommunications service.

(4) The cost of the individual items of equipment, classifiable to Accounts
2112, Motor vehicles; 2113, Aircraft; 2114, Tools and other work equipment;
2122, Furniture; 2123, Office equipment; 2124, General purpose computers,
costing $2,000 or less or having a life of less than one year shall be
charged to the applicable expense accounts, except for personal computers
falling within Account 2124. Personal computers classifiable to Account
2124, with a total cost for all components of $500 or less, shall be charged
to the applicable Plant Specific Operations Expense accounts. The cost of
tools and test equipment located in the central office, classifiable to
central office asset accounts 2210–2232 costing $2,000 or less or having a
life of less than one year shall be charged to the applicable Plant Specific
Operations Expense accounts. If the aggregate investment in the items is
relatively large at the time of acquisition, such amounts shall be
maintained in an applicable material and supplies account until items are
used.

(b) Telecommunications plant acquired. (1) Property, plant and equipment
acquired from an entity, whether or not affiliated with the accounting
company, shall be accounted for at original cost, except that property,
plant and equipment acquired from a nonaffiliated entity shall be accounted
for at acquisition cost if the purchase price is less than $100,000 for
Class A companies or $25,000 for Class B companies.

(2) The accounting for property, plant and equipment to be recorded at
original cost shall be as follows:

(i) The amount of money paid (or current money value of any consideration
other than money exchanged) for the property (together with preliminary
expenses incurred in connection the acquisition) shall be charged to Account
1438, Deferred maintenance, retirements, and other deferred charges.

(ii) The original cost, estimated if not known, of telecommunications plant,
governmental franchises and other similar rights acquired shall be charged
to the applicable telecommunications plant accounts, Telecommunications
Plant Under Construction, and Property Held For Future Telecommunications
Use, as appropriate, and credited to Account 1439. When the actual original
cost cannot be determined and estimates are used, the company shall be
prepared to furnish the Commission with the particulars of such estimates.

(iii) Accumulated Depreciation and amortization balances related to plant
acquired shall be credited to Account 3100, Accumulated depreciation, or
Account 3200, Accumulated depreciation—held for future telecommunications
use, or Account 3410, Accumulated amortization—capitalized leases and
debited to Account 1438. Accumulated amortization balances related to plant
acquired which ultimately is recorded in Accounts 2005, Telecommunications
plant adjustment, Account 2682, Leasehold improvements, or Account 2690,
Intangibles shall be credited to these asset accounts, and debited to
Account 1438.

(iv) Any amount remaining in Account 1438, applicable to the plant acquired,
shall, upon completion of the entries provided in paragraphs (b)(2)(i)
through (b)(2)(iii) of this section, be debited or credited, as applicable,
to Account 2007, Goodwill, or to Account 2005, Telecommunications plant
adjustment, as appropriate.

(3) A memorandum record shall be kept showing the amount of contributions in
aid of construction applicable to the property acquired as shown by the
accounts of the previous owner.

(c) Cost of construction. (1) Telecommunications plant represents an
economic resource which will be used to provide future services, the cost of
which will be allocated in a rational and systematic manner to the future
periods in which it provides benefits. In accounting for construction costs,
the utility shall charge to the telecommunications plant accounts, where
applicable, all direct and indirect costs.

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

(i) “Labor” includes the wages and expenses of employees directly engaged in
or in direct charge of construction work. It includes expenses directly
related to an employee's wages, such as worker's compensation insurance,
payroll taxes, benefits and other similar items of expense.

(ii) “Engineering” includes the portion of the wages and expenses of
engineers, draftsmen, inspectors, and their direct supervision applicable to
construction work. It includes expenses directly related to an employee's
wages, such as worker's compensation insurance, payroll taxes, benefits and
other similar items of expense.

(iii) “Material and supplies” includes the purchase price of material used
at the point of free delivery plus the costs of inspection, loading and
transportation, and an equitable portion of provisioning expense. In
determining the cost of material used, proper allowance shall be made for
unused material, for material recovered from temporary structures used in
performing the work involved, and for discounts allowed and realized in the
purchase of material. This item does not include construction material that
is stolen or rendered unusable due to vandalism. Such material should be
charged to the applicable plant specific operations expense accounts.

