§  36.1   General.

   (a) This part contains an outline of separations procedures for
   telecommunications companies on the station-to-station basis. These
   procedures are applicable either to property costs, revenues, expenses,
   taxes, and reserves as recorded on the books of the company or to
   estimated amounts.

   (1) Where a value basis is used instead of book costs, the “costs”
   referred to are the “values” of the property derived from the
   valuation.

   (b) The separations procedures set forth in this part are designed
   primarily for the allocation of property costs, revenues, expenses,
   taxes and reserves between state and interstate jurisdictions. For
   separations, where required, of the state portion between exchange and
   toll or for separations of individual exchanges or special services,
   further analyses and studies may be required to adapt the procedures to
   such additional separations.

   (c) The fundamental basis on which separations are made is the use of
   telecommunications plant in each of the operations. The first step is
   the assignment of the cost of the plant to categories. The basis for
   making this assignment is the identification of the plant assignable to
   each category and the determination of the cost of the plant so
   identified. The second step is the apportionment of the cost of the
   plant in each category among the operations by direct assignment where
   possible, and all remaining costs are assigned by the application of
   appropriate use factors.

   (d) In assigning book costs to categories, the costs used for certain
   plant classes are average unit costs which equate to all book costs of
   a particular account or subaccount; for other plant classes, the costs
   used are those which either directly approximate book cost levels or
   which are equated to match total book costs at a given location.

   (e) The procedures outlined herein reflect “short-cuts” where
   practicable and where their application produces substantially the same
   separations results as would be obtained by the use of more detailed
   procedures, and they assume the use of records generally maintained by
   Telecommunications Companies.

   (f) The classification to accounts of telecommunications property,
   revenues, expenses, etc., set forth in this manual is that prescribed
   by the Federal Communications Commission's Uniform System of Accounts
   for Telecommunications Companies.

   (g) In the assignment of property costs to categories and in the
   apportionment of such costs among the operations, each amount so
   assigned and apportioned is identified as to the account classification
   in which the property is included. Thus, the separated results are
   identified by property accounts and apportionment bases are provided
   for those expenses which are separated on the basis of the
   apportionment of property costs. Similarly, amounts of revenues and
   expenses assigned each of the operations are identified as to account
   classification.

   (h) The separations procedures described in this part are not to be
   interpreted as indicating what property, revenues, expenses and taxes,
   or what items carried in the income, reserve and retained earnings
   accounts, should or should not be considered in any investigation or
   rate proceeding.