[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: 7CFR1767.16]
[Page 778-791]
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. 1767.16 Electric plant instructions.
(a) Classification of electric plant at effective date of system of
accounts. (1) The electric plant accounts provided herein are the same
as those contained in the prior system of accounts except for inclusion
of accounts for nuclear production plant and some changes in
classification in the general equipment accounts. Except for these
changes, the balances in the various plant accounts, as determined under
the prior system of accounts, should be carried forward. Any remaining
balance of plant which has not yet been classified, pursuant to the
requirements of the prior system, shall be classified in accordance with
the following instructions.
(2) The cost to the utility of its unclassified plant shall be
ascertained by analysis of the utility's records. Adjustments shall not
be made to record in utility plant accounts amounts previously charged
to operating expenses or to income deductions in accordance with the
USoA in effect at the time or in accordance with the discretion of
management as exercised under a USoA, or under accounting practices
previously followed.
(3) The detailed electric plant accounts (301 to 399, inclusive)
shall be stated on the basis of cost to the utility of plant constructed
by it and the original cost, estimated if not known, of plant acquired
as an operating unit or system. The difference between the original
cost, as above, and the cost to the utility of electric plant after
giving effect to any accumulated provision for depreciation or
amortization shall be recorded in Account 114, Electric Plant
Acquisition Adjustments. The original cost of electric plant shall be
determined by analysis of the utility's records or those of the
predecessor or vendor companies with respect to electric plant
previously acquired as operating units or systems and the difference
between the original cost so determined, less accumulated provisions for
depreciation and amortization and the cost to the utility with necessary
adjustments for retirements from date of acquisition, shall be entered
in Account 114, Electric Plant Acquisition Adjustments. Any difference
between the cost of electric plant and its book cost, when not properly
includible in other accounts, shall be recorded in Account 116, Other
Electric Plant Adjustments.
(b) Electric plant to be recorded at cost. (1) All amounts included
in the accounts for electric plant acquired as an operating unit or
system, except as otherwise provided in the texts of the intangible
plant accounts, shall be stated at the cost incurred by the person who
first devoted the property to utility service. All other electric plant
shall be included in the accounts at the cost incurred by the utility
except for property acquired by lease which qualifies as capital lease
property under Sec. 1767.15 (s), Criteria for Classifying Leases, and is
recorded in Account 101.1, Property Under Capital Lease, or Account
120.6, Nuclear Fuel Under Capital Leases. Where the term ``cost'' is
used in the detailed plant accounts, it shall have the meaning stated in
this paragraph (b).
(2) When the consideration given for property is other than cash,
the value of such consideration shall be determined on a cash basis
(see, however, the definition of cost in Sec. 1767.10). In the entry
recording such transition, the actual consideration shall be described
with sufficient particularity to identify it. The utility shall be
prepared to furnish RUS the particulars of
[[Page 779]]
its determination of the cash value of the consideration if other than
cash.
(3) When property is purchased under a plan involving deferred
payments, no charge shall be made to the electric plant accounts for
interest, insurance, or other expenditures occasioned solely by such
form of payment.
(4) The electric plant accounts shall not include the cost or other
value of electric plant contributed to the company. Contributions in the
form of money or its equivalent toward the construction of electric
plant shall be credited to accounts charged with the cost of such
construction. Plant constructed from contributions of cash or its
equivalent shall be shown as a reduction to gross plant constructed when
assembling cost data in work orders for posting to plant ledgers of
accounts. The accumulated gross costs of plant accumulated in the work
order shall be recorded as a debit in the plant ledger of accounts along
with the related amount of contributions concurrently be recorded as a
credit.
(c) Components of construction cost. The cost of construction
properly includible in the electric plant accounts shall include, where
applicable, the direct and overhead costs as listed and defined
hereunder:
(1) Contract work includes amounts paid for work performed under
contract by other companies, firms, or individuals, costs incident to
the award of such contracts, and the inspection of such work.
(2) Labor includes the pay and expenses of employees of the utility
engaged on construction work, and related workmen's compensation
insurance, payroll taxes, and similar items of expense. It does not
include the pay and expenses of employees which are distributed to
construction through clearing accounts nor the pay and expenses included
in other items hereunder.
(3) Materials and supplies includes the purchase price at the point
of free delivery plus customs duties, excise taxes, the cost of
inspection, loading and transportation, the related stores expenses, and
the cost of fabricated materials from the utility's shop. In determining
the cost of materials and supplies used for construction, proper
allowance shall be made for unused materials and supplies, for materials
recovered from temporary structures used in performing the work
involved, and for discounts allowed and realized in the purchase of
materials and supplies.
Note: The cost of individual items of equipment of small value (for
example, $500 or less) or of short life, including small portable tools
and implements, shall not be charged to utility plant accounts unless
the correctness of the accounting therefor is verified by current
inventories. The cost shall be charged to the appropriate operating
expense or clearing accounts, according to the use of such items, or, if
such items are consumed directly in construction work, the cost shall be
included as part of the cost of the construction.