(iv) “Transportation” includes the cost of transporting employees, material
and supplies, tools and other work equipment to and from the physical
construction location. It includes amounts paid therefor to other companies
or individuals and the cost of using the company's own motor vehicles or
other transportation equipment.

(v) “Contract work” includes amounts paid for work performed under contract
or other agreement by other companies, firms or individuals; engineering and
supervision applicable to such work; cost incident to the award of
contracts; and the inspection of such work. The cost of construction work
performed by affiliated companies and other details relating thereto shall
be available from the work in progress and supporting records.

(vi) “Protection” includes the cost of protecting the company's property
from fire or other casualties and the cost of preventing damages to others
or the property of others.

(vii) “Privileges, Permits, and Rights of way” includes such costs incurred
in obtaining these privileges, permits, or rights of way in connection with
construction work, such as for use of private property, streets or highways.
The cost of such privileges and permits shall be included in the cost of the
work for which the privileges or permits are obtained, except for costs
includable in Account 2111, Land, and Account 2690, Intangibles.

(viii) “Taxes” includes taxes properly includable in construction costs
before the facilities are completed for service, which taxes are assessed
separately from taxes on operating property or under conditions that permit
separate identification of the amount chargeable to construction.

(ix) “Special machine service” includes the cost of labor expended,
materials and supplies consumed and other expenses incurred in the
maintenance, operation and use of special and other labor saving machines
(other than transportation equipment (such as trenching equipment, cable
plows and pole setting trucks. Also included are expenditures for rental,
maintenance and operation of such machines owned by others. When a
construction job requires the purchase of special machines, the cost
thereof, less the appraised or salvage value at the time of release from the
job, shall be included in the cost of construction.

(x) Allowance for funds used during construction (“AFUDC”) provides for the
cost of financing the construction of telecommunications plant. AFUDC shall
be charged to Account 2003, Telecommunications plant under construction, and
credited to Account 7300, Nonoperating income and expense. The rate for
calculating AFUDC shall be determined as follows: If financing plans
associate a specific new borrowing with an asset, the rate on that borrowing
may be used for the asset; if no specific new borrowing is associated with
an asset or if the average accumulated expenditures for the asset exceed the
amounts of specific new borrowing associated with it, the capitalization
rate to be applied to such excess shall be the weighted average of the rates
applicable to other borrowings of the enterprise. The amount of interest
cost capitalized in an accounting period shall not exceed the total amount
of interest cost incurred by the company in that period.

(xi) “Insurance” includes premiums paid specifically for protection against
loss and damage in connection with the construction of telecommunications
plant due to fire or other casualty, injury to or death of employees or
others, damages to property of others, defalcations of employees and agents
and the non-performance of contractual obligations of others.

(xii) “Construction services” include the cost of telephone, electricity,
power, construction quarters, office space and equipment directly related to
the construction project.

(xiii) “Indirect construction costs” shall include indirect costs such as
general engineering, supervision and support. Such costs, in addition to
direct supervision, shall include indirect plant operations and engineering
supervision up to, but not including, supervision by executive officers
whose pay and expenses are chargeable to Account 6720, General and
administrative. The records supporting the entries for indirect construction
costs shall be kept so as to show the nature of the expenditures, the
individual jobs and accounts charged, and the bases of the distribution. The
amounts charged to each plant account for indirect costs shall be readily
determinable. The instructions contained herein shall not be interpreted as
permitting the addition to plant of amounts to cover indirect costs based on
arbitrary allocations.

(xiv) The cost of construction shall not include any amounts classifiable as
Corporate Operations Expense.

