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Home My WebLink About20051012Application.pdfECEiVED Corporate Tax Department 1801 California Street, 25th Floor Denver, Colorado 80202 LED \ '~, _ J~J _~!8 ~ ! " t -, ff-"" ,-! sIO\U \ lL_t; :L. ) '",, )\ i! j vJ Qwe st. Spirit of Service - t Q. t.)!..' 1 t - En ? J October 10 , 2005 Mr. Doug Cooley Telecommunications Analyst Idaho Public Utilities Commission 472 West Washington Boise, Idaho 83720 QWE 05'-:2.0 Re: Application for Determination of Qualified Broadband Equipment (2004) Dear Mr. Cooley: Pursuant to Commission Order No. 28784, in Case No. GNR-01-, Qwest Corporation ("Qwest") hereby submits the following information in support of its request that the Idaho Public Utilities Commission ("PUC") determine that the machinery and equipment listed in Tab C constitutes "qualified broadband equipment" as defined in Idaho Code Sec. 63- 30291. 1. 2004 Qualified investment, reported by general broadband, dedicated line and inter- office facilities (Tab A) 2. 2004 retirements of 2002 and 2001 investment, along with an explanation of how the retirements were calculated (Tab B) 3. Explanation of how we differentiate 2004 from 2003, 2002 and 2001 investment and insure that no equipment is reported more than once (Tab C)4. Capitalization policy (Tab D)5. Certification Statement (Tab E) Total Investment for 2004, net of retirements is as follows: General Broadband Services Dedicated Line Services Inter-Office Facilities Total 2004 Investment Retirements of 2001 Investment Retirements of 2002 Investment Retirements of 2003 Investment 2004 Net In vestment $13,191 745 669 768 392 017 $16 253 530 008 787 033 $16 205 702 I am enclosing four copies, two in binders and two unbound copies. I am also enclosing a disk with the investment data information as it would be unreadable if scaled down to fit on 8 II" paper. Please contact me on 303-308-5619 if you have questions or require additional information regarding this submission. Sincerely, --I ~1td- JV Stephanie L. Jackson Staff Tax Analyst Research and Planning cc: John Souba, Qwest Corporation General Broadband Services SEE CASE FILE FO SPREADSHEE TS Dedicated Line Services SEE CASE FILE FOR SPREADSHEETS Inter-Office Facilities SEE CASE FILE FOR SPREADSHEETS Explanation of Retirement Calculation Retirements related to broadband investment made in 2001 and 2002 were determined by means of retirement ratios. Because investment data is provided at a summary level rather than an individual asset basis , it would be extremely time-consuming to attempt to identify retirements of individual assets. For certain types of plant accounts , it would be impossible because tables are used in order to develop retirements. Retirement ratios were developed taking total retirements by year and plant account as a percentage of total investment for that year and plant account. These ratios were then applied to the Idaho broadband investment by year and plant account. Using this approach , the total retirements of vintage years 2001 and 2002 are $863 845 and $56 559 respectively. Retirements of investment made in the immediately preceding year are generall y less than one percent. The method of calculating retirements described above meets the applicable provisions of the Internal Revenue Code and has been accepted by the Internal Revenue Service. See the charts of the following pages for a summary of total retirements and detail by plant account. Owest Corporation - Idaho Central Broadband Retirement Ratios - Vintage 2001 Tax Year 2004 Retirement Curr Yr FRC Investment Ratio Retires 217 0000 534,483 0000 816 0029 139 45C 735,167 0011 839 85C 371 ,026 0000 157C 51 ,1 25 0000 257C 533,436 0036 009 357C 965 516 0000 377C 211 274 0000 845C 208,470 0000 852C 60,400 0000 862C 373 0000 Total 20,798,303 008 Source: 2004 Acufile Book Basis Report for Idaho Central for Vintage 2001. Note: (1) Retirement Ratio calculated at Vintage Plant Account Level (2) Calculation = Total Book Basis of Retirements for Vintage Plant Account divided by Total Book Basis of Investment for Vintage Plant Account. Qwest Corporation - Idaho Central Broadband Retirement Ratios - Vintage 2002 Tax Year 2004 Retirement FRC Investment Ratio Current Yr Retires 123 0759 313 230 733 35C 45C 382 176 0017 650 52C 163 0050 62C 85C 331 915 110C 254 209 257C 391 538 0000 357C 761,467 0000 132 377C 412 204 0017 692 51 DC 8,450 845C 207 608 0000 852C 19,539 862C 935 Total 049 156 787 Source: 2004 Acufile Book Basis Report for Idaho Central for Vintage 2002. Note:(1) Retirement Ratio calculated at Vintage Plant Account Level (2) Calculation = Total Book Basis of Retirements for Vintage Plant Account divided by Total Book Basis of Investment for Vintage Plant Account. Qwest Corporation - Idaho Central Broadband Retirement Ratios - Vintage 2003 Tax Year 2004 Current Yr FRC Investment Retirement Ratio Retires 120 0000 95,964 729 0000 45C 429,836 0029 260 52C 177 0067 85C 142 682 210C 500 257C 213,703 0024 771 357C 354 326 0000 377C 764 679 0000 564C 45,139 845C 180,209 0000 852C 920 862C 561 Total 271 545 033 Source: 2004 Acufile Book Basis Report for Idaho Central for Vintage 2003. Note:(1) Retirement Ratio calculated at Vintage Plant Account Level (2) Calculation = Total Book Basis of Retirements for Vintage Plant Account divided by Total Book Basis of Investment for Vintage Plant Account. Explanation to Insure Equipment is Reported Only Once When a job is first set up or opened, the planner establishes a targeted date on the Common Planning Document (CPD) for the job to be in-service and submits it to the budget tracking system (JETS). Material/equipment purchases with a field reporting code (FRC) ending in a 7 or 9 code for the job are processed through a system called Billing Verification Accounts Payable Processing (BV APP). If work is being performed at multiple locations (address Ids), a unique BV APP number is assigned to each location. The date associated with the job (not the BV APP) is the date used for tracking purposes in JETS. Outside plant FRC codes are processed through the NECT AS system. A job remains open until all BV APPs are complete. The completion date for the last BV APP then becomes the actual in service date for the job in JETS. When a BV APP is complete, the address/FRC associated with that BV APP is turned up in service individually, even thought the entire job is not complete. For purposes of Idaho