(4) Transportation includes the cost of transporting employees,
materials and supplies, tools, purchased equipment, and other work
equipment (when not under own power) to and from points of construction.
It includes amounts paid to others as well as the cost of operating the
utility's own transportation equipment. (See Item in paragraph (c)(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 Item
in paragraph (c)(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 net book cost thereof, less the
appraised or salvage value at time of release from the job, shall be
include in the cost of construction.
(6) Shop service includes the proportion of the expense of the
utility's shop department assignable to construction work except that
the cost of fabricated materials from the utility's shop shall be
included in ``materials and supplies.''
[[Page 780]]
(7) Protection includes the cost of protecting the utility's
property from fire or other casualties and the cost of preventing
damages to others, or to the property of others, including payments for
discovery or extinguishment of fires, cost of apprehending and
prosecuting incendiaries, witness fees in relation thereto, amounts paid
to municipalities and others for fire protection, and other analogous
items of expenditures in connection with construction work.
(8) Injuries and damages includes expenditures or losses in
connection with construction work on account of injuries to persons and
damages to the property of others; also the cost of investigation of and
defense against actions for such injuries and damages. Insurance
recovered or recoverable on account of compensation paid for injuries to
persons incident to construction shall be credited to the account or
accounts to which such compensation is charged. Insurance recovered or
recoverable on account of property damages incident to construction
shall be credited to the account or accounts charged with the cost of
the damages.
(9) Privileges and permits includes payments for and expenses
incurred in securing temporary privileges, permits or rights in
connection with construction work, such as for the use of private or
public property, streets, or highways, but it does not include rents, or
amounts chargeable as franchises and consents for which see Account 302,
Franchises and Consents.
(10) Rents includes amounts paid for the use of construction
quarters and office space occupied by construction forces and amounts
properly includible in construction costs for such facilities jointly
used.
(11) Engineers and supervision includes the portion of the pay and
expenses of engineers, surveyors, draftsmen, inspectors, superintendents
and their assistants applicable to construction work.
(12) General administration capitalized includes the portion of the
pay and expenses of the general officers and administrative and general
expenses applicable to construction work.
(13) Engineering services includes amounts paid to other companies,
firms, or individuals engaged by the utility to plan, design, prepare
estimates, supervise, inspect, or give general advice and assistance in
connection with construction work.
(14) Insurance includes premiums paid or amounts provided or
reserved as self-insurance for the protection against loss and damages
in connection with construction, by fire or other casualty, injuries or
deaths of persons other than employees, damages to property of others,
defalcation of employees and agents, and the nonperformance of
contractual obligations of others. It does not include workmen's
compensation or similar insurance on employees included as ``labor'' in
Item in paragraph (c)(2) of this section.
(15) Law expenditures includes the general law expenditures incurred
in connection with construction and the court and legal costs directly
related thereto, other than law expenses included in ``Protection,''
Item in paragraph (c)(7) of this section, and in Injuries and damages,
Item in paragraph (c)(8) of this section.
(16) Taxes includes taxes on physical property (including land)
during the period of construction and other taxes properly includible in
construction costs before the facilities become available for service.
(17) 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 RUS, allowances computed in
accordance with the formula prescribed in Item in paragraph (c)(17)(i)
of this section. No allowance for funds used during construction charges
shall 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 shall be:
[[Page 781]]
[GRAPHIC] [TIFF OMITTED] TC16SE91.004
Where:
Ai = Gross allowance for borrowed funds used during
construction rate.
Ac = Allowance for other funds used during construction rate.
S = Average short-term debt.
s = Short-term debt interest rate.
D = Long-term debt.
d = Long-term debt interest rate.
P = Preferred stock.
p = Preferred stock cost rate.
C = Patronage capital assigned.
c = Entity's incremental borrowing rate.
W = Average balance in construction work in progress plus nuclear fuel
in process of refinement, conversion, enrichment, and fabrication.
(ii) The rate shall be determined annually.
(A) The balance for long-term debt, preferred stock, and patronage
capital assigned shall be the actual book balances as of the end of the
prior year.
(B) The cost rate for long-term debt and preferred stock shall be
the weighted average cost.
(C) The cost rate for patronage capital assigned shall be the
entity's incremental borrowing rate.
(D) The short-term debt balances and related cost and the average
balance for construction work in progress plus nuclear fuel in process
of refinement, conversion, enrichment, and fabrication shall be
estimated for the current year with appropriate adjustments as actual
data becomes available.
Note: When only a portion of a plant or project is placed in
operation or is completed and ready for service but the construction
work as a whole is incomplete, that part of the cost of the property
placed in operation or ready for service shall be treated as ``Electric
Plant in Service,'' and an allowance for funds used during construction
thereon as a charge to construction shall cease. Allowance for funds
used during construction on that part of the cost of the plant which is
incomplete may continue to be charged to construction until such time as
it is placed in operation or is ready for service, except as limited in
Item in paragraph (c)(17) of this section.
(18) Earnings and expenses during construction. The earnings and
expenses during construction shall constitute a component of
construction costs.