(d) Telecommunications plant retired. (1) Telecommunications plant accounts
shall at all times disclose the original cost of all property in service.
When any item of property subject to plant retirement accounting is worn
out, lost, sold, destroyed, abandoned, surrendered upon lapse of title,
becomes permanently unserviceable, is withdrawn or for any other reason is
retired from service, the plant accounts applicable to that item shall be
credited with the original cost of the plant retired whether replaced or not
(except as provided for minor items in paragraph (d)(2)(ii) of this
section). Normally, these retirement credits with respect to such plant as
entire buildings, entire central offices, all plant abandoned and any large
sections of plant withdrawn from service, shall be entered in the accounts
for the month in which use of the property ceased. For any other plant
withdrawn from service, the retirement credits shall be entered no later
than the next succeeding month. Literal compliance with the provision for
timing of entries with respect to property amounting to less than $50,000
retired under any one project is not required if an unreasonable amount of
recordkeeping and estimating of quantities, original costs and salvage is
necessary. The retirement entry shall refer to the continuing property
record, or records supplemental thereto, from which the cost was obtained
(note also paragraph (d)(3) of this section). Every company shall establish
procedures which will ensure compliance with these requirements.

(2) To avoid undue refinement, depreciable telecommunications plant shall be
accounted for as follows:

(i) Retirement units: This group includes major items of property, a
representative list of which shall be prescribed by this Commission. In lieu
of the retirement units prescribed with respect to a particular account, a
company may, after obtaining specific approval by this Commission, establish
and maintain its own list of retirement units for a portion or all of the
plant in any such account. For items included on the retirement units list,
the original cost of any such items retired shall be credited to the plant
account and charged to Account 3100 Accumulated Depreciation, whether or not
replaced. The original cost of retirement units installed in place of
property retired shall be charged to the applicable telecommunications plant
account.

(ii) Minor items: This group includes any part or element of plant which is
not designated as a retirement unit. The original cost of a minor item of
property when included in the specific or average cost for a retirement unit
or units requires no separate credit to the telecommunications plant account
when such a minor item is retired. The cost of replacement shall be charged
to the account applicable for the cost of repairs of the property. However,
if the replacement effects a substantial betterment (the primary aim of
which is to make the property affected more useful, of greater durability,
of greater capacity or more economical in operation), the excess cost of
such a replacement, over the estimated cost at the then current prices of
replacement without betterment of the minor items being retired, shall be
charged to the applicable telecommunications plant account.

(3) The cost of property to be retired shall be the amount at which property
is included in the telecommunications plant accounts. However, when it is
impracticable to determine the cost of each item due to the relatively large
number or small cost of such items, the average cost of all the items
covered by an appropriate subdivision of the account shall be used in
determining the cost to be assigned to such items when retired. The method
used in determining average cost must give due regard to the quantity,
vintage, size and kind of items, the area in which they were installed and
their classification in other respects. Average cost may be applied in
retirement of such items as poles, wire, cable, cable terminals, conduit and
booths. Any company may use average cost of property installed in a year or
band of years as approved by the Commission. It should be understood,
however, that the use of average costs shall not relieve the company of the
requirement for maintaining its continuing property records to show, where
practicable, dates of installation and removal for purposes of mortality
studies. (See Sec. 32.2000(f) of this subpart, Standard Practices for
Establishing and Maintaining Continuing Property Records.)

(4) The accounting for the retirement of property, plant and equipment shall
be as provided above except that amounts in Account 2111, Land, and amounts
for works of art recorded in Account 2122, Furniture, shall be treated at
disposition as a gain or loss and shall be credited or debited to Account
7100, Other operating income and expense, as applicable. If land or artwork
is retained by the company and held for sale, the cost shall be charged to
Account 2006, Nonoperating plant.

(5) When the telecommunications plant is sold together with traffic
associated therewith, the original cost of the property shall be credited to
the applicable plant accounts and the estimated amounts carried with respect
thereto in the accumulated depreciation and amortization accounts shall be
charged to such accumulated accounts. The difference, if any, between the
net amount of such debit and credit items and the consideration received
(less commissions and other expenses of making the sale) for the property
shall be included in Account 7300, Nonoperating income and expense. The
accounting for depreciable telecommunications plant sold without the traffic
associated therewith shall be in accordance with the accounting provided in
Sec. 32.3100(c).