broadband reporting, we include all FRCs/locations in the year that they are turned up in services. Therefore you will see some jobs that are reported in multiple years. However, when we pull the data for each year, we will by-pass or filter out any address that was previously reported for a job. This insures that we do not duplicate any addresses that have been previously reported for a job. Capitalization Policy To: From: Date: Su bject: Doug Hurst Bill Muir July 10, 2002 Qwest Corporation Capitalization Policy For state tax reporting purposes , Qwest Corporation (formerly U S WEST Communications) follows Part 32 of the FCC's Rules and Regulations. Specifically, paragraph 32.2000(c) detailsthe costs of construction rules. In short, the following direct costs may be capitalized: Labor Engineering Materiel and Supplies Transportation Contract Work Protection Privileges, Rights and Permits Taxes Special Machine Services Interest (a.a. Allowance for Funds Used During Construction , or AFUDC)Insurance, and Construction Services. Qwest is also allowed to capitalize certain indirect costs such as: General Engineering, and Supervision and Support (direct and indirect up to but not including executive officers). Certain accounts are subject to a capitalization threshold for materiel purchases. Paragraph32.2000(a)(4) specifies the following thresholds: 000 for vehicles , aircraft, work equipment, furniture and office equipment $500 for personal computers, and 000 for other general-purpose computers. Materiel purchases for the remaining capital accounts are classified based on the type of equipment Elsewhere in Part 32 , represent lists of capital equipment are listed. I have notattached those sections due to their volume. 9 32. 1500 * 32.1500 Other jurisdictional assets-net. This account shall include the cumu-lative impact on assets of jurisdic- tional ratemaking practices whichvary from those of this Commission, All entries recorded in this account shall be recorded net of any applicable income tax effects and shall be sup- ported by subsidiary records where nec- essary as provided for in 932.13(e) of subpart B, * 32.2000 Instructions for tele-communications plant accounts. (a) Purpose of telecommunications plant accounts, (I) The telecommunicationsplant accounts (2001 to 2007 inclusive)are designed to show the investment in the company s tangible and intangible telecommunications plant which ordi- narily has a service life of more thanone year, including such plant whetherused by the company or others in pro-viding telecommunications service, (2) The telecommunications plant ac-counts shall not includc the cost 01"other valuc of telecommunicationsplant contributed to thc company. Con- tributions in the form of money or its equivalent toward the construction of telecommunications plant shall becredited to thc accounts charged withthe cost of such construction. Amounts of non-reculTing reimbursements basedon the cost of plant or equipment fur- nished in rendering service to a cus-tomer shall be credited to the accounts charged with the cost of the plant orequipment, Amounts received for con- struction which are ultimately to repaid wholly or in pal-t, shall be cred- ited to Account 4360 . Other DeferredCredits; when final determination hasbeen made as to the amount to be re-turned. any unrefunded amounts shall be credited to the accounts charged with the cost of such construction,Amounts received for the constructionof plant, the ownership of which rests with or will revel-t to others. shall be credited to the accounts ch3l-ged withthe cost of such construction, (Note also Account 7110 , Income from Custom Work.) (3) When telecommunications plant ordinarily having a service life of more than one year is installed for tem-porary LIse in providing telecommuni- 47 CFR Ch. I 00-1-00 Edition) cations service, it shall be accountedfor in the same manner as plant having a service I ife of more than one year,This includes temporal-installations of plant (such as poles , wire and cable) installed to maintain service duringthe progress of highway reconstructionor during interruptions due to stormsor other casualties, equipment used forthe training of operators. equipment used to provide intercepting positionsin central offices to handle traffic for a short period following extensive sys-tem changes and similar installationsof property used to provide tele-communications service, (4) The cost of the individual items ofequipmentclassifiable to Accounts2112, Motor vehicles: 2113 , Aircraft: 2114 , Special purpose vehicles; 2115, Ga-rage work equipment; 2116, Other workequipment: 2122. Furniture: 2123 . Officeequipment; 2124. General purpose com- puters. costing $2 000 or less or havinga life of less than one year shall charged to the applicable expense ac- counts, except for per-sonal computersfalling within Account 2124. Personalcomputers classifiable to Account 2124,with a total cost for all components of $500 or less. shall be charged to the ap- plicable Plant Specific Operations Ex-pense accounts. If the aggregate invest- ment in the items is relatively large at the time of acquisition . such amounts shall be maintained in an applicablematerial and supplies account untilitems are used, (b) Telecommunications plant acquired.(I) Property, plant and equipment ac-quired from an entity, whether or notaffiliated with the accounting com-pany, shall be accounted for at original cost. except that property. plant andequipment acquired from non-affiliated entity shall be accounted forat acquisition cost if the purchaseprice is less than $100.000 for Class Acompanies or $25,000 for Class B compa-nies,(2) The accounting for proper-ty,plant and equipment to be recorded at original cost shall be as follows: (i) The amount of money paid (or cur-rent money value of any considerationother than money exchanged) for theproperty (together with preliminary expenses incurred in connection with 410 Federal Communications Commission the acquisition) shall be charged to Ac-count 1439. Deferred Charges, (ii) The original cost, estimated ifnot known, of telecomrnunications plant. governmental franchises andother similar rights acquired shall becharged to the applicable tele-communications plant accounts, Tele- communications Plant Under Con-struction. and Property Held For Fu- ture Telecommunications Use, as ap-propriate, and credited to Account 1439,When the actual original cost cannot be determined and estimates are used,the company shall be prepared to fur- nish the Commission with the particu-lars of such estimates, (iii) Depreciation and amortization of plant acquired shall be credited to Ac- count 3100, Accumulated Depreciation, or Account 3200 Accumulated Depre-ciation-Held for FutUl-e Telecommuni- cations Use , 3400. Accumulated Amorti- zation- Tangible 3410. AccumulatedAmortization-Capitalized Leases . 