payments, no charge must be made to the service company property
accounts for interest, insurance, or other expenditures occasioned
solely by such form of payment.
    (d) The service company property accounts must not include the cost
or other value of service company property contributed to the company.
Contributions in the form of money or its equivalent toward the
construction of property must be credited to accounts charged with the
cost of such construction. Property constructed from contributions of
cash or its equivalent must be shown as a reduction to gross property
constructed when assembling cost data in work orders for posting to
property ledgers of accounts. The accumulated gross costs of property
accumulated in the work order must be recorded as a debit in the plant
ledger of accounts along with the related amount of contributions
concurrently recorded as a credit.

Sec.  367.51  Components of construction.

    (a) For service companies, the cost of construction properly
included in the service company property accounts must include, where
applicable, the direct and overhead costs as listed and defined as
follows:
    (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 the work.
    (2) Labor includes the pay and expenses of employees of the service
company 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 that are distributed
to construction through clearing accounts nor the pay and expenses
included in other items in this section.
    (3)(i) 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 service company's shop.
In determining the cost of materials and supplies used for
construction, proper allowance must 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.
    (ii) The cost of individual items of equipment of small value (for
example, $500 or less) or of short life, including small portable tools
and implements, must not be charged to service company property
accounts unless the correctness of the accounting is verified by
current inventories. The cost must be charged to the appropriate
operating expense or clearing accounts, according to the use of the
items, or, if the items are consumed directly in construction work, the
cost must be included as part of the cost of the construction.
    (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 service company's own transportation equipment. (See
paragraph (a)(5) of this section.)
    (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 individual items of small
value or short life which are included in the cost of materials and
supplies. (See paragraph (a)(3) of this section.) When a particular
construction job requires the use for an extended period of time of
special machines, transportation or other equipment, the associated net
book cost, less the appraised or salvage value at time of release from
the job, must be included in the cost of construction.
    (6) Shop service includes the proportion of the expense of the
service company's shop department assignable to construction work
except that the cost of fabricated materials from the service company's
shop must be included in materials and supplies.
    (7) Protection includes the cost of protecting the service
company'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, related witness fees, 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 the injuries and damages. Insurance
recovered or recoverable on account of compensation paid for injuries
to persons incident to construction must 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
must 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.
    (10) Rents include amounts paid for the use of construction
quarters and office space occupied by construction forces and amounts
properly includible in construction costs for the 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 service company 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
paragraph (a)(2) of this section.
    (15) Law expenditures includes the general law expenditures
incurred in connection with construction and the directly related court
and legal costs, other than law expenses included in protection in
paragraph (a)(7) of this section, and in injuries and damages in
paragraph (a)(8) of this section.
    (16) Taxes include 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) Allowance for funds used 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, not to exceed, without prior approval of the Commission,
allowances computed in accordance with the formula prescribed in
paragraph (i) of this section. No allowance for funds used during
construction charges must be included in these accounts upon
expenditures for construction projects which have been abandoned.
    (i) The formula and elements for the computation of the allowance
for funds used during construction must be:
    (A) Ai=s(S/W)+d(D/D+P+C)(1-S/W)
    (B) Ae=[1-S/W][p(P/D+P+C)+c(C/D+P+C)]
    (C) Ai=Gross allowance for borrowed funds used during construction
rate.
    (D) Ae=Allowance for other funds used during construction rate.
    (E) S=Average short-term debt.
    (F) s=Short-term debt interest rate.
    (G) D=Long-term debt.
    (H) d=Long-term debt interest rate.
    (I) P=Preferred stock.
    (J) p=Preferred stock cost rate.
    (K) C=Common equity.
    (L) c=Common equity cost rate.
    (M) W= Average balance in construction work in progress, less asset
retirement costs (See General Instructions in Sec.  367.22) related to
property under construction.
    (ii) The rates must be determined annually. The balances for long-
term debt, preferred stock and common equity must be the actual book
balances as of the end of the prior year. The cost rates for long-term
debt and preferred stock must be the weighted average cost determined
in the manner indicated in Sec.  35.13 of this chapter. The cost rate
for common equity must be the rate granted common equity in the last
rate proceeding before the ratemaking body of any associate public
utility company for which services were provided during the year. If
this cost rate is not available, the average rate actually earned
during the preceding three years must be used. The short-term debt
balances and related cost and the average balance for construction work
in progress must be estimated for the current year with appropriate
adjustments as actual data becomes available.
    (iii) When a part only of a property 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, must be treated as service
company property and allowance for funds used during the construction
as a charge to construction must cease. Allowance for funds used during
construction on that part of the cost of the property that 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 paragraph (a)(17) of this section.
    (18) Earnings and expenses during construction. The earnings and
expenses during construction must constitute a component of
construction costs.
    (19) Training costs. When it is necessary that employees be trained
to operate or maintain property that is being constructed and the
property is not conventional in nature, or is new to the company's
operations, these costs may be capitalized as a component of
construction cost. Once property is placed in service, the
capitalization of training costs must cease and subsequent training
costs must be expensed. (See Operating Expense Instructions in Sec.
367.83.)
    (20) Studies include the costs of studies such as safety or
environmental studies mandated by regulatory bodies relative to
property under construction. Studies relative to facilities in service
must be charged to account 183, Preliminary Survey and Investigation
Charges (Sec.  367.1830).
    (21) Asset retirement costs. The costs recognized as a result of
asset retirement obligations incurred during the construction and
testing of service company property must constitute a component of
construction costs.

Sec.  367.52  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 service company, law
expenses, insurance, injuries and damages, relief and pensions, taxes
and interest, must be charged to particular jobs or units on the basis
of the amounts of the reasonably applicable overheads.
    (b) As far as practicable, the determination of payroll charges
includible in construction overheads must be based on the related time
card distributions. Where this procedure is impractical, special
studies must be made periodically of the time of supervisory employees
devoted to construction activities to the end that only the overhead
costs that have a definite relation to construction must be
capitalized.
    (c) The records supporting the entries for overhead construction
costs must be kept so 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 property account, and the
bases of distribution of such costs.

Sec.  367.53  Service company property purchased or sold.

    (a) When service company property is acquired by purchase, merger,
consolidation, liquidation, or otherwise, after the effective date of
this system of accounts, the costs of acquisition, including related
incidental expenses, must be charged to the appropriate service company
property accounts and account 107, Construction work in progress (Sec.
367.1070), as appropriate.
    (b) If property acquired is in a physical condition so that it is
necessary to rehabilitate it substantially in order to bring the
property up to the standards of the service company, the cost of the
work, except replacements, must be

accounted for as a part of the purchase price of the property.
    (c) Unless otherwise authorized by the Commission, all service
company property acquired from an affiliate company must be at its book
value. Additionally, if property is acquired that is in excess of $10
million and has been previously devoted to public service at a price
above book value, the service company must file with the Commission the
proposed journal entries associated with the acquisition within six
months from the date of acquisition of the property.
    (d) When service company property is sold, conveyed, or transferred
to another by sale, merger, consolidation, or otherwise, the book cost
of the property sold or transferred to another must be credited to the
appropriate service company property accounts. The amounts (estimated,
if not known) carried with respect the accounts for accumulated
provision for depreciation and amortization must be charged to those
accounts. The difference, if any, between the net amount of debits and
credits and the consideration received for the property (less
commissions and other expenses of making the sale) must be included in
account 421.1, Gain on disposition of property (Sec.  367.4211), or
account 421.2, Loss on disposition of property (Sec.  367.4212).
    (e) In connection with the acquisition of service company property
previously devoted to service company operations or acquired from an
associate company, the service company must procure, if possible, all
existing records relating to the property acquired or related certified
copies, and must preserve the records in conformity with regulations or
practices governing the preservation of records of its own
construction.

Sec.  367.54  Expenditures on leased property.

    (a) The cost of substantial initial improvements (including
repairs, rearrangements, additions, and betterments) made to prepare
service company property leased to be used for a period of more than
one year, and the cost of subsequent substantial additions,
replacements, or betterments to the property, must be charged to the
service company property account appropriate for the class of property
leased. If the service life of the improvements is terminable by action
of the lease, the cost, less net salvage, of the improvements must be
spread over the life of the lease by charges to account 404,
Amortization of limited-term service property. However, if the service
life is not terminated by action of the lease but by depreciation
proper, the cost of the improvements, less net salvage, must be
accounted for as depreciable property. The provisions of this paragraph
are applicable to property leased under either capital leases or
operating leases.
    (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 must be
charged to the account in which the rent is included, either directly
or by amortization.

Sec.  367.55  Land and land rights.

    (a) The accounts for land and land rights must include the cost of
land owned in fee by the service company and rights. Interests, and
privileges held by the service company in land owned by others, such as
leaseholds, easements, water and water power rights, diversion rights,
submersion rights, rights-of-way, and other like interests in land. Do
not include in the accounts for land and land rights and rights-of-way
costs incurred in connection with first clearing and grading of land
and rights-of-way and the damage costs associated with the construction
and installation of property. The costs must be included in the
appropriate property accounts directly benefited.
    (b) Where special assessments for public improvements provide for
deferred payments, the full amount of the assessments must be charged
to the appropriate land account and the unpaid balance must be carried
in an appropriate liability account. Interest on unpaid balances must
be charged to the appropriate interest account. If any part of the cost
of public improvements is included in the general tax levy, the related
amount must be charged to the appropriate tax account.
    (c) The net profit from the sale of timber, cord wood, sand,
gravel, other resources or other property acquired with the rights-of-
way or other lands must be credited to the appropriate property account
to which it is related. Where land is held for a considerable period of
time and timber and other natural resources on the land at the time of
purchase increases in value, the net profit (after giving effect to the
cost of the natural resources) from the sales of timber or its products
or other natural resources must be credited to the appropriate
operating income account when the land has been recorded in account
101, Service company property (Sec.  367.1010), otherwise to account
421, Miscellaneous income or loss (Sec.  367.4210).
    (d) Separate entries must be made for the acquisition, transfer, or
retirement of each parcel of land, and each land right (except rights
of way for distribution lines), or water right, having a life of more
than one year. A record must be maintained showing the nature of
ownership, full legal description, area, map reference, purpose for
which used, city, county, and tax district on 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 must
refer to the original entry recording its acquisition.
    (e) Any difference between the amount received from the sale of
land or land rights, less agents' commissions and other costs incident
to the sale, and the book cost of such land or rights, must be included
in account 421.1, Gains on disposition of property (Sec.  367.4211), or
account 421.2, Losses on disposition of property (Sec.  367.4212), when
the property has been recorded in account 101, Service company property
(Sec.  367.1010). Appropriate adjustments of the accounts must be made
with respect to any structures or improvements located on the land
sold.
    (f) The cost of buildings and other improvements (other than public
improvements) must not be included in the land accounts. If, at the
time of acquisition of an interest in land the interest extends to
buildings or other improvements (other than public improvements) that
are then devoted to operations, the land and improvements must 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 must be charged and the salvage credited to the
account in which the cost of the land is recorded.
    (g) Provisions must 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
111, Accumulated provision for amortization of service company property
in Sec.  367.1110, and account 404, Amortization of limited-term
property in Sec.  367.4040.)
    (h) 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 the related subsequent interest).
    (3) Condemnation proceedings, including court and counsel costs.