(i) The earnings shall include revenues received or earned for power
produced by generating plants during the construction period and sold or
used by the utility.
(A) Where such power is sold to an independent purchaser before
intermingling with power generated by other plants, the credit shall
consist of the selling price of the energy.
(B) Where the power generated by a plant under construction is
delivered to the utility's electric system for distribution and sale, or
is delivered to an associated company, or is delivered to and used by
the utility for purposes other than distribution and sale (for
manufacturing or industrial use, for example), the credit shall be the
fair value of the energy so delivered.
(C) Revenue shall also include rentals for lands, buildings, and
other property, and miscellaneous receipts not properly includible in
other accounts.
(ii) Expenses shall consist of the cost of operating the power
plant, and other costs incident to the production and delivery of the
power for which construction is credited under paragraph (c)(18)(i) of
this section, including the cost of repairs and other expenses of
operating and maintaining lands, buildings, and other property, and
other miscellaneous and like expenses not properly includible in other
accounts.
(19) Training costs. (i) When it is necessary that employees be
trained to operate or maintain plant facilities that are being
constructed and such facilities are not conventional in nature, or are
new to the company's operations,
[[Page 782]]
these costs may be capitalized as a component of construction cost.
(ii) Once plant is placed in service, the capitalization of training
costs shall cease and subsequent training costs shall be expensed. (See
Sec. 1767.17 (d).)
(20) Studies. (i) Studies include the costs of studies such as
nuclear operational, safety, or seismic studies, or environmental
studies mandated by regulatory bodies relative to plant under
construction.
(ii) Studies relative to facilities in service shall be charged to
Account 183, Preliminary Survey and Investigation Charges.
(d) Overhead construction costs. (1) All overhead construction
costs, such as engineering, supervision, general office salaries and
expenses, construction engineering and supervision performed by others
than the accounting utility, law expenses, insurance, injuries and
damages, relief and pensions, taxes and interest, shall be charged to
particular jobs or units on the basis of the amounts of such overheads
reasonably applicable thereto, to the end that each job or unit shall
bear its equitable proportion of such costs and that the entire cost of
the unit, both direct and overhead, shall be deducted from the plant
accounts as the time the property is retired.
(2) As far as practicable, the determination of payroll charges
includible in construction overheads shall be based on time card
distributions thereof.
(i) Where this procedure is impractical, special studies shall be
made periodically of the time of supervisory employees devoted to
construction activities to the end that only such overhead costs as have
a definite relation to construction shall be capitalized.
(ii) The addition to direct construction cost of arbitrary
percentages or amounts to cover assumed overhead costs is not permitted.
(3) The records supporting the entries for overhead constructions
costs shall be so kept as to show:
(i) The total amount of each overhead for each year;
(ii) The nature and amount of each overhead expenditure charged to
each construction work order and to each electric plant account; and
(iii) The bases of distribution of such costs.
(e) Electric plant purchased or sold. (1) When electric plant
constituting an operating unit or system is acquired by purchase,
merger, consolidation, liquidation, or otherwise, after the effective
date of this system of accounts, the costs of acquisition, including
expenses incidental thereto properly includible in electric plant, shall
be charged to Account 102, Electric Plant Purchased or Sold.
(2) The accounting for the acquisition shall then be completed as
follows:
(i) The original cost of plant, estimated if not known, shall be
credited to Account 102, Electric Plant Purchased or Sold, and
concurrently charged to the appropriate electric plant in service
accounts and to Account 104, Electric Plant Leased to Others; Account
105, Electric Plant Held for Future Use; and Account 107, Construction
Work in Progress--Electric, as appropriate.
(ii) The depreciation and amortization applicable to the original
cost of the properties purchased shall be charged to Account 102,
Electric Plant Purchased or Sold, and concurrently credited to the
appropriate account for accumulated provision for depreciation or
amortization.
(iii) The cost to the utility of any property includible in Account
121, Nonutility Property, shall be transferred thereto.
(iv) The amount remaining in Account 102, Electric Plant Purchased
or Sold, shall then be closed to Account 114, Electric Plant Acquisition
Adjustments.
(3) If property acquired in the purchase of an operating unit or
system is in such physical condition when acquired that it is necessary
to substantially rehabilitate it in order to bring the property up to
the standards of the utility, the cost of such work, except
replacements, shall be accounted for as a part of the purchase price of
the property.
(4) When any property acquired as an operating unit or system
includes duplicate or other plant which will be retired by the
accounting utility in the
[[Page 783]]
reconstruction of the acquired property or its consolidation with
previously owned property, the proposed accounting for such property
shall be presented to RUS.
(5) In connection with the acquisition of electric plant
constituting an operating unit or system, the utility shall procure, if
possible, all existing records relating to the property acquired or
certified copies thereof, and shall preserve such records in conformity
with regulations or practices governing the preservation of records of
its own construction.