3420. Accumulated Amortization-LeaseholdImprovements. 3500, Accumulated Am-ortization-Intangibles, and 3600, Accu-mulated Amortization-Other, and deb-ited to Account 1439. (iv) Any amount remaining in Ac- count 1439, applicable to the plant ac-quired , shall. upon completion of theentries provided in paragraphs (b) (2)0). (ii) and Oii) of this section, be deb- ited or credited. as applicable. to Ac- count 2007, Goodwill. or to Account 2005. Telecommunications Plant Ad-justment, as appropriate,(3) A memorandum record shall kept showing the amount of contribu- tions in aid of constl-uction applicable to the property acquired as shown bythe accounts of the previous owner, (c) Cost of construction. (1) Tele-communications plant repl-esents aneconomic resource which will be used to provide future services. the cost ofwhich will be allocated in a rationaland systematic manner to the futureperiods in which it provides benefits, In accounting for construction costs. theutility shall charge to the tele-communications plant accounts, where applicable, all direct and indirectcosts, (2) Direct and indirect costs shall in-clude, but not be limited to: 932.2000 0) "Labor" includes the wages andexpenses of employees directly engaged in or in direct charge of constructionwork, It includes expenses directly re- lated to an employee s wages. such asworkers compensation insurance, pay-roll taxes. benefits and other similar items of expense, Oi) "Engineering" includes the por- tion of the wages and expenses of engi-neers. draftsmen. inspectors . and their direct supervision applicable to con-struction work. It includes expenses di-rectly related to an employee s wagessuch as worker s compensation insur-ance, paYI-oIl taxes. benefits and other similar items of expense- (Hi) "Material and supplies " includesthe purchase price of material used at the point of free delivery plus the costsof inspection. loading and transpor-tation. and an equitable portion of pro-visioning expense, In determining thecost of material used. proper allowanceshall be made for unused material. formaterial recovered from temporarystructures used in perfol-ming the workinvolved. and for discounts allowed andrealized in the purchase of matel-ial. This item does not include construc-tion material that is stolen or renderedunusable due to vandalism, Such mate-rial should be charged to the applicableplant specific operations expense ac-counts, (iv) "Transportation includes thecost of transporting employees. mate-rial and supplies. tools and other workequipment to and from the physicalconstruction location, It includesamounts paid therefor to other compa-nies or individuals and the cost of using the company s own motor vehi-cles or other transportation equip-ment.(v) "Contract work" includesamounts paid foc wock pecfocmed under contcact or other agreement by other companies, firms 01' individuals;engineecing and supervision applicable to such wock: cost incident to theaward of contr acts; and the inspectionof such wock, The cost of constcuctionwack pecformed by affiliated compa-nies and other details relating theretoshall be available fmm the work inprogress and supporting records, (vi) "Protection " includes the cost ofpmtecting the company propecty 411 932.2000 from fire or other casualties and thecost of preventing damages to others or the property of others, (vii) "Privileges. Permits, and Rights of way" includes such costs incurred in obtaining these privileges, pcl-mi ts, orrights of way in connection with con-struction work , such as for use of pri-vate pl-operty, streets or highways, Thecost of such privileges and permitsshall be included in the cost of thework for which the privileges or per-mits are obtained, except for costs in-cludable in Account 2111, Land. and Ac- count 2690, Intangibles,(viii) "Taxes " includes taxes properly includable in construction costs beforethe facilities are completed fol- service,which taxes are assessed separatelyfrom taxes on operating property or under conditions that pennit separateidentification of the amount charge-able to construction, (ix) "Special machine service in- cludes the cost of labor- expended. ma- tel-ials and supplies consumed and other expenses incurred in the mainte-nance, operation and use of special andothel- labor saving machines (otherthan transportation equipment (such as trenching equipment . cable plows and pole setting trucks, Also included are expenditures for rental. mainte-nance and operation of such machinesowned by others, When a constructionjob requires the purchase of specialmachines. the cost thereof. less the ap- praised or salvage value at the time ofrelease from the job, shall be includedin the cost of construction,(x) Allowance for funds used duringconstruction ("AFUDC") provides for the cost of financing the constructionof telecommunications plant, AFUDCshall be charged to Account 2003. Tele- communications Plant Under Con- struction. and CI-edited to Account 7340,The rate for calculating AFUDC shallbe determined as follows: If financingplans associate a specific new bor-rowing with an asset. the rate on thatborrowing may be used for the asset; no specific new borrowing is associated with an asset or if the average accumu- lated expenditures for the asset exceed the amounts of specific new borrowingassociated with it. the capitalization rate to be applied to such excess shallbe weighted average of the rates appli- 47 CFR Ch. (10-1-00 Edition) cable to other borrowing of the enter-prise. The amount of interest cost cap-italized in an accounting period shallnot exceed the total amount of interestcost incurred by the company in thatperiod. (xi) "Insurance" includes premiumspaid specifically for protection against loss and damage in connection with the construction of telecommunicationsplant due to fire or other casualty, in- jury to or death of employees or oth-ers. damages to property of others, de-falca tions of employees and agents and the non-performance of contractual ob- ligations of others, (xii) "Construction