[Code of Federal Regulations]
[Title 7, Volume 11, Parts 1600 to 1899]
[Revised as of January 1, 2000]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1770]
[Page 879-900]
PART 1770--ACCOUNTING REQUIREMENTS FOR RUS TELEPHONE BORROWERS
Subpart A--General Provisions
Sec.
1770.1--1770.9 [Reserved]
Subpart B--Uniform System of Accounts
1770.10 General.
1770.11 Accounting system requirements.
1770.12 Supplementary accounts.
1770.13 Accounting requirements.
1770.14 Continuing property records.
1770.15 Supplementary accounts required of all borrowers.
1770.16 Supplementary accounts required of nonprofit organizations.
1770.17--1770.25 [Reserved]
Subpart C--Accounting Interpretations
1770.26 General.
1770.27 Definitions.
1770.28-1770.45 [Reserved]
Appendix to Subpart C to Part 1770--Accounting Methods and Procedures
Required of All Borrowers
Authority: 7 U.S.C. 901 et seq.; 7 U.S.C. 1921 et seq.; Pub. L. 103-
354, 108 Stat. 3178 (7 U.S.C. 6941 et seq.).
Source: 55 FR 3388, Feb. 1, 1990, unless otherwise noted.
Subpart A--General Provisions
Secs. 1770.1--1770.9 [Reserved]
Subpart B--Uniform System of Accounts
Sec. 1770.10 General.
This subpart implements provisions of the standard RUS loan
documents with respect to the accounting system accounts to be
maintained by telecommunications borrowers of the Rural Utilities
Service.
Sec. 1770.11 Accounting system requirements.
(a) Each RUS borrower subject to the jurisdiction of the Federal
Communications Commission (FCC) or a State regulatory body shall
maintain its accounts and records in accordance with the rules and
regulations prescribed by that regulatory body.
(b) Each RUS borrower not subject to regulatory control as specified
in Sec. 1770.11(a) shall maintain its accounts and records in accordance
with the FCC Uniform System of Accounts as set forth in part 32 of the
Commission's Rules and Regulations.
(1) RUS borrowers having annual revenues derived from regulated
telecommunications operations of $100,000,000 or more shall maintain the
accounts prescribed in part 32 for Class A companies.
(2) RUS borrowers having annual revenues derived from regulated
telecommunications operations of less than $100,000,000 shall maintain
the accounts prescribed in part 32 for Class B companies.
[[Page 880]]
(3) RUS borrowers maintaining the accounts prescribed for Class B
companies may adopt the Class A accounts if they desire more detailed
and sophisticated accounting records.
Sec. 1770.12 Supplementary accounts.
(a) All borrowers shall maintain the supplementary accounts set
forth in Sec. 1770.15. These accounts conform in number and title with
accounts prescribed in the FCC Uniform System of Accounts. In those
instances in which a State regulatory body having jurisdiction over an
RUS borrower has prescribed a system of accounts differing from that of
the FCC, the account titles prescribed by RUS in Sec. 1770.15 shall
remain unchanged; however, the supplementary account numbers shall be
changed to conform with the State's accounting system.
(b) In addition to the accounts set forth in Sec. 1770.15,
cooperative or other nonprofit borrowers shall maintain the
supplementary accounts set forth in Sec. 1770.16.
(c) Borrowers are permitted to deviate from the specific subaccount
numbers detailed in Secs. 1770.15 and 1770.16 provided that the primary
account numbers and account descriptions conform with those prescribed.
(Approved by the Office of Management and Budget under control number
0572-0003)
Sec. 1770.13 Accounting requirements.
(a) Each borrower shall maintain its books of accounts on the
accrual basis of accounting. All transactions shall be recorded in the
period in which they occur and reconciled monthly. The books of accounts
shall be closed at the end of each fiscal year and financial statements
shall be prepared for the period and audited in accordance with the
provisions of 7 CFR part 1773, RUS Policy on Audits of Electric and
Telephone Borrowers.
(b) All books of accounts, records, and memoranda shall be
maintained in such a manner as to fully support the journal entries to
which they relate. The books and records referred to herein shall
include records of a nontechnical nature such as minute books, stock and
membership records, reports, correspondence, and memoranda.
(c) Interpretations of Federal or State requirements shall be
referred to the applicable commission exercising jurisdiction over the
borrower.
(d) Interpretations of RUS accounting requirements shall be referred
to the appropriate Telephone Area office of RUS.
Sec. 1770.14 Continuing property records.
Each borrower shall maintain continuing property records which
detail the date of placement, location, description of property, and the
original cost of the property record units. The continuing property
record and other underlying records of construction costs shall be
maintained so that upon retirement of one or more retirement units or of
minor items without replacement when not included in the costs of
retirement units, the actual cost of the plant retired can be
determined.
Sec. 1770.15 Supplementary accounts required of all borrowers.
Accounts prescribed in the Stockholders' Equity and Patronage
Capital section shall be maintained by stock companies and cooperatives
as appropriate.
------------------------------------------------------------------------
Class of company
---------------------
Account No. Account title
---------------------
A B
------------------------------------------------------------------------
Current Assets
1130.1 1120.11 Cash--General Fund.
1130.2 1120.12 Cash--Construction Fund Trustee.
1130.3 1120.13 Cash--Transfer of Funds.
1120.21 Special Cash Deposits.
1150.1 1120.31 Petty Cash Fund
[[Page 881]]
This account shall include funds in the custody of
employees or agents for making minor
disbursements. The fund shall be operated on an
imprest basis. Expenditures shall be supported by
receipts, and reimbursements to the fund shall be
for the exact amount of such expenditures and
shall be charged to the various accounts to which
the expenditures are allocable. At all times, the
total of the cash on hand and the unreimbursed
expenditures shall equal the amount of the fund.
1150.2 1120.32 Change Fund.
Supplies
1220.1 1220.1 Materials and Supplies.
1220.2 1220.2 Property Held for Sale or Lease.
1220.3 1220.3 Exempt Materials--Clearing.
Prepayments
1280.1 Prepaid Rents.
1280.2 Prepaid Taxes.
1280.3 Prepaid Insurance.
1280.4 Prepaid Directory Expenses.
1280.5 Other Prepayments.
Investments
1402.1 1402.1 Investments in Nonaffiliated Companies--Class B
RTB Stock.
1402.11 1402.11 Investments in Nonaffiliated Companies--Class B
RTB Stock--Cr.
1402.2 1402.2 Investments in Nonaffiliated Companies--Class C
RTB Stock.
1402.3 1402.3 Other Investments in Nonaffiliated Companies.
Property, Plant, and Equipment
2001.1 2001.1 Telecommunications Plant in Service--Classified.
2001.2 2001.2 Telecommunications Plant in Service--Unclassified.
2003.1 2003.1 Telecommunications Plant Under Construction--Short
Term--Contract.
2003.2 2003.2 Telecommunications Plant Under Construction--Short
Term--Force Account.
2003.3 2003.3 Telecommunications Plant Under Construction--Short
Term--Work Orders.
2004.1 2004.1 Telecommunications Plant Under Construction--Long
Term--Contract.
2004.2 2004.2 Telecommunications Plant Under Construction--Long
Term--Force Account.
2004.3 2004.3 Telecommunications Plant Under Construction--Long
Term--Work Orders.
Telecommunications Plant in Service
2210.11 Central Office Switching--Analog.
2210.21 Central Office Switching--Digital.
2210.31 Central Office Switching--Electro-Mechanical--Step-
by-Step.
2210.32 Central Office Switching--Electro-Mechanical--
Crossbar.
2210.33 Central Office Switching--Electro-Mechanical--
Other.
2230.11 Central Office Transmission--Radio Systems--
Satellite and Earth Station Facilities.
2230.12 Central Office Transmission--Radio Systems--Other.
2230.21 Central Office Transmission--Circuit Equipment.
Depreciation and Amortization
3100x 3100x Retirement Work in Progress.
Current Liabilities
4010.11 4010.11 Accounts Payable to Affiliated Companies.
4010.21 4010.21 Accounts Payable to Nonaffiliated Companies.
4010.22 4010.22 Accounts Payable--Employees' Income Tax Withheld.
4010.23 4010.23 Accounts Payable--FICA Taxes Withheld.
4010.24 4010.24 Accounts Payable--Federal Excise Taxes.
4010.25 4010.25 Accounts Payable--Payroll.
4070.1 4070.1 Income Taxes Accrued--Federal.
4070.2 4070.2 Income Taxes Accrued--State and Local
4080.1 4080.1 Other Taxes Accrued--Property.
4080.2 4080.2 Other Taxes Accrued--Employer's Portion--FICA.
4080.3 4080.3 Other Taxes Accrued--Federal Unemployment.
4080.4 4080.4 Other Taxes Accrued--State Unemployment.
4080.5 4080.5 Other Taxes Accrued--Miscellaneous.
4120.1 4120.1 Unmatured Interest Accrued--RUS Notes.
4120.2 4120.2 Unmatured Interest Accrued--Telephone Bank Notes.
4120.3 4120.3 Unmatured Interest Accrued--Federal Financing Bank
Notes.
4120.4 4120.4 Unmatured Interest Accrued--Bank for Cooperatives
Notes.
4120.5 4120.5 Unmatured Interest Accrued--Rural Telephone
Finance Cooperative Notes.
4120.6 4120.6 Other Accrued Liabilities.
Long-Term Debt
4210.11 4210.11 Funded Debt--Other.
4210.12 4210.12 RUS Notes.
4210.13 4210.13 Telephone Bank Notes.
[[Page 882]]
4210.14 4210.14 Federal Financing Bank Notes.
4210.15 4210.15 Bank for Cooperatives Notes.
4210.16 4210.16 Rural Telephone Finance Cooperative Notes.
4210.17 4210.17 RUS Notes--Deferred Interest.
4210.18 4210.18 RUS Notes--Advance Payments, Dr.
4210.19 4210.19 Funded Debt--Other--Unadvanced, Dr.
4210.20 4210.20 RUS Notes--Unadvanced, Dr.
4210.21 4210.21 Telephone Bank Notes--Unadvanced, Dr.
4210.22 4210.22 Federal Financing Bank Notes--Unadvanced, Dr.
4210.23 4210.23 Bank for Cooperatives Notes--Unadvanced, Dr.
4210.24 4210.24 Rural Telephone Finance Cooperative Notes--
Unadvanced, Dr.
Stockholders' Equity and Patronage Capital
4540.11 4540.11 Capital Stock Subscribed.
