§  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) [Reserved]

   (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
   through an acquisition or merger may be accounted for at market value
   at the time of the acquisition or merger.

   (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 3400, Accumulated
   amortization—tangible 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 in
   accordance with GAAP when implementing this system of accounts. 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 § 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 § 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 § 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
   § 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 § 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.

   (C) Provide data for use in connection with depreciation studies.

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

   (8) Notwithstanding any other provision of this part concerning
   continuing property records, carriers subject to price cap regulations
   set forth in part 61 of this chapter shall maintain property records
   necessary to track substantial assets and investments in an accurate,
   auditable manner that enables them to verify their accounting books,
   make such property information available to the Commission upon
   request, and ensure the maintenance of such data.

   (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 paragraph (f)(3) of this section) of the
   property record units. The continuing property records shall be
   compiled on the basis of original cost (or other book cost consistent
   with this system of accounts) and maintained in such manner as will
   provide for the verification of property record units by physical
   examination. 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
   § 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 § 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.

   (C) The retirement is unusual such that similar retirements are not
   likely to recur in the future.

   (5) Upon direction or approval from this Commission, the company shall
   credit Account 3100, Accumulated Depreciation, and charge Account 1438,
   Deferred Maintenance, 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) [Reserved]

   (j) Plant accounts to be maintained by telephone companies as
   indicated:
                       Account title
                      Regulated plant
   Property, plant and equipment:
   Telecommunications plant in service                    ^12001
   Property held for future telecommunications use        2002
   Telecommunications plant under construction-short term 2003
   Telecommunications plant adjustment                    2005
   Nonoperating plant                                     2006
   Goodwill                                               2007
         Telecommunications plant in service (TPIS)
   TPIS—General support assets:
   Land and support assets                                2110
   TPIS—Central Office assets:
   Central Office—switching                               2210
   Operator systems                                       2220
   Central Office—transmission                            2230
   TPIS—Information origination/termination assets:
   Information origination termination                    2310
   TPIS—Cable and wire facilities assets:
   Cable and wire facilities                              2410
   TPIS—Amortizable assets:
   Amortizable tangible assets                            2680
   Intangibles                                            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;  82 FR 20840 , May 4,
   2017]