    (4) Consents and abutting damages, payment for.
    (5) Conveyancers' and notaries' fees.
    (6) Fees, commissions, and salaries to brokers, agents and others
in connection with the acquisition of the land or land rights.
    (7) Leases, cost of voiding upon purchase to secure possession of
land.
    (8) Removing, relocating, or reconstructing, property of others,
such as buildings, highways, railroads, bridges, cemeteries, churches,
telephone and power lines, in order to acquire quiet possession.
    (9) Retaining walls unless identified with structures.
    (10) 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.
    (11) Surveys in connection with the acquisition, but not amounts
paid for topographical surveys and maps where the costs are
attributable to structures or plant equipment erected or to be erected
or installed on the land.
    (12) Taxes assumed, accrued to date of transfer of title.
    (13) Title, examining, clearing, insuring and registering in
connection with the acquisition and defending against claims relating
to the period prior to the acquisition.
    (14) Appraisals prior to closing title.
    (15) 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.
    (16) Filing satisfaction of mortgage.
    (17) Documentary stamps.
    (18) Photographs of property at acquisition.
    (19) Fees and expenses incurred in the acquisition of water rights
and grants.
    (20) Cost of fill to extend bulkhead line over land under water,
where riparian rights are held, that is not occasioned by the erection
of a structure.
    (21) Sidewalks and curbs constructed by the service company on
public property.
    (22) Labor and expenses in connection with securing rights of way,
where performed by company employees and company agents.

Sec.  367.56  Structures and improvements.

    (a) The accounts for structures and improvements must 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 that cannot be removed from the buildings
and facilities 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. Also include those costs incurred
in connection with the first clearing and grading of land and rights-
of-way and the damage costs associated with construction and
installation of property.
    (b) The cost of specially-provided foundations not intended to
outlast the machinery or apparatus for which provided, and associated
costs, such as angle irons, castings, and other items installed at the
base of an item of equipment, must be charged to the same account as
the cost of the machinery, apparatus, or equipment.
    (c) Where the structure of a dam also forms the foundation of the
service company building, the foundation must be considered a part of
the dam.
    (d) The cost of disposing of materials excavated in connection with
construction of structures must be considered as a part of the cost of
that work, except as follows:
    (1) When the material is used for filling, the cost of loading,
hauling, and dumping must be equitably apportioned between the work in
connection with which the removal occurs and the work in connection
with which the material is used.
    (2) When the material is sold, the net amount realized from the
sales must 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 must be credited to the land account in which the site is
carried.
    (e) Lighting or other fixtures temporarily attached to buildings
for purposes of display or demonstration must not be included in the
cost of the building but in the appropriate equipment account.
    (f) This account must include the following items:
    (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 and similar items.
    (5) Bulkheads, including dredging, riprap fill, piling, decking,
concrete, fenders, and similar items 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, 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 cofferdams during construction, and test borings.
    (16) Fences and fence curbs (not including protective fences
isolating items of equipment, which must 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 in this paragraph.
    (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 and similar items.
    (24) Leases, voiding upon purchase to secure possession of
structures.
    (25) Leased property, expenditures on.
    (26) Lighting fixtures and outside lighting system.
    (27) Mail chutes when part of a building.
    (28) Marquee, permanently attached to building.
    (29) Painting, first cost.
    (30) Permanent paving, concrete, brick, flagstone, asphalt, 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
service company 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 meters and supply system for a building or for general
company purposes.
    (61) Water supply piping, hydrants and wells.
    (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.)
    (g) Structures and Improvements accounts must be credited with the
cost of structures created to house, support, or safeguard equipment,
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.

Sec.  367.57  Equipment.

    (a) The cost of equipment chargeable to the service company
property accounts, unless otherwise indicated in the text of an
equipment account, includes the related net purchase price, sales
taxes, investigation and inspection expenses necessary to such
purchase, expenses of transportation when borne by the service company,
labor employed, materials and supplies consumed, and expenses incurred
by the service company in unloading and placing the equipment in
readiness to operate. Also include those costs incurred in connection
with the first clearing and grading of land and rights-of-way and the
damage costs associated with construction and installation of property.
    (b) Exclude from equipment accounts hand and other portable tools,
that are likely to be lost or stolen or that have relatively small
value (for example, $500 or less) or short life, unless the correctness
of the related accounting as service company property is verified by
current inventories. Special tools acquired and included in the
purchase price of equipment must be included in the appropriate
property account. Portable drills and similar tool equipment when used
in connection with the operation and maintenance of a particular plant
or department, such as production, transmission, distribution, or
similar items, or in stores, must be charged to the property account
appropriate for their use.
    (c) The equipment accounts must include angle irons and similar
items that are installed at the base of an item of equipment, but piers
and foundations that are designed to be as permanent as the buildings
that house the equipment, or that are constructed as a part of the
building and that cannot be removed without cutting into the walls,
ceilings or floors or without in some way impairing the building, must
be included in the building accounts.
    (d) The cost of efficiency or other tests made subsequent to the
date equipment becomes available for service must be charged to the
appropriate expense accounts, except that tests to determine whether
equipment meets the specifications and requirements as to efficiency,
performance, and similar items, 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
service company property account.

Sec.  367.58  Work order and property record system required for
service company property.

    (a) Each service company must record all construction and
retirements of service company property by means of work orders or job
orders. Separate work orders may be opened for additions to, and
retirements of, service company property or the retirements may be
included with the construction work order. All items relating to the
retirements must be kept separate from those relating to construction
and any maintenance costs involved in the work likewise must be
segregated.
    (b) Each service company must keep its work order system so as to
show the nature of each addition to or retirement of service company
property, the related total cost, the source or sources of costs, and
the property account or accounts to which charged or credited. Work
orders covering jobs of short duration may be cleared monthly.
    (c) Each service company must maintain records in which, for each
property account, the amounts of the annual additions and retirements
are classified so as to show the number and cost of the various record
units or retirement units.

Sec.  367.59  Additions and retirements of property.

    (a) For the purpose of avoiding undue refinement in accounting for
additions to and retirements and replacements of service company
property, all property will be considered as consisting of retirement
units and minor items of property. Each company must maintain a written
property units listing for use in accounting for additions and
retirements of property and apply the listing consistently.
    (b) The addition and retirement of retirement units must be
accounted for as follows:
    (1) When a retirement unit is added, the related cost must be added
to the appropriate service company property account.
    (2) When a retirement unit is retired, with or without replacement,
the related book cost must be credited to the property account in which
it is included, determined in the manner provided in paragraph (d) of
this section. If the retirement unit is of a depreciable class, the
book cost of the unit retired and credited to service company property
must be charged to the accumulated provision for depreciation
applicable to the property. The cost of removal and the salvage must be
charged or credited, as appropriate, to the depreciation account.
    (c) The addition and retirement of minor items of property must be
accounted for as follows:
    (1) When a minor item of property that did not previously exist is
added to service company property, the related

cost must be accounted for in the same manner as for the addition of a
retirement unit, as provided in paragraph (b)(1) of this section, if a
substantial addition results, otherwise the charge must be to the
appropriate maintenance expense account.
    (2) When a minor item of property is retired and not replaced, the
related book cost must be credited to the property account in which it
is included; and, in the event the minor item is a part of depreciable
property, the account for accumulated provision for depreciation must
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 the unit is retired, no
separate credit to the property account is required when the 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 must be charged to the maintenance account appropriate for
the item. However, 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
excess cost of the replacement over the estimated cost at current
prices of replacing without betterment must be charged to the
appropriate property account.
    (d) The book cost of service company property retired must be the
amount at which the property is included in the property accounts,
including all components of construction costs. The book cost must be
determined from the service company's records and, if this cannot be
done, it must be estimated. Service companies must furnish the
particulars of the estimates to the Commission, if requested. When it
is impracticable to determine the book cost of each unit, due to the
relatively large number or related small cost, an appropriate average
book cost of the units, with due allowance for any differences in size
and character, must be used as the book cost of the units retired.
    (e) The book cost of land retired must be credited to the
appropriate land account. If the land is sold, the difference between
the book cost (less any accumulated provision for related depreciation
or amortization that has been authorized and provided) and the sale
price of the land (less commissions and other expenses of making the
sale) must be recorded in accounts 421.1, Gain on disposition of
property (Sec.  367.4211) or 421.2, Loss on disposition of property
(Sec.  367.4212), as appropriate.
    (f) The book cost less net salvage of depreciable service company
property retired must be charged in its entirety to account 108,
Accumulated provision for depreciation of service company property
(Sec.  367.1080).
    (g) The accounting for the retirement of amounts included in
account 303, Miscellaneous intangible property (Sec.  367.3030), and
the items of limited-term interest in land included in the accounts for
land and land rights, must be as provided for in the text of account
111, Accumulated provision for amortization of service company property
(Sec.  367.1110), account 404, Amortization of limited-term property
(Sec.  367.4040), and account 405, Amortization of other property
(Sec.  367.4050).

Subpart D--Operating Expense Instructions

Sec.  367.80  Supervision and engineering.