4540.12 4540.12 Memberships Subscribed but Unissued.
4540.13 4540.13 Members' Equity Certificates Subscribed but
Unissued.
4540.21 4540.21 Memberships Issued.
4540.22 4540.22 Members' Equity Certificates Issued.
4540.23 4540.23 Members' Equity--Other.
4540.31 4540.31 Installments Paid on Capital Stock.
4540.32 4540.32 Installments Paid on Memberships Subscribed.
4540.33 4540.33 Installments Paid on Equity Certificates
Subscribed.
4540.41 4540.41 Other Capital--Miscellaneous.
4550.1 4550.1 Operating Margins.
4550.2 4550.2 Nonoperating Margins.
4550.3 4550.3 Other Margins.
4550.4 4550.4 Patronage Capital Assignable.
4550.5 4550.5 Patrons' Capital Credits Assigned.
4550.6 4550.6 Gain on the Retirement of Capital Credits.
Plant Specific Operations Expense
6210.11 Analog Electronic Expense.
6210.21 Digital Electronic Expense.
6210.31 Electro-Mechanical Expense.
6230.11 Radio Systems Expense.
6230.21 Circuit Equipment Expense.
Plant Nonspecific Operations Expense
6560.1 Depreciation Expense.
6560.2 Amortization Expense.
Operating Taxes.
7200.1 Operating Investment Tax Credits--Net.
7200.2 Operating Federal Income Taxes.
7200.3 Operating State and Local Income Taxes.
7240.1 7200.41 Operating Taxes--Property.
7240.2 7200.42 Operating Taxes--Miscellaneous.
7200.5 Provision for Deferred Operating Income Taxes--
Net.
Nonoperating Income and Expense
7300.1 Dividend Income.
7300.2 Interest Income.
7300.3 Income From Sinking and Other Funds.
7300.4 Allowance for Funds Used During Construction.
7300.5 Gains or Losses from the Disposition of Certain
Property.
7300.6 Other Nonoperating Income and Expense.
Nonoperating Taxes
7400.1 Nonoperating Investment Tax Credits--Net.
7400.2 Nonoperating Federal Income Taxes.
7400.3 Nonoperating State and Local Income Taxes.
7400.4 Nonoperating Other Taxes.
7400.5 Provision for Deferred Nonoperating Income Taxes--
Net.
Extraordinary Items
7600.1 Extraordinary Income Credits.
7600.2 Extraordinary Income Charges.
7600.3 Current Income Tax Effect of Extraordinary Items--
Net.
7600.4 Provision for Deferred Income Tax Effect of
Extraordinary Items--Net.
1130.1 1120.11 Cash--General Fund
[[Page 883]]
This account shall include all unrestricted funds
derived from revenues and other sources which are
on deposit in banks or other financial
institutions and available on demand. It shall
also include funds in transit to the depository
for which customers and agents have received
credit on their accounts. Separate subaccounts
should be maintained for each bank account in
which general fund cash is deposited.
1130.2 1120.12 Cash--Construction Fund Trustee
This account shall include all loan funds received
from RUS, the Rural Telephone Bank, the Federal
Financing Bank, the Bank for Cooperatives, the
Rural Telephone Finance Cooperative, and all non-
loan funds supplied by the borrower under the
terms of the loan contract or otherwise required
by RUS. The offsetting credit for funds received
from RUS shall be to Account 4210.20, RUS Notes--
Unadvanced, Dr.; funds received from the Rural
Telephone Bank, to Account 4210.21, Telephone
Bank Notes--Unadvanced, Dr.; funds received from
the Federal Financing Bank, to Account 4210.22,
Federal Financing Bank Notes--Unadvanced, Dr.;
funds received from the Bank for Cooperatives, to
Account 4210.23, Bank for Cooperatives Notes--
Unadvanced, Dr.; and funds received from the
Rural Telephone Finance Cooperative, to Account
4210.24, Rural Telephone Finance Cooperative
Notes--Unadvanced, Dr.
1130.3 1120.13 Cash--Transfer of Funds
This account shall include all transfers of funds
from one bank account to another. This account
shall be charged with the amount of a check drawn
for the transfer, and credited when the amount
transferred is entered into the Cash Receipts
Book.
1120.21 Special Cash Deposits
This account shall include all cash on special
deposit, other than in sinking and other special
funds provided for elsewhere, to pay dividends,
interest, and other debts, when such payments are
due one year or less from the date of deposit;
the amount of cash deposited to insure the
performance of contracts to be performed within
one year from the date of the deposit; and other
cash deposits of a special nature not provided
for elsewhere. This account shall include the
amount of cash deposited with trustees to be held
until mortgaged property sold, destroyed, or
otherwise disposed of is replaced, and also cash
realized from the sale of the company's
securities and deposited with trustees to be held
until invested in physical property of the
company or for disbursement when the purposes for
which the securities were sold are accomplished.
1150.1 1120.31 Petty Cash Fund
This account shall include funds in the custody of
employees or agents for making minor
disbursements. The fund shall be operated on an
inprest basis. Expenditures shall be supported by
receipts, and reimbursements to the fund shall be
for the exact amount of such expenditures and
shall be charged to the various accounts to which
the expenditures are allocable. At all times, the
total of the cash on hand and the unreimbursed
expenditures shall equal the amount of the fund.
1150.2 1120.32 Change Fund
This account shall include funds in the custody of
employees or agents for making change. Records
shall be kept of the amount held by each person.
Disbursements shall not be made from the fund.
1220.1 1220.1 Materials and Supplies*
This account shall include the cost of materials
and supplies held in stock including plant
supplies, motor vehicles supplies, tools, fuel,
other supplies and material and articles of the
company in process of manufacture for supply
stock.
Transportation charges and sales and use taxes, as
far as practicable, shall be included as a part
of the cost of the particular material to which
they relate. Transportation and sales and use
taxes which are not included as part of the cost
of particular material shall be equitably
apportioned among the accounts to which material
is charged.
As far as practicable, cash and other discounts on
material shall be deducted in determining cost of
the particular material to which they relate or
credited to the account to which the material is
charged. When such deduction is not practicable,
discounts shall be equitably apportioned among
the accounts to which material is charged.
Material recovered in connection with
construction, maintenance or retirement of
property shall be charged to this account as
follows:
--Reusable items that, when installed or in
service, were retirement units shall be included
in this account at the original cost.
--Reusable minor items that, when installed or
in service, were not retirement units shall be
included in this account at current prices new.
--The cost of repairing reusable material shall
be charged to the appropriate Plant Specific
Operations Expense accounts.
--Scrap and nonusable material included in this
account shall be carried at the estimated amount
which will be received therefor. The difference
between the amounts realized for scrap and
nonusable material sold, and the amounts at which
it is carried in this account shall be adjusted in
the accounts credited when the material was taken
up in this account.
Interest paid on material bills, the payments of
which are delayed, shall be charged to Account
7540, Other Interest Deductions.
[[Page 884]]
Inventories of materials and supplies shall be
taken during each calendar year and the
adjustments to this account shall be charged or
credited to Account 6512, Provisioning Expense.
1220.2 1220.2 Property Held for Sale or Lease*
This account shall include the cost of all items
purchased for resale or lease. The cost shall
include applicable transportation charges, sales
and use taxes, and cash and other purchase
discounts. Inventory shortages and overages shall
be charged and credited, respectively to Account
7991, Other Nonregulated Revenues.
*These accounts shall not include items which
are related to a nonregulated activity unless that
activity involves joint or common use of assets
and resources in the provision of regulated and
nonregulated products and services.
1220.3 1220.3 Exempt Materials--Clearing
This account shall include the cost of materials
and supplies designated as exempt material on the
carrier's ``Exempt Material List''. Charges to
this account shall be cleared monthly to the
primary plant and maintenance accounts in
accordance with percentages developed by the
individual carriers.
When there is a substantial amount of exempt
material on hand at the end of the year,
substantial enough to distort net income or
margins, a physical inventory may be taken. The
cost of the inventory on hand shall be debited to
this account and credited to the appropriate
primary plant and maintenance accounts on a pro-
rata basis related to the original charges to
these accounts. This entry shall be reversed at
the first of the year.
1280.1 Prepaid Rents
This account shall include the amount of rents
paid in advance of the period in which it is
chargeable to income, except amounts chargeable
to telecommunications plant under construction
and minor amounts which may be charged directly
to the final accounts. As the term expires for
which the rents are paid, this account shall be
credited monthly and the appropriate account
charged.
1280.2 Prepaid Taxes
This account shall include the balance of all
taxes paid in advance of the period in which they
are chargeable to income, except amounts
chargeable to telecommunications plant under
construction and minor amounts which may be
charged directly to the final accounts. As the
term expires for which the taxes are paid, this
account shall be credited monthly and the
appropriate account charged.
1280.3 Prepaid Insurance
This account shall include the amount of insurance
premiums paid in advance of the period in which
they are chargeable to income, except premiums
chargeable to telecommunications plant under
construction and minor amounts which may be
charged directly to the final accounts. As the
term expires for which the premiums are paid,
this account shall be credited monthly and the
appropriate account charged.
1280.4 Prepaid Directory Expenses
This account shall include the cost of preparing,
printing, binding, and delivering directories and
the cost of soliciting advertisements for
directories, except minor amounts which may be
charged directly to Account 6620, Services.
Amounts in this account, shall be cleared to
Account 6620 by monthly charges representing that
portion of the expenses applicable to each month.
1280.5 Other Prepayments
This amount shall include prepayments, other than
those includable in Accounts 1280.1 through
1280.4 except minor amounts which may be charged
directly to the final accounts. As the term
expires for which the payments apply, this
account shall be credited monthly and the
appropriate account charged.
1402.1 1402.1 Investments in Nonaffiliated Companies--Class B
RTB Stock
This account shall include the par value of the
required purchase of Class B Rural Telephone Bank
stock and the par value of the Class B Rural
Telephone Bank stock received as a patronage
refund. This account shall be debited at the time
the refund is received and Account 1402.11,
Investments in Nonaffiliated Companies--Class B
RTB Stock--Cr., credited.
This account shall be credited and Account 1402.11
debited when the patronage refund is redeemed.
1402.11 1402.11 Investments in Nonaffiliated Companies--Class B
RTB Stock--Cr.
This account shall include the par value of Class
B Rural Telephone Bank stock received as a
patronage refund. This account shall be credited
at the time the refund is received and Account
1402.1, Investments in Nonaffiliated Companies--
Class B RTB Stock, debited.
