[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1767.10]

[Page 765-768]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1767--ACCOUNTING REQUIREMENTS FOR RUS ELECTRIC BORROWERS--Table of Contents
 
                  Subpart B--Uniform System of Accounts
 
Sec. 1767.10  Definitions.


    As used in this part:
    Accounting borrower is an RUS borrower.
    Accounts are the accounts prescribed in this system of accounts.
    Actually issued as applied to securities issued or assumed by the 
utility, are those which have been sold to bona fide purchasers for a 
valuable consideration, those issued as dividends on stock, and those 
which have been issued in accordance with contractual requirements 
direct to trustees of sinking funds.
    Actually outstanding as applied to securities issued or assumed by 
the utility, are those which have been actually issued and are neither 
retired nor held by or for the utility; provided, however, that 
securities held by trustees shall be considered as actually outstanding.
    Amortization is the gradual extinguishment of an amount in an 
account by distributing such amount over a fixed period, over the life 
of the asset or liability to which it applies, or over the period during 
which it is anticipated the benefit will be realized.
    Associated (affiliated) companies are companies or persons that 
directly, or indirectly through one or more intermediaries, control, or 
are controlled by, or under common control with, the accounting company.
    Book Cost means the amount at which property is recorded in these 
accounts without deduction of related provisions for accrued 
depreciation, amortization, or for other purposes.
    Capital lease is a lease of property used in utility or nonutility 
operations, which meets one or more of the criteria stated in 
Sec. 1767.15 (s).
    CFC is the National Rural Utilities Cooperative Finance Corporation.

[[Page 766]]

    Continuing Property Records are company plant records for retirement 
units and mass property that provide, as either a single record, or in 
separate records readily obtainable by references made in a single 
record, the following information:
    (1) For each retirement unit:
    (i) The name or description of the unit, or both;
    (ii) The location of the unit;
    (iii) The date the unit was placed in service;
    (iv) The cost of the unit as set forth in Sec. 1767.16 (b) and (c); 
and
    (v) The plant control account to which the cost of the unit is 
charged.
    (2) For each category of mass property:
    (i) A general description of the property and quantity;
    (ii) The quantity placed in service by vintage year;
    (iii) The average cost as set forth in Sec. 1767.16 (b) and (c); and
    (iv) The plant control account to which the costs are charged.
    Control (including the terms controlling, controlled by, and under 
common control with) is the possession, directly or indirectly, of the 
power to direct or cause the direction of the management and policies of 
a company, whether such power is exercised through one or more 
intermediary companies, or alone, or in conjunction with, or pursuant to 
an agreement, and whether such power is established through a majority 
or minority ownership or through voting of securities; common directors, 
officers, or stockholders; voting trusts; holding trusts; associated 
companies; contracts; or any other direct or indirect means.
    Cost is the amount of money actually paid for property or services. 
When the consideration given is other than cash in a purchase and sale 
transaction, as distinguished from a transaction involving the issuance 
of common stock in a merger or a pooling of interest, the value of such 
consideration shall be determined on a cash basis.
    Cost of removal is the cost of demolishing, dismantling, tearing 
down or otherwise removing electric plant, including the cost of 
transportation and handling incidental thereto.
    Customer is a consumer or patron.
    Debt expense includes all expenses incurred in connection with the 
issuance and initial sale of evidence of debt, such as fees for drafting 
mortgages and trust deeds; fees and taxes for issuing or recording 
evidences of debt; costs of engraving and printing bonds and 
certificates of indebtedness; fees paid to trustees; specific costs of 
obtaining governmental authority; fees for legal services; fees and 
commissions paid underwriters, brokers, and salesmen for marketing such 
evidences of debt; fees and expenses of listing on exchanges; and other 
like costs.
    Depreciation, as applied to depreciable electric plant, is the loss 
in service value, not restored by current maintenance, incurred in 
connection with the consumption or prospective retirement of electric 
plant in the course of service from causes which are known to be in 
current operation and against which the utility is not protected by 
insurance. Among the causes to be given consideration are wear and tear, 
decay, action of the elements, inadequacy, obsolescence, changes in the 
art, changes in demand and requirements of public authorities.
    Discount, as applied to the securities issued or assumed by the 
utility, is the excess of the par (stated value of no-par stocks) or 
face value of the securities plus interest or dividends accrued at the 
date of the sale over the cash value of the consideration received from 
their sale.
    FASB is the Financial Accounting Standards Board.
    G&T is a generation and transmission cooperative.
    Investment advances are advances, represented by notes or by book 
accounts only, with respect to which it is mutually agreed or intended 
between the creditor and debtor that they shall be settled by the 
issuance of securities or shall not be subject to current settlement.
    Minor items of property are the associated parts or items of which 
retirement units are composed.
    Net salvage value is the salvage value of property retired less the 
cost of removal.
    Nominally issued, as applied to securities issued or assumed by the 
utility,