    (a) The supervision and engineering includible in the operating
expense accounts must consist of the pay and expenses of
superintendents, engineers, clerks, other employees and consultants
engaged in supervising and directing the operation and maintenance of
each service company function. Wherever allocations are necessary in
order to arrive at the amount to be included in any account, the method
and basis of allocation must be reflected by underlying records.
    (b) This account must include the following labor items:
    (1) Special tests to determine efficiency of equipment operation.
    (2) Preparing or reviewing budgets, estimates, and drawings
relating to operation or maintenance for departmental approval.
    (3) Preparing instructions for operations and maintenance
activities.
    (4) Reviewing and analyzing operating results.
    (5) Establishing organizational setup of departments and executing
related changes.
    (6) Formulating and reviewing routines of departments and executing
related changes.
    (7) General training and instruction of employees by supervisors
whose pay is chargeable to the training and instruction. Specific
instruction and training in a particular type of work is chargeable to
the appropriate functional expense account (See Service Company
Property in Sec.  367.51(a)(19)).
    (8) Secretarial work for supervisory personnel, but not general
clerical and stenographic work chargeable to other accounts.
    (c) This account must include the following expense items:
    (1) Consultants' fees and expenses.
    (2) Meals, traveling and incidental expenses.

Sec.  367.81  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 service company property is included in
paragraph (d) of this section. Other work operations applicable to
specific classes of property are listed in functional maintenance
expense accounts.
    (b) Materials recovered in connection with the maintenance of
property must be credited to the same account to which the maintenance
cost was charged.
    (c) Maintenance of property leased from others must be treated as
provided in operating expense instruction in Sec.  367.82.
    (d) This account must include the following items:
    (1) Direct field supervision of maintenance.
    (2) Inspecting, testing, and reporting on condition of property
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 property.
    (4) Rearranging and changing the location of property.
    (5) Repairing for reuse materials recovered from property.
    (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 Service Company Property Instruction
in Sec.  367.59.)

Sec.  367.82  Rents.

    (a) The rent expense accounts provided under the several functional
groups of expense accounts must include all rents, including taxes paid
by the lessee on leased property, for property used in the operations
of the service company, 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 property accounts 391 to 398 (Sec. Sec.
367.3910 to 367.3980), inclusive, that must be treated as an expense
item and included in the appropriate functional account, and
    (2) Rents that are chargeable to clearing accounts, and distributed
from the clearing accounts to the appropriate account. If rents cover
property used for more than one function, such as production and
transmission, or by more than one department, the rents must 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 service company operations is subleased, the
revenue derived from the subleasing must be credited to the rent
revenue account in operating revenues. However, if the rent was charged
to a clearing account, amounts received from subleasing the property
must be credited to the clearing account.
    (c) The cost, when incurred by the lessee, of operating and
maintaining leased property, must 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 property leased from others must be accounted for as provided in
Service Company Property Instruction in Sec.  367.54.

Sec.  367.83  Training costs.

    When it is necessary that employees be trained to specifically
operate or maintain facilities that are being constructed, the related
costs must be accounted for as a current operating and maintenance
expense. These expenses must be charged to the appropriate functional
accounts currently as they are incurred. However, when the training
costs involved relate to facilities that are not conventional in
nature, or are new to the service company's operations, these costs may
be capitalized until the time that the facilities are ready for
functional use.

Subpart E--Special Instructions

Sec.  367.100  Accounts 131--174, 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 service company that
are subject to current settlement, except those items for which
accounts other than those designated as current and accrued assets are
provided. There must 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 the related possible loss has been made. Items of current
character but of doubtful value may be written down and for record
purposes carried in these accounts at nominal value.

Sec.  367.101  Accounts 231--243, 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 from
the date of issuance or assumption, except for: bonds, receivers'
certificates and similar obligations which must be classified as long-
term debt until date of maturity; accrued taxes, such as income taxes,
which must be classified as accrued liabilities even though payable
more than one year from date; compensation awards, which must 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 service company, it shall be credited to
a long-term debt account appropriate for the transaction, except,
however, the current liabilities previously mentioned.

Sec.  367.102  Accounts 408.1 and 408.2, Taxes other than income taxes.

    (a) These accounts must include the amounts 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) These accounts shall be charged in each accounting period with
the amounts of taxes which are applicable to each account, with
concurrent credits to account 236, Taxes accrued (Sec.  367.2360), or
account 165, Prepayments (Sec.  367.1650), as appropriate. When it is
not possible to determine the exact amounts of taxes, the amounts shall
be estimated and adjustments made in current accruals as the actual tax
levies become known.
    (c) The accruals for these taxes must be apportioned among service
company departments and to Other Income and Deductions so that, as
nearly as practicable, each tax is included in the expenses of the
service company department or Other Income and Deductions, the item
from which gave rise to the tax.
    (d) Special assessments for street and similar improvements must be
included in the appropriate service company property account.
    (e) Taxes specifically applicable to construction must be included
in the cost of construction.
    (f) Gasoline and other sales taxes must be charged as far as
practicable to the same account as the materials on which the tax is
levied.
    (g) Social security and other forms of so-called payroll taxes must
be distributed to utility and non-utility functions on a basis related
to payroll. Amounts applicable to construction must be charged to the
appropriate plant account.
    (h) Interest on tax refunds or deficiencies must not be included in
these accounts but in account 419, Interest and dividend income (Sec.
367.4190), or 431, Other interest expense (Sec.  367.4310), as
appropriate.

Sec.  367.103  Accounts 409.1, 409.2, and 409.3, Income taxes.

    (a) These accounts must include the amounts of local, 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 must be made to account
236, Taxes accrued (Sec.  367.2360), and as the exact amounts of taxes
become known, the current tax accruals must be adjusted by charges or
credits to these accounts, so that these accounts include the actual
taxes payable by the service company.
    (b) The accruals for income taxes shall be apportioned among
service company departments and to Other Income and Deductions so that,
as nearly as practicable, each tax will be included in the expenses of
the service company department or Other Income and Deductions, the
income from which gave rise to the tax.
    (c) Taxes assumed by the service company on interest must be
charged to account 431, Other interest expense (Sec.  367.4310).
    (d) Interest on tax refunds or deficiencies must not be included in
these accounts but in account 419, Interest and dividend income (Sec.
367.4190), or account 431, Other interest expense (Sec.  367.4310), as
appropriate.

Sec.  367.104  Accounts 410.1, 410.2, 411.1, and 411.2, Provision for
deferred income taxes.

    (a) Accounts 410.1 (Sec.  367.4101) and 410.2 (Sec.  367.4102) must
be debited, and Accumulated Deferred Income Taxes must be credited,
with amounts equal to any current deferrals of taxes on income or any
allocations of deferred taxes originating in prior periods, as provided
by the texts of accounts 190 (Sec.  367.1900), 282 (Sec.  367.2820),
and 283 (Sec.  367.2830). There must not be netted against entries
required to be made to these accounts any credit amounts appropriately
includible in accounts 411.1 (Sec.  367.4111) or 411.2 (Sec.
367.4112).
    (b) Accounts 411.1 (Sec.  367.4111) and 411.2 (Sec.  367.4112) must
be credited, and Accumulated Deferred Income Taxes must be debited,
with amounts equal to any allocations of deferred taxes originating in
prior periods or any current deferrals of taxes on income, as provided
by the texts of accounts 190 (Sec.  367.1900), 282 (Sec.  367.2820),
and 283 (Sec.  367.2830). There must not be netted against entries
required to be made to these accounts any debit amounts appropriately
includible in account 410.1 (Sec.  367.4101) or 410.2 (Sec.  367.4102).

Sec.  367.105  Accounts 411.4, and 411.5, Investment tax credit
adjustments.

    (a) Account 411.4 (Sec.  367.4114) must be debited with the amounts
of investment tax credits related to service company property that are
credited to account 255, Accumulated deferred investment tax credits
(Sec.  367.2550), 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 in Sec.  367.2550).
    (b) Account 411.4 (Sec.  367.4114) must be credited with the
amounts debited to account 255 (Sec.  367.2550) for proportionate
amounts of tax credit deferrals allocated over the average useful life
of service company property to which the tax credits relate or such
lesser period of time as may be adopted and consistently followed by
the company.
    (c) Account 411.5 (Sec.  367.4115) must also be debited and
credited as directed in paragraphs (a) and (b), for investment tax
credits related to other income and deductions.

Sec.  367.106  Accounts 426.1, 426.2, 426.3, 426.4, and 426.5,
Miscellaneous expense accounts.

    These accounts must include miscellaneous expense items which are
nonoperating in nature but which are properly deductible before
determining total income before interest charges.

Subpart F--Balance Sheet Chart of Accounts

Service Company Property

Sec.  367.1010  Account 101, Service company property.

    (a) This account must include the cost of service company property,
included in accounts 301 (Sec.  367.3010), 303 (Sec.  367.3030) and 389
to 399.1 (Sec. Sec.  376.3890 to 367.3991), owned and used by the
service company in its operations, and having an expectation of life in
service of more than one year from date of installation.
    (b) The cost of additions to, and betterments of, property leased
from others, that are includible in this account, must be recorded in
subaccounts separate and distinct from those relating to owned
property. (See Service Company Property Instruction in Sec.  367.54.)

Sec.  367.1011  Account 101.1, Property under capital leases.

    (a) This account must include the amount recorded under capital
leases for property leased from others and used by the service company
in its operations.
    (b) The property included in this account must be classified
separately according to detailed accounts 301 (Sec.  367.3010), 303
(Sec.  367.3030) and 389 to 399.1 (Sec. Sec.  367.3890 to 367.3991)
prescribed for service company property.
    (c) Records must be maintained with respect to each capital lease
reflecting:
    (1) Name of lessor,
    (2) Basic details of lease,
    (3) Terminal date,
    (4) Original cost or fair market value of property leased,
    (5) Future minimum lease payments,
    (6) Executory costs,
    (7) Present value of minimum lease payments,
    (8) The amount representing interest and the interest rate used,
and
    (9) Expenses paid.

Sec.  367.1070  Account 107, Construction work in progress.

