Community antenna television utilities

Part 1 DEFINITIONS When used in this system of accounts: 1. "Accounts" means the accounts prescribed in this system of accounts. 2. "Actually issued," as applied to securities issued or assumed by the utility, means those which have been sold to bona fide purchasers for a valuable consideration, those issued as dividends on stock, and those which have been issued in accordance with contractual requirements direct to trustees of sinking funds. 3. "Actually outstanding," as applied to securities issued or assumed by the utility, means those which have been actually issued and are neither retired nor held by or for the utility; provided, however, that securities held by trustees shall be considered as actually outstanding. 4. "Amortization" means the gradual extinguishment of an amount in an account by distributing such amount over a fixed period, over the life of the asset or liability to which it applies, or over the period during which it is anticipated the benefit will be realized. 5. A. "Associated companies" means companies or persons that, directly or indirectly, through one or more intermediaries, control, or are controlled by, or are under common control with, the accounting company. B. "Control" (including the terms "controlling," "controlled by," and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a company, whether such power is exercised through one or more intermediary companies, or alone, or in conjunction with, or pursuant to an agreement, and whether such power is established through a majority or minority ownership or voting of securities, common directors, officers, or stockholders, voting trusts, holding trusts, associated companies, contract or any other direct or indirect means. 6. "Book cost" means the amount at which property is recorded in these accounts without deduction of related provisions for accrued depreciation, amortization, or for other purposes. 7. "Commission," unless otherwise indicated by the context, means the commission prescribing this system of accounts. 8. "Cost" means the amount of money actually paid for property or services. When the consideration given is other than cash, the value of such consideration shall be determined on a cash basis. 9. "Cost of removal" means the cost of demolishing, dismantling, tearing down or otherwise removing utility plant, including the cost of transportation and handling incidental thereto. 10. "Debt expense" means all expenses in connection with the issuance and initial sale of evidences of debt, such as fees for drafting mortgages and trust deeds; fees and taxes for issuing or recording evidences of debt; cost of engraving and printing bonds and certificates of indebtedness; fees paid trustees; specific costs of obtaining governmental authority; fees for legal services; fees and commissions paid underwriters, brokers, and salesmen for marketing such evidences of debt; fees and expenses of listing on exchanges; and other like costs. 11. "Depreciation," as applied to depreciable utility plant, means the loss in service value not restored by current maintenance, incurred in connection with the consumption or prospective retirement of utility plant in the course of service from causes which are known to be in current operation and against which the utility is not protected by insurance. Among the causes to be given consideration are wear and tear, decay, action of the elements, inadequacy, obsolescence, changes in the art, changes in demand and requirements of public authorities. 12. "Discount," as applied to the securities issued or assumed by the utility, means the excess of the par (stated value of no-par stocks) or face value of the securities plus interest or dividends accrued at the date of the sale over the cash value of the consideration received from their sale. 13. "Investment advances" means advances, represented by notes or by book accounts only, with respect to which it is mutually agreed or intended between the creditor and debtor that they shall be settled by the issuance of securities or shall not be subject to current settlement. 14. "Minor items of property" means the associated parts or items of which retirement units are composed. 15. "Net salvage value" means the salvage value of property retired less the cost of removal. 16. "Nominally issued," as applied to securities issued or assumed by the utility, means those which have been signed, certified, or otherwise executed, and placed with the proper officer for sale and delivery or pledged, or otherwise placed in some special fund of the utility, but which have not been sold, or issued direct to trustees of sinking funds in accordance with contractual requirements. 17. "Nominally outstanding," as applied to securities issued or assumed by the utility, means those which, after being actually issued, have been reacquired by or for the utility under circumstances which require them to be considered as held alive and not retired, provided, however, that securities held by trustees shall be considered as actually outstanding. 18. "Original cost," as applied to utility plant, means the cost of such property to the person first devoting it to public service. 19. "Person" means an individual, a corporation, a partnership, an association, a joint stock company, a business trust, or any organized group of persons, whether incorporated or not, or any receiver or trustee. 20. "Premium," as applied to the securities issued or assumed by the utility, means the excess of the cash value of the consideration received from their sale over the sum of their par (stated value of no-par stocks) or face value and interest or dividends accrued at the date of sale. 21. "Property retired," as applied to utility plant, means property which has been removed, sold, abandoned, destroyed, or which for any cause has been withdrawn from service. 22. "Replacing" or "replacement," when not otherwise indicated in the context, means the construction or installation of utility plant in place of property retired, together with the removal of the property retired. 23. "Retirement units" mean those items of utility plant which, when retired, with or without replacement, are accounted for by crediting the book cost thereof to the utility plant account in which included. 24. "Salvage value" means the amount received for property retired, less any expenses incurred in connection with the sale or in preparing the property for sale, or, if retained, the amount at which the material recoverable is chargeable to materials and supplies, or other appropriate account. 25. "Service life" means the time between the date utility plant is includible in utility plant in service, or utility plant leased to others, and the date of its retirement. If depreciation is accounted for on a production basis rather than on a time basis, then service life should be measured in terms of the appropriate unit of production. 26. "Service value" means the difference between the original cost and the net salvage value of utility plant. 27. "Utility," as used herein and when not otherwise indicated in the context, means any public utility to which this system of accounts is applicable. Part 2 GENERAL INSTRUCTIONS 1. Applicability of uniform system of accounts Each Community Antenna Television Company or utility as defined in Section 16-1 of the 1965 Supplement to the General Statutes and each municipal Community Antenna Television Company utility or department thereof, subject to accounting regulation by the Commission, shall keep its records and accounts in conformity with this Uniform System of Accounts and in conformity with the definitions and instructions contained herein. 2. Records A. Each utility shall keep its books of account, and all other books, records, and memoranda which support the entries in such books of account so as to be able to furnish readily full information as to any item included in any account. Each entry shall be supported by such detailed information as will permit a ready identification, analysis, and verification of all facts relevant thereto. B. The books and records referred to herein include not only accounting records in a limited technical sense, but all other records, such as minute books, stock books, reports, correspondence, memoranda, etc., which may be useful in developing the history of or facts regarding any transaction. C. No utility shall destroy any such books or records unless the destruction thereof is permitted by rules and regulations of the Commission. D. In addition to prescribed accounts, clearing accounts, temporary or experimental accounts, and subdivisions of any account, may be kept, provided the integrity of the prescribed accounts is not impaired. E. All amounts included in the accounts prescribed herein for utility plant and operating expenses shall be just and reasonable and any payments or accruals by the utility in excess of just and reasonable charges shall be included in account 426, Misc. Income Deductions. F. The arrangement or sequence of the accounts prescribed herein shall not be controlling as to the arrangement or sequence in report forms which may be prescribed by the Commission. 3. Numbering system A. The account numbering scheme used herein consists of a system of three-digit whole numbers as follows: 100-199 Assets and Other Debits. 200-299 Liabilities and Other Credits. 300-399 Plant Accounts. 400-432, 434-435 Income Accounts. 433, 436-439 Retained Earnings Accounts. 440-459 Revenue Accounts. 500-599 Production, Transmitting, Head End and Distribution Expenses. 900-949 Customer Accounts, Sales and General Administrative Expenses. B. In certain instances, numbers have been skipped in order to allow for possible later expansion or to permit better coordination with the numbering system for other utility departments. C. The numbers prefixed to account titles are solely for convenience of reference and are not part of the titles. Each utility may adopt such scheme of account numbers as it deems appropriate; provided, however, that it shall keep readily available a list of the account numbers and subdivisions of accounts which it uses and a reconciliation of such numbers and subdivisions with the account numbers and titles provided herein. Further, the records must be so kept as to permit classification or summarization each accounting period according to the prescribed accounts. 4. Accounting period Each utility shall keep its books on a monthly basis so that for each month all transactions applicable thereto, as nearly as may be ascertained, shall be entered in the books of the utility. Amounts applicable or assignable to specific utility departments shall be so segregated monthly. Each utility shall close its books at the end of each calendar year. 5. Submittal of questions To maintain uniformity of accounting, utilities shall submit questions of doubtful interpretation to the Commission for consideration and decision. 6. Item lists Lists of "items" appearing in the texts of the accounts or elsewhere herein are for the purpose of more clearly indicating the application of the prescribed accounting. The lists are intended to be representative, but not exhaustive. The appearance of an item in a list warrants the inclusion of the item in the account mentioned only when the text of the account also indicates inclusion inasmuch as the same item frequently appears in more than one list. The proper entry in each instance must be determined by the texts of the accounts. 7. Extraordinary items It is the intent that net income shall reflect all items of profit and loss during the period with the sole exception of prior period adjustments as described in paragraph 7.1 below. Those items related to the effects of events and transactions which have occurred during the current period and which are not typical or customary business activities of the company shall be considered extraordinary items. Accordingly, they will be events and transactions of significant effect which would not be expected to recur frequently and which would not be considered as recurring factors in any evaluation of the ordinary operating processes of business. (In determining significance, items of a similar nature should be considered in the aggregate. Dissimilar items should be considered individually; however, if they are few in number, they may be considered in aggregate.) To be considered as extraordinary under the above guidelines, an item should be more than approximately 5 percent of income, computed before extraordinary items. Commission approval must be obtained to treat an item of less than 5 percent, as extraordinary. (see accounts 434 and 435). 7.1 Prior period items A. As a general rule, items relating to transactions which occurred prior to the current calendar year but were not recorded in the books of account shall be included in the same accounts in which they would have been recorded had the item been recorded in the proper period. Such items relate to events or transactions which occurred in a prior period or periods, the accounting effects of which could not be determined with reasonable assurance at the time, usually because of major uncertainty then existing. When the amount of a prior period item is relatively so large its inclusion for a single month would distort the accounts for that month, the amount may be distributed in equal amounts to the accounts for the current and remaining months of the calendar year. However, if the amount of any prior period item is so large that the company believes its inclusion in the income statement would seriously distort the net income for the year, the company shall request Commission approval to record the amount in account 439, Adjustments to Retained Earnings. Such a request must be accompanied by adequate justification. B. Treatment as prior period adjustments should not be applied to the normal, recurring corrections and adjustments which are the natural result of the use of estimates inherent in the accounting process. For example, changes in the estimated remaining lives of fixed assets affect the computed amounts of depreciation, but these changes should be considered prospective in nature and not prior period adjustments. Similarly, relatively insignificant adjustments of provisions for liabilities (including income taxes) made in prior periods should be considered recurring items to be reflected in operations of the current period. Some uncertainties, for example those relating to the realization of assets (collectibility of accounts receivable, ultimate recovery of deferred costs of realizability of inventories or other assets), would not qualify for prior period adjustment treatment, since economic events subsequent to the date of the financial statements must of necessity enter into the elimination of any previously-existing uncertainty. Therefore, the effects of such matters are considered to be elements in the determination of net income for the period in which the uncertainty is eliminated. (See account 439.) 8. Unaudited items Whenever a financial statement is required by the Commission, if it is known that a transaction has occurred which affects the accounts but the amount involved in the transaction and its effect upon the accounts cannot be determined with absolute accuracy, then the amount shall be estimated and such estimated amount included in the proper accounts. The utility is not required to anticipate minor items which would not appreciably affect the accounts. 9. Distribution of pay and expenses of employees The charges to utility plant, operating expenses and other accounts for services and expenses of employees engaged in activities chargeable to various accounts, such as construction, maintenance, and operations, shall be based upon the actual time engaged in the respective classes of work, or in case that method is impracticable, upon the basis of a study of the time actually engaged during a representative period. 10. Payroll distribution Underlying accounting data shall be maintained so that the distribution of the cost of labor charged direct to the various accounts will be readily available. Such underlying data shall permit a reasonably accurate distribution to be made of the cost of labor charged initially to clearing accounts so that the total labor cost may be classified between construction, cost of removal, utility operating functions (source of supply, pumping, transmission and distribution, etc.) and nonutility operations. 11. Operating reserves Accretions to operating reserve accounts made by charges to operating expenses shall not exceed a reasonable provision for the expense. Material balances in such reserve accounts shall not be diverted from the purpose for which provided unless the permission of the Commission is first obtained. 12. Records for each plant Separate records shall be maintained by utility plant accounts of the book cost of each system owned including additions by the utility to plant leased from others and of the cost of operating and maintaining each system owned or operated. The term "plant" as here used means such items as head end equipment, transmission cable, distribution cable, amplifiers, power supplies, program origination equipment, etc. 13. Accounting for other departments If the utility also operates other utility departments, such as electric, gas, etc., it shall keep such accounts for the other departments as may be prescribed by proper authority and in the absence of prescribed accounts, it shall keep such accounts as are proper or necessary to reflect the results of operating each other department. 14. Transactions with associated companies Each utility shall keep its accounts and records so as to be able to furnish accurately and expeditiously statements of all transactions with associated companies. The statements may be required to show the general nature of the transactions, the amounts involved therein and the amounts included in each account prescribed herein with respect to such transactions. Transactions with associated companies shall be recorded in the appropriate accounts for transactions of the same nature. Nothing herein contained, however, shall be construed as restraining the utility from subdividing accounts for the purposes of recording separately transactions with associated companies. 15. Contingent assets and liabilities Contingent assets represent a possible source of value to the utility contingent upon the fulfillment of conditions regarded as uncertain. Contingent liabilities include items which may under certain conditions become obligations of the utility but which are neither direct nor assumed liabilities at the date of the balance sheet. The utility shall be prepared to give a complete statement of material contingent assets and liabilities (including cumulative dividends on preference stock) in its annual report and at such other times as may be requested by the Commission. Part 3 UTILITY PLANT INSTRUCTIONS 1. Classification of utility plant at effective date of system of accounts A. Utility plant as at the effective date of this system should be recorded in account 103, Utility Plant in Process of Reclassification. B. The cost to the utility of its unclassified plant shall be ascertained by analysis of the utility's records. Adjustments shall not be made to record in utility plant accounts amounts previously charged to operating expenses or to income deductions in accordance with the discretion of management as exercised under accounting practices previously followed. 2. Utility plant to be recorded at cost A. All amounts included in the accounts for utility plant, acquired as an operating unit or system, shall be stated at the cost incurred by the person who first devoted the property to utility service and all other utility plant shall be included in the accounts at the cost incurred by the utility except as otherwise provided in the texts of the intangible plant accounts. Where the term "cost" is used in the detailed plant accounts, it shall have the meaning stated in this paragraph. B. When the consideration given for property is other than cash, the value of such consideration shall be determined on a cash basis. In the entry recording such transaction, the actual consideration shall be described with sufficient particularity to identify it. The utility shall be prepared to furnish the Commission the particulars of its determination of the cash value of the consideration if other than cash. C. When property is purchased under a plan involving deferred payments, no charge shall be made to the utility plant accounts for interest, insurance, or other expenditures occasioned solely by such form of payment. D. The utility plant accounts shall not include the cost or other value of utility plant contributed to the company. Contributions in the form of money or its equivalent toward the construction of utility plant shall be credited to the accounts charged with the cost of such construction. Plant constructed from contributions of cash or its equivalent shall be shown as a reduction to gross plant constructed when assembling cost data in work orders for posting to plant ledgers of accounts. The accumulated gross costs of plant accumulated in the work order shall be recorded as a debit in the plant ledger of accounts along with the related amount of contributions concurrently being recorded as a credit. 3. Components of construction cost The cost of construction properly includible in the utility plant accounts shall include, where applicable, the direct and overhead costs as listed and defined hereunder. (1) "Contract work" includes amounts paid for work performed under contract by other companies, firms, or individuals, costs incident to the award of such contracts, and the inspection of such work. (2) "Labor" includes the pay and expenses of employees of the utility engaged on construction work, and related workmen's compensation insurance payroll taxes and similar items of expense. It does not include the pay and expenses of employees which are distributed to construction through clearing accounts nor the pay and expenses included in other items hereunder. (3) "Materials and supplies" includes the purchase price at the point of free delivery plus customs duties, excise taxes, the cost of inspection, loading and transportation, the related stores expenses, and the cost of fabricated materials from the utility's shop. In determining the cost of materials and supplies used for construction, proper allowance shall be made for unused materials and supplies for materials recovered from temporary structures used in performing the work involved, and for discounts allowed and realized in the purchase of materials and supplies. NOTE — The cost of individual items of equipment of small value (for example, $50 or less) or of short life, including small portable tools and implements, shall not be charged to utility plant accounts unless the correctness of the accounting therefore is verified by current inventories. The cost shall be charged to the appropriate operating expense or clearing accounts, according to the use of such items, or, if such items are consumed directly in construction work, the cost shall be included as part of the cost of the construction unit. (4) "Transportation" includes the cost of transporting employees, materials and supplies, tools, purchased equipment, and other work equipment (when not under own power) to and from points of construction. It includes amounts paid to others as well as the cost of operating the utility's own transportation equipment. (See item 5 following.) (5) "Special machine service" includes the cost of labor (optional), materials and supplies, depreciation, and other expenses incurred in the maintenance, operation and use of special machines, such as steam shovels, pile drivers, derricks, ditchers, scrapers, material unloaders, and other labor saving machines; also expenditures for rental, maintenance and operation of machines of others. It does not include the cost of small tools and other invididual items of small value or short life which are included in the cost of materials and supplies. (See item 3, above.) When a particular construction job requires the use for an extended period of time of special machines, transportation or other equipment, the net book cost thereof, less the appraised or salvage value at time of release from the job, shall be included in the cost of construction. (6) "Shop service" includes the proportion of the expense of the utility's shop department assignable to construction work except that the cost of fabricated materials from the utility's shop shall be included in "materials and supplies." (7) "Protection" includes the cost of protecting the utility's property from fire or other casualties and the cost of preventing damages to others, or to the property of others, including payments for discovery or extinguishment of fires, cost of apprehending and prosecuting incendiaries, witness fees in relation thereto, amounts paid to municipalities and others for fire protection, and other analogous items of expenditures in connection with construction work. (8) "Injuries and damages" includes expenditures or losses in connection with construction work on account of injuries to persons and damages to the property of others; also the cost of investigation of and defense against actions for such injuries and damages. Insurance recovered or recoverable on account of compensation paid for injuries to persons incident to construction shall be credited to the account or accounts to which such compensation is charged. Insurance recovered or recoverable on account of property damages incident to construction shall be credited to the account or accounts charged with the cost of the damages. (9) "Privileges and permits" includes payments for and expenses incurred in securing temporary privileges, permits or rights in connection with construction work, such as for the use of private or public property, streets, or highways, but it does not include rents, or amounts chargeable as franchises and consents for which see account 302, Franchises and Consents. (10) "Rents" includes amounts paid for the use of construction quarters and office space occupied by construction forces and amounts properly includible in construction costs for such facilities jointly used. (11) "Engineering and supervision" includes the portion of the pay and expenses of engineers, surveyors, draftsmen, inspectors, superintendents and their assistants applicable to construction work. (12) "General administration capitalized" includes the portion of the pay and expenses of the general officers and administrative and general expenses applicable to construction work. (13) "Engineering services" includes amounts paid to other companies, firms or individuals engaged by the utility to plan, design, prepare estimates, supervise, inspect, or give general advice and assistance in connection with construction work. (14) "Insurance" includes premiums paid or amounts provided or reserved as self-insurance for the protection against loss and damages in connection with construction, by fire or other casualty, injuries to or death of persons other than employees, damages to property of others, defalcation of employees and agents, and the nonperformance of contractual obligations of others. It does not include workmen's compensation or similar insurance on employees included as "labor" in item 2, above. (15) "Law expenditures" includes the general law expenditures incurred in connection with construction and the court and legal costs directly related thereto, other than law expenses included in protection, item 7, and in injuries and damages, item 8. (16) "Taxes" includes taxes on physical property (including land) during the period of construction and other taxes properly includible in construction costs before the facilities become available for service. (17) "Interest during construction" includes the net cost for the period of construction of borrowed funds used for construction purposes and a reasonable rate on other funds when so used. No interest charges shall be included in these accounts upon expenditures for construction projects which have been abandoned. NOTE. — When a part only of a plant or project is placed in operation or is completed and ready for service but the construction work as a whole is incomplete, that part of the cost of the property placed in operation, or ready for service, shall be treated as "Utility Plant in Service" and interest thereon as a charge to construction shall cease. Interest on that part of the cost of the plant which is incomplete may be continued as a charge to construction until such time as it is placed in operation or is ready for service, except as limited in item 17, above. (18) "Earnings and expenses during construction" includes (a) all revenues derived during the construction period from property which is included in the cost of a project under construction and (b) all expenses which are attributable to the revenues received. 