services " includethe cost of telephone, electricity.power. construction quarters. officespace and equipment directly relatedto the 'construction prqject. (xiii) "Indirect construction costs shall include indirect costs such general engineering, supervision andsupport, Such costs . in addition to di- rect supervision . shall include indirectplant operations and engineering su- pervision up to, but not including, su-pervision by executive officers whose pay and expenses are chargeable to Ac-count 6711, Executive, The records sup-porting the entries for ind irect con-struction costs shall be kept so as to show the nature of the expenditures,the individual jobs and accountscharged. and the bases of the distribu-tion- The amounts charged to eachplant account for indirect costs shallbe readily determinable, The instruc- tions contained herein shall not be in-terpreted as permitting the addition to plant of amounts to cover indirect costs based on arbitrary allocations, (xiv) The cost of construction shallnot include any amounts classifiable as Col-porate Operations Expense, (d) Telecommunications plant retired.(1) Telecommunications plant accounts shall at all times disclose the original cost of all property in service, Whenany item of property subject to plantretirement accounting is worn out lost, sold, destroyed. abandoned. sur-rendered upon lapse of title. becomespermanently unserviceable. is ..vith-drawn 01" for any other reason is ret iredfrom service, the plant accounts appli- cable to that item shall be credited 412 Federal Communications Commission with the original cost of the plant re-tired whether replaced or not (exceptas provided for minor items in para-graph (d)(2)(ii) of this section). Nor-mally. these retirement credits with respect to such plant as entire build- ings. entire central offices. all plant abandoned and any large sections ofplant withdrawn from service. shall entered in the accounts for the month in which use of the property ceased,For any other plant withdrawn fromservice. the retirement credits shall entered no later than the next suc- ceeding month, Literal compliancewith the provision for timing of entrieswith respect to property amounting to less than $50.000 retired under anyoneproject is not required if an unreason-able amount of record keeping and esti- mating of quantities, original costs and salvage is necessary. The retiremententry shall refer to the continuing property record. or records supple-mental thereto. from which the costwas obtained (note also paragraph(d) (3) of this section), Every companyshall establish procedures which will ensure compliance with these require-ments, (2) To avoid undue refinement. depre-ciable telecommunications plant shall be accounted for as follows: 0) Retir-ement units: This group in-cludes major items of pr-operty. a rep-resentative list of which shall be pre- scribed by this Commission. In lieu of the retirement units prescribed withrespect to a particular account. a com-pany may, after obtaining specific ap-proval by this Commission, establishand maintain its own list of retirementunits for a portion or all of the plant in any such account. For items includedon the retirement units list . the origi-nal cost of any such items retired shall be credited to the plant account andcharged to Account 3100. Accumulated Depreciation, whether or not replaced,The original cost of retirement unitsinstalled in place of property retiredshall be charged to the applicable tele- communications plant account, (ii) Minor items: This group includesany part or element of plant which is not designated as a retirement unit,The original cost of a minor item of property when included in the specificor average cost for a retir-ement unit or 932.2000 units requires no separate credit to the telecommunications plant accountwhen such a minor item is retired, Thecost of replacement shall be charged tothe account applicable for the cost ofrepairs of the property. However, if the replacement effects a substantial bet-terment (the primary aim of which isto make the property affected more useful. of greater durability, of gr-eater capacity or more economical in oper-ation), the excess cost of such a re- placement. over the estimated cost the then current prices of replacementwithout betterment of the minor items being retired, shall be charged to theapplicable telecommunications plant account. (3) The cost of property to be retiredshall be the amount at which property is included in the telecommunicationsplant accounts, However. when it is im- practicable to determine the cost of each item due to the relatively largenumber or small cost of such items. the average cost of all the items covered byan appropriate subdivision of the ac-count shall be used in determining thecost to be assigned to such items whenretired, The method used in deter-mining average cost must give due re- gard to the quantity. vintage. size andkind of items. the area in which theywere installed and their classification in other respects, Average cost may beapplied in retirement of such items as poles, wire. cable, cable terminals. con-duit and booths. Any company may useaverage cost of property installed in a year or band of years as approved by the Commission. It should be under-stood . however, that the use of averagecosts shall not relieve the company of the requirement for maintaining its continuing property records to showwhere practicable. dates of installat ionand removal for purposes of mortali ty studies, (See ~ 32.2000(f) of this subpart.Standard Practices for Establishing and Maintaining Continuing Property Records, (4) The accounting for the retirementof property, plant and equipment shall be as provided above except: (i) Amounts included in Account 2005,Telecommunications Plant Adjust- ment; Account 2680, Amortizable Tan-gible Assets; Account 2681 , Capital 413 932.2000 Leases: Account 2682, Leasehold Im-provements; Account 2690, Intangibles;and any amounts associated with am-ortizable leaseholds. easements. andsimilar rights in land included in Ac- count 2111 . Land. shall be debited. asappropriate. to Account 3400. 3410. 