    (a) This account must include the total of the balances of work
orders for service company property in process of construction.
    (b) Work orders must 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 that may be placed in service
at different dates, any expenditures that are common to and that will
be used in the operation of the project as a whole must be included in
service company property upon the completion and the readiness for
service of the first unit. Any expenditures that are identified
exclusively with units of property not yet in service must be included
in this account.
    (c) Expenditures on research, development, and demonstration
projects for construction of facilities are to be included in a
separate subaccount in this account. Records must be maintained to show
separately each project along with complete detail of the nature and
purpose of the research, development, and demonstration project
together with the related costs.

Sec.  367.1080  Account 108, Accumulated provision for depreciation of
service company property.

    (a) This account must be credited with the following:
    (1) Amounts charged to account 403, Depreciation expense (Sec.
367.4030), or to clearing accounts for current depreciation expense for
service company property.
    (2) Amounts charged to account 416, Costs and expenses of
merchandising, jobbing, and contract work (Sec.  367.4160), or to
clearing accounts for current depreciation expense.
    (3) Amounts of depreciation applicable to properties acquired. (See
Service Company Property Instruction in Sec.  367.53.)
    (4) Amounts of depreciation applicable to service company property
donated to the service company.
    (b) The service company must maintain separate subaccounts for
depreciation applicable to service company property.
    (c) At the time of retirement of depreciable service company
property, this account must be charged with the book cost of the
property retired and the cost of removal, and must be credited with the
salvage value and any other amounts recovered, such as insurance. When
retirement, costs of removal and salvage are entered originally in
retirement work orders, the net total of such work orders may be
included in a separate related subaccount. Upon completion of the work
order, the proper distribution to subaccounts of this account must be
made as provided in paragraph (d) of this section.
    (d) The subsidiary records for this account must reflect the
current credits and debits to this account in sufficient detail to show
the following separately:
    (1) The amount of accrual for depreciation,
    (2) The book cost of property retired,
    (3) Cost of removal,
    (4) Salvage, and
    (5) Other items, including recoveries from insurance.

    (e) The service company is restricted in its use of the accumulated
provision for depreciation to the purposes identified in paragraphs (a)
through (d) of this section. It must not transfer any portion of this
account to retained earnings or make any other use of the depreciation
without authorization by the Commission.

Sec.  367.1110  Account 111, Accumulated provision for amortization of
service company property.

    (a) This account must be credited with the following:
    (1) Amounts charged to account 404, Amortization of limited-term
property (Sec.  367.4040), for the current amortization of limited-term
service company property investments.
    (2) Amounts charged to account 405, Amortization of other property
(Sec.  367.4050).
    (3) Amounts charged to account 425, Miscellaneous amortization
(Sec.  367.4250), for the amortization of intangible or other property,
that does not have a definite or terminable life and is not subject to
charges for depreciation expense, with Commission approval.
    (b) The service company must maintain subaccounts of this account
for the amortization applicable to service company property and
property leased to others.
    (c) When any property to which this account applies is sold,
relinquished, or otherwise retired from service, this account must be
charged with the amount previously credited in respect to the property.
The book cost of the retired property less the amount chargeable to
this account and less the net proceeds realized at retirement must be
included in account 421.1, Gain on disposition of property (Sec.
367.4211), or account 421.2, Loss on disposition of property (Sec.
367.4212), as appropriate.
    (d) For general ledger and balance sheet purposes, this account
must be regarded and treated as a single composite provision for
amortization. The subsidiary records must reflect the current credits
and debits to this account in sufficient detail to show the following
separately:
    (1) The amount of accrual for amortization,
    (2) The book cost of property retired,
    (3) Cost of removal,
    (4) Salvage, and
    (5) Other items, including recoveries from insurance.
    (e) The service company is restricted in its use of the accumulated
provision for amortization to the purposes provided in paragraphs (a)
through (d) of this section. It must not transfer any portion of this
account to retained earnings or make any other use of the amortization
without authorization by the Commission.

Sec.  367.1230  Account 123, Investment in associate companies.

    (a) This account must include the book cost of investments in
securities issued or assumed by associate companies and investment
advances to the companies, including related accrued interest when the
interest is not subject to current settlement, provided that the
investment does not relate to a subsidiary company. (If the investment
relates to a subsidiary company, it must be included in account 123.1,
Investment in subsidiary companies (Sec.  367.1231).) Include in this
account the offsetting entry to the recording of amortization of
discount or premium on interest-bearing investments. (See account 419,
Interest and dividend income (Sec.  367.4190).)
    (b) This account must be maintained in a manner so as to show the
investment in securities of, and advances to, each associate company
together with full particulars regarding any of the investments that
are pledged.
    (c) Securities and advances of associate companies owned and
pledged must be included in this account, but the securities, if held
in special deposits or in special funds, must be included in the
appropriate deposit or fund account. A complete record of securities
pledged must be maintained.
    (d) Securities of associate companies held as temporary cash
investments are includible in account 136, Temporary cash investments
(Sec.  367.1360).
    (e) Balances in open accounts with associate companies that are
subject to current settlement are includible in account 146, Accounts
receivable from associate companies (Sec.  367.1460).
    (f) The service company must write down the cost of any security in
recognition of a decline in the related value. Securities must be
written off or written down to a nominal value if there is no
reasonable prospect of substantial value. Fluctuations in market value
must not be recorded but a permanent impairment in the value of
securities must be recognized in the accounts. When securities are
written off or written down, the amount of the adjustment must be
charged to account 426.5, Other deductions (Sec.  367.4265), or to an
appropriate account for accumulated provisions for loss in value
established as a separate subdivision of this account.

Sec.  367.1240  Account 124, Other investments.

    (a) This account must include the book cost of investments in
securities issued or assumed by non-associate companies, investment
advances to these companies, and any investments not accounted for
elsewhere. This account must also include unrealized holding gains and
losses on trading and available-for-sale types of security investments.
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 (Sec.  367.4190).)
    (b) The records must be maintained in a manner so as to show the
amount of each investment and the investment advances to each person.

Sec.  367.1280  Account 128, Other special funds.

    (a) This account must include the amount of cash and book cost of
investments that have been segregated in special funds for insurance,
employee pensions, savings, relief, hospital, and other purposes not
provided for elsewhere. This account must also include unrealized
holding gains and losses on trading and available-for-sale types of
security investments. A separate account with appropriate title, must
be kept for each fund.
    (b) Amounts deposited with a trustee under the terms of an
irrevocable trust agreement for pensions or other employee benefits
must not be included in this account.

Current and Accrued Assets

Sec.  367.1310  Account 131, Cash.

    This account must include the amount of current cash funds except
working funds.

Sec.  367.1340  Account 134, Other special deposits.

    (a) This account must include deposits with fiscal agents or others
for special purposes other than the payment of interest and dividends.
The special deposits may include, among other things, 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 service
company's securities and deposited with trustees to be held until
invested in property of the service company. Entries to this account
must specify the purpose for which the deposit is made.
    (b) Assets available for general corporate purposes must not be

included in this account. Further, deposits for more than one year,
that are not offset by current liabilities, must be charged to account
128, Other special funds (Sec.  367.1280).

Sec.  367.1350  Account 135, Working funds.

    This account must include cash advanced to officers, agents,
employees, and others as petty cash or working funds.

Sec.  367.1360  Account 136, Temporary cash investments.

    (a) This account must 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 must be maintained so as to show separately
temporary cash investments in securities of associate companies and of
others. Records must be kept of any pledged investments.

Sec.  367.1410  Account 141, Notes receivable.

    (a) This account must 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 associate companies. (See account 136, Temporary
cash investments (Sec.  367.1360), and account 145, Notes receivable
from associate companies (Sec.  367.1450).)
    (b) The face amount of notes receivable discounted, sold, or
transferred without releasing the service company from liability as a
related endorser, must be credited to a separate subaccount of this
account and appropriate disclosure must be made in financial statements
of any contingent liability arising from the transactions.

Sec.  367.1420  Account 142, Customer accounts receivable.

    (a) This account must include amounts due from customers for
service, and for merchandising, jobbing and contract work. This account
must not include amounts due from associate companies.
    (b) This account must be maintained so as to permit ready
segregation of the amounts due for merchandising, jobbing and contract
work.

Sec.  367.1430  Account 143, Other accounts receivable.

    (a) This account must include amounts due the service company upon
open accounts, other than amounts due from associate companies and from
customers for services and merchandising, jobbing and contract work.
    (b) This account must be maintained so as to show separately
amounts due on subscriptions to capital stock and from officers and
employees, but the account must not include amounts advanced to
officers or others as working funds. (See account 135, Working funds
(Sec.  367.1350).)

Sec.  367.1440  Account 144, Accumulated provision for uncollectible
accounts--Credit.

    (a) This account must be credited with amounts provided for losses
on accounts receivable that may become uncollectible, and also with
collections on related previously charged accounts. Concurrent charges
must be made to account 904, Uncollectible accounts (Sec.  367.9040),
for amounts applicable to service company operations, and to
corresponding accounts for other operations. Records must be maintained
so as to show the write-offs of account receivable for each service
company department.
    (b) This account must be subdivided to show the provision
applicable to the following classes of accounts receivable:
    (1) Service company customers.
    (2) Merchandising, jobbing and contract work.
    (3) Officers and employees.
    (4) Others.
    (c) Accretions to this account must not be made in excess of a
reasonable provision against losses of the related character.
    (d) If provisions for uncollectible notes receivable or for
uncollectible receivables from associate companies are necessary,
separate related subaccounts must be established under the account in
which the receivable is carried.

Sec.  367.1450  Account 145, Notes receivable from associate companies.

    (a) This account must include notes and drafts upon which associate
companies are liable, and that mature and are expected to be paid in
full not later than one year from the date of issue, together with any
related interest, and debit balances subject to current settlement in
open accounts with associate companies. Items that do not bear a
specified due date but that have been carried for more than twelve
months and items that are not paid within twelve months from due date
must be transferred to account 123, Investment in associate companies
(Sec.  367.1230).
    (b) On the balance sheet, accounts receivable from an associate
company may be set off against accounts payable to the same company.
    (c) The face amount of notes receivable discounted, sold or
transferred without releasing the service company from liability as
endorser thereon, must be credited to a separate subaccount of this
account and appropriate disclosure must be made in financial statements
of any contingent liability arising from such transactions.

