Class B WaterUtilities.pdf

I]NIF'ORM SYSTEM OF ACCOT]NTS
FOR CLASS B
WATER UTILITIES
L996
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NATIONAL ASSOCIATION OF
REGIJLATORY UTILITY COMMISSIONERS
1201 Constitution Avenue, N.W., Suite LL02
Post Office Box 684
Washington, DC 200M-0684
Telephone No. Q02) 898-2200
Facsimile No. Q02) 898-2213
Price: $20.00
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Published by the
National Association of
Regulatory Utility Commissioners
L20L Constitution Avenue, N.W., Suite LL02
Post Office Box 684
Washington, DC 2004/+0684
Telephone No. [phone]
Facsimile No. [phone]
(il NATIONAL ASSOCIATION
OF
REGULATORY UTILTTY
COMMI SS IONERS
L996
Uniform System of Accounts
For
Class B
Wat,er Utilities
Pursuant to action by the NationaL Association of RegulatoryUtilit.y Commissioners, thi-s System of Account,s is recommended Eothe Commissions represented in the membership of this Associationfor consideratj-on and for adoption in their respectivejurisdictions with such modifications only as they may deemnecessary in t.he public int.erest..(&
PREFACE
The 1995 Water and Wastewater Uniforn systems of Accounts were proposed by
the SubcommitEee on Accounts of the CornmiEtee on Finance and Technology of the
Nationar Association of Regulatory utility commissi6t'"t" (NARUC) ' The NARUC
Executive Cornrnitcee unanimously approved these uniform systems of account,s at its
Summer Conmittee Meeting held in Los Angeles, California, JuIy 22-25, L996. We
would like to express our appreciation to l.larshall Willis of the Florida Public
Service Gomurission for his participation in uhis project and the many hours he
spent rewriting these uniform systems of accounts.
COMMITTEE ON FINAIiICE AI{D TECHNOLOGY
Ralph Nelson, Idaho, Chairnan
Vice-Chair Marcia G. Weeks, ArizonaRoger Hamilton, Oregon,
J. Terry Deason, Florida
Tom Burton, Itlinnesota
Walter L. Challenger, Virgin Islands
Robert J. l,lclIahon, Delaware
Lowell C. Johnson, Nebraska
Janet Polinsky, Connecticut
M. Dianne Drainer, Missouri
Rhonda Hartman Fergus, Ohio
Edward J. Holmes, Kentucky
Thomas 1,1 . Benedict, ConnecticuE
E. tlason Hendrickson, l'laryland
Dwight D. Ornquist, Alaska
Richard E. Kolhauser, Illinois
G. Nanette Thompson, Alaska
John C. Shea, I,lichigan
Donald L. Soderberg, Nevada
DanieL J. Eastman, llisconsin
David C. Coen, Vermont
STAFF SUBCOMMITTEE ON ACCOUNTS
Forman, Kentucky, ChairmanGary L.
D. Todd Carden, West Virginia
Donald R. Hoover, North Carolina
B. B. Knowles, Georgia
William E. Carter, North Carolina
Timothy J. Devlin, Florida
James D. Pretti, California
Louis Sickman, Minnesota
Miehael E. Gal1ager, Indiana
Norman Reiser, District of Colombia
Charles J. Kruft, I"laryland
David Hodgden, Ohio
James I'lendenhall , l,lichigan
SEephanie Mil1er, Idaho
William P. B1ume, South Carolina
CarI L. Mower, Utah
William Lang, Minnesota
Kenneth K. Louie, CaliforniaBill Dennis, Arkansas
Michael J. Chapman, Nevada
Kenneth ![. Ackerman, FCC
G1enn Barton, Pennsylvania
James Edgar Norman, Alabama
Walter Szymanski, New Jersey
George Machai, Oklahoma
l,like Gaines, Tennessee
I'lerE Lott, WashingEon
Jim Richards, Colorado
Michael Foley, NARUC
Donald Judisch, Iowal,Iillian l,teyer, Missouri
Thomas Massaro, Rhode Island
Ronald A. Gibson, Virginia
Mike Diller, North Dakota
Frank Herbert, New York
Dennis Gee, New Mexico
Eugene F. Sul1ivan, New Hampshire
Terry Lambeth, Oregon
Michael A. Berson, Connecticut
Rich Kania, Mai.ne
Thomas E. Ellison, South Carolina
Connie S. l.lcDowe1l, Delaware
John Gillespie, Texas
Randall W. Sable, Arizona
Denise Parrish, Wyoming
Lee Larson, l{innesota
Jose L. Rodriguez, FCC
Thomas J. Ferris, l.Iisconsin
Donna K. Martin, Illinois
David W. Wirick, NRRI
Donna l,[cl-ain, Oklahoma
Roland Martin, New York
Charles Dickson, New York
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Summary of Proposed Revisions to the
NARUC Uniform System of Accounts for
Class A, B & C Water and Wastewater Utilities
Proposed Changes Water Wastewater
1. Change the term "sewer" to "wastewater" A B C A B C
where applicable to conform with the
terminology currently used by the industry.
2. lncreasedtheClass A, B &C revenue levels A B C AB C
to account for inflation since the levels
were last changed in 1984. This was done
based on the same index used to set the
levels in the 1984 revision. New levels are:
Class A: $1,000,000 and more,
Class B: $200,000 to $999,999, and
Class C: Less than $200,000.
3. [ncluded a monetarylevel forcapitalizing AB C AB C
versus expensing for all Classes as follows:
Class A: $750
Class B: $400
Class C: $150
4. Added definitions, accounting instructions A B A B
and subaccounts to provide for the accounting
for regulatory assets and liabilities.
5. Added a new water plant account to separately A B C
account for backflow prevention devices.
6. Added new wastewater plant accounts to A B
separately account for reuse facilities
used to produce reclaimed water.
7. Added new wastewater expense accounts to A B
separately account for the operation of
(.8 reuse facilities to produce reclaimed water.
Proposed Changes
8. Added new wastewater revenue accounts to
Water Wastewater
AB
separately account for revenue from
reclaimed water sales.
9. Added a new water expense account to A B
separately account for Water Conservation
Expenses.
10. Requires the use of subaccounts to Accounts A B C A B C
2ll - CIAC and 272 - Amortization of CIAC
to separately account for any CIAC gross-up
funds received by a utility. Also adds
definitions for gross-up of CIAC.
11. Added a new account to separately account A B C A B C
for revenues collected by a utility prior
to service being initiated to guarantee
or reserve plant capacity.
12. Added a new water "*O.nr" account to A B C
separately account for water testing
expenses.
13.' Removed confusing languageinAccount2lS - AB C AB C
Proprietary Capital - which indicated that
the system provided language concerning the
use of earned surplus accounts, which it
does not.
14. Added a new wastewater plant account to A B C
separately account for power generation
equipment.
15. Added additional accounts for Contractual C C
Services to separately account for billing
and professional services.
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TABI.E OF CONTEIiI:TS
Paqe
Index of Accounts
Definitions
Accounting Instructions
Balance Sheet Account,s
Wat,er Utilit.y Plant Accounts
Income Accounts
Retained Earnings Accounts
Water Operating Revenue Accounts
Wat,er Operation and Maintenance Expense Accounts
z
I
13
43
76
94
r.08
r-11
115
&
(,&
Acct.
No.
r-01.
]-o2.
103 .
r-04 .
105.
108 .
