EXTRAORDINARY ITEMS AND ACCOUNTING 570 Extraordinary items (net). 590 Income taxes on extraordinary items. 591 Provision for deferred taxes extraordinary items. 592 Cumulative effect of changes in accounting principles. 599 Form of income statement. Clearing Account 601 Material and stores expense. AUTHORITY: Part 1209 issued under sec. 313, 54 Stat. 944, as amended; 49 U.S.C. 913. SOURCE: The provisions of this Part 1209 appear at 32 FR 20362, Dec. 20, 1967, unless otherwise noted. Introduction (1) Regulations prescribed. Carriers by water operating on inland and coastal waterways, and every lessor thereof subject to provisions of the Interstate Commerce Act, shall comply with regulations in this part which, as presented hereinafter, include all modifications thereof effective June 30, 1959, and prior thereto. (ii) Classification of carriers. (a) For purposes of the accounting and reporting regulations, carriers are grouped into the following three classes: Class A. Carriers having annual carrier operating revenues of $500,000 or more. Class B. Carriers having annual carrier operating revenues of $100,000 but less than $500,000. Class C. Carriers having annual carrier operating revenues of less than $100,000. (b) (1) The class to which any carrier belongs shall be determined by annual carrier operating revenue. If at the end of any calendar year such annual carrier operating revenue is greater than the maximum for the class in which the carrier is classified, the carrier shall adopt the accounting and reporting requirements of the higher class in which it falls. For Class B carriers adoption of Class A classification shall be effective as of January 1 of the following year. For Class C carriers adoption of a higher classification shall be effective as of January 1 of the second succeeding year. (2) If at the end of any calendar year a carrier's annual carrier operating revenue is less than the minimum of the class in which the carrier is classified, and has been for three consecutive years, the carrier shall adopt the accounting requirements of the lower class in which the current year revenue falls. Such adoption shall be effective as of January 1 of the following year. (3) Carriers shall notify the Commission of any change in classification by completing and returning the Carrier Classification Form with the Quarterly Financial Report for the third calendar quarter, if appropriate, or by October 31. (4) Any carrier which begins new operations (obtains operating authority not previously held) or extends its existing authority (obtains additional operating rights) shall be classified in accordance with a reasonable estimate of its annual carrier operating revenues. (5) When a business combination occurs, such as a merger, reorganization, or consolidation, the surviving carrier shall be reclassified effective January 1 of the next calendar year on the basis of the combined revenue for the year when the combination occurred. (6) In unusual circumstances, such as partial liquidation, and curtailment or elimination of contracted services, where the classification regulations will unduly burden the carrier, the carrier may request the Commission for an exception to the regulations. Such request shall be in writing specifying the conditions justifying an exception. (c) Class A companies shall keep all of the accounts of this system of accounts which are applicable to their operations. Class B companies shall keep all of the accounts of this system of accounts which are applicable to their operations, except that their accounts for operating revenues and operating expenses may be kept under the accounts of the condensed classification provided herein. [40 FR 51641, Nov. 6, 1975] (d) No carrier shall destroy any books, records, memoranda, etc., which support entries to its accounts unless destruction is permitted by the regulations governing preservation of records, Part 1220 of this chapter. (e) All accounts kept shall conform in numbers and titles to those prescribed herein, except that: (1) Carriers may subdivide the accounts provided such subdivisions does not impair the integrity of the accounts prescribed. (2) The titles of all subdivisions or subaccounts shall refer by number or title to the accounts of which they are subdivisions. (3) When subaccounts are thus kept. it is not required that the main accounts of which they are subdivisions shall also be kept in the carrier's books. (f) Clearing accounts may be kept when necessary or useful in making the proper distribution of items to the appropriate primary accounts. (g) The accounts for each month shall be recorded currently so that all transactions applicable to each month, as nearly as may be ascertained, shall be entered in the books of the carrier. Each carrier shall close its books as of the end of the calendar year. (49 U.S.C. 5b, 12, 20, 304, 320, 904, 917, 1003, 1012) [32 FR 20362, Dec. 20, 1967, as amended at 40 FR 50385, Oct. 29, 1975] When used in this system of accounts the term: (a) "Actually issued" as applied to certificates of capital stock or evidences of funded debt issued or assumed by the carrier means those which have been sold to bona fide purchasers for a valuable consideration (including