[[Page 767]]

are those which have been signed, certified, or otherwise executed, and 
placed with the proper officer for sale and delivery, or pledged, or 
otherwise placed in some special funds of the utility, but which have 
not been sold, or issued direct to trustees of sinking funds in 
accordance with contractual requirements.
    Nominally outstanding, as applied to securities issued or assumed by 
the utility, are those which, after being actually issued, have been 
reacquired by or for the utility under circumstances which require them 
to be considered as held alive and not retired, provided, however, that 
securities held by trustees shall be considered as actually outstanding.
    NRECA is the National Rural Electric Cooperative Association.
    Operating lease is a lease of property used in utility or nonutility 
operations, which does not meet any of the criteria stated in 
Sec. 1767.15 (s).
    Original cost, as applied to electric plant, is the cost of such 
property to the person first devoting it to public service.
    Person is an individual, a corporation, a partnership, an 
association, a joint stock company, a business trust, or any organized 
group of persons, whether incorporated or not, or any receiver or 
trustee.
    Premium, as applied to securities issued or assumed by the utility, 
is the excess of the cash value of the consideration received from their 
sale over the sum of their par (stated value of no-par stocks) or face 
value and interest or dividends accrued at the date of sale.
    Project is a complete unit of improvement or development, consisting 
of a power house, all water conduits, all dams and appurtenant works and 
structures (including navigation structures) which are a part of said 
unit, and all storage, diverting, or forebay reservoirs directly 
connected therewith, the primary line or lines transmitting power 
therefrom to the point of junction with the distribution system or with 
the interconnected primary transmission system, all miscellaneous 
structures used and useful in connection with said unit or any part 
thereof, and all water rights, rights of way, ditches, dams, reservoirs, 
lands, or interest in lands the use and occupancy of which are necessary 
or appropriate in the maintenance and operation of such unit.
    Property retired, as applied to electric plant, is property which 
has been removed, sold, abandoned, destroyed, or which for any cause has 
been withdrawn from service.
    REA means the Rural Electrification Administration formerly an 
agency of the United States Department of Agriculture and predecessor 
agency to RUS with respect to administering certain electric and 
telephone loan programs.
    Regulatory Assets and Liabilities are assets and liabilities that 
result from rate actions of regulatory agencies. Regulatory assets and 
liabilities arise from specific revenues, expenses, gains, or losses 
that would have been included in net income determinations in one period 
under the general requirements of the Uniform System of Accounts but for 
it being probable:
    (1) That such items will be included in a different period(s) for 
purposes of developing the rates the utility is authorized to charge for 
its utility services; or
    (2) In the case of regulatory liabilities, that refunds to 
customers, not provided for in the other accounts, will be required.
    Replacing (including replacement) when not otherwise indicated in 
the context, is the construction or installation of electric plant in 
place of property retired, together with the removal of the property 
retired.
    Research, Development, and Demonstration (RD&D) includes all 
expenditures incurred by borrowers either directly or through another 
person or organization (such as a research institute, industry 
association, foundation, university, engineering company or similar 
contractor) in pursuing research, development, and demonstration 
activities including experiment, design, installation, construction, or 
operation. This definition includes expenditures for the implementation 
or development of new and/or existing concepts until technically 
feasible and commercially feasible operations are verified. Such 
research, development,

[[Page 768]]

and demonstration costs should be reasonably related to the existing or 
future utility business, broadly defined, of the borrower or in the 
environment in which it operates or expects to operate. The term 
includes, but is not limited to, all such costs incidental to the 
design, development or implementation of an experimental facility, a 
plant process, a product, a formula, an invention, a system or similar 
items, and the improvement of already existing items of a like nature; 
amounts expended in connection with the proposed development and/or 
proposed delivery of alternate sources of electricity; and the costs of 
obtaining its own patent, such as attorney's fees expended in making and 
perfecting a patent application. The term includes preliminary 
investigations and detailed planning of specific projects for securing 
for customers non-conventional electric power supplies that rely on 
technology that has not been verified previously to be feasible. The 
term does not include expenditures for efficiency surveys; studies of 
management, management techniques, and organization; or consumer 
surveys, advertising, promotions, or items of a like nature.
    Retirement units are those items of electric plant which, when 
retired with or without replacement, are accounted for by crediting the 
book cost thereof to the electric plant accounts in which included.
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture established pursuant to Section 232 of 
the Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor 
to REA with respect to administering certain electric and telephone 
programs. See 7 CFR 1700.1.
    RUS Form 7 is the August 1988 revision (or the revision of any other 
date which may be specified) of such RUS Form 7, Financial and 
Statistical Report, or any later revision which shall have been at the 
time prescribed for use by RUS.
    RUS Form 12 is the November 1979 revision (or the revision of any 
other date which may be specified) of such RUS Form 12, Operating 
Report--Financial, or any later revision which shall have been at the 
time prescribed for use by RUS.
    RUS USoA is the USoA prescribed in this subpart.
    Salvage value is the amount received for property retired, less any 
expenses incurred in connection with the sale or in preparing the 
property for sale; or, if retained, the amount at which the material 
recovered is chargeable to materials and supplies, or other appropriate 
accounts.
    Service life is the time between the date electric plant is 
includible in electric plant in service, or electric plant leased to 
others, and the date of its retirement. If depreciation is accounted for 
on a production basis rather than on a time basis, service life should 
be measured in terms of the appropriate unit of production.
    Service value is the difference between original cost and net 
salvage value of electric plant.
    State is a State admitted to the Union, the District of Columbia, 
and any organized Territory of the United States.
    Subsidiary company is a company which is controlled by the utility 
through ownership of voting stock. (See the definition of control in 
Sec. 1767.10.) A corporate joint venture in which a corporation is owned 
by a small group of businesses as a separate and specific business or 
project for the mutual benefit of the members of the group is a 
subsidiary company for the purposes of this system of accounts.
    Utility is an RUS borrower.
    Work order is an order authorizing the construction of utility 
plant. It serves as the basis for the accounts or subaccounts in which 
costs are recorded.

[58 FR 59825, Nov. 10, 1993, as amended at 59 FR 66440, Dec. 27, 1994]