1L0 .
1,L4.
LL5.
Lz]..
1-22.
t23.t24.t25.
L27.
]-32.
134 .
135.
]-4L.
1,42.
]-43.t44.
145.
]-46.
151.t52.
]-71.
L74.
IIIDEX OF ACCOUT{TS
BALANCE SHEET ACCOUNTS
Assets and Other Debits
Utilit.y P1ant.
Utilit,y Plant In ServiceUtility Plant Leased to Others
Propert.y Held for Future UseUtility Plant Purchased or SoId 47Construction Work in Progress 47
AccumulaEed Deprecj-ation of Utility Plant in Service 48
Accumulat,ed Amortizat,ion of Utility P1ant in Service 48Utility P1ant Acquisition Adjustments 49
Accumulated Amortj.zat,ion of Utility Plant AcquisitionAdjustments 50
46
46
46
Otsher Property and InveetmenEe
Property 50Depreciation and Amortj.zation of NonutilityNonutility
AccumulatedPropertyInvestment j-n Associated CompaniesUtilit,y Invest,mentsOther Investment,sOther Special Funds
Current and Aecrued Aseets
50
50(il
52
55
55
57
57
131. Cash131.1 Cash on Hand1-31.2 Cash in Bank
52
52
53
53
53
53
53
53
54
54
54
Special Deposit,sWorking Funds
Temporary Cash Investments
Customer Accounts ReceivableOther Accounts Receivable
Accumulated Provision for Uncollectible Accounts--CrNotes ReceivableAccounts Receivable from Associated CompaniesNotes Receivable from Associated CompaniesPlant Materi
PrepaymenEs
aI and Supplies
Accrued Int,erest andMiscellaneous Current
Dividends Receivable
and Accrued Assets
(p
Acct.
No.
181.
l.82.
185 .
190.
201.
204.2tt.
2t2.
21,3.2t4.
2]-5.2t6.
21,8 .
221.
223.
224 -
23L.
232.
233.
234.
235.
236.
237 .
238.
239.
240.
241,.
25t.
252.
253.
255.
IIIDEX OF ACCOI'NTS
Paqe
Deferred Debits
Unamortized Debt Discount and Expense 57
ExtraordS-nary Property Losses 57
Miscellaneous Deferred Debits 58
Accumul-ated Deferred Income Taxes 59
Equity Capital and LiabilitieE
Equity Capital
Common Stock Issued 50Preferred Stock Issued 50
Other Paid-In Capital 61Discount on Capital Stock 5lCapital St.ock ExpenseAppropriated Retained Earnings
62
62
52
52
53
53
64
64
Unappropriated Retained Ea
Reacguired Capital St.ock
rnr-ngs
Proprietary Capital (for proprietorships and partnerships
only)
Long-Tem Debt
Bonds
Advances from Associ-atOther Long-Term Debt
ed Companies
Current and Accrued Liabilitiee
Accounts Payable
Not,es Payable
Accounts Payable to Associated CompanJ-esNotes Payable to Associated CompaniesCustomer Deposits
Accrued Taxes
Accrued InteresE
Accrued Dividends
Matured Long-TermMatured InterestMiscellaneous Current and Accrued Liabilities
Deferred Credits
Unamortized Premium on Debt
Advances for ConstructionOther Deferred Credits
64
55
55
55
55
55
Debt
65
56
66
66
56
55
67
57
68
rp
Accumulat.ed Deferred Investment Tax Credits
IITDEX OF ACCOI'MTS
Operating Reserrres
Acct.
No.
26t.
301.
302.
303.
304.
305.
306.
307.
308.
309.
310 .
311 .
320.
330.
331.
333.
334.
335.
335.
339.
340.
341- .
342.
343.
344.
345.
346.
347 .
348.
Property Insurance Reserve 68
59
69
70
262. Injuries and Damages Reserve263. Pensions and Benefits Reserve265. Miscellaneous Operating Reserves
Contributions in Aid of Construction
27L.
272.
Contributions in Aid of Construction
Accumulated Amort ization of Contributions in Aid of
Construction
70
Accunulated Deferred
281. Accumulated Deferred Income Taxes282. Accumulated Deferred Income Taxes283. Accumulated Deferred fncome Taxes
Income Taxes
- Accelerated Amortization- .Liberalized Depreciat,ion- Other
73
73
74
'78
78
79
7t
83
83
83
84
84
84
85
WATER IITILITY PI.ANT ACCOI'NTS
OrganizationFranchisesLand and Land RightsStructures and Improvements ,";JilCollecting and Impounding Reservoirs t p
Lake, River and Other Intakes 82Wel1s and SpringsInfiltrati-on Galleries and TunnelsSupply Maj.ns
Power Generati-on
Pumping Equipment
Equipment
WaEer Treatment EquipmentDistribution Reservoirs and Standpipes
Transmissi-on and Dist.ribution Mains 85
85ServicesMeters andHydrants Meter Installations 87
88
88
88
89
89
89
90
91
9L
92
92
93
/' !l,L(s,
Backflow Prevention DevicesOther PlanE. and MiscellaneousOffice Furniture and EquipmentTransportat ion Equipment
Equipment
Stores EquipmentTool,s, Shop and GarageLaboratory Equipment
Equipment
Power Operated Eguipment
Communicat ion EquipmentMiscellaneous EquipmentOther Tangible Plant
INCOIIIE ACCOUNTS
Utility Operating Income
400. Operating Revenues 96401. Operati.ng Expenses 96403. Depreciat, j-on Expenses 96406. Amortization of Utility Plant Acquisition Adjustments 96' 407. Amortization Expense407.1 Amortization of Limited Term P1ant 96407.2 Amortization of Property Losses
407 .3 Amort.ization of Other Ut.iliEy Plant407.4 Amortization of Regulatory Assets407.5 Amortization of Regulatory Liabilities 97408. Taxes Other Than Income408.10 Utility Regulatory Assessment Fees408.13 Other Taxes and Licenses . . 99409. Income Taxes409.10 Income Taxes, Utility Operating Income 100410. Provision for Deferred Income Taxes
410. L0 Deferred Income Taxes 10041L. Provision for Deferred Income Taxes - Credit411.10 Provision for Deferred Income Taxes - Credit,
, IIIDEX OF ACCOI'IITS
Acct.
No.
Utility Operating Income41-2. Investment Tax Credits
Paqe
97
97
97
t-0 L
]-02
r-03
103
98
412.10 Investment Tax Credits Deferred to Future Periods,Utilit.y Operations4l2.ll Investment Tax Credits Restored to Operating Income,Utility Operations4L3. Income From Utility Plant Leased Eo Others
cil
. 414. Gains (Losses) From Disposition of Utility Property 104
Other Income and Deductions
4L5. Revenues From Merchandising, ,fobbing and Contract Work 10441-6. Costs and Expenses of Merchandising, .fobbing and ContractWork 1044L9. Int,erest and Dividend Income 104420. Allowance for Funds Used During Construction 10542L. Nonutility Income . 105425. Miscel-laneous Nonutility Expenses L05
Taxes Applicable to Other Income and Deductions
408. Taxes Other Than Income408.20 Taxes Other Than Income, Other fncome and Deductions . 99409. Income Taxes409.20 Income Taxes, Other Income and Deductions 100410. Provision for Deferred Income Taxes410.20 Provision for Deferred Income Taxes, Ot.her Income and(@ Deductions r01
Acct.