Sec.  367.1460  Account 146, Accounts receivable from associate
companies.

    (a) This account must include notes and drafts upon which associate
companies are liable, and that mature and are expected to be paid in
full not later than one year from the date of issue, together with any
related interest thereon, and debit balances subject to current
settlement in open accounts with associate companies. Items that do not
bear a specified due date but that have been carried for more than
twelve months and items that are not paid within twelve months from due
date must be transferred to account 123, Investment in associate
companies (Sec.  367.1230).
    (b) On the balance sheet, accounts receivable from an associate
company may be set off against accounts payable to the same company.
    (c) The face amount of notes receivable discounted, sold or
transferred without releasing the service company from liability as the
related endorser, must be credited to a separate subaccount of this
account and appropriate disclosure must be made in financial statements
of any contingent liability arising from the transactions.

Sec.  367.1520  Account 152, Fuel stock expenses undistributed.

    The service company must utilize this account, where appropriate,
to include the cost of service company labor and of office supplies
used and operating expenses incurred with respect to the review,
analysis and management of fuel supply contracts or agreements, the
accumulation of fuel information and its interpretation, the logistics
and handling of fuel, and other related support functions, as a service
to the company engaged in the procurement and transportation of fuel.
This account must be maintained to show the expenses attributable to
each company through the use of work orders. All expenses of a service
company's fuel department or functions must be cleared through this
account.

Sec.  367.1540  Account 154, Materials and operating supplies.

    (a) This account must include the cost of materials purchased
primarily for use

in the service company business for construction, operation and
maintenance purposes. It must include the book cost of materials
recovered in connection with construction, maintenance or the
retirement of service company property, the materials being credited to
construction, maintenance or accumulated depreciation provision,
respectively. This account must include the following items:
    (1) Reusable materials consisting of large individual items must be
included in this account at original cost, estimated if not known. The
cost of repairing the items must 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
related final abandonment or sale) cannot be ascertained without undue
refinement in accounting, must be included in this account at current
prices new for the items. The cost of repairing the items must be
charged to the appropriate expense account as indicated by previous
use.
    (3) Scrap and non-usable materials included in this account must be
carried at the estimated net amount realizable. The difference between
the amounts realized for scrap and non-usable materials sold and the
net amount at which the materials were carried in this account, as far
as practicable, must be adjusted to the accounts credited when the
materials were charged to this account.
    (b) Materials and supplies issued must be credited in this account
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 any other method of
inventory accounting that conforms with accepted accounting standards
consistently applied.
    (c) This account must include the following 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.
    (d) Where expenses applicable to materials purchased cannot be
directly assigned to particular purchases, they may be charged to a
stores expense clearing account (account 163, Stores expense
undistributed (Sec.  367.1630)), and distributed from there to the
appropriate account.
    (e) When materials and supplies are purchased for immediate use,
they need not be carried through this account, but may be charged
directly to the appropriate service company property or expense
account.

Sec.  367.1630  Account 163, Stores expense undistributed.

    (a) This account must 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 must be cleared by adding to the cost of materials
and supplies issued a suitable loading charge that will distribute the
expense equitably over stores issues. The balance in the account at the
close of the calendar year must not exceed the amount of stores
expenses reasonably attributable to the inventory of materials and
supplies exclusive of fuel, as any amount applicable to fuel costs
should be included in account 152, Fuel stock expenses undistributed
(Sec.  367.1520).
    (c) This account must include the following labor items:
    (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 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.
    (d) This account must include the following supplies and expenses
items:
    (1) Adjustments of inventories of materials and supplies, but not
including large differences that can readily be assigned to important
classes of materials and equitably distributed among the accounts to
which the classes of materials have been charged since the previous
inventory.
    (2) Cash and other discounts not practically assignable to specific
materials.
    (3) Freight, express, and similar items, when not assignable to
specific items.
    (4) Heat, light and power for storerooms and store offices.
    (5) Brooms, brushes, sweeping compounds and other supplies used in
cleaning and tidying storerooms and stores offices.
    (6) Injuries and damages.
    (7) Insurance on materials and supplies and on stores equipment.
    (8) Losses due to breakage, leakage, evaporation, fire or other
causes, less credits for amounts received from insurance,
transportation companies or others in compensation of the losses.
    (9) Postage, printing, stationery and office supplies.
    (10) Rent of storage space and facilities.
    (11) Communication service.
    (12) Excise and other similar taxes not assignable to specific
materials.
    (13) Transportation expense on inward movement of stores and on
transfer between storerooms, but not including charges on materials
recovered from retirements that must be accounted for as part of cost
of removal.
    (e) A physical inventory of each class of materials and supplies
must be made at least every two years.

Sec.  367.1650  Account 165, Prepayments.

    This account must include amounts representing prepayments of
insurance, rents, taxes, interest and miscellaneous items, and must be
kept or supported in a manner so as to disclose the amount of each
class of prepayment.

Sec.  367.1710  Account 171, Interest and dividends receivable.

    (a) This account must include the amount of interest on bonds,
mortgages, notes, commercial paper, loans, open accounts, deposits, and
other similar items, the payment of which is reasonably assured, and
the amount of dividends declared or guaranteed on stocks owned.
    (b) Interest that is not subject to current settlement must not be
included in this account, but in the account in which is carried the
principal on which the interest is accrued.
    (c) Interest and dividends receivable from associate companies must
be

included in account 146, Accounts receivable from associate companies
(Sec.  367.1460).

Sec.  367.1720  Accounts 172, Rents receivable.

    (a) This account must include rents receivable or accrued on
property rented or leased by the service company to others.
    (b) Rents receivable from associate companies must be included in
account 146, Accounts receivable from associate companies (Sec.
367.1460).

Sec.  367.1730  Account 173, Accrued revenues.

    At the option of the service company, the estimated amount accrued
for service rendered, but not billed at the end of any accounting
period, may be included in this account. In case accruals are made for
unbilled revenues, they must be made likewise for unbilled expenses,
such as for the purchase of energy.

Sec.  367.1740  Account 174, Miscellaneous current and accrued assets.

    This account must 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 in the account.

Deferred Debits

Sec.  367.1810  Account 181, Unamortized debt expense.

    This account must include expenses related to the issuance or
assumption of debt securities. Amounts recorded in this account must be
amortized over the life of each respective issue under a plan that will
distribute the amount equitably over the life of the security. The
amortization must be on a monthly basis, and the related amounts must
be charged to account 428, Amortization of debt discount and expense
(Sec.  367.4280). Any unamortized amounts outstanding at the time that
the related debt is prematurely reacquired must be accounted for as
indicated in General Instructions in Sec.  367.16.

Sec.  367.1830  Account 183, Preliminary survey and investigation
charges.

    (a) This account must be charged with all expenditures for
preliminary surveys, plans, investigations, and other similar items,
made for the purpose of determining the feasibility of service company
projects under contemplation. If construction results, this account
must be credited and the appropriate service company property account
charged. If the work is abandoned, the charge must be made to account
426.5, Other deductions (Sec.  367.4265), or to the appropriate
operating expense account.
    (b) The records supporting the entries to this account must be kept
so that the service company 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.
    (c) The amount of preliminary survey and investigation charges
transferred to service company property must not exceed the
expenditures that may reasonably be determined to contribute directly
and immediately and without duplication to service company property.

Sec.  367.1840  Account 184, Clearing accounts.

    This account must include undistributed balances in clearing
accounts at the date of the balance sheet. Balances in clearing
accounts must be substantially cleared not later than the end of the
calendar year unless the items held relate to a future period.

Sec.  367.1850  Account 185, Temporary facilities.

    This account must include amounts shown by work orders for property
installed for temporary use for a period of less than one year. Such
work orders must 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 must be cleared to the construction or service work order to
which the facilities relate.

Sec.  367.1860  Account 186, Miscellaneous deferred debits.

    (a) This account must include all debits not provided for
elsewhere, such as miscellaneous work in progress, and unusual or
extraordinary expenses, not included in other accounts, that are in the
process of amortization and items the proper final disposition of which
is uncertain.
    (b) The records supporting the entries to this account must be kept
so that the service company can furnish full information as to each
deferred debit included in this account.

Sec.  367.1880  Account 188, Research, development, or demonstration
expenditures.

    (a) This account must be charged with the cost of all expenditures
coming within the meaning of research, development and demonstration
(RD&D) of this Uniform System of Accounts (See Definitions Sec.
367.1(a)(37)), except those expenditures properly chargeable to account
107, Construction work in progress (Sec.  367.1070).
    (b) Costs that are minor or of a general or recurring nature must
be transferred from this account to the appropriate operating expense
function or, if the costs are common to the overall operations or
cannot be feasibly allocated to the various operating accounts, then
the costs must be recorded in account 930.2, Miscellaneous general
expenses (Sec.  367.9302).
    (c) In certain instances, a service company may incur large and
significant research, development, and demonstration expenditures that
are nonrecurring and that would distort the annual research,
development, and demonstration charges for the period. In such a case,
the portion of such amounts that causes the distortion may be amortized
to the appropriate operating expense account over a period not to
exceed five years, unless otherwise authorized by the Commission.
    (d) The entries in this account must be maintained so as to show
separately each project along with complete detail of the nature and
purpose of the research, development, and demonstration project
together with the related costs.

Sec.  367.1900  Account 190, Accumulated deferred income taxes.