This account shall be debited and Account 1402.1
credited when the patronage refund is redeemed.
1402.2 1402.2 Investments in Nonaffiliated Companies--Class C
RTB Stock
This account shall include the par value of the
company's investment in Class C Rural Telephone
Bank stock. Cash dividends on Class C stock shall
be recorded in Account 7310/7300.1, Dividend
Income, when declared.
1402.3 1402.3 Other Investments in Nonaffiliated Companies
[[Page 885]]
This account shall include the acquisition cost of
the company's investment in securities issued by
non-affiliated companies, other than securities
held in special funds which shall be charged to
Account 1408, Sinking Funds, and also its
investment advances to such parties and special
deposits of cash for more than one year from the
date of deposit.
Declines in value of investments shall be charged
to Account 4540.41, Other Capital, if temporary
and as a current period loss if permanent.
Detailed records shall be maintained to reflect
unrealized losses for each investment.
2001.1 2001.1 Telecommunications Plant in Service--Classified
This account shall include the original cost of
the property capitalized in Accounts 2110 through
2690.
2001.2 2001.2 Telecommunications Plant in Service--Unclassified
This account shall include the original cost of
telecommunications property which has been
completed and placed in service but which has not
been classified pending completion of final
inventories of construction, final cost
summaries, etc. The balance in this account is
subject to depreciation charges.
2003.1 2003.1 Telecommunications Plant Under Construction--Short
Term--Contract
This account shall include all costs incurred in
the construction of telecommunications plant
performed under contract and designed to be
completed in one year or less. Included among
these costs are contractor payments, and charges
for engineering, supervision, taxes, insurance,
transportation, and other costs incurred in
contract construction. This account shall be
maintained such that the various items of costs
are readily identifiable.
2003.2 2003.2 Telecommunications Plant Under Construction--Short
Term--Force Account
This account shall include all costs incurred in
the construction of telecommunications plant
performed by the borrowers' own employees and
designed to be completed in one year or less.
Included among these costs are charges for
material, labor, engineering, supervision, taxes,
insurance, transportation, supply expense, and
other costs incurred in the construction. This
account shall be maintained so that the various
items of cost are readily identified. Specific
subaccounts should be maintained to distinguish
individual projects.
2003.3 2003.3 Telecommunications Plant Under Construction--Short
Term--Work Orders
This account shall include all costs incurred in
the construction of telecommunications plant
performed under a work order system or a line
extension contract and designed to be completed
in one year or less. This type of construction
generally includes service installations,
subscriber extensions, and minor plant
improvements after the completion of the initial
system. Included among these costs are charges
for labor, materials and supplies,
transportation, payroll taxes, insurance,
supervision and other costs incurred in the
construction. Subsidiary records shall be
maintained to reflect the cost of individual
jobs. These records shall be reconciled
periodically with the general ledger control
account. Specific subaccounts should be
maintained to accumulate costs incurred under
line extension contracts.
2004.1 2004.1 Telecommunications Plant Under Construction--Long
Term--Contract
This account shall include all costs incurred in
the construction of telecommunications plant
performed under contract and designed to be
completed in more than one year. Included among
these costs are contractor payments, and charges
for engineering, supervision, taxes, insurance,
transportation, interest during construction, and
other costs incurred in contract construction.
This account shall be maintained such that the
various items of cost are readily identified.
2004.2 2004.2 Telecommunications Plant Under Construction--Long
Term--Force Account
This account shall include all costs incurred in
the construction of telecommunications plant
performed by the borrowers' own employees and
designed to be completed in more than one year.
Included among these costs are charges for
material, labor, engineering, supervision, taxes,
insurance, transportation, supply expense,
interest during construction, and other costs
incurred in the construction. This account shall
be maintained such that the various items of cost
are readily identified. Specific subaccounts
should be maintained to distinguish individual
projects.
2004.3 2004.3 Telecommunications Plant Under Construction--Long
Term--Work Orders
This account shall include all costs incurred in
the construction of telecommunications plant
performed under a work order system or a line
extension contract and designed to be completed
in more than one year. Included among these costs
are charges for labor, materials and supplies,
transportation, payroll taxes, insurance,
supervision, interest during construction, and
other costs incurred in the construction.
Subsidiary records shall be maintained to reflect
the cost of individual jobs. These records shall
be reconciled periodically with the general
ledger control account. Specific subaccounts
should be maintained to accumulate costs incurred
under line extension contracts.
2210.11 Central Office Switching--Analog*
This account shall include the original cost of
stored program control analog circuit-switching
and associated equipment. This account shall also
include the original cost of remote analog
electronic circuit switches.
2210.21 Central Office Switching--Digital*
[[Page 886]]
This account shall include the original cost of
stored program control digital switches and their
associated equipment. Included in this account is
the original cost of digital switches which
utilize either dedicated or non-dedicated
circuits. This account shall also include the
original cost of remote digital electronic
switches.
2210.31 Central Office Switching--Electro-Mechanical--Step-
by-Step*
This account shall include the original cost of
step-by-step and associated circuit-switching
equipment.
2210.32 Central Office Switching--Electro-Mechanical--
Crossbar*
This account shall include the original cost of
crossbar and associated circuit switching
equipment. Also included in this account is the
original cost of electronic translator system
equipment used in switching.
2210.33 Central Office Switching--Electro-Mechanical--
Other*
This account shall include the original cost of
all other types of non-electronic circuit-
switching equipment such as panel systems and
their associated circuit-switching equipment.
*Switching plant excludes switchboards which
perform operator assistance functions and
equipment which is an integral part thereof. It
does not exclude equipment used solely for the
recording of calling telephone numbers in
connection with customer dialed charged traffic,
dial tandem switches, and special switchboards
used in conjunction with private line service;
such equipment shall be classified to the
particular switch that it serves.
2230.11 Central Office Transmission--Radio Systems--
Satellite and Earth Station Facilities
This account shall include the original cost of an
ownership interest in satellites (including land-
side spares), other spare parts, materials, and
supplies. It shall include launch insurance and
other satellite launch costs. This account shall
also include the original cost of earth stations
and spare parts, materials, and supplies
therefor.
2230.12 Central Office Transmission--Radio Systems--Other
This account shall include the original cost of
radio equipment used to provide radio
communication channels. Radio equipment is that
equipment which is used for the generation,
amplification, propagation, reception,
modulation, and demodulation of radio waves in
free space over which communications channels can
be provided. This account shall also include the
associated carrier and auxiliary equipment and
patch bay equipment which is an integral part of
the radio equipment. Such equipment may be
located in central office buildings, terminal
rooms, or repeater stations or may be mounted on
towers, masts, or other supports.
2230.21 Central Office Transmission--Circuit Equipment
This account shall include the original cost of
equipment which is used to reduce the number of
physical pairs otherwise required to serve a
given number of subscribers by utilizing carrier
systems, concentration stages or combinations of
both. It shall include equipment that provides
for simultaneous use of a number of interoffice
channels on a single transmission path. This
account shall also include the original cost of
equipment which is used for the amplification,
modulation, regeneration, circuit patching,
balancing or control of signals transmitted over
interoffice communications transmission channels.
This account shall include the original cost of
equipment which utilizes the message path to
carry signaling information or which utilizes
separate channels between switching offices to
transmit signaling information independent of the
subscribers' communication paths or transmission
channels. This account shall also include the
original cost of associated material used in the
construction of such plant. Circuit equipment may
be located in central offices, in manholes, on
poles, in cabinets or huts or at other locations.
This account excludes carrier and auxiliary
equipment and patch bay which are recorded in
Account 2230.12, Central Office Transmission--
Radio Systems--Other
3100x 3100x Retirement Work in Progress
This account shall be charged with the original
cost of property retired from the
telecommunications plant accounts. It shall also
be charged with all of the costs incurred in
removing the retired plant from service. This
account shall be credited with the salvage value
of materials recovered in the retirement of the
telecommunications plant. At such time as the
retirement work order is complete, the net income/
loss resulting therefrom shall be transferred
from this account to the appropriate primary
plant depreciation reserve account.
4010.11 4010.11 Accounts Payable to Affiliated Companies
This account shall include all amounts currently
due to affiliated companies for recurring trade
obligations, and not provided for in other
accounts, such as those for traffic settlements,
material and supplies, repairs to
telecommunications plant, matured rents, and
interest payable under monthly settlements on
short-term loans, advances, and open accounts.
4010.21 4010.21 Accounts Payable to Nonaffiliated Companies
This account shall include all amounts currently
due to nonaffiliated companies for recurring
trade obligations, and not provided for in other
accounts, such as those for traffic settlements,
materials and supplies, repairs to
telecommunications plant, matured rents, and
interest payable under monthly settlements on
short-term loans, advances, and open accounts.
4010.22 4010.22 Accounts Payable--Employees' Income Tax Withheld
[[Page 887]]
This account shall include income taxes payable
that have been withheld from employees' salaries.
4010.23 4010.23 Accounts Payable--FICA Taxes Withheld
This account shall include FICA taxes payable that
have been withheld from employees' salaries.
4010.24 4010.24 Accounts Payable--Federal Excise Taxes
This account shall include Federal excise taxes
payable.
4010.25 4010.25 Accounts Payable--Payroll
This account shall include amounts payable to the
company's employees in the form of salaries or
wages.
4070.1 4070.1 Income Taxes Accrued--Federal
For Class A companies, this account shall be
credited and Accounts 7220, 7420, and 7630, as
appropriate, shall be debited for the amount of
Federal income taxes accrued during the current
operating period.
For Class B companies, this account shall be
credited and Accounts 7220.2, 7400.2, and 7600.3,
as appropriate, shall be debited for the amount
of Federal income taxes accrued during the
current operating period.
4070.2 4070.2 Income Taxes Accrued--State and Local
For Class A companies, this account shall be
credited and Accounts, 7230, 7430, and 7630, as
appropriate, shall be debited for the amount of
state and local income taxes accrued during the
current operating period.
For Class B companies, this account shall be
credited and Accounts, 7200.3, 7400.3, and
7600.3, as appropriate, shall be debited for the
amount of state and local income taxes accrued
during the current operating period.
4080.1 4080.1 Other Taxes Accrued--Property
This account shall be credited and Account 7240.1/
7200.41, Operating Taxes--Property, shall be
debited for the amount of property taxes accrued
during the current operating period.