No.
411.
4]-2.
427. Interest Expense427.L Interest427.2 Interest427.3 fnterest427.4 Interest427.5 Int.erest428. Amortization of429. Amortization of
433. Extraordinary434. Extraordinary4O9. Income Taxes409.30 Income
on Debt to Associated CompanJ-eson Short-Term Debt
MDEX OF ACCOUttrrS
Provisions for Deferred Income Taxes - Credit4]-]-.2O Provisions for Deferred Income Taxes - Credit, Other
Income and Deductions 10L
InvesEment Tax Credits41.2.20 Investment, Tax Credits - Net, Nonutility Operations l-034l.2.3O Investment Tax Credits Restored to NbnoperatingIncome, Utility Operations r_03
IatereEt E:qrense
r_06
106
on Long-Term Debt L06on Customer Deposits 106- Ot,her 106
Debt Discount and Expense 107
Premium on Debt 1,07
Ext,raordinary ftemE
Income
Deductions
Taxes, Extraordinary Items
RETAINED E,ARNINGS ACCOI'NTS
,o
1,07
L07
tl2
]-]-2
tL2
1-]-2
Lt2
1,1,2
435.
436.
437.
438.
439.
460.
461-.
Balance Transferred From IncomeAppropriations of Retained EarningsDividends Declared - Preferred StockDividends Declared - Common StockAdjust,ments to Retaj.ned Earnings
WATER OPERATING REVENUE ACCOUIITS
Water Sales
r-0 9
r.0 9
109
r_0 9
109
Unmetered Water Revenue
Metered Water Revenue46L.1 Metered Sales to46]-.2 MeEered Sales Eo461.3 Met,ered Sales t.o46;...4 Metered Sales to451-.5 Metered Sales to
Residential CustomersCommercial CusEomersIndustrial CustomersPubLic AuthoritiesMultiple Family Dwellings
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IIIDEX OF ACCOI'If,TS
Acct.
No.462. Fire Protection Revenue452.1 PubIic Fire Protection462.2 Private Fire Protection464. Other Sales to Public Authorities465. Sa1es to Irrigation Customers465. Sales for Resale467. Interdepartmental
Other Water RevenueE
Guaranteed RevenuesForfeited DiscountsMiscellaneous Service Revenues
Sales
Paqe
1"L2tt2
113
l_L3
l_ 13
113
469.
470.
47]-.
472.
473.
474.
50r..
603.
504.
510.
615.
515 .
518.
620.
Other Water Revenues
WATER OPERATION AI{D MAINTENAI{CE EXPENSE ACCOI'NTS
Salaries and WagesSalaries and Wages
- Employees- Officers,Directors and Majority
Stockholders
Employee Pensions and Benefits
Purchased Water
Purchased PowerFuel for Power Production
ChemicaLsMaterials and Supplies
Rents From Water ProPer
Interdepartment,al Rents
Ly
Engineering
Accounting
Legal
Management Fees
TestJ-ng
L14
114
t-L4
114
t_15
l-15
LL8
r_18
l_L8
118
118
118
LL9
L19
L19
119
]-20
L20
120
]-20
]-20
L20
L20
]-20
]-20]-2tt2t
l.2L
t2:l-
l.2L
]-2]-
:j22
1,22
53L. Contractual Services632. Contractual Services533. Contract.ual Services634. Contract.ual Services535. Contractual Services636. ContractuaL Services Other641-. Rental of Building/Real Property642. Rental of Equipment550. Transportation Expenses655. Insurance - Vehicle657. Insurance - General Liability558. Insurance - Workman's Compensation659. Insurance - Other '.
660. Advertising Expenses666. Regulatory Commission Expenses - Amortization of Rate Case
Expense667. Regulatory Commiss668. Water Resource Con670. Bad Debt Expense
ion Expenses - Otherservation Expense
5"15. Miscellaneous Expenses
DEFINITIONS
When used in t,his system of accounts:
1 . ,'Accounts I' means the accounts prescribed in this system of account,s.
2. "Actually issued, " as applied to securities issued or assumed by theutility, means those which have been soLd to bona fide purchasers
for a valuabLe consideration, those issued as dividends on stock,
and those which have been issued in accordance with contractual
reguirements direct to trusEees of sinking funds.
3. "Actually outsEanding, " as applied to securities issued or assumedby the utility, means those which have been actually issued and areneither retired nor held by or for the utility; provided, however,that securities held by trustees shall be considered as actuallyoutstanding.
4. "Amort.j.zation, means the gradual extinguishment of an amount in anaccount by distributing such amount over a fixed period, over thelife of the asset or liability to which it, applies, or over theperiod during which it is anticipated the benefit will be realized.
5. A. "Associated companiesrr means companies or persons that,,directly or indirectly, through one or more intermedj-aries,control, or are controlled by, or are under common controlwith, the accounting company.
the
hted
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7.
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B . " Control " (j.ncluding the terms " controlling, " r'controlled by, "and "under common control withu) means the possession, directlyor indirectly, of the power t,o direct or cause the direct,ion ofthe management and policies of a company, whether such poweris exercised through one or more intermediary companies, or
aLone, ot in conjunction with, or pursuant to an agireement, and
whet,her such power is established through a majority ormi-nority ownership or vot,ing of securities, common directors,officers, or stockholders, voting trusts, holdj.ng trusts,associated companies, contract or any other direct or indirect
means.
6. "Book cost" means t.he amount at which property is recorded in theseaccounts without deduction of related provisions for accrueddepreciation, amortization, or for other purposes.
I'Commj-ssion", unless otherwise indicated by the context, means
commission prescribing this system of accounts.
"Composite depreciation rate" is a percentage based on the weigaverage service life of a number of units of pIant, each of whi
may have a different individual life expectancy. Composite
8.
9.
10.
DEFINITIONS
depreciation rates may be determined for (a) a single depreciableplant account, (b) a single rate for several depreciable accounts or(c) a single composite rate may be determined for all depreciableplant of the utility.
"CosErr means the amount of money actually paid for property orservice. When the consideration given is other than cash, the valueof such consideration shall be determined on a cash basi-s.
"Cost of removal" means the cost of demolishing, dismantling,tearing down or otherwise removing ut,ility plant,, including Ehe costof transportation and handling incidental thereto.
"Debt expense" means'a11 expenses in connection wit,h the issuance
and initial sale of evidences of debt, such as fees for draft.ing
mortgages and trust deeds; fees and taxes for issuing or recordingevidences of debt; cost of engraving and printing bonds andcertificates of indebtedness; fees paid trustees; specific costs ofobtaining governmental authority; fees for 1egal services; fees and
commissions paid underwriters, brokers, and salesmen or marketing
such evidences of debt; fees and expenses of listing on exchanges,'and other like costs.
"Depreciation", as applied to depreciable utility pIant, means theloss in servj-ce value not restored by current, maintenance, incurredin connection with the consumption or prospective retirement ofutility plant in the course of providing service from causes whichare known to be in current operation and against which the utilityis not protected by insurance. Among the causes to be givenconsideration are wear and tear, decay, action of the elements,inadequacy, obsol-escence, changes in the art, changes in demand, andrequirements of public aut.horities.
"Discount", as applied to the securities issued or assumed by theutility, means the excess of the par (stated value of no-par st.ocks)or face value of the .securities plus interest or dividends accruedat. the date of the sale over the cash value of the considerationreceived from their sale.
L1.