4. Overhead construction costs A. All overhead construction costs, such as engineering, supervision, general office salaries and expenses, construction engineering and supervision by others than the accounting utility, law expenses, insurance, injuries and damages, relief and pensions, taxes and interest, shall be charged to particular jobs or units on the basis of the amounts of such overheads reasonably applicable thereto, to the end that each job or unit shall bear its equitable proportion of such costs and that the entire cost of the unit, both direct and overhead, shall be deducted from the plant accounts at the time the property is retired. B. As far as practicable, the determination of payroll charges includible in construction overheads shall be based on time card distributions thereof. Where this procedure is impractical, special studies shall be made periodically of the time of supervisory employees devoted to construction activities to the end that only such overhead costs as have a definite relation to construction shall be capitalized. The addition to direct construction costs of arbitrary percentages or amounts to cover assumed overhead costs is not permitted. C. The records supporting the entries for overhead construction costs shall be so kept as to show the total amount of each overhead for each year, the nature and amount of each overhead expenditure charged to each construction work order and to each utility plant account, and the basis of distribution of such costs. 5. Utility plant purchased or sold A. When utility plant constituting an operating unit or system is acquired by purchase, merger, consolidation, liquidation, or otherwise, after the effective date of this system of accounts, the cost of acquisition, including expenses incidental thereto properly includible in utility plant, shall be charged to account 102, Utility Plant Purchased or Sold. B. The accounting for the acquisition, shall then be completed as follows: (1) The original cost of plant, estimated if not known, shall be credited to account 102, Utility Plant Purchased or Sold, and concurrently charged to the appropriate utility plant in service accounts and to account 104, Utility Plant Leased to Others, account 105, Property Held For Future Use, and account 107, Construction Work in Progress, as appropriate. (2) The requirements for accumulated provision for depreciation and amortization applicable to the original cost of the properties purchased, if required by the Commission to be recorded by the accounting utility determined with due regard to operating practices of the purchaser and his plans regarding such property, and giving consideration also to the effect on such requirements of any rehabilitation expenditures (see paragraph C), shall be charged to account 102, Utility Plant Purchased or Sold, and concurrently credited to the appropriate account for accumulated provision for depreciation or amortization. (3) The cost to the utility of any property includible in account 121, Nonutility Property, shall be transferred thereto. (4) The amount remaining in account 102, Utility Plant Purchased or Sold, shall then be closed to account 117, Utility Plant Acquisition Adjustments. C. If property acquired in the purchase of an operating unit or system is in such physical condition when acquired that it is necessary substantially to rehabilitate it in order to bring the property up to the standards of the utility, the cost of such work, except replacements, shall be accounted for as part of the purchase price of the property. D. When any property acquired as an operating unit or system includes duplicate or other plant which will be retired by the accounting utility in the reconstruction of the acquired property or its consolidation with previously owned property, the accounting for such property shall be presented to the Commission. E. In connection with the acquisition of utility plant constituting an operating unit or system, the utility shall procure, if possible, all existing records relating to the property acquired, or certified copies thereof, and shall preserve such records in conformity with regulations or practices governing the preservation of records of its own construction. F. When utility plant constituting an operating unit or system is sold, conveyed, or transferred to another by sale, merger, consolidation, or otherwise, the book cost of the property sold or transferred to another shall be credited to the appropriate utility plant accounts, including amounts carried in account 117, Utility Plant Acquisition Adjustments. The amounts (estimated if not known) carried with respect thereto in the accounts for accumulated provision for depreciation and amortization and in account 252, Customer Advances for Construction shall be charged to such accounts and the contra entries made to account 102, Utility Plant Purchased or Sold. Unless otherwise ordered by the Commission, the difference, if any, between (a) the net amount of debits and credits and (b) the consideration received for the property, less commissions and other expenses of making the sale, shall be included in account 411.6, Gains from Disposition of Utility Plant or account 411.7, Losses from Disposition of Utility Plant, as appropriate. (See account 102, Utility Plant Purchased or Sold.) NOTE A. — Significant gains or losses on sale of property, as determined by the Commission, shall be transferred to account 256, Deferred Gains from Disposition of Property or account 187, Deferred Losses from Disposition of Property and amortized to accounts 411.6, gains from Disposition of Utility Plant, or 411.7, Losses from Disposition of Utility Plant, as appropriate. NOTE B. — In eases where existing utilities merge or consolidate because of financial or operating reasons or statutory requirements rather than as a means of transferring title of purchased properties to a new owner, the accounts of the constituent utilities, with the approval of the Commission, may be combined. In the event original cost has not been determined, the resulting utility shall proceed to determine such cost as outlined herein. 6. Expenditures on leased property A. The cost of substantial initial improvements (including repairs, rearrangements, additions, and betterments) made in the course of preparing for utility service property leased for a period of more than one year, and the cost of subsequent substantial additions, replacements, or betterments to such property, shall be charged to the utility plant account appropriate for the class of property leased. If the service life of the improvements is terminable by action of the lease, then the cost, less net salvage, of the improvements shall be spread over the life of the lease by charges to account 404, Amortization of Limited Term Utility Plant. However, if the service life is not terminated by action of the lease but by depreciation proper, then the cost of the improvements, less net salvage, shall be accounted for as depreciable plant. B. If improvements made to property leased for a period of more than one year are of relatively minor cost, or if the lease is for a period of not more than one year, the cost of the improvements shall be charged to the account in which the rent is included either directly or by amortization thereof. 7. Land and land rights A. The accounts for land and land rights include the cost of land owned in fee by the utility and rights, interests, and privileges held by the utility in land owned by others, such as leaseholds, easements, diversion rights, submersion rights, rights of way, and other like interests in land. B. Where special assessments for public improvements provide for deferred payments, the full amount of the assessments shall be charged to the appropriate land account and the unpaid balance shall be carried in an appropriate liability account. Interest on unpaid balances shall be charged to the appropriate interest account. If any part of the cost of public improvements is included in the general tax levy, the amount thereof shall be charged to the appropriate tax account. C. The net profit from the sale of timber, cord wood, or other property acquired with rights of way or other lands shall be credited to the appropriate land and land rights or clearing land account. Where land is held for a considerable period of time and timber on the land at the time of purchase increases in value, the net profit (after giving effect to the cost of the timber) from the sales of timber or its products shall be credited to account 421, Miscellaneous Nonoperating Income. D. Separate entries shall be made for the acquisition, transfer, or retirement of each parcel of land, and each land right (except rights of way for distribution lines), having a life of more than one year. A record shall be maintained showing the nature of ownership, full legal description, area, map reference, purpose for which used, city, county, and tax district in which situated, from whom purchased or to whom sold, payment given or received, other costs, contract date and number, date of recording of deed, and book and page of record. Entries transferring or retiring land or land rights shall refer to the original entry recording its acquisition. E. Any difference between the amount received from the sale of land or land rights, less agent's commissions and other costs incident to the sale, and the book cost of such land or land rights, shall be included in account 411.6, Gains from Disposition of Utility Plant, or account 411.7, losses from Disposition of Utility Plant, Provided such property is recorded in accounts 101-104. If the property being disposed of is recorded in account 105, Property Held for Future Use, or account 121, Nonutility Property; but had previously been recorded in one of the aforementioned utility plant accounts, gains or losses on its sale shall be credited or charged to account 411.6 or 411.7, as appropriate, otherwise to account 421.1, Gain on Disposition of Property, or account 421.2, Loss on Disposition of Property, unless a reserve therefor has been authorized and provided. NOTE—Significant gains or losses on sale of property, as determined by the Commission, shall be transferred to account 256, Deferred Gains from Disposition of Property, or account 187, Deferred Losses from Disposition of Property; and amortized to account 411.6, Gains from Disposition of Utility Plant, 411.7, Losses from Disposition of Utility Plant, 421.1, Gain on Disposition of Property or 421.2, Loss on Disposition of Property, as appropriate. F. The cost of buildings and other improvements (other than public improvements) shall not be included in the land accounts. If at the time of acquisition of any interest in land such interest extends to buildings or other improvements (other than public improvements), which are then devoted to utility operations, the land and improvements shall be separately appraised and the cost allocated to land and buildings or improvements on the basis of the appraisals. If the improvements are removed or wrecked without being used in operations, the cost of removing or wrecking shall be charged and the salvage credited to the account in which the cost of the land is recorded. G. When the purchase of land for utility operations requires the purchase of more land than needed for such purposes, the charge to the specific land account shall be based upon the cost of the land purchased, less the fair market value of that portion of the land which is not to be used in utility operations. The portion of the cost measured by the fair market value of the land not to be used shall be included in account 105, Property Held for Future Use, or account 121, Nonutility Property, as appropriate. H. Provision shall be made for amortizing amounts carried in the accounts for limited-term interests in land so as to apportion equitably the cost of each interest over the life thereof. (See account 114, Accumulated Provision for Amortization of Utility Plant in Service, and account 404, Ammortization of Limited-Term Utility Plant.) I. The items of cost to be included in the accounts for land and land rights are as follows: 1. Bulkheads, buried, not requiring maintenance or replacement. 2. Cost, first, of acquisition including mortgages and other liens assumed (but not subsequent interest thereon.) 3. Clearing (first cost) the land of brush, trees, and debris. 4. Condemnation proceedings, including court and counsel costs. 5. Consents and abutting damages, payment for. 6. Conveyancers' and notaries' fees. 7. Fees, commissions, and salaries to brokers, agents, and others in connection with the acquisition of the land or land rights. 8. Grading the land, except when directly occasioned by the building of a structure. 9. Leases, cost of voiding upon purchase to secure possession of land. 10. Removing, relocating, or reconstructing property of others, such as buildings, highways, railroads, bridges, cemeteries, churches, telephone and power lines, etc., in order to acquire quiet possession. 11. Retaining walls unless identified with structures. 12. Special assessments levied by public authorities for public improvements on the basis of benefits for new roads, new bridges, new sewers, new curbing, new pavements, and other public improvements, but not taxes levied to provide for the maintenance of such improvements. 13. Surveys in connection with the acquisition, but not amounts paid for topographical surveys and maps where such costs are attributable to structures or plant equipment erected or to be erected or installed on such land. 14. Taxes assumed, accrued to date of transfer of title. 15. Title, examining, clearing, insuring, and registering in connection with the acquisition and defending against claims relating to the period prior to the acquisition. 16. Appraisals prior to closing title. 17. Cost of dealing with distributees or legatees residing outside of the state or county, such as recording power of attorney, recording will or exemplification of will, recording satisfaction of state tax. 18. Filing satisfaction of mortgage. 19. Documentary stamps. 20. Photographs of property at acquisition. 21. Fees and expenses incurred in the acquisition of water rights, and grants. 22. Cost of fill to extend bulkhead line over land under water, where riparian rights are held, which is not occasioned by the erection of a structure. 23. Sidewalks and curbs constructed by the utility on public property. 24. Labor and expenses in connection with securing rights of way, where performed by company employees and company agents. 8. Structures and improvements A. The accounts for structures and improvements include the cost of all buildings and facilities to house, support, or safeguard property or persons, including all fixtures permanently attached to and made a part of buildings and which cannot be removed therefrom without cutting into the walls, ceilings, or floors, or without in some way impairing the buildings, and improvements of a permanent character on or to land. B. The cost of specially provided foundations not intended to outlast the machinery or apparatus for which provided, and the cost of angle irons, casting, etc., installed at the base of an item of equipment, shall be charged to the same account as the cost of the machinery, apparatus, or equipment. C. Minor buildings and structures may be considered a part of the facility in connection with which constructed or operated and the cost thereof accounted for accordingly when the nature of the structure and facility indicates the correctness of such accounting. D. Where furnaces and boilers are used primarily for furnishing steam for some particular department and only incidentally for furnishing steam for heating a building and operating the equipment therein, the entire cost of such furnaces and boilers shall be charged to the appropriate plant account, and no part to the building account. E. The cost of disposing of materials excavated in connection with construction of structures shall be considered as a part of the cost of such work, except as follows: (a) When such material is used for filling, the cost of loading, hauling, and dumping shall be equitably apportioned between the work in connection with which the removal occurs and the work in connection with which the material is used; (b) when such material is sold, the net amount realized from such sales shall be credited to the work in connection with which the removal occurs. If the amount realized from the sale of excavated materials exceeds the removal costs and the costs in connection with the sale, the excess shall be credited to the land account in which the site is carried. F. Lighting or other fixtures temporarily attached to buildings for purposes of display or demonstration shall not be included in the cost of the building but in the appropriate equipment account. G. The items of cost to be included in the accounts for structures and improvements are as follows: 1. Architects' plans and specifications including supervision. 2. Ash pits (when located within the building). 3. Athletic field structures and improvements. 4. Boilers, furnaces, piping, wiring, fixtures, and machinery for heating, lighting, signaling, ventilating, and air conditioning systems, plumbing, vacuum cleaning systems, incinerator and smoke pipe, flues, etc. 5. Bulkheads, including dredging, riprap fill, piling, decking, concrete, fenders, etc., when exposed and subject to maintenance and replacement. 6. Chimneys. 7. Coal bins and bunkers. 8. Commissions and fees to brokers, agents, architects and others. 9. Conduit (not to be removed) with its contents. 10. Damages to abutting property during construction. 11. Docks. 12. Door checks and door stops. 13. Drainage and sewerage systems. 14. Elevators, cranes, hoists, etc., and the machinery for operating them. 15. Excavation, including shoring, bracing, bridging, refill, and disposal of excess excavated material, cofferdams around foundation, pumping water from cofferdam during construction, test borings. 16. Fences and fence curbs (not including protective fences isolating items of equipment, which should be charged to the appropriate equipment account). 17. Fire protection systems when forming a part of a structure. 18. Flagpole. 19. Floor covering (permanently attached). 20. Foundations and piers for machinery, constructed as a permanent part of a building or other item listed herein. 21. Grading and clearing when directly occasioned by the building of a structure. 22. Intrasite communication system, poles, pole fixtures, wires and cables. 23. Landscaping, lawns, shrubbery, etc. 24. Leases, voiding upon purchase, to secure possession of structures. 25. Leased property, expenditures on. 26. Lighting fixtures and outside lighting systems. 27. Mailchutes when part of a building. 28. Marquee, permanently attached to building. 29. Painting, first cost. 30. Permanent paving, concrete, brick, flagstone, asphalt, etc., within the property lines. 31. Partitions, including movable. 32. Permits and privileges. 33. Platforms, railings and gratings when constructed as a part of a structure. 34. Power boards for services to a building. 35. Refrigerating systems for general use. 36. Retaining walls except when identified with land. 37. Roadways, railroads, bridges, and trestles intrasite except railroads provided for in equipment accounts. 38. Roofs. 39. Scales, connected to and forming a part of a structure. 40. Screens. 41. Sewer systems, for general use. 42. Sidewalks, culverts, curbs and streets constructed by the utility on its property. 43. Sprinkling systems. 44. Sump pumps and pits. 45. Stacks—brick, steel, or concrete, when set on foundation forming part of general foundation and steelwork of a building. 46. Steel inspection during construction. 47. Storage facilities constituting a part of a building. 48. Storm doors and windows. 49. Subways, areaways, and tunnels, directly connected to and forming part of a structure. 50. Tanks, constructed as part of a building or as a distinct structural unit. 51. Temporary heating during construction (net cost). 52. Temporary water connection during construction (net cost). 53. Temporary shanties and other facilities used during construction (net cost). 54. Topographical maps. 55. Tunnels, intake and discharge, when constructed as part of a structure, including sluice gates, and those constructed to house mains. 56. Vaults constructed as part of a building. 57. Watchmen's sheds and clock systems (net cost when used during construction only). 58. Water basins or reservoirs. 59. Water front improvements. 60. Water supply piping, hydrants and wells. 61. Water meters and supply system for a building or for general company purposes. 62. Wharves. 63. Window shades and ventilators. 64. Yard drainage system. 65. Yard lighting system. 66. Yard surfacing, gravel, concrete, or oil. (First cost only.) NOTE.—Structures and Improvement accounts shall be credited with the cost of coal bunkers, stacks, foundations, subways, tunnels, etc., the use of which has terminated with the removal of the equipment with which they are associated even though they have not been physically removed. 9. Equipment A. The cost of equipment chargeable to the utility plant accounts, unless otherwise indicated in the text of an equipment account, includes the net purchase price thereof, sales taxes, investigation and inspection expenses necessary to such purchase, expenses of transportation when borne by the utility, labor employed, materials and supplies consumed, and expenses incurred by the utility in unloading and placing the equipment in readiness to operate. B. Exclude from equipment accounts hand and other portable tools which are likely to be lost or stolen or which have relatively small value (for example, $50 or less) or short life, unless the correctness of the accounting therefor as utility plant is verified by current inventories. Special tools acquired and included in the purchase price of equipment shall be included in the appropriate plant account. Portable drills and similar tool equipment when used in connection with the operation and maintenance of a particular plant or department, such as pumping, transmission and distribution, etc., or in "stores," shall be charged to the plant account appropriate for their use. C. The equipment accounts shall include angle irons and similar items which are installed at the base of an item of equipment, but piers and foundations which are designed to be as permanent as the buildings which house the equipment, or which are constructed as a part of the building and which cannot be removed without cutting into the walls, ceilings or floors or without in some way impairing the building, shall be included in the building accounts. D. The equipment accounts shall include the necessary costs of testing or running a plant or part thereof during an experimental or test period prior to becoming available for service. The utility shall furnish the Commission with full particulars of and justification for any test or experimental run extending beyond a period of thirty days. E. The cost of efficiency or other tests made subsequent to the date equipment becomes available for service shall be charged to the appropriate expense accounts, except that tests to determine whether equipment meets the specifications and requirements as to efficiency, performance, etc., guaranteed by manufacturers, made after operations have commenced and within the period specified in the agreement or contract of purchase, may be charged to the appropriate utility plant account. 