4080.2 4080.2 Other Taxes Accrued--Employer's Portion--FICA
This account shall be credited and the appropriate
construction, depreciation, or expense account
shall be debited for the employer's portion of
FICA taxes accrued during the current operating
period.
4080.3 4080.3 Other Taxes Accrued--Federal Unemployment
This account shall be credited and the appropriate
construction, removal, or expense account shall
be debited for the amount of Federal unemployment
taxes accrued during the current operating
period.
4080.4 4080.4 Other Taxes Accrued--State Unemployment
This account shall be credited and the appropriate
construction, removal, or expense account shall
be debited for the amount of state unemployment
taxes accrued during the current operating
period.
4080.5 4080.5 Other Taxes Accrued--Miscellaneous
This account shall be credited and Account 7240.2/
7200.42, Operating Taxes--Miscellaneous, shall be
debited for the amount of all other taxes accrued
during the current operating period and not
provided for elsewhere such as a gross receipts
tax, franchise taxes, and capital stock taxes.
4120.1 4120.1 Unmatured Interest Accrued--RUS Notes
This account shall include the interest accrued as
of the balance sheet date but not payable until
after that date on RUS mortgage notes.
Interest expense incurred during the period of
construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant
Under Construction--Long Term, and credited to
Account 7340/7300.4, Allowance for Funds Used
During Construction.
4120.2 4120.2 Unmatured Interest Accrued--Telephone Bank Notes
This account shall include the interest accrued as
of the balance sheet date but not payable until
after that date on Rural Telephone Bank mortgage
notes.
Interest expense incurred during the period of
construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant
Under Construction--Long Term, and credited to
Account 7340/7300.4, Allowance for Funds Used
During Construction.
4120.3 4120.3 Unmatured Interest Accrued--Federal Financing Bank
Notes
This account shall include the interest accrued as
of the balance sheet date but not payable until
after that date on Federal Financing Bank
mortgage notes.
Interest expense incurred during the period of
construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant
Under Construction--Long Term, and credited to
Account 7340/7300.4, Allowance for Funds Used
During Construction.
4120.4 4120.4 Unmatured Interest Accrued--Bank for Cooperatives
Notes
This account shall include the interest accrued as
of the balance sheet date but not payable until
after that date on Bank for Cooperatives mortgage
notes.
[[Page 888]]
Interest expense incurred during the period of
construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant
Under Construction--Long Term, and credited to
Account 7340/7300.4, Allowance for Funds Used
During Construction.
4120.5 4120.5 Unmatured Interest Accrued--Rural Telephone
Finance Cooperative Notes
This account shall include the interest accrued as
of the balance sheet date but not payable until
after that date on Rural Telephone Finance
Cooperative mortgage notes.
Interest expense incurred during the period of
construction of telecommunications plant shall be
charged to Account 2004, Telecommunications Plant
Under Construction--Long Term, and credited to
Account 7340/7300.4, Allowance for Funds Used
During Construction.
4120.6 4120.6 Other Accrued Liabilities
This account shall include the amount of wages,
compensated absences, interest on indebtedness of
the company, dividends on capital stock, and
rents accrued as of the balance sheet date but
not payable until after the date.
This account shall not include interest accrued on
RUS, Rural Telephone Bank, Bank for Cooperatives,
Federal Financing Bank, or Rural Telephone
Finance Cooperative debt.
4210.11 4210.11 Funded Debt--Other
This account shall include the total face amount
of unmatured debt, maturing more than one year
from the date of issue, issued by the company and
not retired, and the total face amount of similar
unmatured debt of other companies, the payment of
which has been assumed by the company, including
funded debt the maturity of which has been
extended by specific agreement.
This account shall not include unmatured RUS,
Rural Telephone Bank, Federal Financing Bank,
Bank for Cooperatives, or Rural Telephone Finance
Cooperative debt.
4210.12 4210.12 RUS Notes
This account shall include the total face amount
of unmatured RUS mortgage notes. Account 4210.20,
RUS Notes--Unadvanced, Dr., shall be charged and
this account credited upon execution of the
notes.
If principal installments are not paid at the
maturity date, the amount due shall be
transferred to Account 4050, Current Maturities--
Long-Term Debt.
4210.13 4210.13 Telephone Bank Notes
This account shall include the total face amount
of unmatured Rural Telephone Bank mortgage notes.
Account 4210.21, Telephone Bank Notes--
Unadvanced, Dr., shall be changed and this
account credited upon execution of the notes.
If principal installments are not paid at the
maturity date, the amount due shall be
transferred to Account 4050, Current Maturities--
Long-Term Debt.
4210.14 4210.14 Federal Financing Bank Notes
This account shall include the total face amount
of unmatured Federal Financing Bank mortgage
notes. Account 4210.22, Federal Financing Bank
Notes--Unadvanced, Dr., shall be charged and this
account credited upon execution of the notes.
If principal installments are not paid at the
maturity date, the amount due shall be
transferred to Account 4050, Current Maturities--
Long-Term Debt.
4210.15 4210.15 Bank for Cooperatives Notes
This account shall include the total face amount
of unmatured Bank for Cooperatives mortgage
notes. Account 4210.23, Bank for Cooperatives
Notes--Unadvanced, Dr., shall be charged and this
account credited upon execution of the notes.
If principal installments are not paid at the
maturity date, the amount due shall be
transferred to Account 4050, Current Maturities--
Long-Term Debt.
4210.16 4210.16 Rural Telephone Finance Cooperative Notes
This account shall include the total face amount
of unmatured Rural Telephone Finance Cooperative
mortgage notes. Account 4210.24, Rural Telephone
Finance Cooperative Notes--Unadvanced, Dr., shall
be charged and this account credited upon
execution of the notes.
If principal installments are not paid at the
maturity date, the amount due shall be
transferred to Account 4050, Current Maturities--
Long-Term Debt.
4210.17 4210.17 RUS Notes--Deferred Interest
This account shall include interest accrued on RUS
mortgage notes, the payment of which has been
deferred in accordance with the terms of the
notes or extension agreements. The offsetting
charge shall be to Account 7510, Interest on
Funded Debt, for Class A companies and Account
7500, Interest and Related Items, for Class B
companies.
If interest payments are not made at the due date,
this account shall be debited and Account
4010.21, Accounts Payable to Nonaffiliated
Companies, credited with the amount of the
matured interest.
4210.18 4210.18 RUS Notes--Advance Payments, Dr.
This account shall include all payments on RUS
mortgage notes made in advance of the due date
and not applied to a specific quarterly payment.
As these payments are applied to specific notes,
this account shall be credited and the long-term
debt and interest liability accounts debited.
[[Page 889]]
4210.19 4210.19 Funded Debt--Other--Unadvanced, Dr.
This account shall include the total face amount
of notes executed to others, for which funds have
not been received.
This account shall be credited and Account 1130.1/
1120.11, Cash--General Funds, debited when funds
are received from the lender.
4210.20 4210.20 RUS Notes--Unadvanced, Dr.
This account shall include the total face amount
of RUS mortgage notes for which funds have not
been received.
This account shall be credited and Account 1130.2/
1120.12, Cash--Construction Fund Trustee, debited
when funds are received from RUS.
4210.21 4210.21 Telephone Bank Notes--Unadvanced, Dr.
This account shall include the total face amount
of Rural Telephone Bank mortgage notes for which
funds have not been received.
This account shall be credited and Account 1130.2/
1120.12, Cash--Construction Fund Trustee, debited
when funds are received from the Rural Telephone
Bank.
4210.22 4210.22 Federal Financing Bank Notes--Unadvanced, Dr.
This account shall include the total face amount
of Federal Financing Bank mortgage notes for
which funds have not been received.
This account shall be credited and Account 1130.2/
1120.12, Cash--Construction Fund Trustee, debited
when funds are received from the Federal
Financing Bank.
4210.23 4210.23 Bank for Cooperatives Notes--Unadvanced, Dr.
This account shall include the total face amount
of Bank for Cooperatives mortgage notes for which
funds have not been received.
This account shall be credited and Account 1130.2/
1120.12, Cash--Construction Fund Trustee, debited
when funds are received from the Bank for
Cooperatives.
4210.24 4210.24 Rural Telephone Finance Cooperative Notes--
Unadvanced, Dr.
This account shall include the total face amount
of Rural Telephone Finance Cooperative mortgage
notes for which funds have not been received.
This account shall be credited and Account 1130.2/
1120.12, Cash--Construction Fund Trustee, debited
when funds are received from the Rural Telephone
Finance Cooperative.
4540.11 4540.11 Capital Stock Subscribed.
This account shall include the par value of
capital stock for which legally enforceable
subscriptions have been received but for which,
at the date of the balance sheet, stock
certificates have not been issued.
This account shall be debited and Account 4510,
Capital Stock, credited when a subscriber has
paid the subscription in full and stock
certificates are issued.
4540.12 4540.12 Memberships Subscribed but Unissued.
This account shall include the face amount of
memberships subscribed but not issued. This
account shall be credited at the time the
subscription is received and Account 1350.2,
Subscriptions to Memberships, debited.
This account shall be debited and Account 4540.21,
Memberships Issued, credited when a subscriber
has paid the subscription in full and the
membership certificates are issued.
4540.13 4540.13 Members' Equity Certificates Subscribed but
Unissued.
This account shall include the face amount of
members' equity certificates subscribed but not
issued. This account shall be credited at the
time the subscription is received and Account
1350.3, Subscriptions to Members' Equity
Certificates, debited.
This account shall be debited and Account 4540.22,
Members' Equity Certificates Issued, credited
when a subscriber has paid the subscription in
full and the members' equity certificates are
issued.
4540.21 4540.21 Memberships Issued.
This account shall include the face amount of
membership certificates outstanding. A subsidiary
membership certificate record shall be maintained
to reflect the detail of the balance in this
account.
4540.22 4540.22 Member's Equity Certificates Issued.
This account shall include the face amount of
members' equity certificates outstanding. A
subsidiary members' equity certificate record
shall be maintained to reflect the detail of the
balance in this account.
4540.23 4540.23 Members' Equity--Other.
This account shall include credit amounts arising
from donations, forfeitures of membership fees,
forgiveness of debts of the cooperative, and
member's equities not otherwise provided for.
4540.31 4540.31 Installments Paid on Capital Stock.
This account shall include the amount of
installments paid on capital stock on a partial
or installment payment plan by subscribers
against whom there is no legally enforceable
subscription contract, and who are entitled to be
reimbursed the principal amount of their
payments, with or without interest, in the event
they fail to complete payment for the stock and
receive certificates therefore.