@ t2.
l-3.
14. "Fire main" means any main forming part of an integrated system usedexclusively for fire protection purposes.
15. rrGross-up of contributions in aid of construction'r is the method bywhich a util-ity extracLs, from developers or others, a sum of moneysufficj-ent t,o pay all or a portion of the tax obligation due to thechange in the federal tax 1aw in 1987 which resulted incontributj-ons made to utilities in aid of construction (CIAC) beingconsidered ordinary income instead of contribut,ions of capital.
Because the sum extracted to pay the tax is also considered incomesubject to tax, the t.erm tax-on-tax has been used to describe the
DEFINITTONS
additional sum of money that must be extract,ed ln order to pay thetax on the initial amount.
Common gross-up met.hods include the fuII gross-up rnethod and the netpresent value method. Under the full gross-up method, a sumsufficient to meet the ful1 tax obligation, including the tax-on-tax, is extracted. Under the net present value method, the sumextracted is t,he net present. value of the estimated future stream oftax benefits resulting from the depreciation deducLj-ons for thecontributed asset to be taken on the Eax returns of the utility.
15. "Investment advancesrr means advances, represented by notes or by
book accounts on1y, with respect to which it is mutually agreed orintended between t,he creditor or debtor that t,hey shall be settledby the issuance of securj.tj-es or sha11 not be subject to currentsettlement.
l'7 . "Minor items of propertyt' means the associat,ed parts or it,ems ofwhlch retirement. units are composed.
18. "Mu1tip1e family dwe11ingl' means a residential structure orstructures which is capable of separately housing more t,hanfamily unit.
group of
one
@less
20.
19. 'rNet salvage value[ means the salvage value of property retiredthe cost of removal.
"Nominally issued", as applied to securities issued or assumed bythe utility means those which have been signed, certJ-fied, orotherwise execut,ed, and placed wit,h the proper officer for sale anddelivery, or pledged, or ot,herwise placed in some special fund ofthe utility, but which have not been sol-d, or issued direct totrustees of sinking funds in accordance with contractualrequirements.
"Nominally outstanding", BS applied to securities issued or assumedby the utility, means those which, after being actually issued, havebeen reacquired by or for the utility under circumstances whichrequire them to be considered as held alive and not retired;provided, however, that securities held by trustees sha]L beconsidered as actually outstanding.
22. "Original costrr, as applied to utility pIant,. means the cost ofsuch propert,y to the person f irst devoting it to the public servj,ce.
23. 'rPerson" means an individual, a corporation, a partnership, Errassociation, a joint'stock company, a business trust, or anyorganized group of persons whether incorporated or not, or anyreceiver or trustee.
2]-.
10
24
DEFINITIONS
,,Premiumtr, as applied to the securities issued or assumed by theutility, means the excess of the cash value of t.he consideration
received from their sale over the sum of Lheir par (stated vaLue of
no-par stocks) or face value and interest or dividends accrued atthe date of sa1e.
I'Property retir€d", as applied to utility plant,, means property
which has been removed, so1d, abandoned, destroyed, or which for any
cause has been permanently withdrawn from service.
25.
26. "Reclaimed waterrr means water that has received at least secondary
treatment and basic disinfection and is reused aft,er flowing out of
a wastewater treaLment pIant.
27. "Regulatory Assets and Liabilities" are assets and liabilities thatresult from rate actions of regulatory agencies. Regulatory assets
and liabilities arise from specific revenues, expenses, gains orlosses that. would have been incLuded in determination of net incomein one period under the general requirements of t,he Uniform Systemof Accounts but for it being probable that; 1) such items will beincluded in a different period(s) for purposes of developing therates the utility is authorized to charge for its utility services;or 2) in the case of regulatory liabilities, thaE. refunds to
customers, not provided for in other accounts, wj-1} be required.
28. "Replacing" or "replacementrr, when not otherwise indicated in thecontext, means the construction or installation of utility plant inplace of property of retired, together with the removal of theproperty ret,ired.
29. 'rResearch and developmentt' means expenditures incurred by publicutilities which represent research and development. costs in theexperimental or l-aboratory sense. The term includes generally all
such costs incident to the development of an experimenLal or pilotmodeI, a plant process, a product, a formula, dfi invention, orsimil-ar property, and t,he improvement of already existing propertyof the type mentioned.
30. "ReEained earnings" means the accumulated net income of the utilityless dist.ribut,ions to stockholders and transfers to other capital
account.s, and other adjustments (See account 439 - Adjustments toRetained Earnings).
31. I'RetiremenE unltsrr means those items of utility plant which, whenretired, with or without replacement, are accounted for by creditingthe original costs.
.,* 32. "Reuse" means the deliberat,e application of reclaimed water, in
f & compliance with Federal and Stale environment,al rules and'-y regulations, for a benef icial purpose.
11
DEFINTTIONS
"Salvage valuerr means the amount received for property ret,j.red, 1
any expenses incurred in connection with t,he sale or in preparing
the property for sale, ot, if retained, the amount at which the
material recoverable is chargeable to material-s and supplies, or
other appropriate account
"Service liferr means the time between the date utility plant is
includible in utility plant in service, or ut,ility plant leased t.oothers, and the date of its retirement. If depreciation is
accounted f or on a production basis rat,her than on a t j.me basis,
then service life should be measured in terms of the appropriate
unj-t of production.
35. "service value'r means the difference between the original cost andnet salvage value of utility p1ant.
35.'lstraight-line remaining life method", ds applied to depreciationaccounting, means t,he plan under which the service value of propertyis charged to operating expenses (and to clearing accounts if used),
and credited to the accumulated depreciation account through equalannual charges during its service Iife. "Remaining life" impliesthat estimates of future life and salvage will be reexaminedperiodically and that depreciation raEes will be corrected toref lect any changes in these estimates. (,O
'rstraight-Iine method" as applied to depreciation accountirrg *""rr}tthe plan under which t,he service vaLue of property is charged tooperatj.ng expenses (and to clearing accounts if used), and creditedto the accumulated depreciation account through equal annual chargesduring its service 1ife. Estimates of t,he service life and salvagewil-l be reexamined periodically and depreciation rates will becorrected to reflect any changes in these estimates.
"Supply main" means any main, pipe, aqueduct or canal Ehe primarypurpose of which is to convey water from one unit to another unit inthe source of supply, waLer treatment or pumping plant and generallyproviding no service connections with customers.
"Transmj-ssion and distrj-bution mainl means any main the primarypurpose of which is to convey wat,er, reguiring no further processingexcept incidental chlorination or pressure boosting, from a unit inthe source of supply, water treat,ment or pumping plant and generallyproviding no service connectj-on with customers.
40. nutility", as used herein and when not otherwise indicated in thecontext, means any public ut,ility to which this system of accountsis applicable.
oess33.
34.
38.
39.
37.
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ACCOI'NTING INSTRUCTIONS
t.Genera] - Classification of Utilities
For the purpose of applying the system of accounts prescribed
the Commission, water utilities are divided inEo three classes,follows:
Utilities having annualof $1, 000, 000 or more.
Utilities having annualof $200,000 or more but
Utilities having annualof less than $200,000.
B. This system of accounts applies to Class B utilities. The
system of accounts applicable t.o Class A and C utilities areissued separately.