10. Additions and retirements of utility plant A. For the purpose of avoiding undue refinement in accounting for additions to and retirements and replacements of utility plant, all property shall be considered as consisting of (1) retirement units and (2) minor items of property. Each utility shall use such list of retirement units as is in use by it at the effective date hereof or as may be prescribed by the Commission, with the option, however, of using smaller units, provided the utility's practice in this respect is consistent. B. The addition and retirement of retirement units shall be accounted for as follows: (1) When a retirement unit is added to the utility plant, the cost thereof shall be added to the appropriate utility plant account, except that when units are acquired in the acquisition of any utility plant constituting an operating system, they shall be accounted for as provided in utility plant instruction 5. (2) When a retirement unit is retired from utility plant, with or without replacement, the book cost thereof shall be credited to the utility plant account in which it is included, determined in the manner set forth in paragraph D, below. If the retirement unit is of a depreciable class, the book cost of the unit retired and credited to utility plant shall be charged to the accumulated provision for depreciation applicable to such property. The cost of removal and the salvage shall be charged or credited, as appropriate, to such depreciation account. C. The addition and retirement of minor items of property shall be accounted for as follows: (1) When a minor item of property which did not previously exist is added to plant, the cost thereof shall be accounted for in the same manner as for the addition of a retirement unit, as set forth in paragraph B (1), above, if a substantial addition results, otherwise the charge shall be to the appropriate maintenance expense account. (2) When a minor item of property is retired and not replaced, the book cost thereof shall be credited to the utility plant account in which it is included; and, in the event the minor item is a part of a depreciable plant, the account for accumulated provision for depreciation shall be charged with the book cost and cost of removal and credited with the salvage. If, however, the book cost of the minor item retired and not replaced has been or will be accounted for by its inclusion in the retirement unit of which it is a part when such unit is retired, no separate credit to the property account is required when such minor item is retired. (3) When a minor item of depreciable property is replaced independently of the retirement unit of which it is a part, the cost of replacement shall be charged to the maintenance account appropriate for the item, except that if the replacement effects a substantial betterment (the primary aim of which is to make the property affected more useful, more efficient, of greater durability, or of greater capacity), the access cost of the replacement over the estimated cost at current prices of replacing without betterment shall be charged to the appropriate utility plant account. D. The book cost of the utility plant retired shall be the amount at which such property is included in the utility plant accounts, including all components of construction costs. The book cost shall be determined from the utility's records and if this cannot be done, it shall be estimated. When it is impracticable to determine the book cost of each unit, due to the relatively large number or small cost thereof, an appropriate average book cost of the units, with due allowance for any differences in size and character, shall be used as the book cost of the units retired. E. The book cost of land retired shall be credited to the appropriate land account. If the land is sold, the difference between the book cost, less any accumulated provision for amortization therefor which has been authorized and provided, and the sale price of the land, less commissions and other expenses of making the sale, shall be included in account 411.6, Gains from Disposition of Utility Plant or account 411.7, Losses from Disposition of Utility Plant, when such property is included in accounts 101-104. If at the time of sale such property is classified in account 105, Property Held for Future Use, or account 121, Nonutility Property; but had previously been classified in the aforementioned utility plant accounts, gains or losses on its sale shall be charged or credited to account 411.6 or 411.7, as appropriate, otherwise to account 421.1, Gain on Disposition of Property or account 421.2, Loss on Disposition of Property, unless otherwise authorized by the Commission. If the land is not used in utility service but is retained by the utility, the book cost shall be charged to account 105, Property Held for Future Use, or account 121, Nonutility Property, as appropriate. NOTE.—Significant gains or losses on sale of property, as determined by the Commission, shall be transferred to account 256, Deferred Gains from Disposition of Property, or account 187, Deferred Losses from Disposition of Property; and amortized to accounts 411.6, Gains from Disposition of Utility Plant, 411.7, Losses from Disposition of Utility Plant, 421.1, Gain on Disposition of Property or 421.2, Loss on Disposition of Property, as appropriate. F. The book cost less net salvage of depreciable utility plant retired shall be charged in its entirety to account 111, Accumulated Provision for Depreciation of Utility Plant in Service. Any amounts which, by approval or order of the Commission, are charged to account 182, Extraordinary Property Losses, shall be credited to account 111, Accumulated Provision for Depreciation of Utility Plant in Service. G. The accounting for the retirement of amounts included in account 302, Franchises and Consents, and account 303, Miscellaneous Intangible Plant, and the items of limited-term interest in land included in the accounts for land and land rights shall be as provided for in the text of account 114, Accumulated Provision for Amortization of Utility Plant in Service, account 404, Amortization of Limited-Term Utility Plant and account 405, Amortization of Other Utility Plant. 11. Work order and property record system required A. Each utility shall record all construction and retirements of utility plant by means of work orders or job orders. Separate work orders may be opened for additions to and retirements of utility plant or the retirements may be included with the construction work order, provided, however, that all items relating to the retirements shall be kept separate from those relating to construction and provided, further, that any maintenance costs involved in the work shall likewise be segregated. B. Each utility shall keep its work order system so as to show the nature of each addition to or retirement of utility plant, the total cost thereof, the source or sources of costs, and the utility plant account or accounts to which charged or credited. Work orders covering jobs of short duration may be cleared monthly. C. Each utility shall maintain records in which, for each plant account, the amounts of the annual additions and retirements are classified so as to show the number and the cost of the various retirement units or other appropriate record units included therein. 12. Transfers of property When property is transferred from one account for utility plant to another, from one utility department to another, such as from water to gas, from one operating division or area to another, to or from accounts 101, Utility Plant in Service Classified, 104, Utility Plant Leased to Others, 105, Property Held for Future Use, and 121, Nonutility Property, the transfer shall be recorded by transferring the original cost thereof from the one account, department, or location to the other. Any related amounts carried in the accounts for accumulated provision for depreciation or amortization shall be transferred in accordance with the segregation of such accounts. 13. Common utility plant A. If the utility is engaged in more than one utility service such as CATV, water, electric and gas, and any of its utility plant is used in common for several utility services or for other purposes to such an extent and in such manner that it is impracticable to segregate it by utility services currently in the accounts, such property with the approval of the Commission, may be designated and classified as "common utility plant." B. Utility plant designated as common utility plant shall be classified according to the detailed utility plant accounts appropriate for the property. C. The utility shall be prepared to show at any time and to report to the Commission annually, or more frequently, if required, and by utility plant accounts (301 to 399) the following: (1) the book cost of common utility plant, (2) the allocation of such cost to the respective departments using the common utility plant, and (3) the basis of the allocation. D. The accumulated provision for depreciation and amortization of the utility shall be segregated so as to show the amount applicable to the property classified as common utility plant. E. The expenses of operation, maintenance, rent, depreciation and amortization of common utility plant shall be recorded in the accounts prescribed herein but designated as common expenses, and the allocation of such expenses to the departments using the common utility plant shall be supported in such manner as to reflect readily the basis of allocation used. 14. Multiple use plant Land, rights of way and structures used jointly for several functions, such as for transmitting and distribution purposes, shall be classified according to the major use thereof. Part 4 OPERATING EXPENSE INSTRUCTIONS 1. Supervision and engineering The supervision and engineering includible in the operating expense accounts shall consist of the pay and expenses of superintendents, engineers, clerks, other employees and consultants engaged in supervising and directing the operations and maintenance of each utility function. Wherever allocations are necessary in order to arrive at the amount to be included in any account, the method and basis of allocation shall be reflected by underlying records. ITEMS LABOR: 1. Special tests to determine efficiency of equipment operation. 2. Preparing or reviewing budgets, estimates, and drawings relating to operation or maintenance for department approval. 3. Preparing instructions for operations and maintenance activities. 4. Reviewing and analyzing of operating results. 5. Establishing organizational setup of departments and executing changes therein. 6. Formulating and reviewing routines of departments and executing changes therein. 7. General training and instruction of employees by supervisors whose pay is chargeable hereto. Specific instruction and training in a particular type of work is chargeable to the appropriate functional account. 8. Secretarial work for supervisory personnel, but not general clerical and stenographic work chargeable to other accounts. EXPENSES: 9. Consultants' fees and expenses. 10. Meals, traveling and incidental expenses. 2. Maintenance A. The cost of maintenance chargeable to the various operating expense and clearing accounts includes labor, materials, overheads and other expenses incurred in maintenance work. A list of work operations applicable generally to utility plant is included hereunder. B. Materials recovered in connection with the maintenance of property shall be credited to the same account to which the maintenance cost was charged. C. If the book cost of any property is carried in account 102, Utility Plant Purchased or Sold, the cost of maintaining such property shall be charged to the accounts for maintenance of property of the same class and use, the book cost of which is carried in other utility plant in service accounts. Maintenance of property leased from others shall be treated as provided in operating expense instruction 3. ITEMS 1. Direct field supervision of maintenance. 2. Inspecting, testing, and reporting on condition of plant specifically to determine the need for repairs, replacements, rearrangements and changes and inspecting and testing the adequacy of repairs which have been made. 3. Work performed specifically for the purpose of preventing failure, restoring serviceability or maintaining life of plant. 4. Rearranging and changing the location of plant not retired. 5. Repairing for reuse materials recovered from plant. 6. Testing for, locating and clearing trouble. 7. Net cost of installing, maintaining, and removing temporary facilities to prevent interruptions in service. 8. Replacing or adding minor items of plant which do not constitute a retirement unit. (See utility plant instruction 10.) 3. Rents A. The rent expense accounts provided under the several functional groups of expense accounts shall include all rents, including taxes paid by the lessee on leased property, for property used in utility operations, except (1) minor amounts paid for occasional or infrequent use of any property or equipment and all amounts paid for use of equipment that, if owned, would be includible in plant accounts 391 to 398, inclusive, which shall be treated as an expense item and included in the appropriate functional account and (2) rents which are chargeable to clearing accounts, and distributed therefrom to the appropriate account. If rents cover property used for more than one function, or by more than one department, the rents shall be apportioned to the appropriate rent expense or clearing accounts of each department on an actual, or, if necessary, an estimated basis. B. When a portion of property or equipment rented from others for use in connection with utility operations is subleased, the revenue derived from such subleasing shall be credited to the rent revenue account in operating revenues; provided, however, that in case the rent was charged to a clearing account, amounts received from subleasing the property shall be credited to such clearing account. C. The cost, when incurred by the lessee, of operating and maintaining leased property, shall be charged to the accounts appropriate for the expense if the property were owned. D. The cost incurred by the lessee of additions and replacements to utility plant leased from others shall be accounted for as provided in utility plant instruction 6. NOTE.—The aggregate of the rents included in the functional operating expense accounts shall be included in the income statement in account 401, Operation Expense. However, where the rents are significant in amount, the aggregate thereof shall be shown separately in the income statement. Part 5 BALANCE SHEET ACCOUNTS 1. Utility Plant 101. Utility plant in service classified A. This account shall include the original cost of utility plant, included in the plant accounts prescribed herein and in similar accounts for other utility departments, owned and used by the utility in its utility operations, and having an expectation of life in service of more than one year from date of installation, including such property owned by the utility but held by nominees. Separate subaccounts shall be maintained hereunder for each utility department. B. The cost of additions to and betterments of property leased from others, which are includible in this account, shall be recorded in subdivisions separate and distinct from those relating to owned property. (See utility plant instruction 6.) 102. Utility plant purchased or sold A. This account shall be charged with the cost of utility plant acquired as an operating unit or system by purchase, merger, consolidation, liquidation, or otherwise, and shall be credited with the selling price of like property transferred to others pending the distribution to appropriate accounts in accordance with utility plant instruction 5. B. Within six months from the date of acquisition or transfer of property recorded herein, the utility shall file with the Commission the proposed journal entries to clear from this account the amounts recorded herein. 103. Utility plant in process of reclassification A. This account shall include temporarily the balance of utility plant which has not yet been reclassified as of the effective date of this system of accounts. The detailed or primary accounts in support of this account employed prior to such date shall be continued pending reclassification into the utility plant accounts herein prescribed (301399), but shall not be used for additions, betterments, or new construction. B. No charges other than as provided in paragraph A, above, shall be made to this account, but retirements of such unclassified utility plant shall be credited hereto and to the supporting (old) fixed capital accounts until the reclassification shall have been accomplished. 104. Utility plant leased to others A. This account shall include the original cost of utility plant owned by the utility, but leased to others as operating units or systems, where the lessee has exclusive possession. B. The property included in this account shall be classified according to the detailed accounts prescribed for utility plant in service and this account shall be maintained in such detail as though the property were used by the owner in its utility operations. 105. Property held for future use A. This account shall include the original cost of property owned and held for future use in utility service under a definite plan for such use. There shall be included herein property acquired but never used by the utility in utility service, but held for such service in the future under a definite plan, and property previously used by the utility in utility service, but retired from such service and held pending its reuse in the future, under a definite plan, in utility service. B. The property included in this account shall be classified according to the detailed accounts prescribed for utility plant in service and the account shall be maintained in such detail as though the property were in service. Separate subaccounts shall be maintained hereunder for each utility department for which plant is held for future use. NOTE. — Materials and supplies and normal spare capacity of plant in service shall not be included in this account. 106. Completed construction not classified At the end of the year or such other date as a balance sheet may be required by the Commission, this account shall include the total of the balances of work orders for utility plant which has been completed and placed in service but which work orders have not been classified for transfer to the detailed utility plant accounts. 107. Construction work in progress A. This account shall include the total of the balances of work orders for utility plant in process of construction but not ready for service at the date of the balance sheet. B. Work orders shall be cleared from this account as soon as practicable after completion of the job. Further, if a project is designed to consist of two or more units which may be placed in service at different dates, any expenditures which are common to and which will be used in the operation of the project as a whole shall be included in utility plant in service upon the completion and the readiness for service of the first unit. Any expenditures which are identified exclusively with units of property not yet in service shall be included in this account. NOTE. — See also account 106, Completed Construction Not Classified. 111. Accumulated provision for depreciation of utility plant in service A. This account shall be credited with the following: (1) Amounts charged to account 403, Depreciation Expense, to account 416, Costs and Expenses of Merchandising, Jobbing, and Contract Work, or to clearing accounts for current depreciation expense. (2) Amounts of depreciation applicable to utility properties acquired as operating units or systems. (See utility plant instruction 5.) (3) Amounts charged to account 182, Extraordinary Property Losses, when authorized by the Commission. (4) Amounts of depreciation applicable to utility plant donated to the utility. B. At the time of retirement of depreciable utility plant in service, this account shall be charged with the book cost of the property retired and the cost of removal, and shall be credited with the salvage value and any other amounts recovered, such as insurance. When retirements, cost of removal and salvage are entered originally in retirement work orders, the net total of such work orders may be included in a separate subaccount hereunder. Upon completion of the work order, the proper distribution to subdivisions of this account shall be made as provided in the following paragraph. C. For general ledger and balance sheet purposes, this account shall be regarded and treated as a single composite provision for depreciation. For purposes of analysis, however, each utility shall maintain subsidiary records in which this account is segregated according to the utility department to which applicable. The amount applicable to utility departments shall be further subdivided to show the amount for each functional group of plant accounts. For the CATV utility department the following functional classification shall be maintained: (1) Transmitting, (2) Head End Equipment, (3) Distribution, and (4) General. These subsidiary records shall reflect the current credits and debits to this account in sufficient detail to show separately for each such functional classification (a) the amount of accrual for depreciation, (b) the book cost of property retired, (c) cost of removal, (d) salvage, and (e) other items, including recoveries from insurance. D. When transfers of plant are made from one utility plant account to another, or from or to nonutility property, the accounting shall be as provided in utility plant instruction 12. E. The utility is restricted in its use of the accumulated provisions for depreciation to the purposes set forth above. It shall not divert any portion of this account to retained earnings or make any other use thereof without authorization by the Commission. 112. Accumulated provision for depreciation of utility plant leased to others A. This account shall be credited with amounts charged to account 413, Expenses of Utility Plant Leased to Others, for currently accruing depreciation of property included in account 104, Utility Plant Leased to Others. Include, also, credits for depreciation applicable to plant acquired as operating units or systems, to plant donated to the utility or for losses transferred to account 182, Extraordinary Property Losses. B. The requirements of account 111, Accumulated Provision for Depreciation of Utility Plant in Service, regarding retirements chargeable thereto and of subsidiary data to be maintained shall be applicable likewise to this account. C. The utility is restricted in its use of the accumulated provisions for depreciation to the purposes set forth above. It shall not divert any portion of this account to retained earnings or make any other use thereof without authorization by the Commission. 113. Accumulated provision for depreciation of property held for future use This account shall be credited with amounts charged to account 421, Miscellaneous Nonoperating Income, for depreciation expense on property included in account 105, Property Held for Future Use. Include, also, the balance of accumulated provision for depreciation or amortization on property which may be transferred to account 105, Property Held for Future Use, from other property accounts. NOTE. — Normally, this account would not be used for current depreciation provisions because, as provided herein, the service life during which depreciation is computed commences with the date property is includible in utility plant in service. However, if special circumstances indicate the propriety of current accruals for depreciation, such charges shall be made to account 421, Miscellaneous Nonoperating Income. 114. Accumulated provision for amortization of utility plant in service A. This account shall be credited with amounts charged to account 404, Amortization of Limited-Term Utility Plant, for the current amortization of limited-term utility investments. It shall be credited also with amounts which may be charged to account 405, Amortization of Other Utility Plant or to account 425, Miscellaneous Amortization, to amortize intangible or other utility plant which does not have a definite or terminable life and is not subject to charges for depreciation expense. B. When any property to which this account applies is sold, relinquished, or otherwise retired from service, this account shall be charged with the amount previously credited in respect to such property. The book cost of the property so retired less the amount chargeable to this account and less the net proceeds realized at retirement shall be included in account 411.6, Gains from Disposition of Utility Plant, or account 411.7, Losses from Disposition of Utility Plant, as appropriate. C. Records shall be maintained so as to show separately the balance applicable to each class of property which is being amortized. D. The utility is restricted in its use of the accumulated provisions for amortization to the purposes set forth above. It shall not divert any portion of this account to retained earnings or make any other use thereof without authorization of the Commission. 115. Accumulated provision for amortization of utility plant leased to others A. This account shall be credited with amounts charged to account 413, Expenses of Utility Plant Leased to Others, for the current amortization of limited-term or other investments subject to amortization included in account 104, Utility Plant Leased to Others. B. When any property to which this account applies is sold, relinquished or otherwise retired from service, this account shall be charged with the amount previously credited in respect to such property. The book cost of the property so retired less the amount chargeable to this account and less the net proceeds realized at retirement shall be included in account 411.6, Gains from Disposition of Utility Plant, or account 411.7, Losses from Disposition of Utility Plant, as appropriate. C. Records shall be maintained so as to show separately the balance applicable to each class of property which is being amortized. 116. Accumulated provision for amortization of property held for future use This account shall be credited with amounts charged to account 421, Miscellaneous Nonoperating Income, for amortization expense on property included in account 105, Property Held for Future Use. Include also, the balance of accumulated provision for amortization on property which may be transferred to account 105, Property Held for Future Use, from other property accounts. NOTE. — See also note to account 113, Accumulated Provision for Depreciation of Property Held for Future Use. 117. Utility plant acquisition adjustments A. This account shall include the difference between (a) the cost to the accounting utility of utility plant acquired as an operating unit or system by purchase, merger, consolidation, liquidation, or otherwise, and (b) the original cost, estimated, if not known, of such property, less the amount or amounts credited by the accounting utility at the time of acquisition to accumulated provisions for depreciation and amortization. B. With respect to acquisitions after the effective date of this system of accounts, this account shall be subdivided so as to show the amounts included herein for each property acquisition and the amounts applicable to each utility department and to utility plant in service and utility plant leased to others. (See utility plant instruction 5.) C. The amounts recorded in this account with respect to each property acquisition shall be amortized, or otherwise disposed of, as the Commission may approve or direct. 118. Accumulated provision for amortization of utility plant acquisition adjustments This account shall be credited or debited with amounts which are includible in account 406, Amortization of Utility Plant Acquisition Adjustments, or account 425, Miscellaneous Amortization, for the purpose of providing for the extinguishment of amounts in account 117, Utility Plant Acquisition Adjustments, in instances where the amortization of account 117 is not being made by direct write-off of the account. 119. Other utility plant adjustments A. This account shall include the difference between the original cost, estimated if not known, and the book cost of utility plant to the extent that such difference is not properly includible in account 117, Utility Plant Acquisition Adjustments. (See utility plant instruction 1C.) B. Amounts included in this account shall be classified in such manner as to show the origin of each amount and shall be disposed of as the Commission may approve or direct. NOTE. — The provisions of this account shall not be construed as approving or authorizing the recording of appreciation of utility plant. 