[[Page 890]]
This account shall be debited and Account 4510,
Capital Stock, credited with the par value of
capital stock when the total subscription is
received and the stock certificates are issued.
Any difference between the purchase price of the
subscription and the par value of the stock shall
be credited to Account 4520, Additional Paid-In
Capital.
A subsidiary ledger shall be maintained to record
for each subscriber, the amount subscribed,
payments made, and the balance due. The balance
in this account shall be reconciled monthly with
the subscription ledger.
4540.32 4540.32 Installments Paid on Memberships Subscribed.
This account shall include the amount of
installments paid by prospective members on
membership subscriptions against whom there is no
legally enforceable subscription contract, and
who are entitled to be reimbursed for the
principal amount of their payments, with or
without interest, in the event they fail to
complete payment for the membership and receive
certificates therefor.
This account shall be debited and Account 4540.21,
Memberships Issued, credited with the face amount
of the membership when the total subscription is
received and the membership certificates are
issued.
A subsidiary ledger shall be maintained to record
for each subscriber, the amount subscribed,
payments made, and the balance due. The balance
in this account shall be reconciled monthly with
the subscription ledger.
4540.33 4540.33 Installments Paid on Equity Certificates
Subscribed
This account shall include the amount of
installments paid by prospective members on
equity certificate subscriptions against whom
there is no legally enforceable subscription
contract, and who are entitled to be reimbursed
for the principal amount of their payments, with
or without interest, in the event they fail to
complete payment for the membership and receive
equity certificates therefor.
This account shall be debited and Account 4540.22,
Members' Equity Certificates Issued, credited
with the face amount of the memberships when the
total subscription is received and the equity
certificates are issued.
A subsidiary ledger shall be maintained to record
for each subscriber, the amount subscribed,
payments made, and the balance due. The balance
in this account shall be reconciled monthly with
the subscription ledger.
4540.41 4540.41 Other Capital--Miscellaneous
This account shall include amounts which are
credits arising from capital recorded upon the
reorganization or recapitalization of the company
and temporary declines in the value of marketable
securities held for investment purposes.
4550.1 4550.1 Operating Margins
This account shall include amounts received or
receivable from the furnishing of
telecommunications service in excess of costs
incurred in the furnishing of such service. If
costs exceed revenues, the excess cost of
furnishing telecommunications service shall be
recorded as a debit to this account.
4550.2 4550.2 Nonoperating Margins
This account shall include margins arising from
transactions or activities not related to the
furnishing of telecommunications service.
Included in this account are receipts from
investments, income from investments, income from
nonoperating plant, and revenues derived from
services performed for others incident to the
company's regulated telecommunications
operations.
4550.3 4550.3 Other Margins
This account shall include patronage capital
credits assigned to the cooperative by other
nonprofit organizations prior to January 1, 1970,
which were not credited directly to an operating
expense account as a reduction in the cost of
furnishing telecommunications service.
No entries shall be made to this account unless it
is to distribute or eliminate prior balances in
conformance with the bylaws of the cooperative.
4550.4 4550.4 Patronage Capital Assignable
This account shall include all amounts transferred
from operating margins, nonoperating margins, and
other margin accounts which are assignable to
individual patrons.
4550.5 4550.5 Patrons' Capital Credits Assigned
This account shall include the amounts of
patronage capital which have been credited to
individual patrons. A subsidiary patronage
capital ledger shall be maintained so as to
reflect the amount of capital furnished by each
patron and the amount of such capital returned to
the patron.
4550.6 4550.6 Gain on the Retirement of Capital Credits
This account shall include credits resulting from
the retirement of patronage capital through
settlement of individual patrons' accounts at
less than 100 percent of the capital assigned to
the patron. The portion of patronage capital not
returned to patrons under such settlements shall
be debited to Account 4550.5, Patrons' Capital
Credits Assigned, and credited to this account.
[[Page 891]]
This account shall also include amounts
representing patronage capital authorized to be
retired to patrons who cannot be located.
Returned checks issued for retirements of
patronage capital, after an appropriate waiting
period, shall be credited to this account and a
record shall be maintained adequate to enable the
cooperative to make payment to the patron if and
when a claim has been established by the patron.
6210.11 Analog Electronic Expense
This account shall include expenses associated
with analog electronic switching.
6210.21 Digital Electronic Expense
This account shall include expenses associated
with digital electronic switching.
6210.31 Electro-Mechanical Expense
This account shall include expenses associated
with electro-mechanical switching.
6230.11 Radio Systems Expense
This account shall include expenses associated
with radio systems.
6230.21 Circuit Equipment Expense
This account shall include expenses associated
with circuit equipment.
6560.1 Depreciation Expense
This account shall include the depreciation
expense associated with telecommunications plant
in service (Accounts 2112 through 2441) and
property held for future telecommunications use
(Account 2002).
6560.2 Amortization Expense
This account shall include the amortization
expense associated with capital leases and
leasehold improvements (Accounts 2681 and 2682),
intangibles (Account 2690), and
telecommunications plant adjustments (Account
2005).
7200.1 Operating Investment Tax Credits--Net
This account shall be charged and Account 4320,
Unamortized Operating Investment Tax Credits--
Net, shall be credited with investment tax
credits generated from qualified expenditures
related to regulated operations which the company
defers rather than recognizes currently in
income.
This account shall be credited and Account 4320
shall be charged ratably with the amortization of
each year's investment tax credits included in
Account 4320 for investment services for
ratemaking purposes. Such amortization shall be
determined in relation to the period of time used
for computing book depreciation on the property
with respect to which the tax credits relate.
7200.2 Operating Federal Income Taxes
This account shall be charged and Account 4070.1,
Income Taxes Accrued--Federal, shall be credited
for the amount of Federal income tax expense
incurred in the current operating period. This
account shall also reflect subsequent adjustments
to amounts previously charged.
Taxes should be accrued each month on an estimated
basis and adjustments made as later data becomes
available.
7200.3 Operating State and Local Income Taxes
This account shall be charged and Account 4070.2,
Income Taxes Accrued--State and Local, shall be
credited for the amount of state and local income
tax expense incurred in the current operating
period. This account shall also reflect
subsequent adjustments to amounts previously
charged.
Taxes should be accrued each month on an estimated
basis and adjustments made as later data becomes
available.
7240.1 7200.41 Operating Taxes--Property
This account shall be charged and Account 4080.1,
Other Taxes Accrued--Property, shall be credited
for the amount of property tax expense incurred
in the current operating period. This account
shall also reflect subsequent adjustments to
amounts previously charged.
Taxes should be accrued each month on an estimated
basis and adjustments made as later data becomes
available.
7240.2 7200.42 Operating Taxes--Miscellaneous
This account shall be charged and Account 4080.5,
Other Taxes Accrued--Miscellaneous, shall be
credited for the amount of all other taxes
accrued during the current operating period and
not provided for elsewhere such as gross
receipts, franchise, and capital stock tax
expense incurred in the current operating period.
This account shall also reflect subsequent
adjustments to amounts previously charged.
Taxes should be accrued each month on an estimated
basis and adjustments made as later data becomes
available.
7200.5 Provision for Deferred Operating Income Taxes-Net
This account shall be charged or credited, as
appropriate, with contra entries recorded in
either Account 4100, Net Current Deferred
Operating Income Taxes, or Account 4340, Net
Noncurrent Deferred Operating Income Taxes, as
appropriate, for income tax expense that has been
deferred.
[[Page 892]]
Subsidiary record categories shall be maintained
to distinguish between property and nonproperty
related deferrals and so that the company may
separately report the amounts contained herein
that relate to Federal, state, and local income
taxes.
7300.1 Dividend Income
This account shall include dividends on
investments in common and preferred stock, which
is the property of the company, whether such
stock is owned by the company and held in its
treasury, or deposited in trust, or otherwise
controlled.
This account shall not include dividends or other
returns on securities issued or assumed by the
company and held by or for it, whether pledged as
collateral, or held in its treasury, in special
deposits, or in sinking or other funds.
Dividends on stocks of other companies held in
sinking or other funds shall be credited to
Account 7300.3, Income from Sinking and Other
Funds.
Dividends received and receivable from affiliated
companies accounted for on the equity method
shall be included in Account 1401, Investments in
Affiliated Companies, as a reduction of the
carrying value of the investments.
7300.2 Interest Income
This account shall include interest on securities,
including notes and other evidences of
indebtedness which are the property of the
company, whether such securities are owned by the
company and held in its treasury, or deposited in
trust (except in sinking or other funds) or
otherwise controlled. It shall also include
interest on bank balances, certificates of
deposits, open accounts, and other analogous
items. There shall be included in this account
for each month, the applicable amount requisite
to extinguish, during the interval between the
date of acquisition and the date of maturity, the
difference between the purchase price and the par
value of securities owned, the income from which
is includable in this account. Amounts thus
credited or charged shall be concurrently
included in the accounts in which the securities
are carried. Any such difference remaining
unextinguished at the sale or upon the maturity
and satisfaction of such securities shall be
cleared to Account 7300.6. Other Nonoperating
Income and Expense.
7300.3 Income from Sinking and Other Funds
This account shall include the income accrued on
cash, securities issued by other companies, and
other assets (not including securities issued or
assumed by the company) held in sinking and other
funds.
There shall be included in this account for each
month the applicable amount requisite to
extinguish, during the interval between the date
of acquisition and the date of maturity, the
difference between the purchase price and the par
value of securities held in sinking or other
funds. Amounts thus credited or charged shall be
concurrently included in the accounts in which
the securities are carried. Any such differences
remaining unextinguished upon the maturity and
satisfaction of such securities shall be cleared
to Account 7300.6. Other Nonoperating Income and
Expense.
7300.4 Allowance for Funds Used During Construction
This account shall be credited with such amounts
as are charged to the telecommunications plant
accounts for the purpose or recording an
allowance for funds used for construction
purposes.
7300.5 Gains or Losses from the Disposition of Certain
Property
This account shall include gains or losses
resulting from the disposition of land or
artworks; plant with traffic, and nonoperating
telecommunications plant not previously used in
the provision of telecommunication services.