(e) Basic property records. (1) The basic property records are that portion
of the total property accounting system which preserves the following
detailed information:

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

(ii) Original and ongoing transactional data (plant account activity) in
terms of such units; and

(iii) Any other specific financial and cost accounting information not
properly warranting separate disclosure as an account or subaccount but
which is needed to support regulatory, cost, tax, management and other
specific accounting information needs and requirements.

(2) The basic property records must be: (i) Subject to internal accounting
controls, (ii) auditable, (iii) equal in the aggregate to the total
investment reflected in the financial property control accounts as well as
the total of the cost allocations supporting the determination of
cost-of-service at any particular point in time, and (iv) maintained
throughout the life of the property.

(3) The basic property records shall consist of (i) continuing property
records and (ii) records supplemental thereto which together reveal clearly,
by accounting area, the detailed and systematically summarized information
necessary to meet fully the requirements of paragraphs (e)(1) and (e)(2) of
this section.

(4) Companies shall establish and maintain basic property records for each
class of property recorded in the several plant accounts which comprise the
balance sheet Account 2001, Telecommunications Plant In Service, Account
2002, Property Held for Future Telecommunications Use, and Account 2006,
Nonoperating Plant.

(5) The company shall notify the Commission of a plan for the basic property
record as follows:

(i) Not later than June 30 of the year following that in which it becomes
subject to this system of accounts, the company shall file with the
Commission two (2) copies of a complete plan of the method to be used in the
compilation of a basic property record with respect to each class of
property. The plan shall include a list of proposed accounting areas
accompanied by description of the boundaries of each area as defined in
accordance with the requirements of Sec. 32.2000(f)(1) (i) and (ii) of this
subpart. The plan shall also include a list of property record units
proposed for use under each regulated plant account. These property record
units shall be selected such that the requirements of Sec. 32.2000(f)(2) (i),
(ii) and (iii) of this subpart can be satisfied.

(ii) The company shall submit to the Commission one copy of any major
proposed changes in its basic property record plan at least 30 days before
the effective date of the proposed changes.

(6) The company shall prepare and maintain the basic property record as
follows:

(i) Not later than June 30 of the year following that in which the company
becomes subject to this system of accounts, begin the preparation of a basic
property record.

(ii) Complete within two years of the prescribed beginning date, basic
property records for all property as of the end of the preceding calendar
year.

(iii) Promptly process in the basic property records all property changes
affecting periods subsequent to initial establishment of the basic property
record.

(7) The basic property record components (see paragraph (c) of this section)
shall be arranged in conformity with the regulated plant accounts prescribed
in this section of accounts as follows:

(i) The continuing property records shall be compiled on the basis of
original cost (or other book cost consistent with this system of accounts).
The continuing property records shall be maintained as prescribed in
Sec. 32.2000(f)(2)(iii) of this subpart in such manner as will meet the
following basic objectives:

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

(B) Provide for accurate accounting for retirements.

(ii) The records supplemental to the continuing property records shall
disclose such service designations, usage measurement criteria,
apportionment factors, or other data as may be prescribed by the Commission
in this part or other parts of its Rules and Regulations. Such data are
subject to the same general controls and standards for auditability and
support as are all other elements of the basic property records.

(f) Standard practices for establishing and maintaining continuing property
records —(1) Accounting area. (i) The continuing property record, as related
to each primary plant account, shall be established and maintained by
subaccounts for each accounting area. An accounting area is the smallest
territory of the company for which accounting records of investment are
maintained for all plant accounts within the area. Areas already established
for administrative, accounting, valuation, or other purposes may be adopted
for this purpose when appropriate. In no case shall the boundaries of
accounting areas cross either State lines or boundaries prescribed by the
Commission.

(ii) In determining the limit of each area, consideration shall be given to
the quantities of property, construction conditions, operating districts,
county and township lines, taxing district boundaries, city limits, and
other political or geographical limits, in order that the area adopted may
have maximum adaptability, within the confines of practicability, for both
the company's purpose and those of Federal, State, and municipal
authorities.