C. The class to which any utility belongs shaII originally be
determined by the average of its annuaL water operating revenuesfor the last three consecutive years. Subsequent changes inclassification sha1l be made when the average annual wateroperatingt revenues for the three immediately preceding years
exceed the upper limit or are less than the lower 1imit, of theannual water operating revenues of the classification previouslyappllcable to the utility. For a utility with both water and
wasEewater operations, the classificat,ion shalI be based on theoperation with the highest annual revenues.
General - Records
A. Each utility shalI keep its books of account, and all otherbooks, records, and memoranda which support the entries in suchbooks of accounts so as to be able to furnish readily fu11information as to any item included in any accounL. Each entryshal1 be supported by such detailed information as will permit aready identification, analysis, and verification of all factsrelevant theret.o.
B. The books and records referred to herein include noL onlyaccounting records in a limited technical sense, but all otherrecords, such as minute books, stock books, reports,correspondence, memoranda, etc., which may be useful in developingt,he history of , or facts regarding, any transaction.
C. No utility sha11 destroy any such books or records unless thedestruction thereof is permitted by rules and regulations of theCommission.
A.
by
as
Class A
Class B
Class C
watrer operatring revenues
water operating revenuesless than $1, 000, 000 .
water operating revenues
2.
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ACCOUNTING INSTRUCTIONS
D. In addition t,o prescribed accounts, clearing accounts,
temporary or experimental accounts, and subdivisj-ons of any
account, r?y be kept, provided the integrity of the prescribed
accounts is not impaired.
E. A11 amounts included in the accounts prescribed herein forutility pIant, and operating expenses shal1 be just and reasonable
and any payments or accruals by the utility in excess of just and
reasonable charges shall be included in account 426 - MiscellaneousNonutiLity Expenses.
F. The arrangement or seqluence of the accounts prescribed herein
sha1l not be controlling as to t,he arrangement or sequence inreport forms which may prescribed by the Commission.
3. General - Numberinq Svst,em
The account numbering scheme used herein consists of a systemthree digit numbers as fol-Iows:A.of
100-199
200 -299300-349
400-434
435-439
450-489
500-599
Assets and Other DebitsEquity, Liabilities and Other CreditsWater Plant Accounts
Income AccountsRet,ained Earnings AccountsWater Operating Revenue AccountsWater Operat,ion and Maint.enance Expenses
(
B. The utility plant and operation and mainEenance expenseaccounts are further subdivided using a suffix of one decimal placeas explained in following instructions.
C. In certain instances, numbers have been skipped in order toal1ow for possible later expansion or to permit better coordinationwith the numbering system for other utilit,y departments.
D. The numbers prefixed to account titles are solely forconvenience of reference and are not a part of the titles. Eachutility may adopt such scheme of account numbers as it deemsappropriate; provided, however, that is sha1l keep readilyavail-able a list of the account numbers and subdivisions of
accounEs which it uses and a reconciliation of such numbers andsubdivisj-ons wlth the account numbers and titles provided herein.Further, the records must be kept. t,o permit classification or
summarizaLion of each accounti-ng period according to t,he prescribedaccounts.
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ACCOUNTING INSTRUCTIONS
General - Accountinq Period
Each utility shall keep its books on a monthly basis so thatfor each accounting period all transactions applicable theret.o, BSnearly as may be ascert,ained, sha11 be entered in the books of theutility. Each utility shall close its books at the end of each
caLendar year unless otherwise authorized by the Commission.
General - Submittal of Ouestions
To maintain uniformity of accounti-ngr, utilities sha11 submit
questj-ons of doubLfuf interpretat,ion to the Commission forconsideration and decision.
6 . General - rr Itemil Lists
List of "items" appearing in the texts of the accounts or
elsewhere herein are for the purpose of more clearly indicating theapplication of the prescribed account,ing. The l-ists are intendedto be representative, but not, exhaustive. The appearance of anltem in a list warrants the inclusion of the item in the accountmentioned only when the text of t.he account also indicatesinclusion inasmuch as the same item freguently appears i.n more than
one list. The proper entry in each instance must be determined bythe texts of t,he account,s.
General - Extraordinarv Items
It is the intent that net income shall reflect all items ofprofit and loss during the period with the sole exception of priorperiod adjustments as described in Accounting Instruction 8. Thoseitems related to the effects of events and transacti-ons which haveoccurred during the current period and which are not typical orcustomary business activities of t.he company sha11 be consideredextraordinary it.ems. Commission approval must be obtained to t.reatan item as extraordinary. Such request must be accompanied bycomplete detailed information.
General - Prior Period ftems
A. A11 prior period adjustments to retained earnings shal1 beapproved by t,he Commission. Generally the only type oftransactions which will be considered as a prior period adjustmentare:
(f-) Correction of an error in the financiaL sEatement,s of aprior period; or
(2) Adjustments that. result from realizat.ion of income taxbenefits of preacquisition Loss carry forwards of purchasedsubsidiaries.
4.
5.
7.
8.
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ACCOI'NTING INSTRUCTIONS
B. Prior period adjustments, when approved, shal1 be charged orcredited to account 439 - Adjustments to Ret,ained Earnings, and arenot considered in income of the period. Prior period adjustment.sshall be recorded net of all state and federal income tax effects.
C. Changes in depreciat,ion or amortization est,imat,es or methodsare considered changes in accounting estimates rat,her than
accounting errorsi and therefor are not subject to prior period
adjustments. Any adjustments made to the accumulated amortizationor depreciation balances of the ut.ility due to a change in estimateor method shall be offset by a charge or credits to either: an
income account; account 185 - Miscellaneous Deferred Debj-tsi or
account 253 - Other Deferred Credits, a's is direct,ed by the
Commission.
General - Allocation of Salaries and Expenses of Employees
Charges to utility plant or to a salaries expense accountshall be based upon the actual time engaged in either pIant.construction or providing operation services. In the event actualtime spent, in the various activities is not available orpracticable, salaries should be a1locaE,ed upon the basis of a study
::.'l: :lH: ::n3fl:u,:::il?."o:::5"ff::"::H-:E51"3; r:n3ln::"ii::0fashion.
l-0. General - Pavroll Distribution
Underlying accounting data shal1 be maintained so that thedistribution of the cost,s of ]abor charged to the various accountswi]] be available. The utility may utilize clearing accounts inits accounting process; however, the use of clearing accounts doesnot relieve t,he utility from the responsibility of providing adistribut,ion of the costs of labor or from being able tosubstantiate its Labor charged wit,h sufficient. source documents.
1l-. General - Operatinq Reserves
Accretions to operating reserve accounts made by charges tooperating expenses sha11 not, exceed a reasonable provision for theexpense. Mat,erial balances in such reserve account.s shall not bediverted from the purpose for which provided, unless the permissj.onof the Commission is'first obt.ained.
1-2. General - Accountinq for Other Departments
If Lhe ut,ility also operates other utility departments, such
ffi" "l;;:I' E;nIl:::Xi: ":; fl:i' b:';;: : :lri33' irn;::n:I':":;::H;" "@iin the absence of prescribed accounts, it sha1l keep such accountE
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ACCOI'NTING TNSTRUCTIONS
as are proper or necessary to reflect the results of operating each
other depart.ment.
13. Utilitv Plant - To be Recorded at Cost
A. All amounts included in the accounts for utilit,y plant
acquired as an operating unit or system, shaLl be stated at the
cost incurred by the person who first devoted the property Eo
utilit.y service. All other utillty plant sha1l be included in the
accounts at the cost incurred by the utilit,y except as otherwiseprovided in the E.exts of Ehe intangible plant accounts. Where the
term I'costl' is used in the detailed p1ant, accounLs, it shall have
t,he meaning stated in this paragraph (See Definition 9).