those issued in exchange for other securities or other property) under the condition that the purchaser secured them free from all control by the issuing carrier; also securities issued as dividends on stock. (b) "Actually outstanding" as applied to certificates of capital stock or evidences of funded debt issued or assumed by the carrier means those which have been "actually issued" and are neither retired nor held by or for the carrier. (c) "Additions" are structures, facilities, or equipment added to transportation property in existence and not replacing property retired. (d) "Affiliated companies" means companies or persons that directly or in directly through one or more intermediaries, control, or are controlled by, or are under common control with, the accounting carrier. NOTE: Where reference is made to control (in referring to a relationship between any person or persons and another person or persons), such reference shall be construed to include actual as well as legal control, whether maintained or exercised through or by reason of the method of or circumstances surrounding organization or operation, through or by common directors, officers, or stockholders, a voting trust or trusts, a holding or investment company or companies, or through or by any other direct or indirect means; and to include the power to exercise control. (e) "Book cost" means the amount at which assets are recorded in the accounts of the carrier without deduction of any related reserves or other items. If the book cost of units and minor items of property retired cannot be definitely determined from the carrier's records, the book cost of such items shall be estimated. (f) "Book liability” means the amount at which liabilities (including securities issued or assumed by the carrier) are recorded in the accounts of the carrier. (g) "Carrier" when not otherwise indicated in the context, means the accounting carrier. (h) "Cost of removal" means the cost of demolishing, or otherwise disposing of transportation property, and recovering the salvage. (1) "Component rates" as applied to depreciation accounting means the rates applied to the various subclasses of property within a primary account in arriving at the depreciation charge. (j) "Debt expense" as applied to funded debt means all expense in connection with the issue and sale of evidences of debt, such as fees for drafting mortgages and trust deeds; fees and taxes for issuing or recording evidences of debt; cost of engraving and printing bonds, certificates of indebtedness, and other commercial paper having a life of more than one year; fees paid trustees, specific costs of obtaining governmental authority; fees for legal services; fees and commissions paid underwriters, brokers, and salesmen for marketing such evidences of debt; fees and expenses of listing on exchanges, and other like costs. (k) "Delayed items" means items relating to transactions which occurred before the current calendar year, but which were not recorded in the books of account in such prior years. It includes adjustments of errors in the operating revenue, operating expense, or income accounts of prior years. See instructions 3 and 4. (1) "Depreciable accounts" are those in which is recorded the cost of property for which depreciation accounting is required. (m) "Depreciation” means the loss in service value not restored by current maintenance, and incurred in connection with the consumption or prospective retirement of physical property in the course of service from causes against which the carrier is not protected by insurance, which are known to be in current operation, and whose effect can be forecast with a reasonable approach to accuracy. (n) "Discount" as applied to securities issued or assumed by the carrier means the excess of the par or face valve of the securities, plus interest or dividends accrued at the date of the sale, over the current money value of the consideration received at their sale. (0) "Fixed improvements" means buildings, wharves, docks, and other structures attached to the land, including fixtures, machinery, and other appurtenances. (p) "Investment advances" means advances, represented by notes or by book accounts, which it is mutually agreed or intended between the creditor and the debtor shall be settled by the issuance of capital stock or funded debt or carried with no intention of making settlement. (q) "Minor items" means any part of physical property which is not designated as a unit of property. (r) "Nominally issued" as applied to certificates of capital stock or evidences of funded debt issued or assumed by the carrier means those which have been signed, certified, or otherwise executed and placed with the proper officer for sale, or pledged or otherwise placed in some special fund of the carrier, but which have not been sold. (s) "Nominally outstanding" as applied to certificates of capital stock or evidences of funded debt issued or assumed by the carrier means those which after being actually issued have been reacquired by or for the carrier under such circumstances as required them to be considered as held alive and not retired. (t) "Nonaffiliated companies" means all companies other than those defined as affiliated. |