(2) Property record units. (i) In each of the established accounting areas,
the “property record units” which are to be maintained in the continuing
property record shall be set forth separately, classified by size and type
with the amount of original cost (or other appropriate book cost) associated
with such units. When a list of property record units has been accepted by
the Commission, they shall become the units referred to in this statement of
standard practices. Such units shall apply to only the regulated portion of
this system of accounts.

(ii) When it is found necessary to revise this list because of the addition
of units used in providing new types of service, or new units resulting from
improvements in technology, or because of the grouping or elimination of
units which no longer merit separate recognition as property record units,
one copy of such changes shall be submitted to the Commission. Upon
appropriate showing by the company, the Commission may specifically exempt
the company from these filing requirements.

(iii) The continuing property record shall reveal the description, location,
date of placement, the essential details of construction, and the original
cost (note also Sec. 32.2000(f)(3) of this subpart) of the property record
units. The continuing property record and other underlying records of
construction costs shall be so maintained that, upon retirement of one or
more retirement units or of minor items without replacement when not
included in the costs of retirement units, the actual cost or a reasonably
accurate estimate of the cost of the plant retired can be determined.

(3) Methods of determining original cost of property record units. The
original cost of the property record units shall be determined by analyses
of the construction costs incurred as shown by completion reports and other
data, accumulated in the respective construction work orders or
authorizations. Costs shall be allocated to and associated with the property
record units to facilitate accounting for retirements. The original cost of
property record units shall be determined by unit identification or
averaging as described in paragraphs (f)(3) (i) and (ii) of this section.

(i) Unit identification. Cost shall be identified and maintained by specific
location for property record units contained within certain regulated plant
accounts or account groupings such as Land, Buildings, Central Office
Assets, Motor Vehicles, garage work equipment included in Account 2114,
Tools and other work equipment, and Furniture. In addition, units involved
in any unusual or special type of construction shall be recorded by their
specific location costs (note also Sec. 32.2000(f)(3)(ii)(B)).

(ii) Averaging. (A) Average costs may be developed for plant consisting of a
large number of similar units such as terminal equipment, poles, wire,
cable, cable terminals, conduit, furniture, and work equipment. Units of
similar size and type within each specified accounting area and regulated
plant account may be grouped. Each such average cost shall be set forth in
the continuing property record of the units with which it is associated.

(B) The averaging of costs permitted under the provisions of the foregoing
paragraph is restricted to plant installed in a particular vintage or band
of years incurred within an accounting area. This paragraph does not permit
the inclusion of the cost of units involved in any unusual or special type
of construction. The units involved in such unusual or special type of
construction shall be recorded at cost by location.

(4) Estimates. In cases where the actual original cost of property cannot be
ascertained, such as pricing an inventory for the initial entry of a
continuing property record or the pricing of an acquisition for which a
continuing property record has not been maintained, the original cost may be
estimated. Any estimated original cost shall be consistent with the
accounting practices in effect at the time the property was constructed.

(5) Identification of property record units. There shall be shown in the
continuing property record or in record supplements thereof, a complete
description of the property records units in such detail as to identify such
units. The description shall include the identification of the work order
under which constructed, the year of installation (unless not determinable
per Sec. 32.2000(f)(4) of this subpart, specific location of the property within
each accounting area in such manner that it can be readily spot-checked for
proof of physical existence, the accounting company's number or designation,
and any other description used in connection with the determination of the
original cost. Descriptions of units of similar size and type shall follow
prescribed groupings.

(6) Reinstalled units. When units to which average costs are not applied,
i.e., specific and fixed location units, are removed or retired and
subsequently reinstalled, the date when the unit was first charged to the
appropriate plant account shall, when required for adequate service life
studies and reasonably accurate retirement accounting, be shown in addition
to the date of reinstallation.

(7) Age and service life of property. The continuing property record shall
disclose the age of existing property and the supporting records shall
disclose the service life of property retired. Exceptions from this
requirement for any property record unit shall be submitted to the
Commission for approval.