2. Other Property and Investments 121. Nonutility property A. This account shall include the book cost of land, structures, equipment or other tangible or intangible property owned by the utility, but not used in utility service and not properly includible in account 105, Property Held for Future Use. B. This account shall be subdivided so as to show the amount of property used in operations which are nonutility in character but nevertheless constitute a distinct operating activity of the company (such as operation of an ice department where such activity is not classed as a utility) and the amount of miscellaneous property not used in operations. The records in support of each subaccount shall be maintained so as to show an appropriate classification of the property. 122. Accumulated provision for depreciation and amortization of nonutility property This account shall include the accumulated provision for depreciation and amortization applicable to property other than utility plant. 123. Investment in associated companies A. This account shall include the book cost of investments in securities issued or assumed by associated companies and investment advances to such companies, including interest accrued thereon when such interest is not subject to current settlement. Include also the offsetting entry to the recording of amortization of discount or premium on interest bearing investments. (See account 419, Interest and Dividend Income.) B. The account shall be maintained in such manner as to show the investment in securities of, and advances to, each associated company together with full particulars regarding any of such investments that are pledged. NOTE A. — Securities and advances of associated companies owned and pledged shall be included in this account, but such securities, if held in special deposits or in special funds, shall be included in the appropriate deposit or fund account. A complete record of securities pledged shall be maintained. NOTE B. — Securities of associated companies held as temporary each investments are includible in account 136, Temporary Cash Investments NOTE C. — Balances in open accounts with associated companies, which are subject to current settlement, are includible in account 146, Accounts Receivable from Associated Companies. NOTE D. — The utility may write down the cost of any security in recognition of a decline in the value thereof. Securities shall be written off or written down to a nominal value if there be no reasonable prospect of substantial value. Fluctuations in market value shall not be recorded but a permanent impairment in the value of securities shall be recognized in the accounts. When securities are written off or written down, the amount of the adjustment shall be charged to account 426, Misc. Income Deduction, or to an appropriate account for provisions for loss in value established as a separate subdivision of this account. 124. Other investments A. This account shall include the book cost of investments in securities issued or assumed by nonassociated companies, investment advances to such companies, and any investments not accounted for elsewhere. Include also the offsetting entry to the recording of amortization of discount or premium on interest bearing investments. (See account 419, Interest and Dividend Income.) B. The cost of capital stock of the utility reacquired by it under a definite plan for resale pursuant to authorization by the Board of Directors may, if permitted by statutes, be included in a separate subdivision of this account. (See also account 217, Reacquired Capital Stock.) C. The records shall be maintained in such manner as to show the amount of each investment and the investment advances to each person. NOTE A. — Securities owned and pledged shall be included in this account, but securities held in special deposit or in special funds shall be included in appropriate deposit or fund accounts. A complete record of securities pledged shall be maintained. NOTE B. — Securities held as temporary each investments shall not be included in this account. NOTE C. — See note D of account 123. 125. Sinking funds This account shall include the amount of cash and book cost of investments held in sinking funds. A separate account, with appropriate title, shall be kept for each sinking fund. Transfers from this account to account 134, Other Special Deposits, may be made as necessary for the purpose of paying matured sinking-fund obligations, or obligations called for redemption but not presented, or the interest thereon. 126. Depreciation fund This account shall include the amount of cash and the book cost of investments which have been segregated in a special fund for the purpose of identifying such assets with the accumulated provisions for depreciation. 128. Other special funds This account shall include the amount of cash and book cost of investments which have been segregated in special funds for insurance, employee pensions, savings, relief hospital, and other purposes not provided for elsewhere. A separate account, with appropriate title, shall be kept for each fund. NOTE. — Amounts deposited with a trustee under the terms of an irrevocable trust agreement for pensions or other employee benefits shall not be included in this account. 3. Current and Accrued Assets Current and accrued assets are cash, those assets which are readily convertible into cash or are held for current use in operations or construction, current claims against others, payment of which is reasonably assured, and amounts accruing to the utility which are subject to current settlement, except such items for which accounts other than those designated as current and accrued assets are provided. There shall not be included in the group of accounts designated as current and accrued assets any item, the amount or collectibility of which is not reasonably assured, unless an adequate provision for possible loss has been made therefor. Items of current character but of doubtful value may be written down and for record purposes carried in these accounts at nominal value. 131. Cash This account shall include the amount of current cash funds except working funds. 132. Interest special deposits This account shall include special deposits with fiscal agents or others for the payment of interest. 133. Dividend special deposits This account shall include special deposits with fiscal agents or others for the payment of dividends. 134. Other special deposits This account shall include deposits with fiscal agents or others for special purposes other than the payment of interest and dividends. Such special deposits may include cash deposited with federal, state, or municipal authorities as a guaranty for the fulfillment of obligations; cash deposited with trustees to be held until mortgaged property sold, destroyed, or otherwise disposed of is replaced; cash realized from the sale of the accounting utility's securities and deposited with trustees to be held until invested in property of the utility, etc. Entries to this account shall specify the purpose for which the deposit is made. NOTE. — Assets available for general corporate purposes shall not be included in this account. Further, deposits for more than one year, which are not offset by current liabilities, shall not be charged to this account but to account 128, Other Special Funds. 135. Working funds This account shall include cash advanced to officers, agents, employees, and others as petty cash or working funds. 136. Temporary cash investments A. This account shall include the book cost of investments, such as demand and time loans, bankers' acceptances, United States Treasury certificates, marketable securities, and other similar investments, acquired for the purpose of temporarily investing cash. B. This account shall be so maintained as to show separately temporary cash investments in securities of associated companies and of others. Records shall be kept of any pledged investments. 141. Notes receivable This account shall include the book cost, not includible elsewhere, of all collectible obligations in the form of notes receivable and similar evidences (except interest coupons) of money due on demand or within one year from the date of issue, except, however, notes receivable from associated companies. (See account 136, Temporary Cash Investments, and account 145, Notes Receivable from Associated Companies.) NOTE. — The face amount of notes receivable discounted, sold or transferred, without releasing the utility from liability as endorser thereon, shall be credited to a separate subdivision of this account and appropriate disclosure shall be made in financial statements of any contingent liability arising from such transactions. 142. Customer accounts receivable A. This account shall include amounts due from customers for utility service, and for merchandising, jobbing and contract work. This account shall not include amounts due from associated companies. B. This account shall be maintained so as to permit ready segregation of amounts due for merchandising, jobbing and contract work. 143. Other accounts receivable A. This account shall include amounts due the utility upon open accounts, other than amounts due from associated companies and from customers for utility services and merchandising, jobbing and contract work. B. This account shall be maintained so as to show separately amounts due on subscriptions to capital stock and from officers and employees, but the account shall not include amounts advanced to officers or others as working funds. (See account 135, Working Funds.) 144. Accumulated provision for uncollectible accounts—cr. A. This account shall be credited with amounts provided for losses on accounts receivable which may become uncollectible, and also with collections on accounts previously charged hereto. Concurrent charges shall be made to account 904, Uncollectible Accounts, for amounts applicable to utility operations, and to corresponding accounts for other operations. Records shall be maintained so as to show the write-offs of accounts receivable for each utility department. B. This account shall be subdivided to show the provision applicable to the following classes of accounts receivable: Utility Customers Merchandising, Jobbing and Contract Work Officers and Employees Other NOTE A. — Accretions to this account shall not be made in excess of a reasonable provision against losses of the character provided for. NOTE B. — If provisions for uncollectible notes receivable or for uncollectible receivables from associated companies are necessary, separate subaccounts therefor shall be established under the account in which the receivable is carried. 145. Notes receivable from associated companies 146. Accounts receivable from associated companies These accounts shall include notes and drafts upon which associated companies are liable, and which mature and are expected to be paid in full not later than one year from date of issue, together with any interest thereon, and debit balances subject to current settlement in open accounts with associated companies. Items which do not bear a specified due date but which have been carried for more than twelve months and items which are not paid within twelve months from due date shall be transferred to account 123, Investment in Associated Companies. NOTE A. — On the balance sheet, accounts receivable from an associated company may be set off against accounts payable to the same company. NOTE B. — The face amount of notes receivable discounted, sold or transferred without releasing the utility from liability as endorser thereon, shall be credited to a separate subdivision of this account and appropriate disclosure shall be made in financial statements of any contingent liability arising from such transactions. 154. Plant materials and operating supplies A. This account shall include the cost of materials purchased primarily for use in the utility business for construction, operation and maintenance purposes. It shall include also the book cost of materials recovered in connection with construction, maintenance or the retirement of property, such materials being credited to construction, maintenance or accumulated depreciation provision, respectively, and included herein as follows: (1) Reusable materials consisting of large individual items shall be included in this account at original cost, estimated if not known. The cost of repairing such items shall be charged to the maintenance account appropriate for the previous use. (2) Reusable materials consisting of relatively small items, the identity of which (from the date of original installation to the final abandonment or sale thereof) cannot be ascertained without undue refinement in accounting, shall be included in this account at current prices new for such items. The cost of repairing such items shall be charged to the appropriate expense account as indicated by previous use. (3) Scrap and nonusable materials included in this account shall be carried at the estimated net amount realizable therefrom. The difference between the amounts realized for scrap and nonusable materials sold and the net amount at which the materials were carried in this account, as far as practicable, shall be adjusted to the accounts credited when the materials were charged to this account. B. Materials and supplies issued shall be credited hereto and charged to the appropriate construction, operating expense, or other account on the basis of a unit price determined by the use of cumulative average, first-in-first-out, or such other method of inventory accounting as conforms with accepted accounting-standards consistently applied. ITEMS 1. Invoice price of materials less cash or other discounts. 2. Freight, switching or other transportation charges when practicable to include as part of the cost of particular materials to which they relate. 3. Customs duties and excise taxes. 4. Costs of inspection and special tests prior to acceptance. 5. Insurance and other directly assignable charges. NOTE. — Where expenses applicable to materials purchased cannot be directly assigned to particular purchase, they shall be charged to account 163, Stores Expense. 155. Merchandise This account shall include the book cost of materials and supplies held primarily for merchandising, jobbing and contract work. The principles prescribed in accounting for utility materials and supplies shall be observed in respect to items carried in this account. 156. Other materials and supplies This account shall include the book cost of materials and supplies held primarily for nonutility purposes. The principles prescribed in accounting for utility materials and supplies shall be observed in respect to items carried in this account. 163. Stores expense A. This account shall include the cost of supervision, labor and expenses incurred in the operation of general storerooms, including purchasing, storage, handling and distribution of materials and supplies. B. This account shall be cleared by adding to the cost of materials and supplies issued a suitable loading charge which will distribute the expense equitably over stores issues. The balance in the account at the close of the year shall not exceed the amount of stores expenses reasonably attributable to the inventory of materials and supplies. ITEMS LABOR: 1. Inspecting and testing materials and supplies when not assignable to specific items. 2. Unloading from shipping facility and putting in storage. 3. Supervision of purchasing and stores department to extent assignable to materials handled through stores. 4. Getting materials from stock and in readiness to go out. 5. Inventorying stock received or stock on hand by stores employees but not including inventories by general department employees as part of internal or general audits. 6. Purchasing department activities in checking material needs, investigating sources of supply, analyzing prices, preparing and placing orders, and related activities to extent applicable to materials handled through stores. (Optional. Purchasing department expenses may also be included in administrative and general expenses.) 7. Maintaining stores equipment. 8. Cleaning and tidying storerooms and stores offices. 9. Keeping stock records, including recording and posting of material receipts and issues and maintaining inventory record of stock. 10. Collecting and handling scrap materials in stores. SUPPLIES AND EXPENSES: 11. Adjustments of inventories of materials and supplies but not including large differences which can readily be assigned to important classes of materials and can be equitably distributed among the accounts to which such classes of materials have been charged since the previous inventory. 12. Cash and other discounts not practically assignable to specific materials. 13. Freight, express, etc., when not assignable to specific items. 14. Heat, light and power for storerooms and store offices. 15. Brooms, brushes, sweeping compounds and other supplies used in cleaning and tidying storerooms and stores offices. 16. Injuries and damages. 17. Insurance on materials and supplies and on stores equipment. 18. Losses due to breakage, leakage, evaporation, fire or other causes, less credits for amounts received from insurance, transportation companies or others in compensation of such losses. 19. Postage, printing, stationery and office supplies. 20. Rent of storage space and facilities. 21. Communication service. 22. Excise and other similar taxes not assignable to special materials. 23. Transportation expense on inward movement of stores and on transfer between storerooms but not including charges on materials recovered from retirements which shall be accounted for as part of cost of removal. NOTE. — A physical inventory of each class of materials and supplies shall be made at least every two years. 165. Prepayments This account shall include amounts representing prepayments of insurance, rents, taxes, interest and miscellaneous items, and shall be kept or supported in such manner as to disclose the amount of each class of prepayment. 171. Interest and dividends receivable This account shall include the amount of interest on bonds, mortgages, notes, commercial paper, loans, open accounts, deposits, etc., the payment of which is reasonably assured and the amount of dividends declared or guaranteed on stocks owned. NOTE A. — Interest which is not subject to current settlement shall not be included herein but in the account in which is carried the principal on which the interest is accrued. NOTE B. — Interest and dividends receivable from associated companies shall be included in account 146, Accounts Receivable from Associated Companies. 172. Rents receivable This account shall include rents receivable or accrued on property rented or leased by the utility to others. NOTE. — Rents receivable from Associated Companies shall be included in account 146, Accounts Receivable from Associated Companies. 173. Accrued utility revenues At the option of the utility, the estimated amount accrued for service rendered, but not billed at the end of any accounting period, may be included herein. In case accruals are made for unbilled revenues, they shall be made likewise for unbilled expenses, such as for the purchase of energy. 174. Miscellaneous current and accrued assets This account shall include the book cost of all other current and accrued assets, appropriately designated and supported so as to show the nature of each asset included herein. 4. Deferred Debits 181. Unamortized debt discount and expense 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 the 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 amounts 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 requirement 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 debited or credited as appropriate to account 421, Miscellaneous Nonoperating Income or account 426, Miscellaneous Income Deductions. 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 421, Miscellaneous Nonoperating Income or account 426, Miscellaneous Income Deductions, 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 Commission must be obtained; provided, however, that special permission of the Commission 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 426, Misc. Income Deductions, 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. F. Discount, expense, or premium on debt shall not be included as part of the cost of constructing or acquiring any property, tangible or intangible, except under the provisions of account 432, Interest Charged to Construction. 182. Extraordinary property losses A. When authorized or directed by the Commission, this account shall include extraordinary losses on property abandoned or otherwise retired from service which are not provided for by the accumulated provisions for depreciation or amortization and which could not reasonably have been foreseen and provided for, and extraordinary losses, such as unforeseen damages to property, which could not reasonably have been anticipated and which are not covered by insurance or other provisions. B. The entire cost, less net salvage, of depreciable property retired shall be charged to accumulated provision for depreciation. If all, or a portion, of the loss is to be included in this account, the accumulated provision for depreciation shall then be credited and this account charged with the amount properly chargeable hereto. C. Application to the Commission for permission to use the account shall be accompanied by a statement giving a complete explanation with respect to the items which it is proposed to include herein, the period over which, and the accounts to which it is proposed to write off the charges, and other pertinent information. 183. Preliminary survey and investigation charges A. This account shall be charged with all expenditures for preliminary surveys, plans, investigations, etc., made for the purpose of determining the feasibility of projects under contemplation. If construction results, this account shall be credited and the appropriate utility plant account charged. If the work is abandoned, the charge shall be to account 426, Misc. Income Deductions, or to the appropriate operating expense account. B. The records supporting the entries to this account shall be so kept that the utility can furnish complete information as to the nature and the purpose of the survey, plans, or investigations and the nature and amounts of the several charges. NOTE. — The amount of preliminary survey and investigation charges transferred to utility plant shall not exceed the expenditures which may reasonably be determined to contribute directly and immediately and without duplication to utility plant. 184. Clearing accounts This caption shall include undistributed balances in clearing accounts at the date of the balance sheet. Balances in clearing accounts shall be substantially cleared not later than the end of the calendar year unless items held therein relate to a future period. 185. Temporary facilities This account shall include amounts shown by work orders for plant installed for temporary use in utility service for periods of less than one year. Such work orders shall be charged with the cost of temporary facilities and credited with payments received from customers and net salvage realized on removal of the temporary facilities. Any net credit or debit resulting shall be cleared to account 451, Miscellaneous Service Revenues. 186. Miscellaneous deferred debits A. This account shall include all debits not elsewhere provided for, such as miscellaneous work in progress, and unusual or extraordinary expenses, not included in other accounts, which are in process of amortization, and items the proper final disposition of which is uncertain. B. The records supporting the entries to this account shall be so kept that the utility can furnish full information as to each deferred debit. 187. Deferred losses from disposition of property This account shall include losses from the sale or other disposition of property previously recorded in accounts, 101-104; in account 105, Property Held for Future Use or account 121, Nonutility Property, where such losses are significant and are to be amortized over a period of five years, unless otherwise authorized by the Commission. The amortization of the amounts in this account shall be made by debits to account 411.7, Losses from Disposition of Utility Plant or account 421.2, Loss on Disposition of Property, as appropriate. Amounts recorded in this account shall be net of related income taxes. (See Utility Plant Instructions 5F, 7E and 10E.) 188. Deferred start-up costs This account may be charged with the excess of start-up operating costs over revenues received during the development period of the cable television system, or segment of the system, which are to be deferred during the preoperating and/or immediate post-operating period, for later amortization. Such start-up costs, at the option of the respondent, may be expended or deferred. Deferment shall cease, and a ten-year amortization period shall begin, at the earliest of (a) two years following completion of the system, or a segment of the system, or (b) subscriber saturation reaches 25% of potential homes passed, or (c) such system condition criteria as management may adopt, provided the deferral period is not longer than in part (a) above. Start-up costs are costs not includible in account 301, organization, account 302, franchises and consents, or account 107, construction work in progress. The amortization of the amounts in this account shall be made by debits to account 407.2, amortization of deferred start-up costs. NOTE: Completion occurs when (a) physical construction and testing have ceased, (b) the system or segment of a system is accepted by the company, and (e) the system or segment is capable of serving at least one subscriber. 5. Proprietary Capital COMMON CAPITAL STOCK 201. Common stock issued 202. Common stock subscribed 203. Common stock liability for conversion PREFERRED CAPITAL STOCK 204. Preferred stock issued 205. Preferred stock subscribed 206. Preferred stock liability for conversion 201. Common stock issued 204. Preferred stock issued A. These accounts shall include the par value or the stated value of stock without par value if such stock has a stated value, and, if not, the cash value of the consideration received for such nonpar stock, of each class of capital stock actually issued, including the par or stated value of capital stock in account 124, Other Investments, and account 217, Reacquired Capital Stock. B. When the actual cash value of the consideration received is more or less than the par or stated value of any stock having a par or stated value, the difference shall be credited or debited, as the case may be, to the premium or discount account for the particular class and series. C. When capital stock is retired, these accounts shall be charged with the amount at which such stock is carried herein. D. A separate ledger account, with a descriptive title, shall be maintained for each class and series of stock. The supporting records shall show the shares nominally issued, actually issued, and nominally outstanding. NOTE. — When a levy or assessment, except a call for payment on subscriptions, is made against holders of capital stock, the amount collected upon such levy or assessment shall be credited to account 207, Premium on Capital Stock; provided, however, that the credit shall be made to account 213, Discount on Capital Stock, to the extent of any remaining balance of discount on the issue of stock. 