(6) When electric plant constituting an operating unit or system is
sold, conveyed, or transferred to another by sale, merger,
consolidation, or otherwise, the book cost of the property sold or
transferred to another shall be credited to the appropriate utility
plant accounts, including amounts carried in Account 114, Electric Plant
Acquisition Adjustments, and the amounts (estimated if not known)
carried with respect thereto in the accounts for accumulated provision
for depreciation and amortization and in Account 252, Customer Advances
for Construction, shall be charged to such accounts and contra entries
made to Account 102, Electric Plant Purchased or Sold. Unless otherwise
ordered by RUS, the difference, if any, between:
(i) The net amount of debits and credits, and
(ii) The consideration received for the property (less commissions
and other expenses of making the sale) shall be included in Account
421.1, Gain on Disposition of Property, or Account 421.2, Loss on
Disposition of Property. (See Account 102, Electric Plant Purchased or
Sold.)
Note: In cases where existing utilities merge or consolidate because
of financial or operating reasons or statutory requirements rather than
as a means of transferring title of purchased properties to a new owner,
the accounts of the constituent utilities, with the approval of RUS, may
be combined. In the event original cost has not been determined, the
resulting utility shall proceed to determine such cost as outlined
herein.
(f) Expenditures on leased property. (1) The cost of substantial
initial improvements (including repairs, rearrangements, additions, and
betterments) made in the course of preparing for utility service
property leased for a period of more than one year, and the cost of
subsequent substantial additions, replacements, or betterments to such
property, shall be charged to the electric plant account appropriate for
the class of property leased.
(i) If the service life of the improvements is terminable by action
of the lease, the cost, less net salvage, of the improvements shall be
spread over the life of the lease by charges to Account 404,
Amortization of Limited-Term Electric Plant.
(ii) If the service life is not terminated by action of the lease
but by depreciation proper, the cost of the improvements, less net
salvage, shall be accounted for as depreciable plant. The provisions of
(1) are applicable to property leased under either capital leases or
operating leases.
(2) If improvements made to property leased for a period of more
than one year are of relatively minor cost, or if the lease is for a
period of not more than one year, the cost of the improvements shall be
charged to the account in which the rent is included, either directly or
by amortization thereof.
(g) Land and land rights. (1) The accounts for land and land rights
shall include the cost of land owned in fee by the utility and rights,
interests, and privileges held by the utility in land owned by others,
such as leaseholds, easements, water and water power rights, diversion
rights, submersion rights, rights-of-way, and other like interests in
land.
(i) 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 plant.
(ii) Such costs shall be included in the appropriate plant accounts
directly benefited.
(2) Where special assessments for public improvements provide for
deferred payments, the full amount of the assessments shall be charged
to the appropriate land account and the unpaid balance shall be carried
in an appropriate liability account.
[[Page 784]]
(i) Interest on unpaid balances shall be charged to the appropriate
interest account.
(ii) If any part of the cost of public improvements is included in
the general tax levy, the amount thereof shall be charged to the
appropriate tax account.
(3) 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 shall be credited to the appropriate plant accounts to which
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 increase
in value, the net profit (after giving effect to the cost of the natural
resources) from the sale of timber or its products or other natural
resources shall be credited to the appropriate utility operating income
account when such land has been recorded in Account 105, Electric Plant
Held for Future Use, or classified as plant in service, otherwise to
Account 421, Miscellaneous Nonoperating Income.
(4) Separate entries shall be made for the acquisition, transfer, or
retirement of each parcel of land, and each land right (except rights-
of-way for distribution lines), or water right, having a life of more
than one year.
(i) A record shall be maintained showing the nature of ownership,
full legal description, area, map reference, purpose for which used,
city, county, and tax district 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.
(ii) Entries transferring or retiring land or land rights shall
refer to the original entry recording its acquisition.
(5) 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, shall be included in
Account 411.6, Gains from Disposition of Utility Plant, or 411.7, Losses
from Disposition of Utility Plant, when such property has been recorded
in Account 105, Electric Plant Held for Future Use, otherwise to Account
421.1, Gain on Disposition of Property, or 421.2, Loss on Disposition of
Property, as appropriate, unless a reserve therefor has been authorized
and provided. Appropriate adjustments of the accounts shall be made with
respect to any structures or improvements located on land sold.
(6) The cost of buildings and other improvements (other than public
improvements) shall not be included in the land accounts. If, at the
time of acquisition of an interest in land, such interest extends to
buildings or other improvements (other than public improvements) which
are then devoted to utility operations, the land and improvements shall
be separately appraised and a cost allocated to land and buildings or
improvements on the basis of the appraisals. If the improvements are
removed or wrecked without being used in operations, the cost of
removing or wrecking shall be charged and the salvage credited to the
account in which the cost of land is recorded.
(7) When the purchase of land for electric operations requires the
purchase of more land than needed for such purposes, the charge to the
specific land account shall be based upon the cost of the land
purchased, less the fair market value of that portion of the land which
is not to be used in utility operations. The portion of the cost
measured by the fair market value of the land not to be used shall be
included in Account 105, Electric Plant Held for Future Use, or Account
121, Nonutility Property, as appropriate.