B. When the consideration given for property is other than cash,the value of such consideration shall be determined on a cash
bas j.s. In the ent.ry recording such t.ransaction, the actualconsideration sha1l be described with sufficient particularity toidentify it. The utility sha1l be prepared to furnish the
Commission the part.iculars of its determinat.ion of the cash valueof the consideration if other than cash.
C. When property is purchased under a plan involving deferredpayments, DO charge shal1 be made to the ut,iIit.y plant accounts forinterest, insurance, or other expenditures occasioned so1e1y bysuch form of payment.
D. Utility plant accounts shaII be charged with constructioncosts (estimated, if not known) of the utility plant, contributed byothers or constructed by t.he utility using contributed cash or itsequivalent. For contributed utility p1ant, the accumulateddepreciation or amortization account, sha1l be charged with the
est,imated amount of depreciation or amortization applicable to theproperty at the time it was contributed to the utility. Account271 - Contributions in Aid of ConsEruction shaI1 be credited withthe net of the amounts charged t,o the plant and the accumulateddepreciation of amortj-zation accounts. For plant constructed usingcontributed cash or its equivalent, account 271 - Contributions inAid of Construction sha1I be credited with the amount of t.he cashor its equivalent contribution.
Ut,i-litv P1ant. - Components of Construction Cost
The cost of construction of property chargeable t.o t,heutility plant accounts sha11 include, where applicable, the costIabor, materials and supplies, transportation, work done by othersfor the utility, injuries and damages incurred in const.ructionwork, privileges and permits, special machine service, allowancefor funds used during construction and such portion of generalengineering, administrat.ive salaries and expenses, insurance, taxesand other analogous items as may be properly includible in
14.
1,7
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ACCOI'NTING INSTRUCTIONS
construct,ion cost
Note: The cost of individuaL items of equipment of less than
$400 or of short life, including smaIl portable tools andimplements, sha11 not be charged to utility plant accounts unlessthe correctness of the accounting therefor is verified by currentinventories. The cost shal1 be charged to the appropriat.eoperating expense or clearing accounts, according to the use of
such items, or, if such items are consumed directly in constructionwork, the cost shaIl be included as part of the cost of theconstruct,ion unit.
Utilitw Plant - Overhead Construetion Costs
A. A11 overhead construction costs, such as engineering,supervision, general office saLaries and expenses, constructionengineering and supervision by others than the accounting utility,1egaI expenses, insurance, injuries and damag€s, relief andpensions, taxes and allowance for funds used during construction,sha]1 be charged to particular jobs or units on the basis of t.he
amounts of such overheads reasonably applicable thereto, so thateach job or unit sha1l bear j-ts equitable proport,ion of such costsand that, the entire costs of t,he unit, both direct and overhead,
i3"l:.i:"3:u".."d from the plant accounts at the time the prop".t@
B. As far as practicable, the determination of payroll chargesincludible in construction overheads shall be based on time carddistributions t,hereof. Where this procedure is impractical,speclal studies shall be made periodically of the time ofsupervisory employees devoted to construction activities so thaEonly such overhead costs as have a definite relation toconstruction shall be capitalized. The addition to directconstruction cosEs of arbitrary percentages or amounts to cover
assumed overhead costs is not permitted.
]-5. Utilitv Plant - Purchased or Sol-d
A. When utility plant constitut.ing an operating unit or system isacquired by purchasie, merger, consolidation, liguidation, orotherwise, the costs of acquisition, including expenses incident.althereto properly incfudible in ut,ilit.y p1ant, shall be charged toaccount, tO4 - Utility Plant Purchased or SoLd.
B. The accounting for the acguisition shal1 then be completed asfoLlows:
(1) The original cost of pIant., estimat,ed if not known, shal1be credited to account l-04 - Utility Plant Purchased omSo1d, and concurrently charged to the appropriate util(E$fplant. in service accounts and account tO2 - Utility plaE-t
18
ACCOIINTING INSTRUCTIONS
Leased to Others and account l-03 - Property Held for
Future Use, and account l-05 - Construction Work in
Progress, BS appropriate.
(2) The requirements for accumulated provision for
depreciation and amortization applicable to theoriginal cost of the properties purchased, if required
by the Commission t,o be recorded by the accountingutility determined with due regard to operatingpractices of the purchaser and his plans regarding suchproperty, and giving consideration also to the effect.
on such requirements of any rehabilitatlon expenditures(see Paragraph C), shal1 be charged to account l-04Utility P1ant Purchased or So1d, and concurrentlycredited to the appropriate account for accumulated
depreciaEion or amortization.
(3) The cost to the utility of any nonutility plant shallbe transferred to account L21, - Nonutility Property.
The amount of contributions in aid of constructionapplicable to the property acquired, and which thepurchaser may be required to record, sha1l be chargedto account 104 - Utility Plant Purchased or Sold, andconcurrently credited to account 271- - Contributions inAid of Construction.
The amount of accumulated amortization applicable tocontributed property, and which the purchaser may berequired to record, shalI be credited to account L04Utility Plant Purchased or Sold and concurrentlydebited to account 272 - Accumulated Amortization ofContributions in Aid of Construction, according to theregulatory treatment of the Commission.
(5) The amount remai-ning in account 104 - Utility Plant
Purchased or Sold, shall then be closed to accountl]..4 - ULility Plant Acquisition Adjustments.
C. If property acquired in the purchase of an operating unit orsystem is in such physical condition when acquired that it isnecessary substant.ially to rehabilitate it in order to bring theproperty up to the standards of the utility, the cost of such work,
except replacements, shall be accounted for as a part of thepurchase price of the property.
D. When any property acguired as an operating unit or systemincl-udes duplicate or other plant, which will be retired by theaccounting utilit.y in the reconstruction of the acquired propertyor its consolidation with previously owned property, the accountingfor such properEy shaI1 be presented to the Commission.
(4)
(s)
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ACCOI'NTING INSTRUCTIONS
E. In connection with the acquisition of utility pIant, Eheutility shaIl procure, if possible, all existing records relatingto the property acquired, or certified copies thereof, and shallpreserve such records in conformity with regulations or practices
governing the preservation of records of its owrr construction.
F. When utility plant constj-tuting an operating unit or system issoId, conveyed, or transferred to another by sa1e, mergler,consolidation, or otherwise, the book cost of the property soLd ortransferred to another shaIl be credited to the appropriate utilityplant accounts, including amount.s carried in account. L14 - Utility
P1ant Acquisition Adjust,ments, and t,he amounts (estimated if not,
known) carried with respect thereto in the accounts for accumulateddepreciation and amortization and j.n account 252 - Advances forConstruction, and account 27]- - Contributions in Aid ofConstruction, shal1 be charged to such accounts and the contraentri-es made Eo account l-04 - Utility Plant Purchased or SoId.
Unless otherwise ordered by t,he Commission, the difference, if anybetween (a) the net amount of debits and credits and (b) theconsideration received for the property (less commj.ssions and other
expenses of making the sale) shall be incLuded in account 414Gains (Losses) From Disposition of Utility Property (See account
104 - Utility Plant. Purchased or Sold).