3420, 3500. or 3600 . and credited to the appli- cable accounts. (ii) Amounts in Account 2111. Landand amounts for works of art recorded in Account 2122 . Furniture. shall be treated at disposition as a gain or loss and shall be credited or debited to Ac- count 7150. Gains and Losses from Dis-position of Land and Artwork . as appli-cable. If land or artwork is retained by the company and held for sale. the cost shall be charged to Account 2006 . Non-operating Plant,(5) When the telecommunicationsplant is sold together with traffic asso- ciated therewith, the original cost of the property shall be credited to theapplicable plant accounts and the esti- mated amounts carried with respect thereto in the accumulated deprecia-tion and amortization accounts shallbe char-ged to such accumulated ac-counts, The differ-ence if any. betweenthe net amount of such debit and credit items and the consideration received(less commissions and other expensesof making the sale) ror the propertyshall be included in Account 7350Gains and Losses from Disposition ofCertain Property, The accounting fordepreciable telecommunications plant sold without the traffic associated therewith shall be in accordance with the accounting provided in 932.3100(c)of this subpart, (e) Basic property records. (I) The basic property records are that portion of the total pr-operty accounting sys-tem which pr-eserves the following de-tailed information: (i) The identity. vintage . locationand original cost of units of property: (ii) Original and ongoing trans-actional data (plant account activity) in terms of such units; and (iii) Any other specific financial and cost accounting information not prop-erly warranting separate disclosure asan account or subaccount but which is needed to support r-egulatory. cost. tax.management and other specific ac- 47 CFR Ch. I (10-1-00 Edition) counting information needs and re-quirernents, (2) The basic pr-operty records mustbe: (i) Subject to internal accountingcontrols. (ii) auditable. (iii) equal in the aggregate to the total investmentreflected in the financial property con-trol accounts as well as the total of thecost allocations supporting the deter-mination of cost-of-service at any par-ticular point in time. and (iv) main-tained throughout the life of the prop-erty.(3) The basic property records shall consist of (i) continuing property recol-ds and (ii) records supplementalthereto which together reveal clearly. by accounting area. the detailed andsystematically summarized informa- tion necessary to meet fully the re- quirements of paragraphs (e) (1) and (e) (2) of this section. (4) Companies shall establish andmaintain basic property records foreach class of property recorded in theseveral plant accounts which comprise the balance sheet Account 2001 . Tele- communications Plant In Service. Ac-count 2002. Property Held for Future Telecommunications Use. and Account2006. Nonoper-ating Plant,(5) The company shall notify the Commission of a plan for the basicproperty record as follows: (i) Not later than June 30 of the yearfollowing that in which it becomes sub-ject to this system of accounts. thecompany shall file with the Commis-sion two (2) copies of a complete plan of the method to be used in the com-pilation of a basic property record withrespect to each class of property, The plan shall include a list of proposed ac-counting areas accompanied by de-scription of the boundaries of each area as defined in accordance with the re-quirements of 9 32.2000(f) (1) (i) and (ii)of this subpart. The plan shall also in-clude a list of property record unitsproposed for use under each regulatedplant account. These property recordunits shall be selected such that the re-quirements of 932,2000(0(2) (i). (ii) and(iii) of this subpart can be satisfied,(ii) The company shall submit to theCommission one copy of any major pro- posed changes in its basic propertyrecord plan at least 30 days before the effective date of the proposed changes, 414 Federal Communications Commission (6) The company shall prepare andmaintain the basic property record as follows: (i) Not later than June 30 of the yearfollowing that in which the companybecomes subject to this system of ac-counts. begin the preparation of a basicproperty record. (ii) Complete within two years of the prescribed beginning date. basic prop-erty records for all property as of the end of the preceding calendar year,(iii) Promptly process in the basicproperty r-ecords all property changesaffecting periods subsequent to initial establishment of the basic propertyrecord, (7) The basic property record compo- nents (see paragraph (c) of this section)shall be arranged in confOl-mity with the regulated plant accounts prescribedin this section of accounts as follows:(i) The continuing property recor-clsshall be compiled on the basis of origi-nal cost (or other book cost consistentwith this system of accounts), The con-tinuing property records shall be main- tained as prescribed in 932,2000(t)(2)(iii)of this subpart in such manner as will meet the following basic objectives: (A) Pr-ovide for the ver-ification ofproperty record units by physical ex-amination, (B) Provide for accurate accountingfor retirements, (C) Provide data for use in connec-tion with depreciation studies, (ii) The records supplemental to thecontinuing property records shall dis-close such service designations. usagemeasurement criteria. apportionmentfactors. or other data as may be pre- scribed by the Commission in this part0'- other parts of its Rules and Regula-tions, Such data are subject to the same gener-al controls and standardsfor auditability and support as are allother- elements of the basic property records, (f) Standard practices for establishingand maintaining continuing propertyrecords-(I) Accounting area, (i) Thecontinuing property record. as relatedto each primary plant account. shall be established and maintained by sub-accounts for each accounting area, An accounting area is the smallest terri- tory of the company for which account- ing records of investment are main- 932.2000 tained for all plant accounts within the area, Areas already established for ad-ministrative. accounting. valuation . orother purposes may be adopted for this purpose when appropriate, In no caseshall the boundaries of accountingareas cross either State lines or bound-aries prescribed by the Commission.