(8) Provisions shall be made for amortizing amounts carried in the
accounts for limited-term interest in land so as to apportion equitably
the cost of each interest over the life thereof. (See Account 111,
Accumulated Provision for Amortization of Electric Utility Plant, and
Account 404, Amortization of Limited-Term Electric Plant.)
(9) The items of cost to be included in the accounts for land and
land rights are as follows:
(i) Bulkheads, buried, not requiring maintenance or replacement;
(ii) First cost of acquisition including mortgages and other liens
assumed (but not subsequent interest thereon);
[[Page 785]]
(iii) Condemnation proceedings, including court and counsel costs;
(iv) Consents and abutting damages;
(v) Conveyancers' and notaries' fees;
(vi) Fees, commissions, and salaries to brokers, agents, and other
in connection with the acquisition of the land or land rights;
(vii) Leases, cost of voiding upon purchase to secure possession of
land;
(viii) Removing, relocating, or reconstructing property of others,
such as buildings, highways, railroads, bridges, cemeteries, churches,
telephone and power lines, etc., in order to acquire quiet possession;
(ix) Retaining walls unless identified with structures;
(x) 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;
(xi) Surveys in connection with the acquisition, but not amounts
paid for topographical surveys and maps where such costs are
attributable to structures or plant equipment erected or to be erected
or installed on such land;
(xii) Taxes assumed, accrued to date of transfer of title;
(xiii) Title, examining, clearing, insuring, and registering in
connection with the acquisition and defending against claims relating to
the period prior to the acquisition;
(xiv) Appraisals prior to closing title;
(xv) 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;
(xvi) Filing satisfaction of mortgage;
(xvii) Documentary stamps;
(xviii) Photographs of property at acquisition;
(xix) Fees and expenses incurred in the acquisition of water rights
and grants;
(xx) Cost of fill to extend bulkhead line over land under water,
where riparian rights are held, which is not occasioned by the erection
of a structure;
(xxi) Sidewalks and curbs constructed by the utility on public
property; and
(xxii) Labor and expenses in connection with securing rights of way,
where performed by company employees and company agents.
(h) Structures and improvements. (1) The accounts for structures and
improvements shall include the cost of all buildings and facilities to
house, support, or safeguard property or persons, including all fixtures
permanently attached to and made a part of buildings and which cannot be
removed therefrom without cutting into the walls, ceilings, or floors,
or without in some way impairing the buildings, and improvements of a
permanent character on or to land.
(2) 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 plant.
(3) The cost of specially provided foundations not intended to
outlast the machinery or apparatus for which provided, and the cost of
angle irons, and castings installed at the base of an item of equipment,
shall be charged to the same account as the cost of the machinery,
apparatus, or equipment.
(4) Minor buildings and structures, such as valve towers,
patrolmen's towers, telephone stations, fish and wildlife, and
recreation facilities which are used directly in connection with or form
a part of a reservoir, dam or waterway shall be considered a part of the
facility in connection with which constructed or operated and the cost
thereof accounted for accordingly.
(5) Where furnaces and boilers are used primarily for furnishing
steam for some particular department and only incidentally for
furnishing steam for heating a building and operating the equipment
therein, the entire cost of such furnaces and boilers shall be charged
to the appropriate plant account, and no part to the building account.
(6) Where the structure of a dam forms also the foundation of the
power plant building, such foundation shall be considered a part of the
dam.
[[Page 786]]
(7) The cost of disposing of materials excavated in connection with
construction of structures shall be considered as a part of the cost of
such work, except when such material is used for filling, the cost of
loading, hauling, and dumping shall be equitably apportioned between the
work in connection with which the removal occurs and the work in
connection with which the material is used; and when such material is
sold, the net amount realized from such sales shall be credited to the
work in connection with which the removal occurs. If the amount realized
from the sale of excavated materials exceeds the removal costs and the
costs in connection with the sale, the excess shall be credited to the
land account in which the site is carried.
(8) Lighting or other fixtures temporarily attached to building for
purposes of display or demonstration shall not be included in the cost
of the building but in the appropriate equipment account.
(9) The items of cost to be included in the accounts for structures
and improvements are as follows:
(i) Architects' plans and specifications including supervision;
(ii) Ash pits (when located within the building);
(iii) Athletic field structures and improvements;.