Note:--In cases where existing utilit,ies merge or consolidatebecause of financial or operating reasons or statutory requiremenrat.her than as a means of transferring title of purchasedproperties to a new owner, the accounts of the constituentutilities, with the approval af the Commission, may be combined.In the event original cost has not been determined, the resultingutility sha11 proceed to determine such cost as outlined herein.
L7. Utility Plant - Accountinq for Capital and Operatj-nq Leases
A. For each lease entered into, the utility shal1 maintainsufficient documents and other background information as necessaryt,o determine whether the lease is a capit,al or operating lease.This i"nformation includes but is not limited to:
@ts
(1
Q
(3
(s
(s
Evidence or documents of ownership;Signed copies of the lease agreement,.Estimated life of the leased property,
Evidence as to the value of the leased property;
Evidence as to the lessor's implicit interest rate(if availabl-e) ;Evidence as to the Lessee's borrowing rate; andThe amount and dispositj-on of executory costs (taxes,
mainEenance and insurance) .
(s(t
B. Leases sha1l be accounted for by the utility as described iStatement of FinanciaL Accounting Standards Nos. L3 (as amended)
20
18.
ACCOI'NTING INSTRUCTIONS
and 71 published by the Financial Accounting Standards Board;
however, the Commj-ssion may elect to approve the entries made t.o
the utilities accounts in recording t.he ef fect of utilit,y leases.
C. Capitalized leases shalI be recorded in the appropriate plantin service account (s) which describe the type of asset leased.
These records sha1l be maintained in sufficient. detail such that
the utility will be able to report the number, general nature, and
residual balances of all capitalized leased assets as well as any
related leasehold amortization balances and the balance of any
leasehold obligations .
IItif itv Plant - Exoenditures on Leased Prooertv
A. The cost of substantial initial improvements (including
repairs, rearrangements, addiEions and bettermenEs) made in thecourse of preparing for utility property leased for a period of
more than one year, and the cost of subsequent substantialadditions, replacements, ot betterments to such property, shal1 becharged to t,he utility plant account appropriate for the class ofproperty leased. If the service life of Ehe improvements isterminable by action of the lease, then the cost, less net salvage,of the improvements shal] be spread over the life of the lease bycharges to account 407.L - Amortization of Limited Term P1ant.
However, if the service life is not terminated by action of thelease, but by depreciation proper, then the cosL of theimprovements, less neE salvage, shall be accounted for asdepreciable p1ant.
B. If improvemenEs made to property leased for a period of morethan one year are of relatively minor cost, or if the lease is fora period of not more t,han one year, the cost of the improvementssha1l be charged to the account in which the rent j-s included.
Utilitv Plant - Land and Land Riohts
A. The accounts for land and land rights include the cost ofland owned in fee by the ut.ility and rights, interests, andprivileges held by the utility in land owned by others, such asleaseholds, easements, water and water power right.s, diversionrights, submersj-on rights, rights of way, and other like interest,sin land. Do not include in the accounts for land, land rights, andrights of way cost,s incurred in connection with first, clearing andgrading of land and rights of way and the damage costs assoclatedwith the construction and installation of pIant. Such cost.s shal1be included in the appropriate plant accounEs directly benefited.
B. Where special assessments for public improvements provide fordeferred payments, the fu1I amount, of the assessments sha11 be
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ACCOI'NTING INSTRUCTIONS
charged to the appropriate land account and the unpaid balance
shaLL be carried in an appropriate liabitity account. Interest on
unpaid balances sha11 be charged to the appropriate interest
expense account. If any part of the cost of public improvements is
included in the general tax levy, the amount thereof sha1l be
charged to the appropriate tax account.
C. Separate ent,ries sha1l be made for the acquisition, transferor retirement of each parcel of land, and each land right (except
rights of way for distribution lines), or water rights, having alife of more than one year. A record shall be maintained showingthe nature of ownership; fuII 1egaI description; area; maPreference; purpose for which used,' city; county; and tax districtin which situated; from whom purchased or to whom sold; payment.given or received; other costs; contract dat,e and number; date ofrecording of deed; and book and page of record. Entriestransferring or retiring land or land rights sha1l refer to theoriginal entry recording it,s acquisition.
D. Any difference between the amount received from the sale ofland or land rights, less agents' commissions and other costsincident to t,he sa1e, and the book cost of such land or rights,shal1 be included in account 41-4 - Gains (Losses) from Disposition
Sl.TllilL 5':::tI; ""31 ;: :,?= :"::il:,: l:I"::';"lii,5"il,"8;3"" = cCommission. Appropriate adjustments of the account,s shall be madewit,h respect to any structures or j-mprovements locat,ed on landsoId.
E. The cost of buildings and other improvements (other thanpublic improvements) sha11 not be included in the Land accounts.If at the time of acquisition of any interest in land, suchinterest extends to buildings or other improvements (other thanpublic improvement,s), which are then devoted to water operations,the Land and improvements sha11 be separately appraised and thecost allocated to land and buildings or improvements on the basisof t,he appraisals. Tf the improvements are removed or wreckedwithout being used in operations, the cost, of removing or wreckingsha]I be charged and the salvage credited to the account in whichthe cost of the land is recorded.
F. When the purchase of land for utility operations requires t,hepurchase of more Land than needed for such purposes, the charge tothe specific l-and account shall be based upon the cost of the Landpurchased, less t,he fair market value of that portion of the landwhich is not to be used in utility operations. The portion of t,hecost measured by the fair market value of the land not to be usedshall be included in account 103 - Property Held for Future Use, oraccount L21- - Nonut j.Iity Property, Ers appropriate. / ,.1,@
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ACCOI'MTING INSTRUCTTONS
G. Provision shall be made for amortizing amounts carried in the
accounts for limited term int,erests in land so as to apportion
equitably the cost of, each interest over the life thereof (See
account. 407.7 - Amortization of Limited Term Plant) .
20. Utj-Iitv P1ant, - Structures and Improvements
A. The accounts for structures and improvements include the costof all buildings and facilities to house, support, or safeguardproperty or persons, including all fixtures permanently attached to
and made a parE of buildings and which cannot be removed therefromwithout cutting j.nto the waI1s, ceilings, or floors, or wiLhout, in
some way impairing the buildings, and improvements of a permanent
character on or to land. Also include those costs incurred in
connection wlth the first clearing and grading of land and rightsof way, and the damage costs associated with construction andinstallation of p1ant.
B. The cost of specially provided foundatlon, not intended tooutlast the machinery for apparatus for which provided, and thecost of angle irons, castings, etc., installed at the base of anyitem of equi-pment, shal] be charged to the same account as the costof t,he machinery, apparatus, or equlpment.
C. Minor buildings.and structures, such as valve towers,patrolmen's towers, telephone stations, etc., which are useddirectly in connection with or form a part of a reservoir, dam,waterway, etc., sha11 be considered a part of that facilityconstructed or operated and the cost t.hereof accounEed foraccordingly.
D. The cost of disposing of materials excavated in connectlonwith construction of structures sha1l be considered as a part ofthe cost of such work, except as follows: (a) When such materialis used for fiIling, the cost of loading, hauling, and dumpingshall be equitably apportioned between the work in connection withwhich the removaf occurs and work in connection with which thematerj-aI is used; (b) When such material is soId, t,he net amountrealized from such sales shall be credited to the work inconnection with which the removal occurs. If the amount realizedfrom the sale of excavated materials exceeds the removal costs andt.he costs in connection with the sale, the excess shalL be creditedto the land account in which the site is carried.