(ii) In determining the limit of eacharea. consideration shall be given tothe quantities of property. construc-tion conditions. operating districts.county and township lines. taxing dis- trict boundaries , city limits. and other poli tical or geographical limits, in order that the area adopted may havemaximum adaptability. within the con- fines of practicability. for both thecompanys purpose and those of Fed- eral. State. and municipal authorities. (2) Property record units. (i) In each ofthe established accounting areas, theproperty record units" which are to be maintained in the continuing prop-erty record shall be set forth sepa- rately. classified by size and type withthe amount of original cost (or otherappropriate book cost) associated withsuch units, When a list of propertyrecord units has been accepted by the Commission. they shall become the units referred to in this statement ofstandard practices, Such units shall apply to only the regulated portion ofthis system of accounts. (ii) When it is found necessary to re-vise this list because of the addition of units used in providing new types of service, or new units resulting from improvements in technology. or be-cause of the grouping or elimination of units which no longer merit separate recognition as property record units. one copy of such changes shall be sub-mitted to the Commission. Upon appro- priate showing by the company, theCommission may specifically exemptthe company from these filing require- n1ents, (iii) The continuing property record shall reveal the description, location.date of placement. the essential detailsof construction, and the original cost (note also 9 32,2000(f) (3) of this subpart) of the property record units, The con- tinuing property record and other un- derlying records of construction costs shall be so maintained that. upon re- tirement of one or more retirement 415 932.2000 units or of minor items without re- placement when not included in thecosts of I-etirement units. the actualcost or a reasonably accurate estimate of the cost of the plant retired can be determi ned, (3) N!ethoc/s of determining original costof property record units. The originalcost of the property record units shallbe determined by analyses of the con- struction costs incurred as shown bycompletion reports and other data. ac- cumulated in the respective construc-tion work orders or authorizations, Costs shall be allocated to and associ-ated with the property record units tofacilitate accounting for retirements.The original cost of property record units shall be determined by unit iden-tification or averaging as described in paragraphs (t) (3) 0) and (ii) of this sec- tion, (i) Unit identification. Cost shall beidentified and maintained by specific location for property record units con- tained wi thin certain regulated plant accounts or account groupings such as Land, Buildings. Central Office Assets.Motor Vehicles. Garage Work Equip-ment. and Furniture. In addition. unitsinvolved in any unusual or special type of construction shall be recorded by their specific location costs (note also 332, 2000(f) (3) (ii)(B) of this subpart, (ii) A veraging. (A) Average costs may be developed for plant consisting of a lal-ge number of similar units such asterminal equipment. poles. wire. cable.cable terminals . conduit . furniture, andwork equipment. Units of similar size and type within each specified account- ing a,-ea and regulated plant accountmay be grouped, Each such averagecost shall be set forth in the con- tinuing property record of the units with which it is associated. (8) The averaging of costs permitted unde,- the p,-ovisions of the foregoing paragraph is restricted to plant in-stalled in a particular vintage or band of years incurred within an accounting al-ea, This paragraph does not permit the inclusion of the cost of units in-volved in any unusual 01- special typeof construction, The units involved in such unusual or special type of con- struction shall be recorded at cost location. 47 CFR Ch. I (10-1-00 Edition) (4) Estimates, In cases where the ac-tual original cost of property cannot be ascertained, such as pricing an inven-tory for the initial entry of a con- tinuing property record or the pricingof an acquisition for which a con-tinuing property record has not beenmaintained, the original cost may beestimated. Any estimated original costshall be consistent with the accounting practices in effect at the time the prop- erty was constructed, (5) Identification of property record units. There shall be shown in the con- tinuing property record or in record supplements thereof. a complete de-scription of the property records unitsin such detail as to identify such units.The description shall include the iden-tification of the work order underwhich constructed, the year of installa-tion (unless not determinable per 9 32.2000(f) (4) of this subpart. specific lo- cation of the property within each ac- counting area in such manner that itcan be readily spot-checked for proof of physical existence the accountingcompanys number or designation. andany other description used in connec-tion with the determination of theoriginal cost, Descriptions of units of similar size and type shall follow pre- scribed groupings, (6) Reinstalled units. When units towhich average costs a,-e not applied.Le,. specific and fixed location units. are removed or retired and subse-quently reinstalled. the date when the unit was first charged to the appro-priate plant account shall . when Ct:- quiI-ed for adequate service life studies and reasonably accurate retirement ac- counting. be shown in addi tion to thedate of reinstallation, (7) Age and service life of property. Thecontinuing property record shall dis-close the age of existing property and the supporting records shall disclosethe service life of property retired- Ex- ceptions from this requirement for anyproperty record unit shall be submitted to the Commission for approval. (8) Reference to sources of information.There shall be shown by appropriate refe,-ence the source of all entries, All dr-awings, computations. and other de- tailed records which support quantitiesand costs or estimC'lted costs shall 416 Federal Communications Commission retained as a part of or in support of the continuing property record, (9) Jointly owned property. (I) With re-spect to jointly owned property. there shall be shown in the continuing prop-erty record or recQl-ds supplementalthereto: (A) The identity of all joint owners. (B) The percentage owned by the ac- counting company,(ii) When regulated plant is con- structed under arrangements for joint ownership. the amount received by theconstructing company from the other joint owner or owners shall be credited as a reduction of the gross cost of the plant in place, (iii) When a sale of a part interest inregulated plant is made. the fractionalinterest sold shall be treated as a re-tirement and the amount received shallbe treated as salvage, The continuingproperty record or records supple-mental thereto shall be so maintained as to identify sepa,-ately retirements of this nature from physical retirements of jointly owned plant.