202. Common stock subscribed 205. Preferred stock subscribed A. These accounts shall include the amount of legally enforceable subscriptions to capital stock of the utility. They shall be credited with the par or stated value of the stock subscribed, exclusive of accrued dividends, if any. Concurrently, a debit shall be made to subscriptions to capital stock, included as a separate subdivision of account 143, Other Accounts Receivable, for the agreed price and any premium shall be credited to the appropriate premium account. When properly executed stock certificates have been issued representing the shares subscribed, this account shall be debited, and the appropriate capital stock account credited, with the par or stated value of such stock. B. The records shall be kept in such manner as to show the amount of subscriptions to each class and series of stock. 203. Common stock liability for conversion 206. Preferred stock liability for conversion A. These accounts shall include the par value or stated value, as appropriate, of capital stock which the utility has agreed to exchange for outstanding securities of other companies in connection with the acquisition of properties of such companies under terms which allow the holders of the securities of the other companies to surrender such securities and receive in return therefor capital stock of the accounting utility. B. When the securities of the other companies have been surrendered and capital stock issued in accordance with the terms of the exchange, these accounts shall be charged and accounts 201, Common Stock Issued, or 204, Preferred Stock Issued, as the case may be, shall be credited. C. The records shall be kept so as to show separately the stocks of each class and series for which a conversion liability exists. 207. Premium on capital stock A. This account shall include in a separate subdivision for each class and series of stock, the excess of the actual each value of the consideration received on original issues of capital stock over the par or stated value and accrued dividends of such stock, together with assessments against stockholders representing payments required in excess of par or stated values. B. Premium on capital stock shall not be set off against expenses. Further, a premium received on an issue of a certain class or series of stock shall not be set off against expenses of another issue of the same class or series. C. When capital stock which has been actually issued is retired, the amount in this account applicable to the shares retired shall be transferred to account 210, Gain on Resale or Cancellation of Reacquired Capital Stock. 208. Donations received from stockholders This account shall include the balance of credits for donations received from stockholders consisting of capital stock of the utility, of cancellation or reduction of debt of the utility, and the cash value of other assets received as a donation. 209. Reduction in par or stated value of capital stock This account shall include the balance of credits arising from a reduction in the par or stated value of capital stock. 210. Gain on resale or cancellation of reacquired capital stock This account shall include the balance of credits arising from the resale or cancellation of reacquired capital stock. (See account 217, Reacquired Capital Stock.) 211. Miscellaneous paid-in capital This account shall include the balance of all other credits for paid-in capital which are not properly includible in the foregoing accounts. NOTE. — Amounts included in capital surplus at the effective date of this system of accounts which cannot be classified as to the source thereof shall be included in this account. 212. Installments received on capital stock A. This account shall include in a separate subdivision for each class and series of capital stock the amount of installments received on capital stock on a partial or installment payment plan from subscribers who are not bound by legally enforceable subscription contracts. B. As subscriptions are paid in full and certificates issued, this account shall be charged and the appropriate capital stock account credited with the par or stated value of such stock. Any discount or premium on an original issue shall be included in the appropriate discount or premium account. 213. Discount on capital stock A. This account shall include in a separate subdivision for each class and series of capital stock all discount on the original issuance and sale of capital stock, including additional capital stock of a particular class or series as well as first issues. B. When capital stock which has been actually issued is retired, the amount in this account applicable to the shares retired shall be written off to account 210, Gain on Resale or Cancellation of Reacquired Capital Stock, provided, however, that the amount shall be charged to account 439, Adjustments to Retained Earnings, to the extent that it exceeds the balance in account 210. C. The utility may amortize the balance in this account by charges to account 439, Adjustments to Retained Earnings. 214. Capital stock expense A. This account shall include in a separate subdivision for each class and series of stock all commissions and expenses incurred in connection with the original issuance and sale of capital stock, including additional capital stock of a particular class or series as well as first issues. Expenses applicable to capital stock shall not be deducted from premium on capital stock. B. When capital stock which has been actually issued by the utility is retired, the amount in this account applicable to the shares retired shall be written off to account 210, Gain on Resale or Cancellation of Reacquired Capital Stock, provided, however, that the amount shall be charged to account 439, Adjustments to Retained Earnings, to the extent that it exceeds the balance in account 210. C. The utility may amortize the balance carried in this account by systematic charges to account 425, Miscellaneous Amortization, or it may write off capital stock expense in whole or in part by charges to account 439, Adjustments to Retained Earnings. NOTE. — Expenses in connection with the reacquisition or resale of utility's capital stock shall not be included herein. 215. Appropriated retained earnings This account shall include the amount of retained earnings which has been appropriated or set aside for specific purposes. Separate subaccounts shall be maintained under such titles as will designate the purpose for which each appropriation was made. 216. Unappropriated retained earnings This account shall include the balance, either debit or credit, of unappropriated retained earnings arising from earnings. It shall not include items includible in any of the accounts for paid-in capital. 217. Reacquired capital stock A. This account shall include in a separate subdivision for each class and series of capital stock the cost of capital stock actually issued by the utility and reacquired by it and not retired or canceled, except, however, stock which is held by trustees in sinking or other funds. B. When reacquired capital stock is retired or canceled, the difference between its cost, including commissions and expenses paid in connection with the reacquisition, and its par or stated value plus any premium and less any discount and expenses applicable to the shares retired, shall be debited or credited, as appropriate, to account 210, Gain on Resale or Cancellation of Reacquired Capital Stock, provided, however, that debits shall be charged to account 439, Adjustments to Retained Earnings, to the extent that they exceed the balance in account 210. C. When reacquired capital stock is resold by the utility, the difference between the amount received on the resale of the stock, less expenses incurred in the resale, and the cost of the stock included in this account shall be accounted for as outlined in paragraph B. NOTE A. — See account 124, Other Investments, for permissive accounting treatment of stock reacquired under a definite plan for resale. NOTE B. — The accounting for reacquired stock shall be as prescribed herein unless otherwise specifically required by statute. 6. Long-Term Debt 221. Bonds This account shall include, in a separate subdivision for each class and series of bonds, the face value of the actually issued and unmatured bonds which have not been retired or canceled; also, the face value of such bonds issued by others the payment of which has been assumed by the utility. 222. Reacquired bonds A. This account shall include the face value of bonds actually issued or assumed by the utility and reacquired by it and not paid, retired, or canceled. The account for reacquired debt shall not include securities which are held by trustees in sinking or other funds. B. When bonds are reacquired, the difference between face value, adjusted for unamortized discount, expense or premium and the amount paid upon reacquisition, shall be debited or credited as appropriate, to account 421, Miscellaneous Non-operating income or account 426, Miscellaneous Income Deductions (See, however, account 181, paragraph E, as to refunding operations.) 223. Advances from associated companies A. This account shall include the face value of notes payable to associated companies and the amount of open book accounts representing advances from associated companies. It does not include notes and open accounts representing indebtedness subject to current settlement which are includible in account 233, Notes Payable to Associated Companies, or account 234, Accounts Payable to Associated Companies. B. The records supporting the entries to these accounts shall be so kept that the utility can furnish complete information concerning each note and open account. 224. Other long-term debt A. This account shall include, until maturity, all longterm debt not otherwise provided for. This covers such items as receivers' certificates, real estate mortgages executed or assumed, assessments for public improvements, notes and unsecured certificates of indebtedness not owned by associated companies, receipts outstanding for long-term debt, and other obligations maturing more than one year from date of issue or assumption. B. Separate accounts shall be maintained for each class of obligation, and records shall be maintained to show separately for each class all details as to date of obligation, date of maturity, interest dates and rates, security for the obligation, etc. NOTE. — Miscellaneous long-term debt reacquired shall be accounted for in accordance with the procedure set forth in account 222, Reacquired Bonds. 7. Current and Accrued Liabilities Current and accrued liabilities are those obligations which have either matured or which become due within one year from the date thereof; except, however, bonds, receivers' certificates and similar obligations which shall be classified as long-term debt until date of maturity; accrued taxes, such as income taxes, which shall be classified as accrued liabilities even though payable more than one year from date; compensation awards, which shall be classified as current liabilities regardless of date due; and minor amounts payable in installments which may be classified as current liabilities. If a liability is due more than one year from date of issuance or assumption by the utility, it shall be credited to a long-term debt account appropriate for the transaction, except, however, the current liabilities previously mentioned. 231. Notes payable This account shall include the face value of all notes, drafts, acceptances, or other similar evidences of indebtedness, payable on demand or within a time not exceeding one year from date of issue, to other than associated companies. 232. Accounts payable This account shall include all amounts payable by the utility within one year, which are not provided for in other accounts. 233. Notes payable to associated companies 234. Accounts payable to associated companies These accounts shall include amounts owing to associated companies on notes, drafts, acceptances, or other similar evidences of indebtedness, and open accounts payable on demand or not more than one year from date of issue or creation. NOTE. — Exclude from these accounts notes and accounts which state includible in account 223, Advances from Associated Companies. 235. Customer deposits This account shall include all amounts deposited with the utility by customers as security for the payment of bills. 236. Taxes accrued A. This account shall be credited with the amount of taxes accrued during the accounting period, corresponding debits being made to the appropriate accounts for tax charges. Such credits may be based upon estimates, but from time to time during the year as the facts become known, the amount of the periodic credits shall be adjusted so as to include as nearly as can be determined in each year the taxes applicable thereto. Any amount representing a prepayment of taxes applicable to the period subsequent to the date of the balance sheet, shall be shown under account 165, Prepayments. B. If accruals for taxes are found to be insufficient or excessive, correction therefor shall be made through current tax accruals. However, if such corrections are so large as to seriously distort current expenses, see General Instructions 7.1. C. Accruals for taxes shall be based upon the net amounts payable after credit for any discounts, but shall not include any amounts for interest on tax deficiencies or refunds. Interest received on refunds shall be credited to account 419, Interest and Dividend Income, and interest paid on deficiencies shall be charged to account 431, Other Interest Expense. D. The records supporting the entries to this account shall be kept so as to show for each class of taxes, the amount accrued, the basis for the accrual, the accounts to which charged, and the amount of tax paid. 237. Interest accrued This account shall include the amount of interest accrued but not matured on all liabilities of the utility not including, however, interest which is added to the principal of the debt on which incurred. Supporting records shall be maintained so as to show the amount of interest accrued on each obligation. 238. Dividends declared This account shall include the amount of dividends which have been declared but not paid. Dividends shall be credited to this account when they become a liability. 239. Matured long-term debt This account shall include the amount of long-term debt (including any obligation for premiums) matured and unpaid, without specific agreement for extension of the time of payment and bonds called for redemption but not presented. 240. Matured interest This account shall include the amount of matured interest on long-term debt or other obligations of the utility at the date of the balance sheet unless such interest is added to the principal of the debt on which incurred. 241. Tax collections payable This account shall include the amount of taxes, sewage charges or rentals, surcharges and the like collected by the utility through payroll deductions or otherwise for the account of, and pending transmittal to the proper taxing authority or political subdivision. NOTE. — Do not include liability for taxes assessed directly against the utility which are accounted for as part of the utility's own tax expense. 242. Miscellaneous current and accrued liabilities This account shall include the amount of all other current and accrued liabilities not provided for elsewhere appropriately designated and supported so as to show the nature of each liability. 8. Deferred Credits 251. Unamortized premium on debt This account shall include the total of the credit balances in the discount, expense and premium accounts, for all classes of long-term debt, including receivers' certificates. (See account 181, Unamortized Debt Discount and Expense.) 252. Customer advances for construction This account shall include advances by or in behalf of customers for construction which are to be refunded either wholly or in part. When a person is refunded the entire amount to which he is entitled according to the agreement or rule under which the advance was made, the balance, if any, remaining in this account shall be credited to the respective plan account. 253. Other deferred credits This account shall include advance billings and receipts and other deferred credit items, not provided for elsewhere, including amounts which cannot be entirely cleared or disposed of until additional information has been received. 255. Accumulated deferred investment tax credits A. Prior to any use of this account, the utility must file with the Commission, for the purpose of obtaining authorization, a copy of its proposed plan of accounting for deferred investment tax credits. The utility shall not use these accounts unless such use has been authorized by the Commission. This account shall be credited and Account 411.3, Investment Tax Credit Adjustments, debited with investment tax credits deferred by companies which do not apply such credits as a reduction of the overall income tax expense in the year in which a tax credit is realized. There can be neither changes in accounting method for utility operations nor transfers from this account, except as authorized herein or as may otherwise be authorized by the Commission. (See Account 411.3.) B. This account shall be debited and Account 411.3 credited with a proportionate amount determined in relation to the average useful life of utility property to which the tax credits relate, or such lesser period of time as may be adopted and consistently followed by the company. C. Subdivisions of this account by department shall be maintained for deferred investment tax credits that are related to nonutility or other operations. Contra entries affecting such account subdivisions shall be appropriately recorded. Use of deferral or nondeferral accounting procedures adopted for nonutility or other operations are to be followed on a consistent basis. D. Separate records for each utility department and nonutility operation shall be maintained identifying the properties giving rise to the investment tax credits for each year with the weighted average service life of such properties and any unused balances of such credits. Such records are not necessary unless the tax credits are deferred. 256. Deferred gains from disposition of property This account shall include gains from the sale or other disposition of property previously recorded in accounts 101-104; in account 105, Property Held for Future Use or account 121, Nonutility Property, where such gains are significant and are to be amortized over a period of five years, unless otherwise authorized by the Commission. The amortization of the amounts in this account shall be made by credits to account 411.6, Gains from Disposition of Utility Plant or account 421.1, Gain on Disposition of Property, as appropriate. Amounts recorded in this account shall be net of related income taxes. (See Utility Plant Instruction 5F, 7E, and 10E.) 9. Operating Reserves 261. Property insurance reserve A. This account shall include amounts reserved by the utility for self-insurance against losses through accident, fire, flood, or other hazards to its own property or property leased from others. The amounts charged to account 924, Property Insurance, or other appropriate accounts to cover such risks shall be credited to this account. A schedule of risks covered by this reserve shall be maintained, giving a description of the property involved, the character of the risks covered and the rates used. B. Charges shall be made to this account for losses covered by self-insurance. Details of these charges shall be maintained according to the year the casualty occurred which gave rise to the loss. 262. Injuries and damages reserve A. This account shall be credited with amounts charged to account 925, Injuries and Damages, or other appropriate accounts, to meet the probable liability, not covered by insurance, for deaths or injuries to employees and others, and for damages to property neither owned nor held under lease by the utility. B. When liability for any injury or damage is admitted by the utility either voluntarily or because of the decision of a court or other lawful authority, such as a workmen's compensation board, the admitted liability shall be charged to this account and credited to the appropriate liability account. Details of these charges shall be maintained according to the year the casualty occurred which gave rise to the loss. NOTE. — Recoveries or reimbursements for losses charged to this account shall be credited hereto; the cost of repairs to property of others if provided for herein, shall be charged to this account. 263. Pensions and benefits reserve A. This account shall include provisions made by the utility and amounts contributed by employees, for pensions, accident and death benefits, savings, relief, hospital and other provident purposes, where the funds represented by the reserve are included in the assets of the utility either in general or in segregated fund accounts. B. Amounts paid by the utility for the purposes for which this reserve is established shall be charged hereto. C. A separate account shall be kept for each kind of reserve included herein. NOTE. — If employee pension or benefit plan funds are not included among the assets of the utility but are held by outside trustees, payments into such funds, or accruals therefor, shall not be included in this account. 265. Miscellaneous operating reserves A. This account shall include reserves include all operating reserves maintained by the utility which are not provided for elsewhere. B. This account shall be maintained in such manner as to show the amount of each separate reserve and the nature and amounts of the debits and credits thereto. NOTE. — This account includes only such reserves as may be created for operating purposes and does not include any reservations of income the credits for which should be carried in account 215, Appropriated Retained Earnings. 10. Accumulated Deferred Income Taxes A. Authorization to practice deferred tax accounting must first be obtained from the Commission. B. The utility shall use the accounts provided below for prior accumulations of deferred taxes on income and for additional provisions. NOTE A. — The text of the accounts below are designed primarily to cover deferrals of federal income taxes pursuant to provisions of the Internal Revenue Code of 1954 but the accounts are also applicable to deferrals of State taxes on income. NOTE B. — A utility which has more than one utility department and/or nonutility property and which has deferred taxes on income with respect thereto shall classify such deferrals in the accounts provided below so as to allow ready identification of items relating to each utility department and to Other Income and Deductions. 281. Accumulated deferred income taxes — accelerated amortization A. This account shall be credited and account 410, Provision for Deferred Income Taxes, shall be debited with an amount equal to that by which taxes on income payable for the year are lower because of the use of accelerated (5-year) amortization of certified defense facilities in computing such taxes, as permitted by Section 168 of the Internal Revenue Code of 1954 (Section 124A of previous Internal Revenue Code), as compared to the depreciation deduction otherwise appropriate and allowable for tax purposes according to the straight line or other nonaccelerated depreciation method and appropriate estimated useful life for such property. B. This account shall be debited and account 411, Income Taxes Deferred in Prior Years-Credit, shall be credited with an amount equal to that by which taxes on income payable for the year are greater because of the use in prior years of accelerated (5-year) amortization of certified defense facilities instead of nonaccelerated or nonliberalized depreciation otherwise appropriate for income tax purposes, and deferral of taxes in such prior years as described in paragraph A, above. Such debit to this account and credit to account 411 shall, in general, represent the effect on taxes payable for the current year of the unavailability of a depreciation deduction for tax purposes, or a reduced amount, with respect to any depreciable property for which accelerated amortization was used in prior years, as compared to the depreciation deduction otherwise available and appropriate for such property, considering its estimated useful life, according to the depreciation method ordinarily used by the utility for similar property in computing depreciation for tax purposes by a nonaccelerated or nonliberalized depreciation method. C. Records with respect to entries to this account as described above, and the account balance, shall be so maintained as to show the factors of calculation and the separate amounts applicable to the facilities of each certification or authorization of accelerated amortization for tax purposes. D. The use of this account and the accounting described above are not mandatory for any utility, which in accordance with a consistent policy elects not to follow deferred tax accounting even though accelerated amortization is used in computing taxes on income. If, however, deferred tax accounting is initiated with respect to any certified defense facility, the accounting shall not be suspended or discontinued on the property covered by that certificate, without approval of the Commission. E. The utility is restricted in its use of this account to the purposes set forth above. It shall not transfer the balance in this account or any portion thereof to retained earnings or make any use thereof except as provided in the text of this account without prior approval of the Commission. Any remaining balance of accumulated deferred taxes with respect to any certified defense facility for which deferred tax accounting has been followed, shall, upon expiration of the estimated useful life of the facility on which deferred tax calculations were based or upon retirement of such facility or predominant part thereof, be credited to account 411, Income Taxes Deferred in Prior Years-Credit, or otherwise be applied as the Commission may authorize or direct. 