(8) Reference to sources of information. There shall be shown by appropriate
reference the source of all entries. All drawings, computations, and other
detailed records which support quantities and costs or estimated costs shall
be retained as a part of or in support of the continuing property record.

(9) Jointly owned property. (i) With respect to jointly owned property,
there shall be shown in the continuing property record or records
supplemental thereto:

(A) The identity of all joint owners.

(B) The percentage owned by the accounting company.

(ii) When regulated plant is constructed under arrangements for joint
ownership, the amount received by the constructing company from the other
joint owner or owners shall be credited as a reduction of the gross cost of
the plant in place.

(iii) When a sale of a part interest in regulated plant is made, the
fractional interest sold shall be treated as a retirement and the amount
received shall be treated as salvage. The continuing property record or
records supplemental thereto shall be so maintained as to identify
separately retirements of this nature from physical retirements of jointly
owned plant.

(iv) If jointly owned regulated property is substantial in relation to the
total of the same kind of regulated property owned wholly by the company,
such jointly owned regulated property shall be appropriately segregated in
the continuing property record.

(g) Depreciation accounting —(1) Computation of depreciation rates. (i)
Unless otherwise provided by the Commission, either through prior approval
or upon prescription by the Commission, depreciation percentage rates shall
be computed in conformity with a group plan of accounting for depreciation
and shall be such that the loss in service value of the property, except for
losses excluded under the definition of depreciation, may be distributed
under the straight-line method during the service life of the property.

(ii) In the event any composite percentage rate becomes no longer
applicable, revised composite percentage rates shall be computed in
accordance with paragraph (g)(1)(i) of this section.

(iii) The company shall keep such records of property and property
retirements as will allow the determination of the service life of property
which has been retired, or facilitate the determination of service life
indications by mortality, turnover, or other appropriate methods. Such
records will also allow the determination of the percentage of salvage value
and cost of removal for property retired from each class of depreciable
plant.

(2) Depreciation charges. (i) A separate annual percentage rate for each
depreciation category of telecommunications plant shall be used in computing
depreciation charges.

(ii) Companies, upon receiving prior approval from this Commission, or, upon
prescription by this Commission, shall apply such depreciation rate, except
where provisions of paragraph (g)(2)(iv) of this section apply, as will
ratably distribute on a straight line basis the difference between the net
book cost of a class or subclass of plant and its estimated net salvage
during the known or estimated remaining service life of the plant.

(iii) Charges for currently accruing depreciation shall be made monthly to
the appropriate depreciation accounts, and corresponding credits shall be
made to the appropriate depreciation reserve accounts. Current monthly
charges shall normally be computed by the application of one-twelfth of the
annual depreciation rate to the monthly average balance of the associated
category of plant. The average monthly balance shall be computed using the
balance as of the first and last days of the current month.

(iv) In certain circumstances and upon prior approval of this Commission,
monthly charges may be determined in total or in part through the use of
other methods whereby selected plant balances or portions thereof are
ratably distributed over periods prescribed by this Commission. Such
circumstances could include but not be limited to factors such as the
existence of reserve deficiencies or surpluses, types of plant that will be
completely retired in the near future, and changes in the accounting for
plant. Where alternative methods have been used in accordance with this
subparagraph, such amounts shall be applied separately or in combination
with rates determined in accordance with paragraph (g)(2)(ii) of this
section.

(3) Acquired depreciable plant. When acquired depreciable plant carried in
Account 1438, Deferred maintenance, retirements and other deferred charges,
is distributed to the appropriate plant accounts, adjusting entries shall be
made covering the depreciation charges applicable to such plant for the
period during which it was carried in Account 1438.

(4) Plant Retired for Nonrecurring Factors not Recognized in Depreciation
Rates.

(i) A retirement will be considered as nonrecurring (extraordinary) only if
the following criteria are met:

(A) The impending retirement was not adequately considered in setting past
depreciation rates.

(B) The charging of the retirement against the reserve will unduly deplete
that reserve.