(Iv) If jointly owned regulated prop-erty is substantial in relation to thetotal of the same kind of regulated p,- operty owned wholly by the com-pany, such jointly owned regulatedproperty shall be appropriately seg- regated in the continuing property record, (g) Depreciation accounting-(I) Com-putation of depreciation rates, (i) Unlessotherwise provided by the Commission.either through prior approval or upon prescription by the Commission, depre-ciation percentage rates shall be com- puted in conformity with a group planof accounting for depreciation and shall be such that the loss in servicevalue of the property, except for lossesexcluded under the definition of depre-ciation. may be distributed under thestraight-line method during the service life of the property, (ii) In the event any composite per- centage rate becomes no longer appli-cablc revised composite percentagerates shall be computed in accordancewith paragraph (g) (I) (i) of this section, (iii) The company shall keep such records of prope,-ty and property retire-ments as will allow the determination of the service life of property which hasbeen retired, or facilitate the deter- 932.2000 mination of service life indications by mortality, turnover, or other appro-priate methods, Such records will alsoallow the determination of the percent-age of salvage value and cost of re-moval for property retired from eachclass of depreciable plant, (2) Depreciation charges, (i) A separate annual percentage rate for each depre-ciation category of telecommuni- cations plant shall be used in com- puting depreciation charges. (ii) Companies. upon receiving prior approval from this Commission , orupon prescription by this Commission shall apply such depreciation rate. ex- cept where provisions of paragraph (g) (2) (iv) of this section apply, as willratably distribute on a straight line basis the difference between the netbook cost of a class or subclass of plantand its estimated net salvage during the known or estimated remaining service life of the plant. (iii) Charges for currently accruingdepreciation shall be made monthly to the approp,-iate depreciation accounts.and corresponding credits shall bemade to the appropriate depreciationreserve accounts, Current monthly cha'-ges shall normally be computed by the application of one-twelfth of theannual depreciation rate to the month- ly average balance of the associatedcategory of plant. The average month-ly balance shall be computed using thebalance as of the first and last days ofthe current month,(iv) In certain circumstances andupon prior approval of this Commis-sion, monthly charges may be dete'-mined in total or in part through theuse of other methods whereby selected plant balances or portions thereof areratably distributed over periods pre-scribed by this Commission, Such cir- cumstances could include but not belimited to factors such as the existenceof reserve deficiencies or surpluses types of plant that will be completelyretired in the near future. and changes in the accounting for plant, Where al-ternative methods have been used in accordance with this subparagraphsuch amounts shall be applied sepa-rately or in combination with rates de-termined in accordance with paragraph (g) (2) (i i) of this section, 417 9 32.2000 (3) Acquired depreciable plant, Whenacquired depreciable plant carried in Account 1439. Deferred Charges. is dis- tributed to the appl"opriate plant ac-counts, adjusting entries shall be made covering the depreciation charges ap- plicable to such plant for the periodduring which it was carried in Account 1439.(4) Plant Retired for NonrecurringFactors not Recognized in Depl"eciationRates,(i) A retirement will be considered asnonrecurring (extraordinary) only if the following criteria are met:(A) The impending retil-ement was not adequately considered in settingpast depreciation rates. (8) The charging of the retirement against the I-eserve will unduly deplete that reserve,(C) The retir-ement is unusual suchthat similar reti.-ements an; not likely to recur in the future,(5) Upon direction or approval from this Commission. the company shallcredit Account 3100. Accumulated De-preciation, and charge Account 1438.Deferred Maintenance and Retire- ments. with the unprovided-for loss in service value. Such amounts shall distributed from Account 1438 to Ac- count 6561 Depreciation Expense- Telecommunications Plant in Service,or Account 6562 Depreciation Ex-pense-Property Held for Future Tele- communications Use. over such pel-iodas this Commission may direct or ap- prove, (h) Amortization accounting. (I) Unlessotherwise provided by this Commis-sion. either through approval. or upon prescription by this Commission. amor-tization shall be computed on thestraight-line method. Le,. equal annualamounts shall be applied, The cost ofeach type asset shall be amortized onthe basis the estimated life of that asset and shall not be written off in theaccounting period in which the asset isacquired, A reasonable estimate of theuseful life may be based on the upperor lower limits even though a fixed ex-istence is not determinable, However,the period of amortization shall not ex- ceed forty years,(2) In the event any estimated useful life becomes no longer applicablc, a re- vised estimated useful life shall be de- 47 CFR Ch. I (1~1-00 Edition) tennined in accordance with paragraph (h)(1) of this section. (3) Amortization charges shall made monthly to the appropriate am-ortization expense accounts and cor-responding credits shall be made to theappropriate amortization reserve ac-counts. Monthly charges shall be com- puted by the application of one-twelfthto the annual amortization amount,(4) The company shall keep suchrecords as will allow the determinationof the useful I ife of the asset, 0) Accounting for software. The origi-nal cost of initial operating systemsoftware for computers shall be classi-fied to the same account as the associ- ated hardware whether acquired sepa-rately or in conjunction with the asso- ciated hardware. U) Plant Accounts to be Maintainedby Class A and Class B telephone com- panies as indicated: Account title REGULATED PLANT Property, plant and equipment: Telecommunications plant service ,....,..,....,..,..'