    (a) This account must be debited and account 411.1, Provision for
deferred income taxes--Credit, operating income (Sec.  367.4111), or
account 411.2, Provision for deferred income taxes--Credit, other
income and deductions (Sec.  367.4112), as appropriate, must be
credited with an amount equal to that by which income taxes payable for
the year are higher because of the inclusion of certain items in income
for tax purposes, which items for general accounting purposes will not
be fully reflected in the service company's determination of annual net
income until subsequent years.
    (b) This account must be credited and account 410.1, Provision for
deferred income taxes, operating income (Sec.  367.4101), or account
410.2, Provision for deferred income taxes, other income and deductions
(Sec.  367.4102), as appropriate, must be debited with an amount equal
to that by which income taxes payable for the year are lower because of
prior payment of taxes as provided by paragraph (a) of this section,
because of difference in timing for tax purposes of particular items of
income or income deductions from that recognized by the utility for
general accounting purposes. The credit to this account and debit to
account 410.1 (Sec.  367.4101), or 410.2 (Sec.  367.4102) must, in
general, represent the effect on taxes payable in the current year of
the

smaller amount of book income recognized for tax purposes as compared
to the amount recognized in the service company's current accounts with
respect to the item or class of items for which deferred tax accounting
by the service company was authorized by the Commission.
    (c) The service company is restricted in its use of this account to
the purpose provided in paragraphs (a) and (b) of this section. The
service company must not make use of the balance in this account or any
related portion 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 year's tax deferral,
the amortization of which or other recognition in the service company's
income accounts has been completed, or other disposition made, must be
debited to account 410.1, Provision for deferred income taxes,
operating income (Sec.  367.4101), or account 410.2, Provision for
deferred income taxes, other income and deductions (Sec.  367.4102), as
appropriate, or otherwise disposed of as the Commission may authorize
or direct. (See General Instructions in Sec.  367.17.)

Proprietary Capital

Sec.  367.2010  Account 201, Common stock issued.

    This account must include the par or stated value of all common
capital stock issued and outstanding.

Sec.  367.2040  Account 204, Preferred stock issued.

    This account must include the par or stated value of all preferred
stock issued and outstanding.

Sec.  367.2110  Account 211, Miscellaneous paid-in capital.

    This account must include the balance of all other credits for
paid-in capital that is not properly included in proprietary capital
accounts. This account may include all commissions and expenses
incurred in connection with the issuance of capital stock.

Sec.  367.2150  Account 215, Appropriated retained earnings.

    This account must include the amount of retained earnings that has
been appropriated or set aside for special purposes. Separate
subaccounts must be maintained under titles that will designate the
purpose for which each appropriation was made.

Sec.  367.2160  Account 216, Unappropriated retained earnings.

    This account must include the balances, either debit or credit, of
unappropriated retained earnings arising from earnings of the service
company. This account must not include any amounts representing the
undistributed earnings of subsidiary companies.

Sec.  367.2161  Account 216.1, Unappropriated undistributed subsidiary
earnings.

    This account must include the balances, either debit or credit, of
undistributed retained earnings of subsidiary companies since their
acquisition. When dividends are received from subsidiary companies
relating to amounts included in this account, this account must be
debited and account 216, Unappropriated retained earnings (Sec.
367.2160), credited.

Sec.  367.2190  Account 219, Accumulated other comprehensive income.

    (a) This account must include revenues, expenses, gains, and losses
that are properly includable in other comprehensive income during the
period. Examples of other comprehensive income include, but are not
limited to, minimum pension liability adjustments, and unrealized gains
and losses on certain investments in debt and equity securities.
Records supporting the entries to this account must be maintained so
that the service company can furnish the amount of other comprehensive
income for each item included in this account.
    (b) This account also must be debited or credited, as appropriate,
with amounts of accumulated other comprehensive income that have been
included in the determination of net income during the period and in
accumulated other comprehensive income in prior periods. Separate
records for each category of items must be maintained to identify the
amount of the reclassification adjustments from accumulated other
comprehensive income to earnings made during the period.

Long-Term Debt

Sec.  367.2230  Account 223, Advances from associate companies.

    (a) This account must include the face value of notes payable to
associate companies and the amount of open book accounts representing
advances from associate companies. It does not include notes and open
accounts representing indebtedness subject to current settlement that
are includible in account 233, Notes payable to associate companies
(Sec.  367.2330), or account 234, Accounts payable to associate
companies (Sec.  367.2340).
    (b) The records supporting the entries to this account must be kept
so that the service company can furnish complete information concerning
each note and open account.

Sec.  367.2240  Account 224, Other long-term debt.

    (a) This account must include, until maturity, all long-term debt
not otherwise provided for. This covers items such as receivers'
certificates, real estate mortgages executed or assumed, assessments
for public improvements, notes and unsecured certificates of
indebtedness not owned by associate companies, receipts outstanding for
long-term debt, and other obligations maturing more than one year from
date of issue or assumption.
    (b) Separate accounts must be maintained for each class of
obligation, and records must be maintained to show for each class all
details as to date of obligation, date of maturity, interest dates and
rates, security for the obligation, and other similar items.

Sec.  367.2250  Account 225, Unamortized premium on long-term debt.

    (a) This account must include the excess of the cash value of
consideration received over the face value upon the issuance or
assumption of long-term debt securities.
    (b) Amounts recorded in this account must be amortized over the
life of each respective issue under a plan that will distribute the
amount equitably over the life of the security. The amortization must
be on a monthly basis, with the related amounts credited to account
429, Amortization of premium on debt--Credit (Sec.  367.4290). (See
General Instructions in Sec.  367.16.)

Sec.  367.2260  Account 226, Unamortized discount on long-term debt--
Debit.

    (a) This account must include the excess of the face value of long-
term debt securities over the related cash value of consideration
received, related to the issue or assumption of all types and classes
of debt.
    (b) Amounts recorded in this account must be amortized over the
life of the respective issues under a plan that will distribute the
amount equitably over the life of the securities. The amortization must
be on a monthly basis, with the related amounts charged to account 428,
Amortization of debt discount and expense (Sec.  367.4280). (See
General Instructions in Sec.  367.16.)

Other Noncurrent Liabilities

Sec.  367.2270  Account 227, Obligations under capital lease--Non-
current.

    This account must include the portion not due within one year, of
the obligations recorded for the amounts

applicable to leased property recorded as assets in account 101.1,
Property under capital leases (Sec.  367.1011).

Sec.  367.2300  Account 230, Asset retirement obligations.

    (a) This account must include the amount of liabilities for the
recognition of asset retirement obligations related to service company
property. This account must be credited for the amount of the
liabilities for asset retirement obligations with amounts charged to
the appropriate property account to record the related asset retirement
costs.
    (b) The service company must charge the accretion expense to
account 411.10, Accretion expense (Sec.  367.4116), and credit account
230, Asset retirement obligations (Sec.  367.2300).
    (c) This account must be debited with amounts paid to settle the
asset retirement obligations recorded in this account.
    (d) The service company must clear from this account any gains or
losses resulting from the settlement of asset retirement obligations in
accordance with the instructions prescribed in the General Instructions
in Sec.  367.22.

Current and Accrued Liabilities

Sec.  367.2310  Account 231, Notes payable.

    This account must 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 associate companies.

Sec.  367.2320  Account 232, Accounts payable.

    This account must include all amounts payable by the service
company within one year, that are not provided for in other accounts.

Sec.  367.2330  Account 233, Notes payable to associate companies.

    (a) This account must include amounts owing to associate 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.
    (b) Exclude from this account notes and accounts that are
includible in account 223, Advances from associate companies (Sec.
367.2230).

Sec.  367.2340  Account 234, Accounts payable to associate companies.

    (a) This account must include amounts owing to associate 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.
    (b) Exclude from this account notes and accounts that are included
in account 223, Advances from associate companies (Sec.  367.2230).

Sec.  367.2360  Account 236, Taxes accrued.

    (a) This account must be credited with the amount of taxes accrued
during the accounting period, corresponding debits being made to the
appropriate accounts for tax charges. The 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 must be adjusted so as to
include as nearly as can be determined in each year the related
applicable taxes. Any amount representing a prepayment of taxes
applicable to the period subsequent to the date of the balance sheet,
must be shown under account 165, Prepayments (Sec.  367.1650).
    (b) If accruals for taxes are found to be insufficient or
excessive, corrections must be made through current tax accruals.
    (c) Accruals for taxes must be based upon the net amounts payable
after credit for any discounts, and must not include any amounts for
interest on tax deficiencies or refunds. Interest received on refunds
must be credited to account 419, Interest and dividend income (Sec.
367.4190), and interest paid on deficiencies must be charged to account
431, Other interest expense (Sec.  367.4310).
    (d) The records supporting the entries to this account must 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.

Sec.  367.2370  Account 237, Interest accrued.

    This account must include the amount of interest accrued but not
matured on all liabilities of the service company not including,
however, interest that is added to the principal of the debt on which
it is incurred. Supporting records must be maintained so as to show the
amount of interest accrued on each obligation.

Sec.  367.2380  Account 238, Dividends declared.

    This account must include the amount of dividends that have been
declared but not paid. Dividends must be credited to this account when
they become a liability.

Sec.  367.2410  Account 241, Tax collections payable.

    (a) This account must include the amount of taxes collected by the
service company through payroll deductions or otherwise pending
transmittal of the taxes to the proper taxing authority.
    (b) Do not include liability for taxes assessed directly against
the service company that is accounted for as part of the service
company's own tax expense.

Sec.  367.2420  Account 242, Miscellaneous current and accrued
liabilities.

    This account must include the amount of all other current and
accrued liabilities not provided for in accounts 231 through 243
(Sec. Sec.  367.2310 through 367.2430), appropriately designated and
supported so as to show the nature of each liability.

Sec.  367.2430  Account 243, Obligations under capital leases--current.

    This account must include the portion, due within one year, of the
obligations recorded for the amounts applicable to leased property
recorded as assets in account 101.1, Property under capital leases
(Sec.  367.1011).

Deferred Credits

Sec.  367.2530  Account, 253, Other deferred credits.

    This account must 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.

Sec.  367.2550  Account 255, Accumulated deferred investment tax
credits.

    This account must be credited with all investment tax credits
deferred by companies that have elected to follow deferral accounting,
partial or full, rather than recognizing in the income statement the
total benefits of the tax credit as realized. After this election, a
company may not transfer amounts from this account, except as
authorized in this account and in accounts 411.4, Investment tax credit
adjustments, service company property (Sec.  367.4114) or 411.5,
Investment tax credit adjustments, other income and deductions (Sec.
367.4115), or with approval of the Commission.

Sec.  367.2820  Account 282, Accumulated deferred income taxes--Other
property.