(iv) Boilers, furnaces, piping, wiring, fixtures, and machinery for
heating, lighting, signaling, ventilating, and air conditioning systems,
plumbing, vacuum cleaning systems, incinerator and smoke pipe, flues,
etc;
(v) Bulkheads, including dredging, riprap fill, piling, decking,
concrete, fenders, etc., when exposed and subject to maintenance and
replacement;
(vi) Chimneys;
(vii) Coal bins and bunkers;
(viii) Commissions and fees to brokers, agents, architects and
others;
(ix) Conduit (not to be removed) with its contents;
(x) Damages to abutting property during construction;
(xi) Docks;
(xii) Door checks and door stops;
(xiii) Drainage and sewerage systems;
(xiv) Elevators, cranes, hoists, etc., and the machinery for
operating them;
(xv) Excavation, including shoring, bracing, bridging, refill and
disposal of excess excavated material, cofferdams around foundation,
pumping water from cofferdams during construction and test borings;
(xvi) Fences and fence curbs (not including protective fences
isolating items of equipment, which shall be charged to the appropriate
equipment accounts);
(xvii) Fire protection systems when forming a part of a structure;
(xviii) Flagpole;
(xix) Floor covering (permanently attached);
(xx) Foundations and piers for machinery, constructed as a permanent
part of a building or other item listed herein;
(xxi) Grading and clearing when directly occasioned by the building
of a structure;
(xxii) Intrasite communication system, poles, pole fixtures, wires,
and cable;
(xxiii) Landscaping, lawns, shrubbery, etc.;
(xxiv) Leases, voiding upon purchase to secure possession of
structures;
(xxv) Leased property, expenditures on;
(xxvi) Lighting fixtures and outside lighting system;
(xxvii) Mailchutes when part of a building;
(xxviii) Marquee, permanently attached to the building;
(xxix) Painting, first cost;
(xxx) Permanent paving, concrete, brick, flagstone, asphalt, etc.,
within the property lines;
(xxxi) Partitions, including movable;
(xxxii) Permits and privileges;
(xxxiii) Platforms, railings and gratings when constructed as a part
of a structure;
(xxxiv) Power boards for services to a building;
(xxxv) Refrigerating systems for general use;
(xxxvi) Retaining walls except when identified with land;
(xxxvii) Roadways, railroads, bridges, and trestles intrasite except
railroads provided for in equipment accounts;
(xxxviii) Roofs;
(xxxix) Scales, connected to and forming a part of a structure;
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(xl) Screens;
(xli) Sewer systems, for general use;
(xlii) Sidewalks, culverts, curbs and streets constructed by the
utility on its property;
(xliii) Sprinkling systems;
(xliv) Sump pumps and pits;
(xlv) Stacks--brick, steel, or concrete, when set on foundation
forming part of general foundation and steelwork of a building;
(xlvi) Steel inspection during construction;
(xlvii) Storage facilities constituting a part of a building;
(xlviii) Storm doors and windows;
(xlix) Subways, areaways, and tunnels, directly connected to and
forming part of a structure;
(l) Tanks, constructed as part of a building or as a distinct
structural unit;
(li) Temporary heating during construction (net cost);
(lii) Temporary water connection during construction (net cost);
(liii) Temporary shanties and other facilities used during
construction (net cost);
(liv) Topographical maps;
(lv) Tunnels, intake and discharge, when constructed as part of a
structure, including sluice gates, and those constructed to house mains;
(lvi) Vaults constructed as part of a building;
(lvii) Watchmen's sheds and clock systems (net cost when used during
construction only);
(lviii) Water basins or reservoirs;
(lix) Water front improvements;
(lx) Water meters and supply system for a building or for general
company purposes;
(lxi) Water supply piping, hydrants, and wells;
(lxii) Wharves;
(lxiii) Window shades and ventilators;
(lxiv) Yard drainage system;
(lxv) Yard lighting system; and
(lxvi) Yard surfacing, gravel, concrete, or oil (First cost only).
Note: Structures and improvements accounts shall be credited with
the cost of coal bunkers, stacks, foundations, subways, and tunnels, 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.
(i) Equipment. (1) The cost of equipment chargeable to the electric
plant accounts, unless otherwise indicated in the text of an equipment
account, includes the net purchase price thereof, sales taxes,
investigation and inspection expenses necessary to such purchase,
expenses of transportation when borne by the utility, labor employed,
materials, and supplies consumed, and expenses incurred by the utility
in unloading and placing the equipment in readiness to operate.
(2) 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 plant.
(3) Exclude from equipment accounts hand and other portable tools,
which are likely to be lost or stolen or which have relatively small
value (for example, $500 or less) or short life, unless the correctness
of the accounting therefor as electric plant is verified by current
inventories.
(i) Special tools acquired and included in the purchase price of
equipment shall be included in the appropriate plant accounts.
(ii) Portable drills and similar tool equipment when used in
connection with the operation and maintenance of a particular plan or
department, such as production, transmission, or distribution or in
``stores'', shall be charged to the plant accounts appropriate for their
use.
(4) The equipment accounts shall include angle irons and similar
items which are installed at the base of an item of equipment, but piers
and foundations which are designed to be as permanent as the buildings
which house the equipment, or which are constructed as a part of the
building and which cannot be removed without cutting into the walls,
ceilings, or floors or, without in some way impairing the building,
shall be included in the building accounts.
(5) The equipment accounts shall include the necessary costs of
testing or running a plant or parts thereof during an experimental or
test period prior to such plant becoming ready for or placed in service.
(i) The utility shall furnish RUS with full particulars of and
justification for
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any test or experimental run extending beyond a period of 120 days for
nuclear plant, and a period of 90 days for all other plant.
(ii) Such particulars shall include a detailed operational and
downtime log showing days of production, gross kilowatts generated by
hourly increments, types, and periods of outages by hours with
explanation thereof, beginning with the first date the equipment was
either tested or synchronized on the line to the end of the test period.
(6) The cost of efficiency or other tests made subsequent to the
date equipment becomes available for service shall be charged to the
appropriate expense accounts, except that tests to determine whether
equipment meets the specifications and requirements as to efficiency, or
performance 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 electric plant accounts.
(j) Additions and retirements of electric plant. (1) For the purpose
of avoiding undue refinement in accounting for additions to and
retirements and replacements of electric plant, all property shall be
considered as consisting of retirement units and minor items of
property.
(2) The addition and retirement of retirement units shall be
accounted for as follows:
(i) When a retirement unit is added to electric plant, the cost
thereof shall be added to the appropriate electric plant account, except
that when units are acquired in the acquisition of any electric plant
constituting an operating system, they shall be accounted for as
provided in paragraph (e) of this section.
(ii) When a retirement unit is retired from electric plant, with or
without replacement, the book cost thereof shall be credited to the
electric plant account in which it is included, determined in the manner
set forth in Item in paragraph (j)(4) of this section. If the retirement
unit is of a depreciable class, the book cost of the unit retired and
credited to electric plant shall be charged to the accumulated provision
for depreciation applicable to such property. The cost of removal and
the salvage shall be charged or credited, as appropriate, to such
depreciation account.
(3) The addition and retirement of minor items of property shall be
accounted for as follows:
(i) When a minor item of property which did not previously exist is
added to plant, the cost thereof shall be accounted for in the same
manner as for the addition of a retirement unit, as set forth in Item in
paragraph (j)(2)(i) of this section, if a substantial addition results,
otherwise the charge shall be to the appropriate maintenance expense
account.
(ii) When a minor item of property is retired and not replaced, the
book cost thereof shall be credited to the electric plant account in
which it is included; and, in the event the minor item is a part of
depreciable plant, the account for accumulated provision for
depreciation shall be charged with the book cost and cost of removal and
credited with the salvage. If, however, the book cost of the minor item
retired and not replaced has been or will be accounted for by its
inclusion in the retirement unit of which it is a part when such unit is
retired, no separate credit to the property account is required when
such minor item is retired.
(iii) When a minor item of depreciable property is replaced
independently of the retirement unit of which it is a part, the cost of
replacement shall be charged to the maintenance account appropriate for
the item, except that if the replacement effects a substantial
betterment (the primary aim of which is to make the property affected
more useful, more efficient, of greater durability, or of greater
capacity), the excess cost of the replacement over the estimated cost at
current prices of replacing without betterment shall be charged to the
appropriate electric plant accounts.
(4) The book cost of electric plant retired shall be the amount at
which such property is included in the electric plant accounts,
including all components of construction costs. The book cost shall be
determined from the utility's records and if this cannot be done, it
shall be estimated. When it is impracticable to determine the book
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cost of each unit, due to the relatively large number or small cost
thereof, an appropriate average book cost of the units with due
allowance for any differences in size and character, shall be used as
the book cost of the units retired.
(5) The book cost of land retired shall be credited to the
appropriate land accounts. If the land is sold, the difference between
the book cost (less any accumulated provision for depreciation or
amortization therefore which has been authorized and provided) and the
sale price of the land (less commissions and other expenses of making
the sale) shall be recorded in Account 411.6, Gains from Disposition of
Utility Plant, or Account 411.7, Losses from Disposition of Utility
Plant, when the property has been recorded in Account 105, Electric
Plant Held for Future Use, otherwise to Accounts 421.1, Gain on
Disposition of Property, or 421.2, Loss on Disposition of Property, as
appropriate. If the land is not used in utility service but is retained
by the utility, the book cost shall be charged to Account 105, Electric
Plant Held for Future Use, or Account 121, Nonutility Property, as
appropriate.
(6) The book cost less net salvage of depreciable electric plant
retired shall be charged in its entirety to Account 108, Accumulated
Provision for Depreciation of Electric Utility Plant in Service. Any
amounts which, by approval or order of RUS, are charged to Account
182.1, Extraordinary Property Losses, shall be credited to Account 108.
(7) The accounting for the retirement of amounts included in Account
302, Franchises and Consents, and Account 303, Miscellaneous Intangible
Plant, and the items of limited-term interest in land included in the
accounts for land and land rights, shall be as provided for in the text
of Account 111, Accumulated Provision for Amortization of Electric
Utility Plant in Service; Account 404, Amortization of Limited-Term
Electric Plant; and Account 405, Amortization of Other Electric Plant.
(k) Work order and property record system required. (1) Each utility
shall record all construction and retirements of electric plant by means
of work orders or job orders. Separate work orders may be opened for
additions to and retirements of electric plant or the retirements may be
included with the construction work order, provided, however, that all
items relating to the retirements shall be kept separate from those
relating to construction and provided, further, that any maintenance
costs involved in the work shall likewise be segregated.