....'..,'....... Property held for future tele- communications use ............ Telecommunications plant under construction-short term ........, Telecommunications plant under construction-long term ..,..,.... Telecommunications plant ad- justment ,..,......,......,................ Nonoperating plant """""""""'" Goodwill ..,............,..,..,..,..,.......... TELECOMMUNICATIONS PLANT IN SERVICE (TPIS) TPIS-General support assets: land and support assets ..",.... land ..'............,....,..,.."..,..,......,.. Motor vehicles """""""""""""" Aircraft ..,....,.......,..,..',......,..,..,.... Tools and other work equipment Buildings ..,........,....,......, Furniture ....,..,......,..,'.."..,..,.. Office equipment """..........,....,.. General purpose computers ,..,..TPIS-Central Office assets: Central Office-Switching ......,.., Analog electronic switching ........ Digital electronic switching ......... Electro-mechanical switching "", Operator systems """"""""""'" Central Office-Transmission .... Radio systems ............,............'.. Circuit equipment ..'............,.. .., TPIS-Information origination/termi- nation assets: Information origination/termi-nation """"""""""""""""""" Station apparatus ""'......, ..,.., Customer premises wiring ,....,.... large private branch exchanges 418 Class Aaccount Class 8account '2001 '2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 .............., 21102111 """"....,..,2112 ........,.,.., 2113 ..,....,..,..... 2114 .............., 2121 ........,...., 21222123 "'...." ,..,.. 2124 ........ ,....,.."""""""" 22102211 ..........,..,.. 2212 ,........,...., 2215 ....,.......... 2220 2220 '......,......" 22302231 ....,....,...... 2232 /.....,..,..,.."""""""" 2310 2311 2321 2341 """"""'" Federal Communications Commission --'----------,u _----- ,- -_n___,_,-- Account title Class A Class Baccount account Public telephone terminal equip- ment """""""""""""""""""" Other terminal equipment """"'" TPIS-Cable and wire facilities as- sets: Cable and wire facilities ..........,., Poles """"""""""""""""""""" Aerial cable """""""""""""""" Underground cable """""""""'" Buried cable """"""""""""""'" Submarine cable ,...,..,....,.,......,.. Deep Sea cable """""""""""'" Intrabuilding network cable ..,..." Aerial wire """"""""""""""""" Conduit systems """""""""'....., TPIS-Amortizable assets: Amortizable tangible assets ,...... Capital leases """""""""""""'" Leasehold improvements --....,.... Intangibles """"""""""""""""" 1 Balance sheet summary account only, 2351 """"""'"2362 """"""'" """""""" 2411 """""""" 2421 """"""""2422 """""""" 2423 """"'......,2424 """"""""2425 """"""""2426 """"""""2431 "..,....",..2441 """""""" """""""" 2681 .,.,........,.. 2682 "" """"" 2690 2690 (51 FR ,nI99. Dee. 2 . 1986, as amended at FR 7580, rvlar. 12, 1987; 53 FR 30059. Aug, 10, 1988; 59 FR 46930, Sept, 13, i994; 60 FR 12138Mar. 6. 1995; 62 FR 39451 , July 23, 1997; 6,1 FR 50007 , Sept. 15, 1999) EFFECTIVE DATE NOTE: At 64 FR 50007Sept, 15, 1999. 532,2000 was amended by re-moving paragraph (b) (4), This section con- tains information collection requirementsand will not become effective until approvedby the Office of Management and Budget. * 32.2001 Telecommunications plant inservice. This account shall include the origi- nal cost of the investment included inAccounts 2110 through 2690. * 32.2002 Property held for future tele-communications use. (a) This account shall include theoriginal cost of property owned and held for no longer than two year-s undera definite plan for use in telecommuni-cations service, If at the end of twoyea.-s the property is not in service, theoriginal cost of the property may re-main in this account so long as the car-rier excludes the original cost and as-sociated depreciation from its ratebase and ratemaking considerations and re-port those amounts in reports fi ledwith the Commission pursuant to 43,21 (e) (1) and 43,21 (e) (2) of this chapter, (b) Subsidiary records shall be main-tained to show the character of theamounts carried in this account, 165 FR 16334, Mar. 28. 2000) 932.2005 2410 * 32.2003 Telecommunicationsunder construction. (a) This account shall include the original cost of const.-uction projects (note also 932,2000(c)) of this part andthe cost of software development projects that are not yet ready for their intended use, (b) There may be charged directly the appropriate plant accounts the cost of any construction project which is es-timated to be completed and ready forservice within two months from the date on which the project was begun. There may also be charged directly to the plant accounts the cost of any con-struction project for which the gross additions to plant are estimated to amount to less than $100,000, (c) If a constr'uction project has beensuspended for six months or more, the cost of the project included in this ac-count may remain in this account solong as the carrier excludes the origi-nal cost and associated depreciation frotH its ratebase and ratemaking con-siderations and reports those amountsin r-eports filed with the Commissionpursuant to 43,21 (eHI) and 43,21 (eH2) this chapter. If a project is abandoned the cost inc1 uded in this account shall be charged to Account 7370, SpecialCharges. (d) When any telecommunications plant. the cost of which has been in- cluded in this account. is completedready for service. the cost thereof shall be credited to this account and charged to the appropriate telecommunications plant or other accounts, plant 2680 (51 FR 43,199. Dec, 2 . 1986, as amended at FR 12138. Mar. 6, 1995; 64 FR 50007. Sept, 15, 1999; 65 FR 16335 . Mar, 28, 2000) * 32.2005 Telecommunicationsadjustment. (a) This account shall includeamounts determined in accordance with 932.2000(b) of this subpart rep-resenting the difference between (1) thefair market value of the telecommuni- cations plant acquired, plus prelimi-nary expenses incurred in connectionwith the acquisition; and (2) the origi- nal cost of such plant. governmental franchises and similar rights acquired plant 419 Certification Statement Qwest Corporation , Stephanie L. Jackson, have read the applicable statutes for broadband investment income tax credit and I believe that the subject broadband equipment qualifies for the tax credit under Idaho Code Sec. 63-30291. Date:/0/ J L.2tXl5 Signature: Title:Staff Tax Analyst