INSTRUCTIONS FOR BALANCE-SHEET

ACCOUNTS

§ 31.1-10 Purpose of balance sheet

accounts.

The balance sheet accounts (100:1 to 181, inclusive) are designed to show the assets, liabilities, capital stock and retained earnings or deficit of the company.

[34 F.R. 9862, June 26, 1969]

§ 31.1-11 Current assets.

(a) In the group of accounts designated as current assets (accounts 113123, inclusive) there shall not be included any item the book cost of which is not reasonably assured, except that items of current character but of doubtful value may be written down and for record purposes carried in these accounts at a nominal amount. If not thus written down, they shall be included in account 139, "Other deferred charges," at book cost or nominal amount, or written off, as may be appropriate, but they shall not be so included at book cost unless there is a reasonable prospect of future substantial value.

(b) The amount of any current asset written off shall be included in account 323, "Miscellaneous income charges," account 530, "Uncollectible operating revenues-Dr.," account.

or other appropriate

[28 F.R. 13039, Dec. 5, 1963, as amended at 34 F.R. 9862, June 26, 1969]

§ 31.1-12 Book cost of securities owned.

(a) Securities issued by others shall be recorded in these accounts at the time of purchase at the current money value of the consideration given therefor by the company. (Note also paragraph (d) of account 313 and paragraph (b) of account 314.)

(b) The company is allowed the option of writing down such book cost in recognition of the decline in value of the securities. It shall write down to a nominal amount or write off the book cost if there is no reasonable prospect of future substantial value. The amount of such adjustment shall be charged to account 370, "Extraordinary income charges."

[28 F.R. 13039, Dec. 5, 1963, as amended at 34 F.R. 9862, June 26, 1969]

§ 31.1-13 Company securities owned.

(a) The book or face amount of nominally issued and nominally outstanding stocks and other securities issued or as

sumed by the company shall be excluded from the balance sheet and shown in a footnote thereto.

(b) The necessary adjustments for the difference between (1) the face amount of bonds and other evidences of debt that have been reacquired and (2) the amounts actually paid therefor plus the expenses incurred in connection with their reacquisition shall be included, when a credit, in account 360, "Extraordinary income credits," and when a debit in account 370, "Extraordinary income charges." (See also § 31.1-15 (f).) In the case of refinancing, amounts that ordinarily would thus be credited to account 360 or charged to account 370 may be made subject to amortization upon specific approval by the Commission in each instance.

(c) The necessary adjustments for the difference between (1) the face amount of bonds and other evidences of debt previously reacquired that are resold and (2) the amounts actually received therefor less the expense incurred in connection with their resale shall be included, when a credit, in account 360, "Extraordinary income credits," and when a debit, in account 370, "Extraordinary income charges."

(d) The necessary adjustments for the difference between (1) the book amount of capital stock that has been reacquired and (2) the amount actually paid for it plus the amount of expense incurred in connection with its reacquisition shall be included in account 179, "Other capital," except that the excess of a debit adjustment over the balance in account 179, applicable to capital stock of the same class, shall be charged to account 413, "Miscellaneous debits to retained earnings": And, provided further, That a credit adjustment shall be included in account 402, "Miscellaneous credits to retained earnings," to the extent that any previous charges to retained earnings on account of transactions in the same class of stock have not been offset by previous credits to retained earnings on account of such transactions.

(e) The necessary adjustments for the difference between (1) the book amount of capital stock that previously has been reacquired and is resold, and (2) the amount actually received for it less the amounts of expense incurred in connection with its resale shall be included in account 179, "Other capital,” except that the excess of a debit adjustment over the balance in account 179 applicable to

31.8

Engineering expense.

House service expense.

RETIREMENT UNITS

List of retirement units.

Appendix A: Interpretations of the Accounting Requirements Contained in this System of Accounts.

Appendix B: Standard Practices for the Establishment and Maintenance of Continuing Property Records by Telephone Companies Having Investment in Account 100:1, "Telephone Plant in Service," in Excess of $40,000,000.

AUTHORITY: The provisions of this Part 31 issued under sec. 4, 48 Stat. 1066, as amended; 47 U.S.C. 154. Interpret or apply secs. 219, 220, 48 Stat. 1077 as amended, 1078; 47 U.S.C. 219, 220.

SOURCE: The provisions of this Part 31 appear at 28 F.R. 13039, Dec. 5, 1963, unless otherwise noted.

NOTE: Explanation of numbering in this part.

The several section numbers indicate the relationship among the instructions and accounts of Part 31, as follows:

Examples:

(1) Sec. 31.01-1 (2) Sec. 31.1-10 (3) Sec. 31.100:1 (4) Sec. 31.201

EXPLANATION:

The number "31" (appearing to the left of the decimal point) indicates the part number.

The dash "-" indicates an instruction that is applicable to several accounts. See examples (1) and (2).

With the exception of the instructions that are applicable to more than one group of accounts (which are indicated by a zero following the decimal point), the number between the decimal point and the dash indicates the group of accounts to which the instruction is applicable. A mnemonic method of indication is used consisting of the first digit of the first account in the group. Thus, in the foregoing examples:

Sec. 31.01-1 refers to several groups of accounts;

Sec. 31.1-10 refers to the balance-sheet accounts (beginning with account 100).

When no dash appears in the section number, the number to the right of the decimal point is an account number. See examples (3) and (4).

Cross references to accounts are made by citing the account numbers, e.g., account 323 instead of the corresponding section number (§ 31.323).

§ 31.01-1

GENERAL INSTRUCTIONS

Classification of companies.

(a) For accounting purposes, telephone companies are divided into four classes as follows:

Class A. Companies having annual operating revenues exceeding $250,000.

Class B. Companies having annual operating revenues exceeding $100,000 but not more than $250,000.

Class C. Companies having annual operating revenues exceeding $50,000 but not more than $100,000.

Class D. Companies having annual operating revenues not exceeding $50,000.

(b) Class A companies shall keep all the accounts of this system of accounts, which are applicable to their affairs.

(c) Class B companies shall keep all the accounts of this system of accounts, which are applicable to their affairs, except that their accounts for operating revenues and operating expenses may be kept under the accounts of the condensed classification provided for herein. (See §§ 31.5-53 and 31.6-65.)

(d) Class C companies shall keep all the accounts prescribed by Part 33 of this chapter which are applicable to their affairs.

(e) It is recommended but not required that Class D companies keep the accounts prescribed in Part 33 of this chapter.

(f) Companies that desire more detailed accounting may adopt the accounts prescribed for a higher classification of telephone companies: Provided, That the Commission is notified promptly of such action. Such companies are not required to comply with the more detailed reporting requirements contained in the rules respecting such higher classification.

(g) The initial classification of a company shall be determined by its lowest annual operating revenues for the three immediately preceding years. Subsequent changes in classification shall be made when the annual operating revenues show a greater or lesser classification for three consecutive years. Companies becoming subject to the jurisdiction of the Commission and not having revenue data for the three immediately preceding years shall estimate the amount of their annual revenues and adopt the scheme of accounts appropriate for the amount of such estimated revenues.

(a) The company's records shall be kept with sufficient particularity to show fully the facts pertaining to all entries in these accounts. Where the full information is not recorded in the general books the entries therein shall be supported by other records in which the full details shall be shown and the general book entries shall contain sufficient reference to the detail records to permit ready identification. The detail records shall be filed in such manner as to be readily accessible for examination by representatives of this Commission.

(b) Attention is directed to the following extract from section 220 of the Communications Act of 1934 (48 Stat. 1078; 47 U. S. C. 220):

(e) Any person who shall willfully make any false entry in the accounts of any book of accounts or in any record or memoranda kept by any such carrier, or who shall willfully destroy, mutilate, alter, or by any other means or device falsify any such account, record, or memoranda, or who shall willfully neglect or fail to make full, true, and correct entries in such accounts, records, or memoranda of all facts and transactions appertaining to the business of the carrier, shall be deemed guilty of a misdemeanor, and shall be subject, upon conviction, to a fine of not less than $1,000 nor more than $5,000 or imprisonment for a term of not less than one year nor more than three years, or both such fine and imprisonment: Provided, That the Commission may in its discretion issue orders specifying such operating, accounting, or financial papers, records, books, blanks, or documents which may, after a reasonable time, be destroyed, and prescribing the length of time such books, papers, or documents shall be preserved.

CROSS REFERENCE: For regulations governing the periods for which records are to be retained, see the pertinent part of this chapter which relates to preservation of records.

(c) All charges to the accounts prescribed in this system of accounts for telephone plant, income, operating revenues, and operating expenses shall be just and reasonable and any payments by the company in excess of such just and reasonable charges shall be included in account 323, "Miscellaneous income charges."

(d) Accounts which are clearly summaries of other accounts or subaccounts provided for herein are not required to be kept in the company's books. All accounts kept shall conform in numbers