(5) Upon direction or approval from this Commission, the company shall
credit Account 3100, Accumulated Depreciation, and charge Account 1438,
Deferred Maintenance, retirements and other deferred charges, with the
unprovided-for loss in service value. Such amounts shall be distributed from
Account 1438 to Account 6561, Depreciation expense—Telecommunications plant
in service, or Account 6562, Depreciation expense—property held for future
telecommunications use, over such period as this Commission may direct or
approve.

(h) Amortization accounting. (1) Unless otherwise provided by this
Commission, either through approval, or upon prescription by this
Commission, amortization shall be computed on the straight-line method,
i.e., equal annual amounts shall be applied. The cost of each type asset
shall be amortized on the basis the estimated life of that asset and shall
not be written off in the accounting period in which the asset is acquired.
A reasonable estimate of the useful life may be based on the upper or lower
limits even though a fixed existence is not determinable. However, the
period of amortization shall not exceed forty years.

(2) In the event any estimated useful life becomes no longer applicable, a
revised estimated useful life shall be determined in accordance with
paragraph (h)(1) of this section.

(3) Amortization charges shall be made monthly to the appropriate
amortization expense accounts and corresponding credits shall be made to
accounts 2005, 2682, 2690, and 3410, as appropriate. Monthly charges shall
be computed by the application of one-twelfth to the annual amortization
amount.

(4) The company shall keep such records as will allow the determination of
the useful life of the asset.

(i) Accounting for software. The original cost of initial operating system
software for computers shall be classified to the same account as the
associated hardware whether acquired separately or in conjunction with the
associated hardware.

(j) Plant Accounts to be Maintained by Class A and Class B telephone
companies as indicated:
Account title Class A
account Class B
account
Regulated plant
Property, plant and equipment:
Telecommunications plant in service ^12001 ^12001
Property held for future telecommunications use 2002 2002
Telecommunications plant under construction-short term 2003 2003
Telecommunications plant adjustment 2005 2005
Nonoperating plant 2006 2006
Goodwill 2007 2007
Telecommunications plant in service (TPIS)
TPIS—General support assets:
Land and support assets 2110
Land 2111
Motor vehicles 2112
Aircraft 2113
Tools and other work equipment 2114
Buildings 2121
Furniture 2122
Office equipment 2123
General purpose computers 2124
TPIS—Central Office assets:
Central Office—switching 2210
Non-digital switching 2211
Digital electronic switching 2212
Operator systems 2220 2220
Central Office—transmission 2230
Radio systems 2231
Circuit equipment 2232
TPIS—Information origination/termination assets:
Information origination termination 2310
Station apparatus 2311
Customer premises wiring 2321
Large private branch exchanges 2341
Public telephone terminal equipment 2351
Other terminal equipment 2362
TPIS—Cable and wire facilities assets:
Cable and wire facilities 2410
Poles 2411
Aerial cable 2421
Underground cable 2422
Buried cable 2423
Submarine and deep sea cable 2424
Intrabuilding network cable 2426
Aerial wire 2431
Conduit systems 2441
TPIS—Amortizable assets:
Amortizable tangible assets 2680
Capital leases 2681
Leasehold improvements 2682
Intangibles 2690 2690

^1Balance sheet summary account only.

[ 51 FR 43499 , Dec. 2, 1986, as amended at 52 FR 7580 , Mar. 12, 1987; 53 FR 30059 , Aug. 10, 1988; 59 FR 46930 , Sept. 13, 1994; 60 FR 12138 , Mar. 6,
1995; 62 FR 39451 , July 23, 1997; 64 FR 50007 , Sept. 15, 1999; 67 FR 5683 ,
Feb. 6, 2002; 69 FR 53648 , Sept. 2, 2004]

Effective Date Note: At 64 FR 50007 , Sept. 15, 1999, Sec. 32.2000 was amended
by removing paragraph (b)(4). This section contains information collection
requirements and will not become effective until approved by the Office of
Management and Budget.

Goto Section: 32.1500 | 32.2001

Goto Year: 2007 | 2009 CiteFind - See documents on FCC website that cite this rule

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