282. Accumulated deferred income taxes—liberalized depreciation A. This account shall be credited and account 410, Provision for Deferred Income Taxes, shall be debited with an amount equal to that by which taxes on income payable for the year are lower because of the use of liberalized depreciation in computing such taxes, as permitted by Section 167 of the Internal Revenue Code of 1954, as compared to the depreciation deduction otherwise appropriate and allowable for tax purposes for similar property of the same estimated useful life according to the straight line or other nonliberalized method of depreciation. B. This account shall be debited and account 411, Income Taxes Deferred in Prior Years-Credit, shall be credited with an amount equal to that by which taxes on income payable for the year are greater because of the use in prior years of liberalized depreciation for income tax purposes, and deferral of taxes in such prior years as described in paragraph A above. Such debit to this account and credit to account 411, shall in general, represent the effect on taxes payable for the current year of the smaller amount of depreciation permitted for tax purposes for the current year with respect to any depreciable property for which liberalized depreciation was used in prior years, as compared to the depreciation deduction otherwise appropriate and available for similar property of the same estimated useful life according to the straight line or other nonliberalized depreciation method ordinarily used by the utility in computing depreciation for tax purposes. C. Records with respect to entries to this account, as described above, and account balance, shall be so maintained as to show the factors of calculation and the separate amounts applicable to the plant additions of each vintage year for each class, group, or unit as to which different liberalized depreciation methods and estimated useful lives have been used. The underlying calculation to segregate and associate deferred tax amounts with the respective vintage years may be based on reasonable methods of approximation, if necessary, consistently applied. D. The use of this account and the accounting described above are not mandatory for any utility, which in accordance with a consistent policy, elects not to follow deferred tax accounting even though liberalized depreciation is used in computing taxes on income. If, however, deferred tax accounting is initiated with respect to any property such accounting shall not be discontinued on that property, without approval of the Commission. E. The utility is restricted in its use of this account to the purposes set forth above. It shall not transfer the balance in the account or any portion thereof to retained earnings or make any use thereof except as provided in the text of this account without prior approval of the Commission. Any remaining deferred tax balance with respect to any years' plant additions or subdivisions thereof for which liberalized depreciation accounting has been followed upon retirement from service of such property or predominant portion thereof, or upon expiration of the estimated useful life on which the depreciation calculations for tax purposes are based, shall be credited to account 411, Income Taxes Deferred in Prior Years-Credit, or otherwise applied as the Commission may authorize or direct. 283. Accumulated deferred income taxes—other A. This account, when its use has been authorized by the Commission for specific types of tax deferrals shall be credited and account 410, Provision for Deferred Income Taxes, shall be debited with an amount equal to that by which taxes on income payable for the year are lower because of the current use of deductions other than accelerated amortization or liberalized depreciation in the computation of income taxes, which deductions for general accounting purposes will not be fully reflected in the utility's determination of annual net income until subsequent years. B. This account, when its use has been authorized by the Commission, shall be debited and account 411, Income Taxes Deferred in Prior Years-Credit, shall be credited with an amount equal to that by which taxes on income payable for the year are greater because of deferral of taxes on income in previous years, as provided by paragraph A, above, because of difference in timing for tax purposes of particular income deductions from that recognized by the utility for general accounting purposes, other than with respect to accelerated amortization or liberalized depreciation. Such debit to this account and credit to account 411 shall, in general, represent the effect on taxes payable in the current year of the smaller deduction permitted for tax purposes as compared to the amount recognized in the utility's general accounts with respect to the item or class of items for which deferred tax accounting by the utility was authorized by the Commission. C. Records with respect to entries to this account, as described above, and the account balance, shall be so maintained as to show the factors of calculation with respect to each annual amount of the item or class of items, other than accelerated amortization or liberalized depreciation, for which tax deferral accounting by the utility is authorized by the Commission. D. The utility is restricted in its use of this account to the purposes set forth above. It shall not transfer the balance in the account or any portion thereof to retained earnings or make any use thereof except as provided in the text of this account, without prior approval of the Commission. Any remaining deferred tax account balance with respect to an amount for any prior years tax deferral, the amortization of which or other recognition in the utility's income accounts has been completed, or other dispositions made, shall be credited to account 411, Income Taxes Deferred In Prior Years-Credit, or otherwise disposed of as the Commission may authorize or direct. NOTE. — In determining appropriate use of this account as a basis of request to the Commission for authorization of its use, consideration shall be given to the relative importance of the amount involved, and to other items in the utility's accounts where "prepaid tax accounting" may be appropriate such as situations (a) where the time of taking a deduction in computing taxes on income is such that the tax deduction must be delayed or applied to a series of future years as opposed to earlier recognition of such item in determination of income in the general accounts of the utility, or (b) where inclusion of an income item is required for tax purposes but is to be recognized in whole or in part in the utility's income accounts of a subsequent year or years. Part 6 UTILITY PLANT ACCOUNTS 1. Intangible Plant 301. Organization This account shall include all fees paid to federal or state governments for the privilege of incorporation and expenditures incident to organizing the corporation, partnership or other enterprise and putting it into readiness to do business. ITEMS 1. Cost of obtaining certificates authorizing an enterprise to engage in the public utility business. 2. Fees and expenses for incorporation. 3. Fees and expenses for mergers or consolidations. 4. Office expenses incident to organizing the utility. 5. Stock and minute books and corporate seal. NOTE A. — This account shall not include any discounts upon securities issued or assumed; nor shall it include any costs incident to negotiating loans, selling bonds or other evidences of debt, or expenses in connection with the authorization, issuance and sale of capital stock. NOTE B. — Exclude from this account and include in the appropriate expense account the cost of preparing and filing papers in connection with the extension of the term of incorporation unless the first organization costs have been written off. Where charges are made to this account for expenses incurred in mergers, consolidations or reorganizations, amounts previously included herein or in similar accounts in the books of the companies concerned shall be excluded from this account. 302. Franchises and consents A. This account shall include amounts paid to the federal government, to a state or to a political subdivision thereof in consideration for franchises, consents or certificates, running in perpetuity or for a specified term of more than one year, together with necessary and reasonable expenses incident to procuring such franchises, consents or certificates of permission and approval, including expenses of organizing and merging separate corporations, where statutes require solely for the purpose of acquiring franchises. B. If a franchise, consent or certificate is acquired by assignment, the charge to this account in respect thereof shall not exceed the amount paid therefor by the utility to the assignor, nor shall it exceed the amount paid by the original grantee, plus the expense of acquisition to such grantee. Any excess of the amount actually paid by the utility over the amount above specified shall be charged to account 426, Miscellaneous Income Deductions. C. When any franchise has expired, the book cost thereof shall be credited hereto and charged to account 426, Miscellaneous Income Deductions, or to account 114, Accumulated Provision for Amortization of Utility Plant in Service, as appropriate. D. Records supporting this account shall be kept so as to show separately the book cost of each franchise or consent. NOTE. — Annual or other periodic payments under franchises shall not be included herein but in the appropriate operating expense account. 303. Miscellaneous intangible plant A. This account shall include the cost of patent rights, licenses, privileges and other intangible property necessary or valuable in the conduct of utility operations and not specifically chargeable to any other account. B. When any item included in this account is retired or expires, the book cost thereof shall be credited hereto and charged to account 426, Miscellaneous Income Deductions, or to account 108, Accumulated Provision for Amortization of Utility Plant in Service, as appropriate. C. This account shall be maintained in such a manner that the utility can furnish full information with respect to the amounts included herein. 2. Transmitting Facilities 310. Land and land rights This account shall include the cost of land and land rights used in connection with transmitting activities. (See Utility Plant Instruction 7.) 311. Structures and improvements This account shall include the cost in place of structures and improvements used in connection with transmitting activities. (See Utility Plant Instruction 8.) 312. Electronic transmitting equipment This account shall include the cost of electronic transmitting equipment. ITEMS 1. Cameras. 2. Microphones. 3. Audio-Video Modulators. 4. Monitors. 5. Amplifiers. 6. Tape Recorders. 313. Accessory transmitting equipment This account shall include the cost installed of auxiliary transmitting apparatus. ITEMS 1. Air cleaning and cooling apparatus. 2. Cooling Systems, including Towers, Pumps, Tanks, and Piping. 3. Auxiliary generators, including boards, compartments, switching equipment and control equipment used to supply power to the transmitting plant. 314. Other equipment This account shall include the cost installed of miscellaneous equipment in and about the transmitting station which is not properly includable in any of the foregoing accounts. ITEMS 1. Fire fighting equipment. 2. Miscellaneous equipment, such as first aid cabinet, intrasite communication equipment, incinerator, and other similar equipment. 3. Station maintenance equipment. 3. Head End Equipment 320. Land and land rights This account shall include the cost of land and land rights used in connection with head end operations. (See Utility Plant Instruction 7.) 321. Structure and improvements This account shall include the cost in place of structures and improvements used in connection with head end operations. (See Utility Plant Instruction 8.) 322. Towers and antennas This account shall include the cost of towers and antennas comprising the head end tower assemblies or arrays. ITEMS 1. Towers. 2. Tower lighting system. 3. Antennas. 4. Preamplifiers. 5. Lead in Cables. 323. Electronic receiving and signal processing equipment This account shall include the cost of head end receiving and signal processing equipment. ITEMS 1. Mixers. 2. Attenuators. 3. Preamplifiers. 4. Convertors. 5. Amplifiers. 324. Power supply equipment This account shall include the cost of all power supply and distribution equipment serving as or associated with the prime source of power used in head end operations. This account shall also include the cost of equipment used for the purpose of supplying emergency or auxiliary head end power. ITEMS 1. Generators. 2. Motors. 3. Transformers. 4. Voltage Stabilizers. 325. Other head end equipment This account shall include the cost of miscellaneous equipment devoted to general station use, and not properly includable in any of the other head end equipment accounts. ITEMS 1. Air cleaning and cooling apparatus. 2. Fire fighting equipment. 3. Testing and monitoring equipment. 4. Office furniture and equipment. 5. Housing and cabinets. 6. Shop tools and equipment. 4. Distribution Facilities 360. Land and land rights This account shall include the cost of land and land rights used in connection with distribution operations. (See Utility Plant Instruction 7.) 361. Structures and improvements This account shall include the cost in place of structures and improvements used in connection with distribution operations. (See Utility Plant Instruction 8.) 362. Towers, poles and fixtures This account shall include the cost installed of towers and poles together with appurtenant fixtures used for supporting overhead distribution conductors and service wires. ITEMS 1. Anchors, head arm, and other guys, including guy guards, guy clamps, etc. 2. Brackets. 3. Excavation and backfill, including disposal of excess excavated material. 4. Foundations. 5. Poles, wood, steel, concrete, or other material. 6. Equipment racks and platforms. 363. Underground conduit This account shall include the cost installed of underground conduit and tunnels used for housing distribution cables or wires. ITEMS 1. Conduit. 2. Excavation, including shoring, bracing, bridging, backfill, and disposal of excess excavated material. 3. Pavement disturbed, including cutting and replacing pavement. 364. Electronic conductors and devices This account shall include the cost installed of conductors and devices used for distribution purposes. ITEMS 1. Trunk line cable. 2. Feeder cable. 3. Equalizers. 4. Amplifiers. 5. Convertor-amplifiers. 6. Bridging amplifiers. 7. Directional coupler. 8. Taps. 9. Spitters. 10. Resistors. 365. Distribution system—power supply This account shall include the cost of all power supply and distribution equipment serving as or associated with the prime source of power used in signal distribution. This account shall include also the cost of power rectifiers or motor generator installations (not forming an integral part of the transmitting or head end stations) that are provided as a source of power for the distribution system. ITEMS 1. Generators. 2. Motors. 3. Transformers. 4. AGL units for remote cable powering of amplifiers. 5. Power stabilization and protection units and systems. 6. Carrier generators. 366. Services This account shall include the cost installed of overhead and underground conductors locating from the pressure tap to the power of connection with the customers outlet or wiring. Conduit used for underground service conductors shall be included herein. ITEMS 1. Cables and Wires. 2. Matching transformer. 3. Brackets. 4. Insulators. 367. Installations on customers' premises This account shall include the cost installed of equipment on customers' premises when the utility incurs such cost and when the utility retains title to and assumes full responsibility for maintenance and replacement of such property. This account shall not include leased equipment. 368. Leased property on customers' premises This account shall include the cost of equipment on customers' premises, leased or loaned to customers, but not including property held for sale. NOTE. — The cost of setting and connecting such appliances or equipment on the premises of customers and the cost of resetting or removal shall not be charged to this account but to operating expenses account 566, Customer Installation Expenses. 369. Other equipment This account shall include the cost installed of all other distribution system equipment not provided for in the foregoing accounts. 5. General Plant 389. Land and land rights This account shall include the cost of land and land rights used for utility purposes, the cost of which is not properly includible in other laud and land rights accounts. (See Utility Plant Instruction 7.) 390. Structures and improvements This account shall include the cost in place of structures and improvements usual for utility purposes, the cost of which is not properly includible in other structures and improvements accounts. (See Utility Plant Instruction 8.) 391. Office furniture and equipment A. This account shall include the cost of office furniture and equipment owned by the utility and devoted to utility service, and not permanently attached to buildings, except the cost of such furniture and equipment which the utility elects to assign to other plant accounts on a functional basis. B. If the utility has equipment includible in this account at more than one location, separate records shall be maintained for each location. ITEMS 1. Book cases and shelves. 2. Desks, chairs, anti desk equipment. 3. Drafting room equipment. 4. Ceiling, storage, and other cabinets. 5. Floor covering. 6. Library and library equipment. 7. Mechanical office equipment such as accounting machines, typewriters, etc. 8. Safes. 9. Tables. 392. Transportation equipment This account shall include the cost of transportation vehicles used for utility purposes. ITEMS 1. Airplanes. 2. Automobiles. 3. Bicycles. 4. Electrical vehicles. 5. Motor trucks. 6. Motorcycles. 7. Repair cars or trucks. 8. Tractors and trailers. 9. Other transportation vehicles. 393. Stores equipment A. This account shall include the cost of equipment used for the receiving, shipping, handling and storage of materials and supplies. B. If the utility has equipment includible in this account at more than one location, separate records shall be maintained for each location. ITEMS 1. Chain falls. 2. Counters. 3. Cranes (portable). 4. Elevating and stacking equipment (portable). 5. Hoists. 6. Lockers. 7. Scales. 8. Shelving. 9. Storage bins. 10. Trucks, hand and power driven. 11. Wheelbarrows. 394. Tools, shop and garage equipment This account shall include the cost of tools, implements, and equipment used in construction, repair work, general shops and garages and not specifically provided for or includible in other accounts. ITEMS 1. Air compressors. 2. Anvils. 3. Automobile repair shop equipment. 4. Battery charging equipment. 5. Belts, shafts and countershafts. 6. Boilers. 7. Cable pulling equipment. 8. Concrete mixers. 9. Drill presses. 10. Derricks. 11. Electric equipment. 12. Engines. 13. Forges. 14. Furnaces. 15. Foundations and settings specially constructed for and not expected to outlast the equipment for which provided. 16. Gas producers. 17. Gasoline pumps, oil pumps and storage tanks. 18. Greasing tools and equipment. 19. Hoists. 20. Ladders. 21. Lathes. 22. Machine tools. 23. Motor driven tools. 24. Motors. 25. Pipe threading and cutting tools. 26. Pneumatic tools. 27. Pumps. 28. Riveters. 29. Smithing equipment. 30. Tool racks. 31. Vises. 32. Welding apparatus. 33. Work benches. 395. Laboratory equipment A. This account shall include the cost installed of laboratory equipment used for general laboratory purposes and not specifically provided for or includible in other departmental or functional plan accounts. B. If the utility has equipment includible in this account at more than one location, separate records shall be maintained for each location. ITEMS 1. Autoclaves. 2. Barometers. 3. Cameras. 4. Centrifuge. 5. Distilling apparatus. 6. Furnaces. 7. Microscopes. 8. Ovens. 9. Pedometers. 10. Rain gauges. 11. Refrigerators. 12. Scales. 13. Sterilizers. 14. Stop watches. 15. Testing machines. 16. Thermometers. 17. Voltmeters. 18. Other bacteriological, electric, chemical hydraulic or research equipment. 396. Power operated equipment This account shall include the cost of power operated equipment used in construction or repair work exclusive of equipment includible in other accounts. Include, also, the tools and accessories acquired for use with such equipment and the vehicle on which such equipment is mounted. ITEMS 1. Air compressors, including driving unit and vehicle. 2. Back filling machines. 3. Boring machines. 4. Bulldozers. 5. Cranes and hoists. 6. Diggers. 7. Engines. 8. Pile drivers. 9. Pipe cleaning machines. 10. Pipe coating or wrapping machines. 11. Tractors—Crawler type. 12. Trenchers. 13. Other power operated equipment. NOTE. — It is intended that this account include only such large units as are generally self-propelled or mounted on moveable equipment. 397. Communication equipment This account shall include the cost installed of telephone, telegraph and wireless equipment for general use in connection with utility operations. ITEMS 1. Antennae. 2. Booths. 3. Cables. 4. Distribution boards. 5. Extension cords. 6. Gongs. 7. Handsets, manual and dial. 8. Insulators. 9. Intercommunicating sets. 10. Loading coils. 11. Operators desks 12. Poles and fixtures used wholly for telephone and telegraph wires. 13. Radio transmitting and receiving sets. 14. Remote control equipment and lines. 15. Sending keys. 16. Storage batteries. 17. Switchboards. 18. Telautograph circuit connections. 19. Telegraph receiving sets. 20. Telephone and telegraph circuits. 21. Testing instruments. 22. Towers. 23. Underground conduit used wholly for telephone or telegraph wires and cable wires. 398. Miscellaneous equipment This account shall include the cost of equipment, apparatus, etc., used in utility operations, and which is not includible in any other account. ITEMS 1. Hospital and infirmary equipment. 2. Kitchen equipment. 3. Recreation equipment. 4. Radios. 5. Restaurant equipment. 6. Soda fountains. 7. Operator's cottage furnishings. 8. Other miscellaneous equipment. NOTE. — Miscellaneous equipment of the nature indicated above wherever practicable shall be included in the utility plant accounts on a functional basis. 399. Other tangible property This account shall include the cost of tangible utility plant not provided for elsewhere. Part 7 INCOME ACCOUNTS 1. Utility Operating Income 400. Operating revenues There shall be shown under this caption the total amount included in the operating revenue accounts provided herein and in similar accounts for other utility departments. Separate subaccounts shall be maintained for each utility department. 401. Operation expense There shall be shown under this caption the total amount included in the operation expense accounts provided herein and in similar accounts for other utility departments. Separate subaccounts shall be maintained for each utility department. 402. Maintenance expense There shall be shown under this caption the total amount included in the maintenance expense accounts provided herein and in similar accounts for other utility departments. Separate subaccounts shall be maintained for each utility department. 403. Depreciation expense A. This account shall include the amount of depreciation expense for all classes of depreciable utility plant in service except such depreciation expense as is chargeable to clearing accounts or to account 416, Costs and Expenses of Merchandising, Jobbing, and Contract Work. B. The utility shall keep such records of property and property retirements as will reflect the service life of property which has been retired and aid in estimating probable service life by mortality, turnover, or other appropriate methods; and also such records as will reflect the percentage of salvage and cost of removal for property retired from each account, or subdivision thereof for depreciable utility plant. C. If the utility is engaged in more than one utility service, a separate account shall be kept hereunder for each utility service. NOTE A. — Depreciation expense applicable to property included in account 104, Utility Plant Leased to Others, shall be charged to account 413, Expenses of Utility Plant Leased to Others. NOTE B. — Depreciation expense applicable to transportation equipment, shop equipment, tools, work equipment and power operated equipment and other general equipment may be charged to clearing accounts as necessary in order to obtain a proper distribution of expenses between construction and operation. 404. Amortization of limited-term utility plant This account shall include amortization charges applicable to amounts included in the utility plant accounts for limited-term franchises, licenses, patent rights, limited-term interests in land, and expenditures on leased property where the service life of the improvements is terminable by action of the lease. The charges to this account shall be such as to distribute the book cost of each investment as evenly as may be over the period of its benefit to the utility. (See account 114, Accumulated Provision for Amortization of Utility Plant in Service.) 405. Amortization of other utility plant A. When authorized by the Commission, this account shall include charges for amortization of intangible or other utility plant in service which does not have a definite or terminable life and which is not subject to charges for depreciation expense. B. This account shall be supported in such detail as to show the amortization applicable to each investment being amortized, together with the book cost of the investment and the period over which it is being written off. 406. Amortization of utility plant acquisition adjustments This account shall be debited or credited, as the case may be, with amounts includible in operating expenses, pursuant to approval or order of the Commission, for the purpose of providing for the extinguishment of the amount in account 117, Utility Plant Acquisition Adjustments. 407.1. Amortization of property losses This account shall be charged with amounts credited to account 182, Extraordinary Property Losses, when the Commission has authorized the amount in the latter account to be amortized by charges to operating expenses. 407.2. Amortization of deferred start-up costs This account shall be charged with amounts credited to account 188, deferred start-up costs, when the utility has elected to amortize these costs over a ten-year period. (See account 188.). 