7300.6 Other Nonoperating Income and Expense
This account shall include all other items of
income and gains or losses from activities not
specifically provided for elsewhere such as gains
or losses realized on the sale of temporary cash
investments or marketable equity securities; fees
collected in connection with the exchange of
coupon bonds for registered bonds; uncollectible
amounts previously credited to Accounts 7300.1,
7300.2, 7300.3, 7300.4, 7300.5, and 7300.6, gains
or losses from the extinguishment of debt made to
satisfy sinking fund requirements; gains or
losses of a nonoperating nature arising from the
exchange or translation of foreign currency; net
unrealized losses on investments in current
marketable equity securities; write-downs or
write-offs of the book costs of investments in
equity securities due to permanent impairment;
amortization of goodwill; the company's share of
earnings or losses of affiliated companies
accounted for on the equity method; and the net
balance of the revenue from and the expenses of
property, plant, and equipment, the cost of which
is includable in Account 2006, Nonoperating
Plant.
7400.1 Nonoperating Investment Tax Credits--Net
This account shall be charged and Account 4330,
Unamortized Nonoperating Investment Tax Credits--
Net, shall be credited with nonoperating
investment tax credits generated from qualified
expenditures related to other operations which
the company has elected to defer rather than
recognize currently in income.
[[Page 893]]
This account shall be credited and Account 4330,
Unamortized Nonoperating Investment Tax Credits--
Net, shall be charged with the amortization of
each year's investment tax credits included in
such accounts relating to amortization of
previously deferred investment tax credits of
other property or regulated property, the
amortization of which does not serve to reduce
costs of service (but the unamortized balance
does reduce rate base) for ratemaking purposes.
Such amortization shall be determined with
reference to the period of time used for
computing book depreciation on the property with
respect to which the tax credits relate.
7400.2 Nonoperating Federal Income Taxes
This account shall be charged and Account 4070.1,
Income Taxes Accrued--Federal, shall be credited
for the amount of nonoperating Federal income
taxes for the current period. This account shall
also reflect subsequent adjustments to amounts
previously charged.
Taxes shall be accrued each month on an estimated
basis and adjustments made as later data becomes
available. Companies that adopt the flowthrough
method of accounting for investment tax credits
shall reduce the calculated provision in this
account by the entire amount of the credit
realized during the year. Tax credits, if
normalized, shall be recorded consistent with the
accounting for investment tax credits.
No entries shall be made to this account to
reflect interperiod tax allocation.
7400.3 Nonoperating State and Local Income Taxes
This account shall be charged and Account 4070.2,
Income Taxes Accrued--State and Local, shall be
credited for the amount of nonoperating state and
local income taxes for the current period. This
account shall also reflect subsequent adjustments
to amounts previously charged.
Taxes shall be accrued each month on an estimated
basis and adjustments made as later data becomes
available.
No entries shall be made to this account to
reflect interperiod tax allocation.
7400.4 Nonoperating Other Taxes
This account shall be charged and Account 4080.5,
Other Taxes Accrued--Miscellaneous, shall be
credited for all nonoperating taxes, other than
Federal, state, and local income taxes, and
payroll related taxes for the current period.
Among the items includable in this account are
property, gross receipts, franchise and capital
stock taxes. This account shall also reflect
subsequent adjustments to amounts previously
charged.
7400.5 Provision for Deferred Nonoperating Income Taxes--
Net
This account shall be charged or credited, as
appropriate, with contra entries recorded in
either Account 4110, Net Current Deferred
Nonoperating Income Taxes, or Account 4350, Net
Noncurrent Deferred Nonoperating Income Taxes, as
appropriate, for nonoperating tax expenses that
have been deferred.
Subsidiary record categories shall be maintained
to distinguish between property and nonproperty
related deferrals and so that the company may
separately report the amounts contained herein
that relate to Federal, state, and local income
taxes.
7600.1 Extraordinary Income Credits
This account shall be credited with nontypical,
noncustomary, and infrequently recurring gains
which would significantly distort the current
year's income computed before such extraordinary
items, if reported other than as extraordinary
items. Income tax relating to the amounts
recorded in this account shall be recorded in
Account 7600.3, Current Income Tax Effect for
Extraordinary Items--Net, and Account 7600.4,
Provision for Deferred Income Tax Effect of
Extraordinary Items--Net.
7600.2 Extraordinary Income Charges
This account shall be debited with nontypical,
noncustomary, and infrequently recurring losses
which would significantly distort the current
year's income computed before such extraordinary
items, if reported other than as extraordinary
items. Income tax relating to the amounts
recorded in this account shall be recorded in
Account 7600.3, Current Income Tax Effect for
Extraordinary Items--Net, and Account 7600.4,
Provision for Deferred Income Tax Effect of
Extraordinary Items--Net.
7600.3 Current Income Tax Effect of Extraordinary Items--
Net
This account shall be charged or credited and
Account 4070.1, Income Taxes Accrued--Federal, or
Account 4070.2, Income Taxes Accrued--State and
Local, shall be credited or charged, as
appropriate, for all current income tax effects
(Federal, state, and local) of items included in
Account 7600.1, Extraordinary Income Credits, and
Account 7600.2, Extraordinary Income Charges.
7600.4 Provision for Deferred Income Tax Effect of
Extraordinary Items--Net
This account shall be charged or credited, as
appropriate, with a contra amount recorded in
Account 4350, Net Noncurrent Deferred
Nonoperating Income Taxes, or Account 4110, Net
Current Deferred Nonoperating Income Taxes, for
the income tax effects (Federal, state, and
local) of items included in Account 7600.1,
Extraordinary Income Credits, and Account 7600.2,
Extraordinary Income Charges, that have been
deferred.
------------------------------------------------------------------------
[55 FR 3388, Feb. 1, 1990; 55 FR 17352, Apr. 24, 1990, as amended at 55
FR 53488, Dec. 31, 1990]
[[Page 894]]
Sec. 1770.16 Supplementary accounts required of nonprofit
organizations.
------------------------------------------------------------------------
Class of company
---------------------
Account No. Account title
---------------------
A B
------------------------------------------------------------------------
Current Assets
1350.1 1350.1 Subscriptions to Capital Stock.
1350.2 1350.2 Subscriptions to Memberships.
1350.3 1350.3 Subscriptions to Members' Equity Certificates.
1350.4 1350.4 Other Current Assets.
Current Liabilities
4130.1 4130.1 Patronage Capital Payable.
4130.2 4130.2 Other Current Liabilities--Miscellaneous.
Long-Term Debt
4270.1 4270.1 Members' Redeemable Equity Certificates Subscribed
but Unissued.
4270.2 4270.2 Members' Redeemable Equity Certificates Issued.
4270.3 4270.3 Other Long-Term Debt.
1350.1 1350.1 Subscriptions to Capital Stock
This account shall include the balance due from
subscribers upon legally enforceable
subscriptions to capital stock.
The purchase price of subscriptions shall be
charged to this account at the time the
subscription is received. The par value of the
stock subscribed shall be credited to Account
4540.11, Capital Stock Subscribed, and the
difference between the purchase price and the par
value shall be credited to Account 4520,
Additional Paid-In Capital.
1350.2 1350.2 Subscriptions to Memberships
This account shall include the balance due on
memberships subscribed. The face amount of
memberships subscribed shall be charged to this
account at the time the subscription is received.
The offsetting credit shall be to Account
4540.12, Memberships Subscribed but Unissued.
A subscription ledger shall be maintained to
record for each subscriber, the amount
subscribed, payments made, and the balance due.
The balance in this account shall be reconciled
monthly with the subscription ledger.
1350.3 1350.3 Subscriptions to Members' Equity Certificates
This account shall include the balance due on
member's equity certificates subscribed. The face
amount of certificates subscribed shall be
charged to this account at the time the
subscription is received. The offsetting credit
shall be to Account 4540.13, Members' Equity
Certificates Subscribed but Unissued, or to
Account 4270.1, Members' Redeemable Equity
Certificates Subscribed but Unissued.
A subscription ledger shall be maintained to
record for each subscriber, the amount
subscribed, payments made, and the balance due.
The balance in this account shall be reconciled
monthly with the subscription ledger. The
subscription ledger shall be maintained in such a
manner as to separately identify redeemable and
nonredeemable certificates.
1350.4 1350.4 Other Current Assets
This account shall include the amount of all
current assets which are not includable in
Accounts 1120 through 1350.3.
4130.1 4130.1 Patronage Capital Payable
This account shall include the amount of patronage
capital which has been authorized to be returned
to patrons.
4130.2 4130.2 Other Current Liabilities--Miscellaneous
This account shall include liabilities of current
character which are not includable in Accounts
4010 through 4130.1.
4270.1 70.1 Members' Redeemable Equity Certificates Subscribed
but Unissued
This account shall include the face amount of
members' equity certificates which are redeemable
at some specified future date for which
subscriptions have been received but for which
certificates have not been issued. This account
shall be credited at the time the subscription is
received and Account 1350.3, Subscriptions to
Members' Equity Certificates, debited.
This account shall be debited and Account 4270.2,
Members' Redeemable Equity Certificates Issued,
credited when a subscriber has paid the
subscription in full and the equity certificates
are issued.
4270.2 4270.2 Members' Redeemable Equity Certificates Issued
This account shall include the face amount of
outstanding members' equity certificates which
are redeemable at some specified future date. A
subsidiary members' redeemable equity certificate
record shall be maintained to reflect the detail
of the balance in this account.
4270.3 4270.3 Other Long-Term Debt
This account shall include long-term debt not
provided for elsewhere.
------------------------------------------------------------------------
[[Page 895]]
Secs. 1770.17--1770.25 [Reserved]
Subpart C--Accounting Interpretations
Source: 61 FR 39847, July 31, 1996, unless otherwise noted.
Sec. 1770.26 General.
(a) The standard provisions of the security instruments utilized by
the Rural Utilities Service (RUS) and the Rural Telephone Bank (RTB) for
all telecommunications borrowers require borrowers to at all times keep
and safely preserve, proper books, records, and accounts in which full
and true entries will be made of all of the dealings, business, and
affairs of the borrower in accordance with the methods and principles of
accounting prescribed by the state regulatory body having jurisdiction
over the borrower and by the Federal Communications Commission (FCC) in
its Uniform System of Accounts for telecommunications companies (47 CFR
part 32), as those methods and principles of accounting are supplemented
from time to time by RUS.
(b) This subpart implements those standard provisions of the RUS and
RTB security instruments by prescribing accounting principles,
methodologies, and procedures applicable to all telecommunications
borrowers for particular situations.
Sec. 1770.27 Definitions.
As used in this part:
Borrower is an RUS telecommunications borrower.