(2) Each utility shall keep its work order system so as to show the
nature of each addition to or retirement of electric plant, the total
cost thereof, the source or sources of costs, and the electric plant
account or accounts to which charged or credited. Work orders covering
jobs of short duration may be cleared monthly.
(3) Each utility shall maintain records in which, for each plant
account, the amounts of the annual additions and retirements are
classified so as to show the number and cost of the various record units
or retirement units.
(l) Transfers of property. When property is transferred from one
electric plant account to another, from one utility department to
another, such as from electric to gas, from one operating division or
area to another, to or from Account 101, Electric Plant in Service;
Account 104, Electric Plant Leased to Others; Account 105, Electric
Plant Held for Future Use, and Account 121, Nonutility Property, the
transfer shall be recorded by transferring the original cost thereof
from the one account, department, or location to the other. Any related
amounts carried in the accounts for accumulated provision for
depreciation or amortization shall be transferred in accordance with the
segregation of such accounts.
(m) Common utility plant. (1) If the utility is engaged in more than
one utility service, such as electric, gas, and water, and any of its
utility plant is used in common for several utility services or for
other purposes to such an extent and in such manner that it is
impracticable to segregate it by utility services currently in the
accounts, such property, with the approval of RUS, may be designated and
classified as ``common utility plant.''
(2) The book amount of utility plant designated as common plant
shall be
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included in Account 118, Other Utility Plant, and if applicable in part
to the electric department, shall be segregated and accounted for in
subaccounts as electric plant is accounted for in Accounts 101 to 107,
inclusive, and electric plant adjustments in Account 116, Other Electric
Plant Adjustments; any amounts classifiable as common plant acquisition
adjustments or common plant adjustments shall be subject to disposition
as provided in Paragraphs C and B of Accounts 114 and 116, respectively,
for amounts classified in those accounts. The original cost of common
utility plant in service shall be classified according to the detailed
utility plant accounts appropriate for the property.
(3) The utility shall be prepared to show, at any time, and to
report to RUS annually, or more frequently, if required, and by utility
plant accounts (301 to 399) the book cost of common utility plant, the
allocation of such cost to the respective departments using the common
utility plant, and the basis of the allocation.
(4) The accumulated provision for depreciation and amortization of
the utility shall be segregated so as to show the amount applicable to
the property classified as common utility plant.
(5) The expenses of operation, maintenance, rents, depreciation and
amortization of common utility plant shall be recorded in the accounts
prescribed herein, but designated as common expenses, and the allocation
of such expenses to the departments using the common utility plant shall
be supported in such manner as to reflect readily the basis of
allocation used.
(n) Transmission and distribution plant. For the purpose of this
system of accounts:
(1) Transmission system is all land, conversion structures, and
equipment employed at a primary source of supply (i.e. generating
station, or point of receipt in the case of purchased power) to change
the voltage or frequency of electricity for the purpose of its more
efficient or convenient transmission; all land, structures, lines,
switching and conversion stations, high tension apparatus, and their
control and protective equipment between a generating or receiving point
and the entrance to a distribution center or wholesale point; and all
lines and equipment whose primary purpose is to augment, integrate or
tie together the sources of power supply.
(2) Distribution system is all land, structures, conversion
equipment, lines, line transformers, and other facilities employed
between the primary source of supply (i.e. generating station, or point
of receipt in the case of purchased power) and of delivery to customers,
which are not includible in transmission system, as defined in Item in
paragraph (n)(1) of this section, whether or not such land, structures,
and facilities are operated as part of a transmission system or as part
of a distribution system.
Note: Stations which change electricity from transmission to
distribution voltage shall be classified as distribution stations.
(3) Where poles or towers support both transmission and distribution
conductors, the poles, towers, anchors, guys, and rights-of-way shall be
classified as transmission system. The conductors, cross-arms, braces,
grounds, tiewire, and insulators shall be classified as transmission or
distribution facilities, according to the purpose for which used.
(4) Where underground conduit contains both transmission and
distribution conductors, the underground conduit and right-of-way shall
be classified as distribution system. The conductors shall be classified
as transmission or distribution facilities according to the purpose for
which used.
(5) Land (other than rights-of-way) and structures used jointly for
transmission and distribution purposes shall be classified as
transmission or distribution according to the major use thereof.
(o) Hydraulic production plant. For purpose of this system of
accounts hydraulic production plant is all land and land rights,
structures and improvements used in connection with hydraulic power
generation, reservoirs, dams and waterways, water wheels, turbines,
generators, accessory electric equipment, roads, railroads, and bridges
and structures and improvements used in connection with fish and
wildlife, and recreation.
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(p) Nuclear fuel records required. Each utility shall keep all the
necessary records to support the entries to the various nuclear fuel
plant accounts classified under ``Assets and Other Debits,'' Utility
Plant Accounts 120.1 through 120.5, inclusive; Account 518, Nuclear Fuel
Expense; and Account 157, Nuclear Materials Held for Sale. These records
shall be so kept as to readily furnish the basis of the computation of
the net nuclear fuel costs.