408. Taxes other than income taxes A. This account shall include the amount of ad valorem, gross revenue or gross receipts taxes, state unemployment insurance, franchise taxes, federal excise taxes, social security taxes, and all other taxes assessed by federal, state, county, municipal, or other local governmental authorities, except income taxes. B. This account shall be charged in each accounting period with the amount of taxes which is applicable thereto, with concurrent credits to account 236, Taxes Accrued, or account 165, Prepayments, as appropriate. When it is not possible to determine the exact amount of taxes, the amount shall be estimated and adjustments made in current accruals as the actual tax levies become known. C. The charges to this account shall be made or supported so as to show the amount of each tax and the basis upon which each charge is made. In the case of a utility rendering a number of utility services, taxes includible in this account shall be assigned directly to the utility department the operation of which gave rise to the tax in so far as practicable. Where the tax is not attributable to a specific utility department, it shall be distributed among the utility departments or nonutility operations on an equitable basis. D. This account shall be maintained according to the subaccounts 408.1 and 408.2 inclusive as shown below. NOTE A. — Special assessments for street and similar improvements shall be included in the appropriate utility plant or nonutility property account. NOTE B. — Taxes specifically applicable to construction shall be included in the cost of construction. NOTE C. — Gasoline and other sales taxes shall be charged as far as practicable to the same account as the materials on which the tax is levied. NOTE D. — Social security and other forms of so-called payroll taxes shall be distributed to utility departments and to nonutility functions on a basis related to payroll. Amounts applicable to construction shall be charged to the appropriate plant account. NOTE E. — Interest on tax refunds or deficiencies shall not be included in this account but in account 419, Interest and Dividend Income or 431, Other Interest Expense, as appropriate. 408.1. Taxes other than income taxes, utility operating income This account shall include those taxes recorded in account 408, Taxes Other Than Income Taxes which relate to utility operating income. This account shall be maintained so as to allow ready identification of taxes relating to Utility Operating Income (by department), Utility Plant Leased to Others and Other Utility Operating Income. 408.2. Taxes other than income taxes, other income and deductions This account shall include those taxes recorded in account 408, Taxes Other Than Income Taxes which relate to Other Income and Deductions. 409. Income taxes A. This account shall include the amount of state and federal income taxes on income properly accruable during the period covered by the income statement to meet the actual liability for such taxes. Concurrent credits for the tax accruals shall be made to account 236, Taxes Accrued, and as the exact amount of taxes becomes known, the current tax accruals shall be adjusted by a charge or credit to this account, unless such adjustment is properly includible in account 439, Adjustments to Retained Earnings, so that this account as nearly as can be ascertained shall include the actual taxes payable by the utility. (See general instructions 7.1 for prior period adjustments.) B. The accruals for income taxes shall be apportioned among utility departments and to Other Income and Deductions so that, as nearly as practicable, each tax shall be included in the expenses of the utility department or Other Income and Deductions, the income from which gave rise to the tax. The income tax effect of amounts recorded in account 439, Adjustments to Retained Earnings shall be recorded in that account. C. This account shall be maintained according to the subaccounts 409.1, 409.2 and 409.3 inclusive as shown below. NOTE A. — Taxes assumed by the utility on interest shall be charged to account 431, Other Interest Expense. NOTE B. — Interest on tax refunds or deficiencies shall not be included in this account but in account 419, Interest and Dividend Income, or account 431, Other Interest Expense, as appropriate. 409.1. Income taxes, utility operating income This account shall include the amount of those state and federal income taxes reflected in account 409, Income Taxes, which relate to utility operating income. This account shall be maintained so as to allow ready identification of tax effects (both positive and negative) relating to Utility Operating Income (by department) and Utility Plant Leased to Others. 409.2. Income taxes, other income and deductions This account shall include the amount of those state and federal income taxes reflected in account 409, Income Taxes, (both positive and negative) which relate to Other Income and Deductions. 409.3. Income taxes, extraordinary items This account shall include the reflected amount of those state and federal income taxes in account 409, Income Taxes, (both positive and negative) which relate to Extraordinary Items. 410. Provision for deferred income taxes A. This account shall be debited and Accumulated Deferred Income Taxes shall be credited with an amount equal to any deferral of taxes on income as provided by the texts of accounts 281, 282 and 283. There shall not be netted against entries required to be made to this account any credit amounts appropriately includible in account 411, Income Taxes Deferred In Prior Years-Credit. B. This account shall be maintained according to the subaccounts 410.1 and 410.2 inclusive, as shown below. 410.1. Provisions for deferred income taxes, utility operating income This account shall include the amount of those deferred income taxes reflected in account 410, Provision for Deferred Income Taxes, which relate to Utility Operating Income (by department). 410.2. Provisions for deferred income taxes, other income and deductions This account shall include the amount of those deferred income taxes reflected in account 410, Provision for Deferred Income Taxes, which relate to Other Income and Deductions. 411. Income taxes deferred in prior years-credit A. This account shall be credited and Accumulated Deferred Income Taxes debited with an amount equal to the portion of taxes on income payable for the year that is attributable to a deferral of taxes on income in a prior year, in accordance with the plan of deferred tax accounting provided by the texts of accounts 281, 282, and 283. There shall not be netted against entries required to be made to this account any debit amounts appropriately includible in account 410, Provision for Deferred Income Taxes. B. This account shall be maintained according to the subaccounts 411.1 and 411.2 inclusive, as shown below. 411.1. Income taxes deferred in prior years-credit, utility operating income This account shall include the amount of those taxes deferred in prior years-credit, reflected in account 411, Income Taxes Deferred in Prior Years-Credit, which relate to Utility Operating Income (by department). 411.2. Income taxes deferred in prior years-credit, other income and deductions This account shall include the amount of those taxes deferred in prior years-credit, reflected in account 411, Income Taxes Deferred in Prior Years Credit, which relate to Other Income and Deductions. 411.3. Investment tax credit adjustments A. This account shall be debited with the amounts of investment tax credits related to utility property that are credited to account 255, Accumulated Deferred Investment Tax Credits, by companies which do not apply the entire amount of the benefits of the investment credit as a reduction of the overall income tax expense in the year in which such credit is realized. (See account 255.) B. This account shall be credited with the amounts debited to account 255 for proportionate amounts of tax credit deferrals allocated over the average useful life of utility property to which the tax credits relate or such lesser period of time as may be adopted and consistently followed by the company. C. This account shall be maintained according to the subaccounts 411.4 and 411.5, inclusive, as shown below. 411.4. Investment tax credit adjustments, utility operations This account shall include the amount of those investment tax credit adjustments reflected in account 411.3, Investment Tax Credit Adjustments, related to property used in Utility Operations (by department). 411.5. Investment tax credit adjustments, nonutility operations This account shall include the amount of those investment tax credit adjustments reflected in account 411.3, Investment Tax Credit Adjustments, related to property used in Nonutility Operations. 411.6. Gains from disposition of utility plant This account shall include amounts relating to gains from the sale or other disposition of utility plant recorded in accounts 101-104; or property recorded in account 105, Property Held for Future Use or account 121, Nonutility Property, which had previously been classified in the aforementioned utility plant accounts. Record income taxes on gains recorded in this account in account 409, Income Taxes. 411.7. Losses from disposition of utility plant This account shall include amounts relating to losses from the sale or other disposition of utility plant recorded in accounts 101-104, or property recorded in account 105, Property Held for Future Use or account 121, Nonutility Property, which had previously been classified in the aforementioned utility plant accounts. Record the reductions in income taxes attributable to losses recorded in this account in account 409, Income Taxes. 412. Revenues from utility plant leased to others 413. Expenses of utility plant leased to others A. These accounts shall include respectively, revenues from utility property constituting a distinct operating unit or system leased by tire utility to others, and which property is properly includible in account 104, Utility Plant Leased to Others, and the expenses attributable to such property. B. The detail of expenses shall be kept or supported so as to show separately the following: Operation Maintenance Depreciation Amortization NOTE. — Related operating taxes shall be recorded in account 408, Taxes Other than Income Taxes and income taxes shall be recorded in account 409, Income Taxes, identified separately. 2. Other Income and Deductions A. Other Income 415. Revenues from merchandising, jobbing, and contract work 416. Costs and expenses of merchandising, jobbing, and contract work A. These accounts shall include respectively, all revenues derived from the sale of merchandise and jobbing or contract work, including any profit or commission accruing to the utility on jobbing work performed by it as agent under contracts whereby it does jobbing work for another for a stipulated profit or commission, and all expenses incurred in such activities. B. Records in support of these accounts shall be so kept as to permit ready summarization of revenues, costs and expenses by such major items as are feasible. NOTE A. — Revenues and expenses of merchandising, jobbing, and contract work shall be reported in these accounts, if a state regulatory body having jurisdiction over the utility requires the net income therefrom to be reported as other income; but the revenues and expenses shall be reported in account 914, Revenues from Merchandising, Jobbing, and Contract Work, and account 915, Costs and Expenses of Merchandising, Jobbing, and Contract Work, if such regulatory body requires the net income to be reported as an operating income or expense item. In the absence of a requirement by a state regulatory body, the utility may use these accounts or accounts 914 and 915 at its option, in which case the practice of the utility must be consistent. NOTE B. — Related operating taxes shall be recorded in account 408, Taxes Other Than Income Taxes, and income taxes shall be recorded in account 409, Income Taxes. 417. Revenues from nonutility operations 417.1. Expenses of nonutility operations A. These accounts shall include revenues and expenses applicable to operation which are nonutility in character but nevertheless constitute a distinct operating activity of the enterprise as a whole, such as the operation of a servicing organization for furnishing supervision, management, engineering, and similar services to others. NOTE. — Related operating taxes shall be recorded in account 408, Taxes Other Than Income Taxes and income taxes shall be recorded in account 409, Income Taxes. B. The expenses shall include all elements of costs incurred in such operations, and the accounts shall be maintained so as to permit ready summarization as follows: Operation Maintenance Rents Depreciation Amortization 418. Nonoperating rental income A. This account shall include all rent revenues and related expenses of land, buildings, or other property included in account 121, Nonutility Property, which is not used in operations covered by accounts 417 or 417.1. B. The expenses shall include all elements of costs incurred in the ownership and rental of property and the account shall be maintained so as to permit ready summarization as follows: Operation Maintenance Rents Depreciation Amortization NOTE. — Related operating taxes shall be recorded in account 408, Taxes Other Than Income Taxes and income taxes shall be recorded in account 409, Income Taxes. 419. Interest and dividend income A. This account shall include interest revenues on securities, loans, notes, advances, special deposits, tax refunds and all other interest-bearing assets, and dividends on stocks of other companies, whether the securities on which the interest and dividends are received are carried as investments or included in sinking or other special fund accounts. B. This account may include for each accounting period the pro rata amount necessary to extinguish (during the interval between the date of acquisition and the date of maturity), the difference between the cost to the utility and the face value of interest-bearing securities. Amounts thus credited or charged shall be concurrently included in the accounts in which the securities are carried. C. Where significant in amount, expenses excluding operating taxes and income taxes, applicable to security investments and to interest and dividend revenues thereon shall be charged hereto. NOTE A. — Related operating taxes shall be recorded in account 408, Taxes Other Than Income Taxes and income taxes shall be recorded in account 409, Income Taxes. NOTE B. — Interest accrued, the payment of which is not reasonably assured, dividends receivable which have not been declared or guaranteed, and interest or dividends upon reacquired securities issued or assumed by the utility shall not be credited to the account. 421. Miscellaneous nonoperating income This account shall include all revenue and expense items, except taxes, properly includible in the income account and not provided for elsewhere. Related operating taxes shall be recorded in account 408, Taxes Other Than Income Taxes and income taxes shall be recorded in account 409, Income Taxes. ITEMS 1. Profit on sale of timber. (See utility plant instruction 7-C.) 2. Profits from operations of others realized by the utility under contracts. 3. Gain on disposition of investments and reacquisition and resale or retirement of utility's debt securities and investments. 421.1. Gain on disposition of property This account shall be credited with the gain on the sale, conveyance, exchange or transfer of property other than that property recorded in, or previously recorded in, accounts 101-104. (See utility plant instructions 5F, 7E and 10E. ) Income Taxes on Gains recorded in this account shall be recorded in account 409, Income Taxes. (See account 411.6, Gains from Disposition of Utility Plant.) B. Other Income Deductions 421.2. Loss on disposition of property This account shall be charged with the loss on the sale, conveyance, exchange or transfer of property other than that property recorded in, or previously recorded in, accounts 101-104. (See utility plant instructions 5F, 7E and 10E.) The reduction in income taxes attributable to losses recorded in this account shall be recorded in account 409, Income Taxes. (See account 411.7, Losses from Disposition of Utility Plant.) 425. Miscellaneous amortization This account shall include amortization charges not includible in other accounts which are properly deductible in determining the income of the utility before interest charges. Charges includible herein, if significant in amount, must be in accordance with an orderly and systematic amortization program. ITEMS 1. Amortization of utility plant acquisition adjustments, or of intangibles included in utility plant in service when not authorized to be included in utility operating expenses by the Commission. 2. Amortization of amounts in account 182, Extraordinary Property Losses, when not authorized to be included in utility operating expenses by the Commission. 3. Amortization of capital stock expenses when in accordance with a systematic amortization program. 426. Miscellaneous income deductions This account shall include miscellaneous expense items which are nonoperating in nature but which are properly deductible before determining total income before interest charges. ITEMS 1. Donations for charitable, social or community welfare purposes. 2. Life insurance on officers and employees where utility is beneficiary (net premiums less increase in cash surrender value of policies.) 3. Penalties or fines for violations of statutes pertaining to regulation. 3. Interest Charges 427. Interest on long-term debt A. This account shall include in each accounting period the amount of interest applicable thereto on outstanding long-term debt issued or assumed by the utility, the liability for which is included in account 221, Bonds, or account 224, Other Long-Term Debt. B. This account shall be so kept or supported as to show the interest accruals on each class and series of long-term debt. NOTE. — This account shall not include interest on nominally issued or nominally outstanding long-term debt, including securities assumed. 428. Amortization of debt discount and expense A. This account shall include in each accounting period the portion of unamortized debt discount and expense on outstanding long-term debt which is applicable to such period. Amounts charged to this account shall be credited concurrently to account 181, Unamortized Debt Discount and Expense. B. This account shall be so kept or supported as to show the debt discount and expense on each class and series of long-term debt. 429. Amortization of premium on debt—cr. A. This account shall include in each accounting period the portion of unamortized net premium on outstanding long-term debt which is applicable to such period. Amounts credited to this account shall be charged concurrently to account 251, Unamortized Premium on Debt. B. This account shall be so kept or supported as to show the premium on each class and series of long-term debt. 430. Interest on debt to associated companies A. This account shall include in each accounting period interest accrued on amounts included in account 223, Advances from Associated Companies, and on all other obligations to associated companies. B. The records supporting the entries to this account shall be so kept as to show to whom the interest is to be paid, the period covered by the accrual, the rate of interest and the principal amount of the advances or other obligations on which the interest is accrued. 431. Other interest expense This account shall include in each accounting period all interest charges not provided for elsewhere. ITEMS 1. Interest on notes payable on demand or maturing one year or less from date and on open accounts, except notes and accounts with associated companies. 2. Interest on customers' deposits. 3. Interest on claims and judgments, tax assessments, and assessments for public improvements past due. 4. Income and other taxes levied upon bondholders of utility and assumed by it. 432. Interest charged to construction—cr. This account shall include concurrent credits for interest charged to construction based upon the net cost for the period of construction of borrowed funds used for construction purposes and a reasonable rate upon other funds when so used. (See utility plant instruction 3 (17).) 4. Extraordinary Items 434. Extraordinary income This account shall be credited with nontypical, noncustomary, infrequently recurring gains, which would significantly distort the current year's income computed before Extraordinary Items, if reported other than as extraordinary items. The applicable income tax effects of this account shall be recorded in account 409, Income Taxes, identified separately. (See general instruction 7.) 435. Extraordinary deductions This account shall be debited with nontypical, noncustomary, infrequently recurring losses, which would significantly distort the current year's income computed before Extraordinary Items, if reported other than as extraordinary items. The applicable income tax effects of this account shall be recorded in account 409, Income Taxes, identified separately. (See general instruction 7.) Part 8 RETAINED EARNINGS ACCOUNTS 433. Balance transferred from income This account shall include the net credit or debit transferred from income for the year. 436. Appropriations of retained earnings This account shall include appropriations of retained earnings. ITEMS 1. Appropriations required under terms of mortgages, orders of courts, contracts, or other agreements. 2. Appropriations required by action of regulatory authorities. 3. Other appropriations made at option of utility for specific purposes. 437. Dividends declared—preferred stock A. This account shall include amounts declared payable out of retained earnings as dividends on actually outstanding preferred or prior lien capital stock issued by the utility. B. Dividends shall be segregated for each class and series of preferred stock as to those payable in cash, stock and other forms. If not payable in cash, the medium of payment shall be described with sufficient detail to identify it. 438. Dividends declared—common stock A. This account shall include amounts declared payable out of retained earnings as dividends on actually outstanding common capital stock issued by the utility. B. Dividends shall be segregated for each class of common stock as to those payable in cash, stock and other forms. If not payable in cash, the medium of payment shall be described with sufficient detail to identify it. 439. Adjustments to retained earnings A. This account shall include significant nonrecurring transactions relating to prior periods. Other than transactions of capital stock as specified in paragraph B below, all entries to this account must receive prior Commission approval. These transactions are limited to those adjustments which (a) can be specifically identified with and related to the business activities of particular prior periods, and (b) are not attributable to economic events occurring subsequent to the date of the financial statements for the prior period, and (c) depend primarily on determinations by persons other than the management and (d) were not susceptible of reasonable estimation prior to such determination. This account shall also include the related income tax effects (State and Federal) on items included herein. All items included in this account shall be sufficiently described in the entries relating thereto as to permit ready analysis. B. Adjustments, charges or credits due to losses on reacquisition, resale or retirement of the company's own capital stock shall be included in this account. (See account 210, Gain on Resale or Cancellation of Reacquired Capital Stock, for the treatment of gains.) ITEMS 1. Significant nonrecurring adjustments or settlements of income taxes. 2. Significant amounts resulting from litigation or similar claims. 3. Significant amounts relating to adjustments or settlement of utility revenue under rate processes. 4. Significant adjustments to plant in service depreciation and amortization as a result of Commission direction. 5. Write-off of unamortized capital stock expenses. Part 9 OPERATING REVENUE ACCOUNTS 1. Service Revenues 440. General service revenues This account shall include the net billing for service supplied for residential or domestic purposes. 441. Commercial and industrial revenues This account shall include the net billing for service supplied which is billed under distinct multiple extension rates. 442. Sales to public authorities This account shall include the net billing for services supplied to municipalities or divisions or agencies of federal or state governments, under special contracts or agreements or service classifications applicable only to public authorities. 443. Special service revenues This account shall include service revenues not provided for in accounts 440 through 442 derived from the Operation of property, the investment in which is included in utility plant accounts, including revenues arising from special fees imposed to obtain programs not obtainable by means of regular subscription fees. 2. Other Operating Revenues 450. Forfeited discounts This account shall include the amount of discounts forfeited or additional charges imposed because of failure of customers to pay their service bills on or before a specified date. 451. Miscellaneous service revenues This account shall include revenues for all miscellaneous service and charges billed to customers which are not specifically provided for in other accounts. ITEMS 1. Fees for changing, connecting or disconnecting service. 2. Profit on maintenance of installations on customer premises. 3. Net credit or debit (cost less net salvage and less payment from customers) on closing of work orders for plant installed for temporary service of less than one year. (See account 185, Temporary Facilities). 454. Rent from utility property A. This account shall include rents received for the use by others of land, buildings and other property devoted to utility operations. B. When property owned by the utility is operated jointly with others under a definite arrangement for apportioning the actual expenses among the parties to the arrangement, any amounts received by the utility for interest or return or reimbursement of taxes or depreciation on the property shall be credited to this account. NOTE. — Do not include in this account rents from property constituting an operating unit or system. (See account 412, revenues from Utility Plant Leased to Others). 456. Other operating revenues This account shall include revenues derived from utility operations which are not includible in any of the foregoing accounts. ITEMS 1. Compensation for minor or incidental services provided for others, such as customer billing, engineering, etc. 2. Profit or loss on sale of material and supplies not ordinarily purchased for resale and not handled through merchandising and jobbing accounts. Part 10 OPERATION AND MAINTENANCE EXPENSE ACCOUNTS 1. Transmitting Expense Operation Operation 500. Operation supervision and engineering This account shall include the cost of labor and expenses incurred in the general supervision and direction of the operation of transmitting facilities. (See operating expense instruction 1.) 