Cushion of Credit Account is a 5 percent interest bearing account
established by RUS in which all voluntary payments or overpayments on
Rural Electric and Telephone Revolving Funds after October 1, 1987, are
deposited.
FCC is the Federal Communications Commission.
Part 32 is 47 CFR part 32, Uniform System of Accounts, issued by the
Federal Communications Commission.
RAO is the Responsible Accounting Officer of the Federal
Communications Commission.
RE Act is the Rural Electrification Act of 1936, as amended (7
U.S.C. 901 et seq.).
RETRF is the Rural Electric and Telephone Revolving Fund.
RTB is the Rural Telephone Bank.
RUS is the Rural Utilities Service, an agency of the United States
Department of Agriculture, or its predecessor or successor.
Secs. 1770.28-1770.45 [Reserved]
Appendix to Subpart C to Part 1770--Accounting Methods and Procedures
Required of All Borrowers
All borrowers shall maintain and keep their books of accounts and
all other books and records which support the entries in such books of
accounts in accordance with the accounting principles prescribed in this
appendix.
Numerical Index
Number and Title
101 Postretirement Benefits
102 Rural Telephone Bank Stock
103 Cushion of Credit Investments
104 Rural Economic Development Loan and Grant Program
105 Satellite and Cable Television Services
106 Consolidated Financial Statements
Subject Matter Index Number
C
Cable Television Services.................................. 105
Consolidated Financial Statements.......................... 106
Cushion of Credit Investments.............................. 103
E
Economic Development Loan and Grant Program................ 104
F
Financial Statements--Consolidated......................... 106
I
Investments--Cushion of Credit............................. 103
P
Postretirement Benefits.................................... 101
R
Rural Economic Development Loan and Grant Program.......... 104
Rural Telephone Bank Stock................................. 102
S
Satellite Television Services.............................. 105
Stock--Rural Telephone Bank................................ 102
Postretirement Benefits....................................
A. Statement of Financial Accounting Standards No. 106, Employers'
Accounting for Postretirement Benefits Other than Pensions (Statement
No. 106), requires reporting
[[Page 896]]
entities to accrue the expected cost of postretirement benefits during
the years the employee provides service to the entity. For purposes of
applying the provisions of Statement No. 106, members of the board of
directors are considered to be employees of the cooperative. Prior to
the issuance of Statement No. 106, most reporting entities accounted for
postretirement benefit costs on a ``pay-as-you-go'' basis; that is,
costs were recognized when paid, not when the employee provided service
to the entity in exchange for the benefits. (Statement 106 is available
from the Financial Accounting Standards Board, 401 Merritt 7, P.O. Box
5116, Norwalk, CT. 06856-5116.)
B. As defined in Statement No. 106, a postretirement benefit plan is
a deferred compensation arrangement in which an employer promises to
exchange future benefits for an employee's current services.
Postretirement benefit plans may be funded or unfunded. Postretirement
benefits include, but are not limited to, health care, life insurance,
tuition assistance, day care, legal services, and housing subsidies
provided outside of a pension plan.
C. Statement No. 106 applies to both written plans and to plans
whose existence is implied from a practice of paying postretirement
benefits. An employer's practice of providing postretirement benefits to
selected employees under individual contracts with specific terms
determined on a employee-by-employee basis does not, however, constitute
a postretirement benefit plan under the provisions of this statement.
D. Postretirement benefit plans generally fall into three
categories: single-employer defined benefit plans, multiemployer plans,
and multiple-employer plans.
E. A single-employer plan is a postretirement benefit plan that is
maintained by one employer. The term may also be applied to a plan that
is maintained by related parties such as a parent and its subsidiaries.
A multiemployer plan is a postretirement benefit plan in which two or
more unrelated employers contribute, usually pursuant to one or more
collective-bargaining agreements. One characteristic of a multiemployer
plan is that the assets contributed by one participating employer may be
used to provide benefits to employees of other participating employers
since assets contributed by an employer are not segregated in a separate
account or restricted to provide benefits only to employees of that
employer.
F. A multiple-employer plan is a postretirement benefit plan that is
maintained by more than one employer but is not a multiemployer plan. A
multiple-employer plan is generally not collectively bargained and is
intended to allow participating employers to pool their plan assets for
investment purposes and reduce the cost of plan administration. A
multiple-employer plan maintains separate accounts for each employer so
that contributions provide benefits only for employees of the
contributing employer.
G. The accounting requirements set forth in this interpretation
focus on single- and multiple-employer plans. The accounting
requirements set forth in Statement No. 106 for multiemployer plans or
defined contribution plans shall be adopted for borrowers electing those
types of plans.
H. Under the provisions of Statement No. 106, there are two
components of the postretirement benefit cost: the current period cost
and the transition obligation. The transition obligation is a one-time
accrual of the costs resulting from services already provided. Statement
No. 106 allows the transition obligation to be deferred and amortized on
a straight-line basis over the average remaining service period of the
active employees. If the average remaining service period of the active
employees is less than 20 years, a 20-year amortization period may be
used.
I. Accounting Requirements
A. All borrowers shall adopt the accrual accounting provisions and
reporting requirements as set forth in Statement No. 106. The transition
obligation and accrual of the current period cost must be based upon an
actuarial study. This study must be updated to allow the borrower to
comply with the measurement date requirements of Statement No. 106;
however, the study must, at a minimum, be updated every five years.
Borrowers may not account for postretirement benefits on a ``pay-as-you-
go'' basis.
B. Under the provisions of Statement No. 106, an entity may
recognize the transition obligation, in its entirety, when Statement No.
106 is first adopted or the entity may elect to delay the recognition of
the transition obligation. On December 26, 1991, however, the FCC issued
6 FCC Rcd 7560, which requires telecommunications carriers to recognize
the transition obligation on a delayed basis. RUS reviewed this issuance
and has determined that borrowers must comply with this ruling and
recognize the transition obligation on a delayed basis.
C. The deferral and amortization of the transition obligation on a
delayed basis is considered to be an off balance sheet item. As a
result, an accounting entry is not required at the time of adoption of
Statement No. 106. Instead, the transition obligation is recognized as a
component of postretirement benefit cost as it is amortized. The amount
of the unamortized transition obligation must be disclosed in the notes
to the financial statements.
D. In accordance with the provisions of Responsible Accounting
Officer (RAO) Letter 20, released by the FCC on April 24, 1992, Account
4310, Other Long-Term Liabilities, shall be used to record the liability
accrued for postretirement benefits. (RAO Letter 20
[[Page 897]]
is available from the Federal Communications Commission, 1919 M Street,
NW., Washington, DC 20554.) Borrowers shall credit this account for the
net periodic cost of postretirement benefits for the current year and
shall debit this account for any fund payments made during the current
year.
E. Net periodic postretirement benefit cost includes current period
service cost, interest cost, return on plan assets, amortization of
prior service cost, gains and losses, and amortization of the transition
obligation. If fund payments create a debit balance in the
postretirement benefits portion of Account 4310, the debit balance
applicable to postretirement benefits shall be reported in Account 1410,
Other Noncurrent Assets. Account 1410 shall also be used to record any
prepaid postretirement benefit cost.
F. The benefits portion of the expense matrix for the appropriate
Part 32 expense accounts shall be used to record the current period
service cost component of the current year's net periodic postretirement
benefit cost. The interest cost component, return on plan assets,
amortization of prior service cost, gains and losses, and amortization
of the transition obligation shall be charged to the benefits portion of
the expense matrix of Account 6728, Other General and Administrative.
II. Effective Date and Implementation
A. For plans outside the United States and for defined benefit plans
of employers that (a) are nonpublic enterprises and (b) sponsor defined
benefit postretirement plans with no more than 500 plan participants in
the aggregate, Statement No. 106 is effective for fiscal years beginning
after December 15, 1994. For all other plans, Statement No. 106 is
effective for fiscal years beginning after December 15, 1992.
102 Rural Telephone Bank Stock
A. Capital stock issued by the Rural Telephone Bank consists of
Class A, Class B, and Class C stock. Class A stock is issued only to the
Administrator of RUS on behalf of the United States in exchange for
capital furnished to RTB.
B. Class B stock is issued only to recipients of loans under Section
408 of the Rural Electrification Act (RE Act). Borrowers receiving loan
funds pursuant to Section 408(a) (1) or (2) of the RE Act are required
to invest 5 percent of the amount of loan funds approved in Class B
stock. No dividends are payable on Class B stock. All holders of Class B
stock are entitled to patronage refunds in the form of Class B stock
under the terms and conditions specified in the bylaws of the RTB.
C. Class C stock is available for purchase by borrowers,
corporations, and public bodies eligible to borrow under Section 408 of
the RE Act, or by organizations controlled by such borrowers,
corporations and public bodies. The payment of dividends is in
accordance with the bylaws of the RTB.
Accounting Requirements
A. The purchase of RTB stock required by the RE Act shall be debited
to Account 1402.1, Investments in Nonaffiliated Companies--Class B RTB
Stock. Patronage refunds in the form of additional shares of RTB Class B
Stock shall be debited to Account 1402.1 and credited to Account
1402.11, Investments in Nonaffiliated Companies--Class B RTB Stock--Cr.
B. Purchases of Class C RTB stock shall be debited to Account
1402.2, Investments in Nonaffiliated Companies--Class C RTB Stock. Cash
dividends received on Class C RTB stock shall be credited to Account
7310, Dividend Income.
C. Once a borrower has repaid all of its RTB loans, it may request
that its Class B stock be converted to Class C stock. When the
conversion is made, Account 1402.2 shall be debited and Account 1402.1
shall be credited for the face value of the stock converted. Account
1402.21, Investments in Nonaffiliated Companies--Class C RTB Stock--Cr.,
shall be credited and Account 1402.11 shall be debited for the face
value of the Class B stock that has been received as patronage refunds.
103 Cushion of Credit Investments
A. The RUS Cushion of Credit account is an investment account
bearing an interest rate of 5 percent. All voluntary payments or
overpayments on Rural Electric and Telephone Revolving Fund (RETRF)
loans made after October 1, 1987, are deposited into this account in the
appropriate borrower's name.
Accounting Requirements
A. The following journal entries shall be used by RUS borrowers to
record the transactions associated with cushion of credit payment:
1. Dr. 4210.18, RUS Notes--Advance Payments, Dr. Cr. 1130.1/1120.11,
Cash--General Fund. To record the cushion of credit payment.
2. Dr. 4210.18, RUS Notes--Advance Payments, Dr. Cr. 7320/7300.2,
Interest Income. To record interest earned on cushion of
credit deposits.