E. Lighting or other fixtures temporarily attached to buildingfor purposes of display or demonstration sha11 not be included inthe cost of the building, but in the appropriate equipment account..
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AECOU!{TING INSTRUCTIONS
21. utilitv Plant - Ecruipment
A. The cost of equj-pment chargeable to the ut.ility plant
account,s, unless otherwise indicat,ed in the t,ext of an equipmentaccount, includes the net purchase price thereof, .saIes taxes,investigation and inspection expenses necessary to such purchase,
expenses of t,ransportation when borne by the utility, labor
employed, mat,erials and supplies consumed, and expenses incurred bythe utility in unloading and placing the equipment in readiness tooperate. Also include those costs incurred in connection wit,h thefirst clearing and grading of land and rights of way and the damagecosts assocj.ated with construcEion and installation of p1ant.
B. Exclude f rom equipment. account,s hand and other port.abletools, which are Iikely to be lost. or stolen or which have a valueof less than $400 or short life, unless t,he correctness of theaccounting therefor as utility plant is verified by currentinventories. Special tools acquired and included in the purchaseprice of eguipment sha1l be included in the appropriat.e plantaccount. Portable drills and similar tool equipment, when used in
conneeEj-on with the operation and maintenance of a particuLar plantor department or in I'storesit, shall be charged to the plant accountappropriate for their use.
C. The equipment accounts shaIl include angle irons and simiI"$items which are installed at the base of an item of equipment, butpiers and foundations whlch are designed to be as permanent as Ehebuildings which house the equipment, or which are constructed as apart of the buildings and which cannot be removed without cutt,inginto the waIls, ceilings or floors wit,hout in some way impairingthe building, sha1l be included in the building accounts.
D. The equipment accounts shal1 include the necessary costs oftesting or running a plant or parE t,hereof durj-ng an experiment,alor test period prior to becoming available for service. Theut.ility shal1 furnish the Commission with fuII particulars of andjustification for any test or experimental run extending beyond aperiod of thirty days.
E. The cost of efficiency or other test,s made subsequent to thedate equipment, becomes available for service shaIl be charged tothe appropriate expense accounts, except that t,ests to determinewhether eguipment meets the specifications and requirements as toefficiency, performance, etc., guaranteed by manufacturers, madeafter operatJ-ons have commenced and within the period specified inthe agreement or contract of purchase, may be charged to theappropriate uti-lity plant account.
24
22.
ACCOUIITING INSTRUCTTONS
Utilitv Plant - Addi!ions and Retirements
A. For the purpose of avoiding undue refinement in account,ingfor additions to and retirements and replacements of utility p1ant,
all propert,y shaLl be considered as consisting of (1) retirement.
units and Q) minor items of property. Each utility sha1l use such
Iist. of retirement units as is in use by it aE the effective date
hereof or as may be prescribed by the Commission, with the opEion,
however, of using smaller units, provided the utility's practice
in this respect is consistent.
B. The addition and retirement of reti-rement units sha1l be
accounted for as follows:
(1) When a retj-rement unit is added to the utilj.ty pIant, the
cost thereof sha]I be added to the appropriate utilityplant account, except that when units are acquired in
the acquisitlon of any utility plant constit,uting an
operating system, they sha1l be accounted for asprovided in Inst,ruction L5.
(2) When a retirement unit is retired from utility plant,with or wit,hout replacement, t,he book cost thereofshall be credited to the utilit,y plant account in whichit is included, determined in the manner set forth in
paragraph D, below. If the retiremenE unit is of adepreciable c1ass, the book cost of the unit retired
and credited to utility plant shaLl be charged to the
accumulated depreciation applicable to such property.
The cost of removal and the salvage shall be charged orcredited, ES appropriate, to such depreciation account.
The addition and retirement of minor items of property sha11
accounted for as fo]lows:
(1) When a minor item of property which did not previouslyexj-st is added to plant and a substantial additionresults, the cost thereof shaI1 be accounted for in the
same manner as for the addition of a retirement unit,as set forth in paragraph B(1), above, otherwise the
charge sha11 be t,o the appropriate maintenance expense
account.
(2) When a minor item of propert,y is retired and notreplaced, the book cost thereof shall be credited tothe uEiLity plant account in which it is includedi and,in the event the minor item is a part of a depreciablepIant, the account for accumulated depreciation shallbe charged with the book cost and cost of removal and
C.
be
(
25
ACCOI'!i|:TING INSTRUCTIONS
credited with the salvage. If, however, the book costof the minor item retired and not replaced has been orwill be accounted for by its inclusion in theretirement unit, of which is a part when such unit is
retired, rro separate credit to the property account is
required when such minor item is ret.ired.
(3) When a minor item of depreciable property is replaced
independently of the retirement unit of which it is apart, the cost of replacement sha11 be charged to the
maintenance expense account appropriate for the item,
except that if the replacement effects a substantial
bettermenE . (the primary aim of which is to make theproperty affected more useful, more efficient, ofgreater durability, or of greater capacity), the excess
cost of the replacement over the estimated cost atcurrent prices of replacing without betterment sha11 be
charged to the appropriate ut,ility plant account.
D. The book cost of the utilit,y plant retired shaIl be the amountat which such property is included in the utility planE accounts,includj-ng all components of construction costs. The book costshall be determined from the utility's records and if this cannotbe done, it shal1 be estimated. When it is impracticable t,o
i:ffi :T' 3i !l3rl":5= ;":1. ::"; :":""l*;"Sli ": : :*,IE: ";::;' I"] i'ffi @the units, with due allowance for any dj.fferences in size andcharacter, shal1 be used as t,he book cost of the units retired.
E. The book cost of land retired sha11 be credited to theappropriate land account. If the land is sold, the difference
bet,ween the book cost and the sale price of the land (less
commissions and other expenses of making the sale) shal1 beincluded in account 41-4 - Gains (Losses) from Disposition ofUtility Property, unless otherwise authorized or required by theCommission. If the land is not used in ut,ility service buE isretained by the ut.ility, the book cost shal1 be charged Eo account
103 - Property Held for Future Use, or account 1-21- - NonutilityProperty, Ers appropriate.
F. The book cost less net salvage of utility plant retired shaLlbe charged in its entirety to account L08 - AccumulatedDepreciation and l-10 - AccumuLated Amortization of Utility Plant inServj-ce. Any amounts which, by approval or order of the
Commission, are charged to account L82 - Extraordinary PropertyLosses, sha1l be credited to account 108 - Accumulated Depreciated
and 1L0 - Accumulated AmortizaEion of Utility Plant in Service.
26
23.
ACCOI'IITING INSTRUCTIONS
G. In some instances the unexpected early retirement of a majorunit of property, which would eliminate or seriously deplet.e theexisting depreciation reserve, Rdy require accounting treatment
which differs from that descrlbed in paragraph B above. In suchinstances the Commission may authorize or order the loss onretirement (Iess any tax savings) to be charged to income in thecurrent year or transferred t,o account 185 - Miscellaneous DeferredDebiEs, and amortized in future periods. Such accounting treatmentsha1l be used only when specifically authorized or directed by the
Commission.
Utilitw Plant - Transfers of Prooertv
A. When property is transferred from one utility plant account.to another, from one utility department to another, such as from
wat.er to wastewater, from one operating division or area toanother, to or from Utility P1ant in Service, