and open accounts, shall be included in accounts 120:1 or 120:2, as appropriate. § 31.122 Material and supplies.

(a) This account shall include the cost of unapplied material and supplies held in stock (see also Note E to this account), including plant supplies, tools, fuel, stationery, directory paper stock, and other supplies; and material and articles of the company in process of manufacture for supply stock.

(b) Transportation charges and sales and use taxes, so far as practicable, shall be included as a part of the cost of the particular material to which they relate.

(c) So far as practicable, cash and other discounts on material shall be deducted in determining the cost of the particular material to which they relate or credited to the account to which the material is charged. When not so deductible, they shall be credited to account 704, "Supply expense."

(d) Material recovered in connection with construction, maintenance, or retirement of property shall be charged to this account as follows:

(1) Reusable material comprising items that, when installed or in service, were retirement units or principal components of assemblies that were retirement units, shall be included in this account at original cost, estimated if not known. (Note also § 31.2-25 (e).) Reusable material comprising minor items that, when installed or in service, were neither retirement units nor principal components of assemblies that were retirement units, shall be included in this account at current prices new. The cost of repairing reusable material shall be charged to the appropriate account in operating expenses.

(2) 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, so far as practicable, shall be adjusted in the accounts credited when the material was taken up in this account.

NOTE A: This account shall not include amounts representing the cost of material or articles, title to which is not vested in the company.

NOTE B: Interest paid on material bills, the payments of which are delayed, shall be charged to account 336.

NOTE C: Inventories of material and supplies shall be taken during each calendar year and the necessary adjustment to bring this account into harmony with the actual inventory shall be made. In effecting this adjustment, differences which may practically be assigned to important classes of material shall be equitably adjusted among the accounts to which the classes of material are ordinarily chargeable. Other differences shall be equitably apportioned among the primary accounts to which material has been charged since the last inventory or included in account 704. The company is permitted to equalize over the period between inventories, through debits or credits to account 704 and concurrent credits or debits to account 122, the estimated amount, based on the company's past experience, of the overage or shortage which will occur at the subsequent inventory. Determined differences between the amount of the provision thus made and the actual inventory overage or shortage shall be cleared as provided for in the second and third sentences of this note.

NOTE D: If, for convenience in accounting and economy in handling material and supplies for nontelephone operations, their cost is included in this account, the company's records shall be maintained so that the cost of such material and supplies so carried can be determined.

NOTE E: This account shall not include items in stock which are includible in account 231, "Station apparatus." Materials in stock that are normally used for station apparatus repair purposes shall be included in account 605, "Repairs of station equipment," if company-held, and in this account if in stocks held by others.

§ 31.123 Other current assets.

This account shall include the amount of all current assets which are not includible in accounts 113 to 122, inclusive, such as unmatured rents receivable. (Note also § 31.1-11.)

§ 31.126

OTHER ASSETS

Subscriptions to capital stock. (a) This account shall include the balance owing from subscribers upon legally enforceable subscriptions to capital stock.

(b) The purchase price shall be debited to this account at the time the subscription is received. Concurrently there shall be credited to account 153:1, "Capital stock subscribed," the book amount of the stock subscribed. The difference between these amounts shall be debited or credited, as appropriate. to account 134:1, "Discount on capital stock," or account 152, "Premium on capital stock."

(c) Payments received from subscribers shall be credited to this account.

NOTE: The records supporting the entries to this account shall be kept so that the company can furnish the name and address of each subscriber, the amount and kind of capital stock subscribed, the date of subscription, the date that each payment is due and the date that each is paid, the nature of each payment (whether cash or other consideration), and any other information that is necessary to make the history of the subscription complete.

§ 31.127 Subscriptions to funded debt.

(a) This account shall include the balance owing from subscribers upon legally enforceable subscriptions to funded debt.

(b) The purchase price shall be debited to this account at the time the subscription is received. Concurrently there shall be credited to account 154:2, "Funded debt subscribed," the face amount of the funded debt subscribed. The difference between these amounts shall be debited or credited, as appropriate, to account 135, "Discount on long-term debt," or account 168, "Premium on long-term debt."

(c) Payments received from subscribers shall be credited to this account.

NOTE: The records supporting the entries to this account shall be kept so that the company can furnish the name and address of each subscriber, the amount and kind of funded debt subscribed, the date of subscription, the date that each payment is due and the date that each is paid, the nature of each payment (whether cash or other consideration), and any other information that is necessary to make the history of the subscription complete.

PREPAID ACCOUNTS AND DEFERRED CHARGES

§ 31.129 Prepaid rents.

This account shall include the amounts of rents paid in advance, except minor amounts which may be charged direct to the final accounts. As the term expires for which the rents are paid, this account shall be credited at monthly intervals and the appropriate account charged. (Note also §§ 31.2-22(b) (9) and 31.2-23(a), accounts 303, 315, and 671, and the clearing accounts.)

This account shall include the amount of insurance premiums paid in advance, except premiums chargeable to the telephone plant accounts and minor amounts which may be charged direct to the final accounts. As the term expires for which the premiums are paid, this account shall be credited at monthly intervals and the appropriate account charged.

§ 31.132 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 direct to account 649, "Directory expenses." Amounts carried in this account shall be cleared to account 649 by monthly charges of such amounts as represent the portion of the expense that is applicable to the respective months. (Note also account 649.)

§ 31.133 Other prepayments.

This account shall include prepayments other than those includible in accounts 129 to 132, inclusive, except minor amounts which may be charged direct to the final accounts. As the term expires for which the payments apply, this account shall be credited at monthly intervals and the appropriate account charged.

§ 31.134:1 Discount on capital stock.

This account shall include the total of debit balances in the discount and premium accounts, for all classes of capital stock having debit balances in these accounts. (Note § 31.1-14.)

§ 31.134:2 Capital stock expense.

(a) This account shall include all commissions and expenses incurred in connection with the issuance or sale of capital stock, including additional capital stock of a certain class or series as well as first issues. (Note § 31.1-13 (d), (e), and (f).)

(b) When any issue of capital stock, or a portion thereof, is reacquired, there shall be credited to this account and charged to account 179, "Other capital surplus," the amount herein with respect to such stock, except that any excess of such amount over the balance in account 179 applicable to capital stock of the same class, shall be charged to earned surplus.

(c) The company may amortize or write off the balance carried in this account by credits hereto and concurrent charges to account 179, "Other capital surplus," or to earned surplus in case the amount exceeds the balance in account 179 applicable to the same class of stock.

(d) Separate subaccounts shall be provided hereunder for each class and series of capital stock.

§ 31.135 Discount on long-term debt.

This account shall include the total of debit balances in the discount, premium, and debt expense accounts, for all classes of long-term debt having debit balances in these accounts. (Note 31.1-15.)

This account shall include the amount of cash, the book cost of securities of other companies, and the book or face amount of nominally issued and nominally outstanding securities issued or assumed by the company, and other assets held by trustees or managers of employees' pension funds, savings funds, relief, hospital, and other association funds (whether contributed by the company, by employees, or by others), when such trustees or managers are acting for the company in the administration of such funds. (Note also §§ 31.1-12, 31.113, and 31.3-31.)

NOTE: This account shall not include funds held by trustees when such funds are irrevocably devoted to pension purposes.

§ 31.137 Insurance and other funds.

This account shall include the amount of cash, the book cost of securities of other companies, and the book or face amount of nominally issued and nominally outstanding securities issued or assumed by the company, and other assets held by trustees or managers (including workmen's compensation commissions) of insurance and other funds which have been specifically set aside or invested for specific purposes not provided for elsewhere. A separate account shall be kept for each fund under titles which will designate the obligation in support of which the fund is created. (Note also §§ 31.112, 31.1-13, and 31.3-31.)

§ 31.138 Extraordinary maintenance

and retirements.

(a) This account shall include the unprovided-for loss in service value of telephone plant retired in accordance

(b) This account shall include also the cost of extensive replacements of station apparatus, inside wires, and drop and block wires, in accordance with the provisions of § 31.6-64. (Note also account 605.)

(c) Charges provided in paragraphs (a) and (b) of this section shall be included in this account only after permission of this Commission has been obtained. The company's application to this Commission for such permission shall give full particulars concerning the property retired or of the extensive replacements of apparatus or wires, the amount chargeable to operating expenses, and the period over which in its judgment the amount of such charges should be distributed.

§ 31.139

Other deferred charges.

This account shall include all deferred charges, not provided for elsewhere, such as unaudited amounts and other debit balances in suspense that cannot be cleared and disposed of until additional information is received; debit balances in clearing accounts; the amount, pending determination of loss, of funds on deposit with banks which have failed; assets of current character but of doubtful value (note also § 31.1-11); revenue, expense, and income items held in suspense (note also § 31.01-6); amounts paid for options pending final disposition; the cost of preliminary surveys, plans, investigations, etc., made for determining the feasibility of projects under contemplation. This account shall include also the cost of valuations, inventories, and appraisals taken in connection with the contemplated acquisition or sale of property. If the property is subsequently acquired, the preliminary costs shall be accounted for as a part of the cost of acquisition, or if it is sold, such costs shall be deducted from the sale price in accounting for the property sold. If contemplated projects are carried out, the preliminary costs shall be included in the cost of the projects; if the contemplated projects are abandoned, such costs (including options paid, if any) shall be charged to account 413, "Miscellaneous debits to earned surplus."

(c) The amounts included herein shall be further divided so as to show the book amount of stocks with par value and stocks without par value, classified according to preferences in distribution of dividends or assets, difference in voting rights, and difference in conditions under which they may be retired.

(d) This account shall be charged with the book amount of any stock retired at the time of retirement.

NOTE A: When a general levy or assessment is made against holders of par stock requiring the payment of any sum in addition to the consideration agreed upon at the time of the Bale, the amount collected upon such levy or assessment shall be credited to the discount or premium account for the class of stock on which the assessment is made. If such a levy or assessment is made against the holders of nonpar stock, the amount collected shall be added to the book amount carried in this account for such stock.

NOTE B: No entries shall be made in this account for stock certificates before the certificates have been lawfully authorized and authenticated.

§ 31.151 Stock liability for conversion.

This account shall include the company's liability under agreements to exchange its capital stock for the outstanding securities of other companies which have not been surrendered for exchange.

NOTE: When prior to their actual converon the securities outstanding have been given all rights and privileges of capital stock of the company's own issue, such securities shall be included in account 150.

31.152 Premium on capital stock.

This account shall include the total of credit balances in the discount and premium accounts, for all classes of capital stock having credit balances in these accounts. (Note § 31.1-14.)

§ 31.153:1 Capital stock subscribed.

(a) This account shall include the book amount 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. A separate subaccount shall be maintained for each class of capital stock.

(b) This account shall be debited and account 150, "Capital stock," credited when a subscriber has paid his subscription in full and stock certificates are issued representing the shares subscribed.

(c) Accrued dividends, if any, on the stock certificates issued to subscribers shall be accounted for through the appropriate dividend account. (Note account 126.)

§ 31.153:2 Installments paid on capital

stock.

(a) 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 for the principal amount of their payments, with or without interest, in the event they fail to complete payments for the stock and reIceive certificates therefor.

(b) As the total amount of each subscription is received and stock certifcates are issued this account shall be cleared; the book amount of the certificates shall be included in account 150, "Capital stock," and any discount or premium involved shall be included in the appropriate discount or premium account.

NOTE: The records supporting the entries to this account shall be kept so that the company can furnish the name and address of each subscriber, the amount and kind of capital stock subscribed, the date of subscription, the date that each payment is due and the date that each is paid, the nature of each payment (whether cash or other consideration), and any other information that is necessary to make the history of the subscription complete.

LONG-TERM DEBT

§ 31.154:1 Funded debt.

(a) This account shall include the total face amount of unmatured debt, maturing more than 1 year from 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. (Note §§ 31.1-13 and 31.1-15. and also account 154:2.)

(b) This account shall be kept so as to show the face amount of: (1) Nominally issued funded debt, (2) actually outstanding funded debt, and (3) nominally outstanding funded debt.

(c) The amounts included herein shall be further divided so as to show the amounts of each class of funded debt as follows:

(1) Mortgage bonds: Bonds secured by lien on physical property and not includible in the other subdivisions of this account.

(2) Collateral trust bonds: Bonds and notes secured by a lien on securities or other negotiable paper, and stock trust certificates that are similar in character to collateral trust bonds.

(3) Income bonds: Bonds which are a lien on a company's income alone, or bonds which, while being a lien on its property and franchises, can claim payment of interest only in case interest is earned.

(4) Miscellaneous obligations: All funded obligations not provided for by the other subdivisions of this account, including unsecured certificates of indebtedness, debenture bonds, plain bonds, and other similar obligations maturing more than 1 year from date of issue.

(d) Each of the above classes shall also be divided into subclasses according to differences in mortgage or other lien or security therefor, rate of interest, interest dates, or date of maturity.

NOTE A: Securities maturing 1 year or less from date of issue shall be included in accounts 158:1 or 158:2, as appropriate, except that where an issue of securities maturing serially over a period of more than 1 year contains short-term obligations, such obligations shall be included as funded debt. NOTE B: Matured funded debt shall be included in account 163.

NOTE C: Investment advances, including those represented by notes, shall be included in account 156 or account 157, as may be appropriate.

§ 31.154:2 Funded debt subscribed.

(a) This account shall include the face amount of funded debt for which legally enforceable subscriptions have been received but for which, at the date of the balance-sheet, evidences of indebtedness have not been issued. A separate subaccount shall be maintained for each class of funded debt.

(b) This account shall be debited and account 154:1, "Funded debt," credited when the total amount of each subscrip

tion is received and evidences of indebtedness are issued.

(c) Accrued interest on the evidences of indebtedness issued to subscribers shall be accounted for through the appropriate interest account. (Note account 127.)

§ 31.155 Receivers' certificates.

When any receiver acting under the orders of a court is in possession of the property of the company and under the orders of such court issues evidences of indebtedness chargeable upon such property, the face amount of such evidences of indebtedness shall be credited to this account.

§ 31.156 Advances from affiliated companies.

This account shall include the amount of investment advances from affiliated companies.

NOTE: Amounts due affiliated companies which are subject to current settlement shall be included in accounts 158:1 or 159:1, as appropriate.

§ 31.157 Other long-term debt.

This account shall include investment advances from nonaffiliated companies and individuals, and other long-term debt not provided for elsewhere.

NOTE: Amounts due nonaffiliated companies and individuals which are subject to current settlement shall be included in accounts 158:2 or 159:2, as appropriate.

This account shall include the face amount of notes, drafts, and other evidences of indebtedness to affiliated companies issued or assumed by the company (except interest coupons) which are payable on demand or not more than 1 year from date of issue.

NOTE A: Exclude from this account notes that are within the definition of account 156. NOTE B: The records supporting the entries to this account shall be kept so that the company can furnish complete details as to each note, when it is issued, the consideration received, and when it is payable. § 31.158:2 Other notes payable.

This account shall include the face amount of notes, drafts, and other evidences of indebtedness to nonaffiliated companies and individuals issued or assumed by the company (except interest coupons) which are payable on demand