3. Dr. 4210.12, RUS Notes, Cr. 4210.18, RUS Notes--Advance Payments, Dr.
To apply cushion of credit payments (and interest) to the RUS
note.
104 Rural Economic Development Loan and Grant Program
A. On December 21, 1987, Section 313, Cushion of Credit Payments
Program (7 U.S.C. 901
[[Page 898]]
et seq.), was added to the RE Act. Section 313 establishes a Rural
Economic Development Subaccount and authorizes the Administrator of the
RUS to provide zero interest loans or grants to RE Act borrowers for the
purpose of promoting rural economic development and job creation
projects. Effective December 5, 1994, this authority was assigned to the
Administrator, Rural Business and Cooperative Development Service.
B. 7 CFR part 1703, Subpart B, Rural Economic Development Loan and
Grant Program, sets forth the policies and procedures relating to the
zero interest loan program and for approving and administering grants.
Accounting Requirements
A. The accounting journal entries required to record the
transactions associated with a Rural Economic Development grant are as
follows:
1. Dr. 1130.4/1120.14, Cash--General Fund--Economic Development Grant
Funds. Cr. 4210.25, RUS Notes--Economic Development Grant; Cr.
4540.41, Other Capital--Miscellaneous; or Cr. 7360/7300.6,
Other Nonoperating Income. To record grant funds disbursed by
RUS. If the grant agreement requires repayment of the funds
upon termination of the revolving loan program, Account
4210.25 shall be credited. If the grant agreement states that
there is absolutely no obligation for repayment upon
termination of the revolving loan program, the funds shall be
accounted for as a permanent infusion of capital by crediting
Account 4540.41. If, however, the grant agreement is silent as
to the final disposition of the grant funds, Account 7360/
7300.6 shall be credited.
2. Dr. 1401.1, Other Investments in Affiliated Companies--Federal
Economic Development Grant Loans or Dr. 1402.4, Other
Investments in Nonaffiliated Companies--Federal Economic
Development Grant Loans Cr. 1130.4/1120.14, Cash--General
Fund--Economic Development Grant Funds. To record a Federal
revolving loan to an economic development project.
3. Dr. 1130.1/1120.11, Cash--General Fund. Cr. 7360/7300.6, Other
Nonoperating Income. To record payment of loan servicing fees
charged to the economic development project.
4. Dr. 1130.5/1120.15, Cash--General Fund--Economic Development Non-
Federal Revolving Funds. Cr. 1401.1, Other Investments in
Affiliated Companies --Federal Economic Development Grant
Loans or Cr. 1402.4, Other Investments in Nonaffiliated
Companies--Federal Economic Development Grant Loans. To record
the repayment, by the project, of the Federal revolving loan.
5. Dr. 1401.2, Other Investments in Affiliated Companies--Non-Federal
Economic Development Grant Loans or Dr. 1402.5, Other
Investments in Nonaffiliated Companies--Non-Federal Economic
Development Grant Loans. Cr. 1130.5/1120.15, Cash--General
Fund--Economic Development Non-Federal Revolving Funds. To
record a Non-Federal revolving loan to an economic development
project.
6. Dr. 1210, Interest and Dividends Receivable Cr. 7320/7300.2, Interest
Income. To record the interest earned on a Non-Federal
revolving loan to an economic development project.
7. Dr. 1130.5/1120.15, Cash--General Fund--Economic Development Non-
Federal Revolving Funds. CR. 1401.2, Other Investments in
Affiliated Companies--Non-Federal Economic Development Grant
Loans or Cr. 1402.5, Other Investments in Nonaffiliated
Companies--Non-Federal Economic Development Grant Loans. To
record the repayment, by the project, of the Non-Federal
revolving loan.
B. The accounting journal entries required to record the
transactions associated with a Rural Economic Development loan are as
follows:
1. Dr. 4210.26, Economic Development Notes--Unadvanced, Fr. Cr. 4210.25,
Economic Development Notes. To record the contractual
obligation to RUS for the Economic Development Notes.
2. Dr. 1130.6/1120.16, Cash--General Fund--Economic Development Loan
Funds Cr. 4210.26, Economic Development Notes--Unadvanced, Dr.
To record the receipt of the economic development loan funds.
3. Dr. 1401.3, Other Investments in Affiliated Companies--Federal
Econmic Development Loans or Dr. 1402.6, Other Investments in
Nonaffilitated Companies--Federal Economic Development Loans.
Cr. 1130.6/1120.16, Cash--General Fund--Ecoomice Development
Loan Funds. To record the discursement of economci development
loand funds to the project.
4. Dr. 1130.1/1120.11, Cash--General Fund. Cr. 7360/7300.6, Other
Nonoperating Income. To record payment of loan servicing fees
charged to the economic development project.
5. Dr. 1210, Interest and Dividends Receivable Cr. 7320/7300.2, Interest
Income. To record the interest earned on the investment of
rural economic development loan funds.
6. Dr. 7370, Special Charges. Cr. 1130.1, Cash--General Funds. To record
the payment of interest earned in excess of $500 on the
investment of rural economic development loan funds. Note:
Interest earned in excess of $500 must be used for the rural
economic development project for which the loan funds were
received or returned to RUS.
[[Page 899]]
7. Dr. 1130.6/1120.16, Cash--General Fund--Economic Development Loan
Funds. Cr. 1401.3, Other Investments in Affiliated Companies--
Federal Economic Development Loans or Cr. 1402.6, Other
Investments in Nonaffiliated Companies--Federal Economic
Development Loans. To record repayment, by the project, of the
economic development loan.
8. Dr. 4210.25, Economic Development Notes. Cr. 1130.6/1120.16, Cash--
General Fund--Economic Development Loan Funds. To record the
repayment, to RUS, of the economic development loan funds.
105 Satellite and Cable Television Services
A. Many RUS borrowers have become involved in providing either
satellite or cable television services to their members and others
through subsidiaries, joint ventures, or as segments of their current
operations.
Accounting Requirements
A. This section outlines the accounting to be followed when
recording transactions involving satellite or cable television services.
1. Separate Subsidiary. If a borrower provides satellite or cable
television services through a separate subsidiary, the investment in the
subsidiary shall be debited to Account 1401, Investments in Affiliated
Companies. The net income or loss of the subsidiary shall be debited or
credited to Account 1401, as appropriate, with an offsetting entry to
Account 7360, Other Nonoperating Income.
2. Joint Venture. i. If a borrower provides satellite or cable
television services through a joint venture, the borrower's ownership
interest dictates the accounting methodology. If the borrower has less
than a 20 percent ownership interest in the joint venture, the
investment is accounted for under the cost method of accounting in
Account 1402, Investments in Nonaffiliated Companies. Under the cost
method, the joint venture's net income or loss is not recorded in the
borrower's records. Income is recognized only to the extent of any
dividends declared by the joint venture. When a dividend is declared,
the borrower shall debit Account 1210, Interest and Dividends
Receivable, and credit Account 7310, Dividend Income. When the dividend
is received in cash, the borrower shall debit Account 1130.1, Cash--
General Fund, and credit Account 1210.
ii. If a borrower has a 20-percent or more ownership interest in the
joint venture, the investment is accounted for under the equity method
in Account 1401, Investments in Affiliated Companies. The borrower's
proportionate share of the joint venture's net income or loss shall be
debited or credited to Account 1401, as appropriate, with an offsetting
entry to Account 7360, Other Nonoperating Income.
3. Segment of Current Operations. i. If a borrower provides
satellite or cable television service as a segment of its current
operations and there are no shared assets between this activity and the
regulated telecommunications activities of the borrower, the investment
shall be debited to Account 1406.1, Nonregulated Investments--Permanent
Investment. The net income or loss from providing such service shall be
debited or credited, as appropriate, to Account 1406.3, Nonregulated
Investments--Current Net Income, with an offsetting entry to Account
7990, Nonregulated Net Income.
ii. If a borrower provides satellite or cable television service as
a segment of current operations and shares assets between this activity
and the regulated telecommunications activities of the borrower, the
franchise and application fees shall be debited to a subaccount of
Account 2690, Intangibles. The cost of the satellite or cable television
equipment shall be debited to a subaccount of Account 2231, Radio
Systems. Revenues earned from providing satellite or cable service shall
be credited to Account 5280, Nonregulated Operating Revenue, while the
associated expenses shall be recorded in a subaccount of the applicable
regulated expense accounts.
4. Sale and Installation of Satellite or Cable Television Equipment.
i. If a borrower sells or installs satellite or cable television
equipment as a segment of its current operations and there are no shared
assets between this activity and the regulated telecommunications
activities of the borrower, the purchase of the equipment shall be
debited to Account 1406.1, Nonregulated Investments--Permanent
Investment. The net income or loss from providing such services shall be
debited or credited, as appropriate, to Account 1406.3, Nonregulated
Investments--Current Net Income, with an offsetting entry to Account
7990, Nonregulated Net Income.
ii. If a borrower sells or installs satellite or cable television
equipment as a segment of its current operations and shares assets
between this activity and the regulated telecommunications activities of
the borrower, the purchase of the equipment shall be debited to Account
1220.2, Property Held for Sale or Lease. Revenues received for the sale
or installation of the equipment shall be credited to Account 5280,
Nonregulated Operating Revenue, while the associated expenses shall be
debited to a subaccount of the applicable regulated expense accounts.
106 Consolidated Financial Statements
A. In October 1987, FASB issued Statement of Financial Accounting
Standards No. 94, Consolidation of All Majority-Owned Subsidiaries
(Statement No. 94). (Statement 94 is available from the Financial
Accounting Standards Board, 401 Merritt 7, P.O. Box 5116,
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Norwalk, CT 06856-5116.) For purposes of reporting to RUS, Statement No.
94 shall be applied as follows:
1. A borrower that is a subsidiary of another entity shall prepare
and submit to RUS separate financial statements even though this
financial information is presented in the parent's consolidated
statements.
2. In those cases in which a borrower has a majority-ownership in a
subsidiary, the borrower shall prepare consolidated financial statements
in accordance with the requirements of Statement No. 94. These
consolidated statements must also include supplementary schedules
presenting a Balance Sheet and Income Statement for each majority-owned
subsidiary included in the consolidated statements.
B. Although Statement No. 94 requires the consolidation of majority-
owned subsidiaries, the RUS Form 479, Financial and Statistical Report
for Telecommunications Borrowers, shall be prepared on an unconsolidated
basis by all borrowers.