    (a) This account must include the tax deferrals resulting from
adoption of the principle of comprehensive inter-period income tax
allocation described in the General Instructions in Sec.  367.17 that
are related to all property other than accelerated amortization
property.
    (b) This account must be credited and accounts 410.1, Provision for
deferred income taxes, operating income (Sec.  367.4101), or 410.2,
Provision for deferred income taxes, Other income and deductions (Sec.
367.4102), as appropriate, must be debited with tax

effects related to property described in paragraph (a) of this section
where taxable income is lower than pretax accounting income due to
differences between the periods in which revenue and expense
transactions affect taxable income and the periods in which they enter
into the determination of pretax accounting income.
    (c) This account must be debited, and accounts 411.1, Provision for
deferred income taxes--credit, operating income (Sec.  367.4111), or
411.2, Provision for deferred income taxes--credit, other income and
deductions (Sec.  367.4112), as appropriate, must be credited with tax
effects related to property described in paragraph (a) of this section
where taxable income is higher than pretax accounting income due to
differences between the periods in which revenue and expense
transactions affect taxable income and the periods in which they enter
into the determination of pretax accounting income.
    (d) The service company is restricted in its use of this account to
the purposes described in paragraphs (a) through (c) of this account.
It must not transfer the balance in this account or any related portion
to retained earnings or make any other use of the balance except as
provided in paragraph (a) through (c) of this account without prior
approval of the Commission. Upon the disposition by sale, exchange,
transfer, abandonment or premature retirement of property on which
there is a related balance, this account must be charged with an amount
equal to the related income tax expense, if any, arising from the
disposition and accounts 411.1, Income taxes deferred in prior years--
Credit (Sec.  367.4111), or 411.2, Income taxes deferred in prior
years--Credit, other income and deductions (Sec.  367.4112), must be
credited. When property is disposed of by transfer to a wholly-owned
subsidiary, the related balance in this account also must be
transferred. When the disposition relates to retirement of an item or
items under a group method of depreciation where there is no tax effect
in the year of retirement, no entries are required in this account if
it can be determined that the related balance must be retained to
offset future group item tax deficiencies.

Sec.  367.2830  Account 283, Accumulated deferred income taxes--Other.

    (a) This account must include all credit tax deferrals resulting
from the adoption of the principles of comprehensive inter-period
income tax allocation described in the General Instructions in Sec.
367.17 other than those deferrals that are includible in accounts and
account 282, Accumulated deferred income taxes--Other property (Sec.
367.2820).
    (b) This account must be credited, and accounts 410.1 Provision for
deferred income taxes, operating income (Sec.  367.4101), or 410.2
Provision for deferred income taxes, other income and deductions (Sec.
367.4102), as appropriate, must be debited with tax effects related to
items described in paragraph (a) of this account where taxable income
is lower than pretax accounting income due to differences between the
periods in which revenue and expense transactions affect taxable income
and the periods in which they enter into the determination of pretax
accounting income.
    (c) This account must be debited, and accounts 411.1, Provision for
deferred income taxes--Credit, operating income (Sec.  367.4111), or
411.2, Provision for deferred income taxes--Credit, other income and
deductions (Sec.  367.4112), as appropriate, must be credited with tax
effects related to items described in paragraph (a) of this account
where taxable income is higher than pretax accounting income due to
differences between the periods in which revenue and expense
transactions affect taxable income and the periods in which they enter
into the determination of pretax accounting income.
    (d) Records with respect to entries to this account, as described
in paragraphs (a) through (c) of this account, and the account balance,
must be maintained so as to show the factors of calculation with
respect to each annual amount of the item or class of items.
    (e) The service company is restricted in its use of this account to
the purposes described in paragraphs (a) through (c) of this account.
It must not transfer the balance in the account or any portion of the
account to retained earnings or to any other account or make any use of
the account except as provided in the text of this account, without
prior approval of the Commission. Upon the disposition by sale,
exchange, transfer, abandonment or premature retirement of items on
which there is a related balance herein, this account must be charged
with an amount equal to the related income tax effect, if any, arising
from the disposition and accounts 411.1, Provision for deferred income
taxes--Credit, operating income (Sec.  367.4111), or 411.2, Provision
for deferred income taxes--Credit, other income and deductions (Sec.
367.4112), as appropriate, must be credited.
    (f) When property is disposed of by transfer to a wholly-owned
subsidiary, the related balance in this account also must be
transferred. When the disposition relates to retirement of an item or
items under a group method of depreciation where there is no tax effect
in the year of retirement, no entries are required in this account if
it can be determined that the related balance must be retained to
offset future group item tax deficiencies.

Subpart G--Service Company Property Chart of Accounts

Sec.  367.3010  Account 301, Organization.

    (a) This account must 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
    (b) This account must include the following items:
    (1) Cost of obtaining certificates authorizing the service company
to engage in its business.
    (2) Fees and expenses for incorporation.
    (3) Fees and expenses for mergers or consolidations.
    (4) Office expenses incident to organizing the service company.
    (5) Stock and minute books and corporate seal.
    (c) This account must not include any discounts upon securities
issued or assumed; nor may it include any costs incident to negotiating
loans, selling bonds or other evidences of debt or expenses in
connection with the authorization, issuance or sale of capital stock.
    (d) 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. When charges are made to this
account for expenses incurred in mergers, consolidations, or
reorganizations, amounts previously included in this account or in
similar accounts in the books of the companies concerned must be
excluded from this account.

Sec.  367.3030  Account 303, Miscellaneous intangible property.

    (a) This account must include the cost of patent rights, licenses,
privileges, and other intangible property necessary or valuable in the
conduct of service company operations and not specifically chargeable
to any other account.
    (b) When any item included in this account is retired or expires,
the related book cost must be credited to this account and charged to
account 426.5, Other deductions (Sec.  367.4265), or account 111,
Accumulated provision for amortization of property (Sec.  367.1110).

    (c) This account must be maintained in a manner so that the service
company can furnish full information with respect to the amounts
included in this account.

Sec.  367.3890  Account 389, Land and land rights.

    This account must include the cost of land and land rights used for
service company purposes, the cost of which is not properly includible
in other land and land rights accounts. (See Service Company Property
Instructions in Sec.  367.55.)

Sec.  367.3900  Account 390, Structures and improvements.

    This account must include the cost in place of structures and
improvements used for service company purposes, the cost of which is
not properly includible in other structures and improvements accounts
(See Service Company Property Instructions in Sec.  367.56).

Sec.  367.3910  Account 391, Office furniture and equipment.

    (a) This account must include the cost of office furniture and
equipment owned by the service company and devoted to service company
operations, and not permanently attached to buildings, except the cost
of the furniture and equipment that the service company elects to
assign to other property accounts on a functional basis.
    (b) This account must include the following items:
    (1) Bookcases and shelves.
    (2) Desks, chairs, and desk equipment.
    (3) Drafting-room equipment.
    (4) Filing, storage, and other cabinets.
    (5) Floor covering.
    (6) Library and library equipment.
    (7) Mechanical office equipment, such as accounting machines,
typewriters, and other similar items.
    (8) Safes.
    (9) Tables.

Sec.  367.3920  Account 392, Transportation equipment.

    (a) This account must include the cost of transportation vehicles
used for service company purposes.
    (b) This account must include the following 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.

Sec.  367.3930  Account 393, Stores equipment.

    (a) This account must include the cost of equipment used for the
receiving, shipping, handling, and storage of materials and supplies.
    (b) This account must include the following 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.

Sec.  367.3940  Account 394, Tools, shop and garage equipment.

    (a) This account must 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.
    (b) This account must include the following 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 equipment
in this account 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.

Sec.  367.3950  Account 395, Laboratory equipment.

    (a) This account must include the cost installed of laboratory
equipment used for general laboratory purposes.
    (b) This account must include the following items:
    (1) Ammeters.
    (2) Balances and scales.
    (3) Barometers.
    (4) Calorimeters-bomb, flow, recording types, and other similar
items.
    (5) Current batteries.
    (6) Electric furnaces.
    (7) Frequency changers.
    (8) Galvanometers.
    (9) Gas burning equipment.
    (10) Gauges.
    (11) Glassware, beakers, burettes, and other similar items.
    (12) Humidity testing apparatus.
    (13) Inductometers.
    (14) Laboratory hoods.
    (15) Laboratory standard millivolt meters.
    (16) Laboratory standard volt meters.
    (17) Laboratory tables and cabinets.
    (18) Meter-testing equipment.
    (19) Millivolt meters.
    (20) Motor generator sets.
    (21) Muffles.
    (22) Oil analysis apparatus.
    (23) Panels.
    (24) Phantom loads.
    (25) Piping.
    (26) Portable graphic ammeters, voltmeters, and wattmeters.
    (27) Portable loading devices.
    (28) Potential batteries.
    (29) Potentiometers.
    (30) Rotating standards.
    (31) Specific gravity apparatus.
    (32) Standard bottles for meter prover testing.
    (33) Standard cell, reactance, resistor, and shunt.
    (34) Stills.
    (35) Sulphur and ammonia apparatus.
    (36) Switchboards.
    (37) Synchronous timers.
    (38) Tar analysis apparatus.
    (39) Testing panels.
    (40) Testing resistors.
    (41) Thermometers-indicating and recording.
    (42) Transformers.
    (43) Voltmeters.
    (44) Other testing, laboratory, or research equipment not provided
for elsewhere.
    (45) Other items of equipment for testing gas, fuel, flue gas,
water, residuals, and other similar items.

Sec.  367.3960  Account 396, Power operated equipment.

    (a) This account must 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 the equipment and the vehicle on which the equipment is
mounted.

    (b) This account must include the following 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.
    (b) It is intended that this account include only the large units
that are generally self-propelled or mounted on movable equipment.

Sec.  367.3970  Account 397, Communication equipment.