502. Station power This account shall include the cost of electricity purchased, the cost of fuel and other supplies used, and the expenses incurred in the generation, conversion, and storage of current for operating the transmission equipment. 504. Station expenses This account shall include the cost of labor, materials used, and expenses incurred in operating transmitting facilities and their auxiliary apparatus to the point where signals leave for distribution. ITEMS 1. Operating, testing, checking and adjusting electronic equipment. 2. Keeping station log and records and preparing reports of station operations. 3. Cleaning equipment when not incidental to maintenance work. 4. Operating monitoring and regulating equipment. 506. Rents This account shall include all rents of property of others used, occupied or operated in connection with transmitting operations. (See operating expense instruction 3.) 508. Miscellaneous transmitting expenses This account shall include the cost of labor, materials used, and expenses incurred which are not specifically provided for or are not readily assignable to other transmitting expense accounts. ITEMS 1. General clerical and stenographic work. 2. Guarding and patrolling plant and yard. 3. Building services. 4. First aid supplies and safety equipment. Maintenance 510. Maintenance supervision and engineering This account shall include the cost of labor and expenses incurred in the general supervision and direction of the maintenance of transmitting station apparatus. (See operating expense instruction 1.) 512. Maintenance of structures This account shall include the cost of labor, materials used and expenses incurred in maintenance of transmitting structures the book cost of which is includible in account 311, Structures and Improvements. (See operating expense instruction 2.) 514. Maintenance of transmitting equipment This account shall include the amount of expenses incurred in maintaining equipment, the cost of which is includible in account 312, Electronic Transmitting Equipment and account 313, Accessory Transmitting Equipment. (See operating expense instruction 2.) 516. Maintenance of other transmitting facilities This account shall include the cost of labor, materials used and expenses incurred in maintenance of other transmitting equipment, the book cost of which is includible in account 314, Other Equipment. (See operating expense instruction 2.) 2. Head End Expenses Operation 530. Operation supervision and engineering This account shall include the cost of labor and expenses incurred in the general supervision and direction of the operation of the head end facilities. (See operating expenses instruction 1.) 532. Head end operations This account shall include the cost of labor, materials used and expenses incurred in operating the receiving and signal processing equipment and their auxiliary head end apparatus to the point where signals leave for distribution. ITEMS 1. Operating, testing, checking and adjusting electronic equipment. 2. Keeping station log and records and preparing reports of station operations. 3. Cleaning equipment when not incidental to maintenance work. 4. Operating monitoring and regulating equipment. 534. Station power This account shall include the amounts of expenses incurred in supplying power for the operation of the head end station. This includes the cost of power purchased, the cost of fuel and other supplies consumed, and other expenses incurred in the generation, conversion and storage of current for operating the head end equipment. 535. Copyright fees and royalties This account shall include costs of copyright fees and royalties paid for broadcast and similar rights. 536. Rents This account shall include all rents of property of others used, occupied or operated in connection with head end operations. (See operating expense instruction 3.) 538. Other head end expenses This account shall include the cost of labor, materials used and expenses incurred in the operation of the head end station which are not specifically provided for or are not readily assignable to other head end expense accounts. ITEMS 1. General clerical and stenographic work. 2. Guarding and patrolling station and yard. 3. Building service. Maintenance 540. Maintenance supervision and engineering This account shall include the cost of labor and expenses incurred in the general supervision and direction of the maintenance of the head end station apparatus. (See operating expense instruction 1.) 542. Maintenance of structures and improvements This account shall include the cost of labor, materials used and expenses incurred in the maintenance of head end structures, the book cost of which is includible in account 321, Structures and Improvements. (See operating expense instruction 2.) 544. Maintenance of towers and antennas This account shall include the cost of labor, materials used, and expenses incurred in maintenance of plant includible in account 322, Towers and Antennas. (See operating expense instruction 2.) 546. Maintenance of head end apparatus This account shall include the cost of labor, materials used, and expenses incurred in maintenance of apparatus, the book cost of which is includible in account 323, Electronic Receiving and Signal Processing Equipment, and account 324, Power Supply Equipment. (See operating expense instruction 2.) 548. Maintenance of other head end equipment This account shall include the cost of labor, materials used, and expenses incurred in maintenance of plant, the book cost of which is includible in account 325, Other Head End Equipment. (See operating expense instruction 2.) 3. Distribution Expenses Operation 560. Operation supervision and engineering This account shall include the cost of labor and expenses incurred in the general supervision and direction of the operation of the distribution system. (See operating expense instruction 1.) 562. Distribution system expenses This account shall include the cost of labor, materials used, and expenses incurred in the operation of overhead and underground distribution lines. ITEMS 1. Inspecting and testing electronic equipment for the purpose of determining operating performance. 2. Removing electronic apparatus with or without replacement. 3. Installing electronic equipment provided that the cost of first installation of these items is included in account 364, Electronic Conductors and Devices. 4. Inspecting and adjusting distribution system testing equipment. 564. Distribution system power This account shall include the cost of power for distributing signals. This includes the cost of electricity purchased, the cost of fuel and other supplies used, and the expenses incurred in the generation, conversion, and storage of current for operating the signal distribution equipment. 566. Customer installation expenses This account shall include the cost of labor, materials used, and expenses incurred in work on customer installations in inspecting premises and in rendering services to customers of the nature of those indicated by the list of items hereunder. 1. Supervising customer installation work. 2. Investigating service complaints including examination of customers' appliances, wiring, or equipment to locate cause of interference. 3. Cost of changing customers' equipment due to changes in service characteristics. 4. Materials used in servicing customers' fixtures, appliances and equipment. 568. Miscellaneous distribution expenses This account shall include the cost of labor, materials used, and expenses incurred in distribution system operation not provided for elsewhere. ITEMS 1. General records of physical characteristics of equipment, such as capacities, etc. 2. System layout maps and records. 3. Service interruption and trouble records. 4. Operating records covering poles, converters, amplifiers, and other distribution facilities. 569. Rents This account shall include rents of property of others used, occupied, or operated in connection with the distribution system. (See operating expense instruction 3.) Maintenance 570. Maintenance supervision and engineering This account shall include the cost of labor and expenses incurred in the general supervision and direction of maintenance of the distribution system. (See operating expense instruction 1.) 572. Maintenance of structures This account shall include the cost of labor, materials used and expenses incurred in maintenance of structures, the book cost of which is includible in account 361, Structures and Improvements. (See operating expense instruction 2.) 574. Maintenance of overhead lines This account shall include the cost of labor, materials used and expenses incurred in the maintenance of overhead distribution cable facilities, the book cost of which is includible in account 362, Towers, Poles and Fixtures, account 364, Electronic Conductors and Devices, account 365, Distribution System Power Supply, and account 366, Services. (See operating expense instruction 2.) 576. Maintenance of underground lines This account shall include the cost of labor, materials used and expenses incurred in the maintenance of underground distribution cable facilities, the book cost of which is includible in account 363, Underground Conduit, account 364, Electronic Conductors and Devices, account 365, Distribution System Power Supply, and account 366, Services. (See operating expense instruction 2.) 578. Maintenance of miscellaneous distribution plant This account shall include the cost of labor, materials used and expenses incurred in maintenance of plant, the book cost of which is includible in account 367, Installation on Customers' Premises, and account 368, Leased Property on Customers' Premises, and any other plant, the maintenance of which is assignable to the distribution function and is not provided for elsewhere. (See operating expense instruction 2.) 4. Customer Accounts Expenses Operation 901. Supervision This account shall include the cost of labor and expenses incurred in the general direction and supervision of customer accounting and collecting activities. 903. Customer records and collection expenses This account shall include the cost of labor, materials used and expenses incurred in work on customer applications, contracts, orders, credit investigations, billing and accounting, collections and complaints. 904. Uncollectible accounts This account shall be charged with amounts sufficient to provide for losses from uncollectible utility revenues. Concurrent credits shall be made to account 144, Accumulated Provision for Uncollectible Accounts—Cr. Losses from uncollectible accounts shall be charged to account 144. 905. Miscellaneous customer accounts expenses This account shall include the cost of labor, materials used and expenses incurred not provided for in other accounts. 5. Sales Expenses Operation 911. Supervision This account shall include the cost of labor and expenses incurred in the general direction and supervision of sales activities, except merchandising. Direct supervision of a specific activity, such as demonstrating, selling, or advertising shall be charged to the account wherein the costs of such activity are included. (See operating expense instruction 1.) 912. Demonstrating and selling expenses This account shall include the cost of labor, materials used and expenses incurred in promotional, demonstrating, and selling activities, except by merchandising, the object of which is to promote or retain the use of utility services by present and prospective customers. 913. Advertising expenses This account shall include the cost of labor, materials used and expenses incurred in advertising designed to promote or retain the use of utility service, except advertising the sale of merchandise by the utility. NOTE. — Exclude from this account and charge to account 930, miscellaneous General Expenses, the cost of publication of stockholder reports, dividend notices, bond redemption notices, financial statements, and other notices of a general corporate character. Exclude also all institutional or goodwill advertising. (See account 930, Miscellaneous (General Expenses.) 914. Revenues from merchandising, jobbing and contract work 915. Costs and expenses of merchandising, jobbing and contract work A. These accounts shall include, respectively, all revenues derived from the sale of merchandise and jobbing or contract work, including any profit or commission accruing to the utility on jobbing work performed by it as agent under contracts whereby it does jobbing work for another for a stipulated profit or commission and all expenses incurred in such activities. B. Records in support of these accounts shall be so kept as to permit ready summarization of revenues, costs and expenses by such major items as are feasible. NOTE A. — Revenues and expenses of merchandising, jobbing and contract work shall be reported in this account, if a state regulatory body having jurisdiction over the utility requires shall income to be reported as an operating expense items; but the revenues and expenses shall be reported in accounts 415 and 416 if such regulatory body requires such income to be reported as nonoperating income. In the absence of a requirement by a state regulatory body, the utility may use these accounts or accounts 415 and 416 at its option, in which case the practice of the utility must be consistent. NOTE B. — Related operating taxes shall be recorded in account 408, Taxes Other Than Income Taxes, and income taxes shall be recorded in account 409, Income Taxes. 6. Administrative and General Expenses Operation 920. Administrative and general salaries A. This account shall include the compensation (salaries, bonuses, and other consideration for services, but not including directors' fees) of officers, executives, and other employees of the utility properly chargeable to utility operations and not chargeable directly to a particular operating function. B. This account may be subdivided in accordance with a classification appropriate to the departmental or other functional organization of the utility. 921. Office supplies and other expenses A. This account shall include office supplies and other expenses incurred in connection with the general administration of the utility's operations which are assignable to specific administrative or general departments and are not specifically provided for in other accounts. This includes the expenses of the various administrative and general departments, the salaries and wages of which are includible in account 920. B. This account may be subdivided in accordance with a classification appropriate to the departmental or other functional organization of the utility. NOTE. — Office expenses which are clearly applicable to any group of operating expenses other than the administrative and general group shall be included in the appropriate account in each functional group. Further, general expenses which apply to the utility as a whole rather than to a particular administrative function shall be included in account 930, Miscellaneous General Expenses. 922. Administrative expenses transferred—cr. This account shall be credited with administrative expenses recorded in accounts 920 and 921 which are transferred to construction costs or to nonutility accounts. 923. Outside services employed A. This account shall include the fees and expenses of professional consultants and others for general services which are not applicable to a particular operating function nor to other accounts. It shall include also the pay and expenses of persons engaged for a special or temporary administrative or general purpose in circumstances where the person so engaged is not considered as an employee of the utility. B. This account shall be so maintained as to permit ready summarization according to the nature of service and the person furnishing the same. ITEMS 1. Fees, pay and expenses of accountants and auditors, actuaries, appraisers, attorneys, engineering consultants, management consultants, negotiators, public relations counsel, tax consultants, etc. 2. Supervision fees and expenses paid under contracts for general management services. NOTE. — Do not include inspection and brokerage fees and commissions chargeable to other accounts or fees and expenses in connection with security issues which are includible in the expenses of issuing securities. 924. Property insurance A. This account shall include the cost of insurance or reserve accruals to protect the utility against losses and damages to owned or leased property used in its utility operations. It shall include also the cost of labor and related supplies and expenses incurred in property insurance activities. B. Recoveries from insurance companies or other for property damages shall be credited to the account charged with the cost of the damage. If the damaged property has been retired, the credit shall be to the appropriate account for accumulated provision for depreciation. C. Records shall be kept so as to show the amount of coverage for each class of insurance carried, the property covered, and the applicable premiums. Any dividends distributed by mutual insurance companies shall be credited to the accounts to which the insurance premiums were charged. NOTE A. — The cost of insurance or reserve accruals capitalized shall be charged to construction either directly or by transfer to construction work orders from this account. NOTE B. — The cost of insurance or reserve accruals for the following classes of property shall be charged as indicated: (1) Materials and supplies and stores equipment, to account 163, Stores Expense, or appropriate material account. (2) Transportation and other general equipment, to appropriate clearing accounts that may be maintained. (3) Utility plant leased to others, to account 413, Expenses of Utility Plant Leased to Others. (4) Nonutility property to the appropriate nonutility income account. (5) Merchandise and jobbing property, to account 416, Costs and Expenses of Merchandising, Jobbing and Contract Work, or account 915, as appropriate. NOTE C. — The cost of labor and related supplies and expenses of administrative and general employees who are only incidentally engaged in property insurance work may be included in accounts 920 and 921, as appropriate. 925. Injuries and damages A. This account shall include the cost of insurance or reserve accruals to protect the utility against injuries and damage claims of employees or others, losses of such character not covered by insurance, and expenses incurred in settlement of injuries and damages claims. It shall also include the cost of labor and related supplies and expenses incurred in injuries and damages activities. B. Reimbursements from insurance companies or others for expenses charged hereto on account of injuries and damages and insurance dividends or refunds shall be credited to this account. NOTE A. — Payments to or in behalf of employees for accident or death benefits, hospital expenses, medical supplies or for salaries while incapacitated for service on or lease of absence beyond periods normally allowed, when not the result of occupational injuries, shall be charged to account 926, Employee Pensions and Benefits. (See also note B of account 926.) NOTE B. — The cost of injuries and damages or reserve accruals capitalized shall be charged to construction directly or by transfer to construction work orders from this account. NOTE C. — Exclude herefrom the time and expenses of employees (except those engaged in injuries and damages activities) spent in attendance at safety and accident prevention educational meetings, if occurring during the regular work period. NOTE D. — The cost of labor and related supplies and expenses of administrative and general employees who are only incidentally engaged in injuries and damages activities may be included in accounts 920 and 921 as appropriate. 926. Employee pensions and benefits A. This account shall include pensions paid to or on behalf of retired employees, or accruals to provide for pensions, or payments for the purchase of annuities for the purpose, when the utility has definitely, by contract, committed itself to a pension plan under which the pension funds are irrevocably devoted to pension purposes, and payments for employee accident, sickness, hospital, and death benefits, insurance therefor. Included, also, expenses included in medical, educational or recreational activities for the benefit of employees and administrative expenses in connection with employee pensions and benefits. B. The utility shall maintain a complete record of accruals or payments for pensions and be prepared to furnish full information to the Commission of the plan under which it has created or proposes to create a pension fund and a copy of the declaration of trust or resolution under which the pension plan is established. C. There shall be credited to this account the portion of pensions and benefits expenses which is applicable to nonutility operations or which is charged to construction unless such amounts are distributed directly to the accounts involved and are not included herein in the first instance. D. Records in support of this account shall be so kept that the total pensions expense, the total benefits expense, the administrative expenses included herein, and the amounts of pensions and benefits expenses transferred to construction or other accounts will be readily available. NOTE A. — The cost of labor and related supplies and expenses of administrative and general employees who are only incidentally engaged in employee pension and benefit activities may be included in account 920 and 921, as appropriate. NOTE B. — Salaries paid to employees during periods of nonoccupational sickness may be charged to the appropriate labor account rather than to employee benefits. 927. Franchise requirements A. This account shall include payments to municipal or other governmental authorities, and the cost of materials, supplies and services furnished such authorities without reimbursement in compliance with franchise, ordinance, or similar requirements; provided, however, that the utility may charge to this account no regular tariff rates, instead of cost, utility service furnished without charge under provisions of franchises. B. When no direct outlay is involved, concurrent credit for such charges shall be to account 929, Duplicate Charges—Cr. C. The account shall be maintained so as to readily reflect the amounts of cash outlays, utility service supplied without charge, and other items furnished without charge. NOTE A. — Franchise taxes shall not be charged to this account but to account 408, Taxes Other Than Income Taxes. NOTE B. — Any amount paid as initial consideration for a franchise running for more than one year shall be charged to account 302, Franchises and Consents. 928. Regulatory commission expenses A. This account shall include all expenses (except pay of regular employees only incidentally engaged in such work) properly included in utility operating expenses, incurred by the utility in connection with formal cases before regulatory commissions, or other regulatory bodies, or cases in which such a body is a party, including payments made to a regulatory commission for fees assessed against the utility for pay and expenses of such commission, its officers, agents, and employees. B. Amounts of regulatory commission expenses which by approval or direction of the Commission are to be spread over future periods, shall be charged to account 186, Miscellaneous Deferred Debits, and amortized by charges to this account. C. The utility shall bc prepared to report the cost of each formal case. NOTE A. — Exclude from this account and include in other appropriate operating expense accounts, expenses incurred in the improvement of service, additional inspection, or rendering reports, which are made necessary by the rules and regulations, or orders, of regulatory bodies. NOTE B. — Do not include in this account amounts includible in account 302, Franchises and Consents, account 181, Unauthorized Debt Discount and Expense, or account 214, Capital Stock Expense. 929. Duplicate charges—cr. This account shall include concurrent credits for charges which may be made to operating expenses or to other accounts of the utility for the use of utility service from its own supply. Include, also, offsetting credits for any other charges made to operating expenses for which there is no direct money outlay. 930. Miscellaneous general expenses This account shall include the cost of labor and expenses incurred in connection with the general management of the utility not provided for elsewhere. ITEMS Labor: 1. Miscellaneous labor not elsewhere provided for. 2. Industry association dues for company memberships. 3. Contributions for conventions and meetings of the industry. 4. Experimental and general research work for the industry. 5. Communication service not chargeable to other accounts. 6. Trustee, registrar, and transfer agent fees and expenses. 7. Stockholders meeting expenses. 8. Dividend and other financial notices. 9. Printing and mailing dividend checks. 10. Directors' fees and expenses. 11. Publishing and distributing annual reports to stockholders. 12. Institutional or goodwill advertising. (See note below.) 13. Public notices of financial, operating, and other data required by regulatory statutes, not including, however, notices required in connection with security issues or acquisitions of property. NOTE.—The cost of any advertising for the purpose of influencing public opinion as to the election of public officers, referenda, proposed legislation, proposed ordinances, repeal of existing laws or ordinances, approval or revocation of franchises, or for the purpose of influencing the public or its elected officials, in respect to political matters shall not be included herein but charged to account 426, Other Income Deductions. 931. Rents This account shall include rents properly includible in utility operating expenses for the property of others used, occupied, or operated in connection with the customer accounts, sales and general and administrative functions of the utility. (See Operating Expense Instruction 3.) Maintenance 932. Maintenance of general plant This account shall include the cost assignable to customer accounts, sales and administrative and general functions of labor, materials used and expenses incurred in the maintenance of property, the book cost of which is includible in account 390, Structures and Improvements, account 391, Office Furniture and Equipment, account 397, Communication Equipment, and account 398, Miscellaneous Equipment, and of similar property leased from others. Include, also the cost of repairing for reuse materials which previously were included in those accounts. (See Operating Expense Instruction 2. NOTE.—Maintenance of plant included in other general equipment accounts shall be included herein unless charged to clearing accounts or to the particular functional maintenance expense account indicated by the use of the equipment. Notes: Use of the term "Revised" in the section history note changed to "Amended" (November 24, 2014)