    (a) This account must include the cost installed of telephone,
telegraph, and wireless equipment for general use in connection with
service company operations.
    (b) This account must include the following items:
    (1) Amplifiers.
    (2) Antennae.
    (3) Booths.
    (4) Cables.
    (5) Carrier terminal equipment.
    (6) Conductors.
    (7) Distributing boards.
    (8) Extension cords.
    (9) Gongs.
    (10) Hand sets, manual and dial.
    (11) Insulators.
    (12) Intercommunicating sets.
    (13) Loading coils.
    (14) Microwave equipment.
    (15) Operators' desks.
    (16) Paraboloids.
    (17) Poles and fixtures used wholly for telephone or telegraph
wire.
    (18) Power supply equipment.
    (19) Radio transmitting and receiving sets.
    (20) Reflectors.
    (21) Repeaters.
    (22) Remote control equipment and lines.
    (23) Sending keys.
    (24) Storage batteries.
    (25) Switchboards.
    (26) Telautograph circuit connections.
    (27) Telegraph receiving sets.
    (28) Telephone and telegraph circuits.
    (29) Testing instruments.
    (30) Towers.
    (31) Underground conduit used wholly for telephone or telegraph
wires and cable wires.

Sec.  367.3980  Account 398, Miscellaneous equipment.

    (a) This account must include the cost of equipment, apparatus, and
other similar items, used in the service company's operations, that is
not included in any other account of this system of accounts.
    (b) This account must include the following items:
    (1) Hospital and infirmary equipment.
    (2) Kitchen equipment.
    (3) Employees' recreation equipment.
    (4) Radios.
    (5) Restaurant equipment.
    (6) Soda fountains.
    (7) Operators' cottage furnishings.
    (8) Other miscellaneous equipment.

Sec.  367.3990  Account 399, Other tangible property.

    This account must include the cost of tangible service company
property not provided for elsewhere.

Sec.  367.3991  Account 399.1, Asset retirement costs for service
company property.

    This account must include asset retirement cost on service company
property.

Subpart H--Income Statement Chart of Accounts

Service Company Operating Income

Sec.  367.4000  Account 400, Operating revenues.

    There must be shown under this caption the total amount included in
the service company operating revenue accounts 457 through 459
(Sec. Sec.  367.4570 through 367.4590).

Sec.  367.4010  Account 401, Operation expense.

    There must be shown under this caption the total amount included in
the service company operation expense accounts 500 through 589
(Sec. Sec.  367.5000 through 367.5890), 800 through 881 (Sec. Sec.
367.8000 through 367.8810) and 901 through 931 (Sec. Sec.  367.9010
through 367.9310).

Sec.  367.4020  Account 402, Maintenance expense.

    There must be shown under this caption the total amount included in
the service company maintenance expense accounts 500 through 598
(Sec. Sec.  367.5000 through 367.5890), 800 though 894 (Sec. Sec.
367.8000 through 367.8810), and 935 (Sec.  367.9350).

Sec.  367.4030  Account 403, Depreciation expense.

    (a) This account must include the amount of depreciation for all
service company property, the cost of which is included in accounts 390
through 399.1 (Sec. Sec.  367.3900 through 367.3991). Provide
subaccounts by each class of service company property owned or leased
except the depreciation expense that is charged to clearing accounts or
to account 416, Costs and expenses of merchandising, jobbing and
contract work (Sec.  367.4160).
    (b) The service company must keep the records of property and
property retirements that will reflect the service life of property
that has been retired and aid in estimating probable service life by
mortality, turnover, or other appropriate methods; and also the records
that will reflect the percentage of salvage and costs of removal for
property retired from each account, or related subaccount, for
depreciable property.
    (c) Depreciation expenses applicable to transportation equipment,
shop equipment, tools, work equipment, 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.

Sec.  367.4031  Account 403.1, Depreciation expense for asset
retirement costs.

    This account must include the depreciation expense for asset
retirement costs included in service company property.

Sec.  367.4040  Account 404, Amortization of limited-term property.

    This account must include amortization charges applicable to
amounts included in the service company property's 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 must be sufficient to distribute the book
cost of each investment as evenly as may be over the period of its
benefit. (See account 111, Accumulated provision for amortization of
service company property (Sec.  367.1110).)

Sec.  367.4050  Account 405, Amortization of other property.

    (a) When authorized by the Commission, this account must include
charges for amortization of intangible or other property that does not
have a definite or terminable life and that is not subject to charges
for depreciation expense.
    (b) This account must be supported in sufficient detail 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.

Sec.  367.4081  Account 408.1, Taxes other than income taxes, operating
income.

    This account must include those taxes, other than income taxes,
that relate to service company operating income. This account must be
maintained so as to allow ready identification of the various classes
of taxes.

Sec.  367.4082  Account 408.2, Taxes other than income taxes, other
income and deductions.

    This account must include those taxes, other than income taxes,
that relate to other income and deductions.

Sec.  367.4091  Account 409.1, Income taxes, operating income.

    This account must include the amount of those local, state and
Federal income taxes that relates to service company operating income.

Sec.  367.4092  Account 409.2, Income taxes, other income and
deductions.

    This account must include the amount of those local, state and
Federal income taxes (both positive and negative), that relate to other
income and deductions.

Sec.  367.4093  Account 409.3, Income taxes, extraordinary items.

    This account must include the amount of those local, state and
Federal income taxes (both positive and negative), that relate to
extraordinary items.

Sec.  367.4101  Account 410.1, Provision for deferred income taxes,
operating income.

    This account must include the amounts of those deferrals of taxes
and allocations of deferred taxes that relate to service company
operating income.

Sec.  367.4102  Account 410.2, Provision for deferred income taxes,
other income and deductions.

    This account must include the amounts of those deferrals of taxes
and allocations of deferred taxes that relate to other income and
deductions.

Sec.  367.4111  Account 411.1, Provision for deferred income taxes--
Credit, operating income.

    This account must include the amounts of those allocations of
deferred taxes and deferrals of taxes, credit, that relate to service
company operating income.

Sec.  367.4112  Account 411.2, Provision for deferred income taxes--
Credit, other income and deductions.

    This account must include the amounts of those allocations of
deferred taxes and deferrals of taxes, credit, that relate to other
income and deductions.

Sec.  367.4114  Account 411.4, Investment tax credit adjustments,
service company property.

    This account must include the amount of those investment tax credit
adjustments that relate to service company property.

Sec.  367.4115  Account 411.5, Investment tax credit adjustments,
other.

    This account must include the amount of those investment tax credit
adjustments not properly included in other accounts.

Sec.  367.4116  Account 411.10, Accretion expense.

    This account must be charged for accretion expense on the
liabilities associated with asset retirement obligations included in
account 230, Asset retirement obligations (Sec.  367.2300), related to
service company property.

Sec.  367.4150  Account 415, Revenues from 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 service company 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. Interest related income from
installment sales must be recorded in Account 419, Interest and
Dividend income (Sec.  367.4190).
    (b) Records in support of this account must be so kept as to permit
ready summarization of revenues by such major items as are feasible.
    (c) This account must include revenues from the sale of merchandise
and from jobbing and contract work, and discounts and allowances made
in settlement of bills for merchandise and jobbing work.
    (d) Related taxes must be recorded in account 408.2, Taxes other
than income taxes, other income and deductions (Sec.  367.4082), or
account 409.2, Income taxes, other income and deductions (Sec.
367.4092), as appropriate.

Sec.  367.4160  Account 416, Costs and expenses of merchandising,
jobbing and contract work.

    (a) This account must include the following labor items:
    (1) Canvassing and demonstrating appliances in homes and other
places for the purpose of selling appliances.
    (2) Demonstrating and selling activities in sales rooms.
    (3) Installing appliances on customer premises where the work is
done only for purchasers of appliances from the utility.
    (4) Installing wiring, piping, or other property work, on a jobbing
or contract basis.
    (5) Preparing advertising materials for appliance sales purposes.
    (6) Receiving and handling customer orders for merchandise or for
jobbing services.
    (7) Cleaning and tidying sales rooms.
    (8) Maintaining display counters and other equipment used in
merchandising.
    (9) Arranging merchandise in sales rooms and decorating display
windows.
    (10) Reconditioning repossessed appliances.
    (11) Bookkeeping and other clerical work in connection with
merchandise and jobbing activities.
    (12) Supervising merchandise and jobbing operations.
    (b) This account must include the following materials and expenses
items:
    (1) Advertising in newspapers, periodicals, radio, television, and
other similar items.
    (2) Cost of merchandise sold and of materials used in jobbing work.
    (3) Stores expenses on merchandise and jobbing stocks.
    (4) Fees and expenses of advertising and commercial artists'
agencies.
    (5) Printing booklets, dodgers, and other advertising data.
    (6) Premiums given as inducement to buy appliances.
    (7) Light, heat and power.
    (8) Depreciation on equipment used primarily for merchandise and
jobbing operations.
    (9) Rent of sales rooms or of equipment.
    (10) Transportation expense in delivery and pick-up of appliances
by the utility's facilities or by others.
    (11) Stationery and office supplies and expenses.
    (12) Losses from uncollectible merchandise and jobbing accounts.
    (c) Records in support of this account shall be so kept as to
permit ready summarization of costs and expenses by such major items as
are feasible.
    (d) Related taxes must be recorded in account 408.2, Taxes other
than income taxes, other income and deductions (Sec.  367.4082), or
account 409.2, Income taxes, other income and deductions (Sec.
367.4092), as appropriate.

Sec.  367.4171  Account 417.1, Expenses of non-utility related
operations.

    (a) This account will include expenses incurred in providing
services to non-utility companies where the revenues from which are
included in Account 459, Services rendered to non-utility companies
(Sec.  367.4590).

Expenses related to providing customer, sales or administrative and
general services to non-utility companies will initially be recorded in
the 900 series of accounts and transferred to Account 417.1 (Sec.
367.4171), through credit to Account 922, Administrative expenses
transferred--Credit (Sec.  367.9220). The cost of other services
provided to non-utility companies will be charged directly to Account
417.1 (Sec.  367.4171).
    (b) Related taxes must be recorded in account 408.1, Taxes other
than income taxes, operating income (Sec.  367.4081), or account 409.1,
Income taxes, operating income (Sec.  367.4091).

Sec.  367.4181  Account 418.1, Equity in earnings of subsidiary
companies.

    This account must include the service company's equity in the
earnings or losses of subsidiary companies for the year.

Sec.  367.4190  Account 419, Interest and dividend income.

    (a) This account must 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 the pro rata amount necessary to
extinguish (during the interval between the date of acquisition and the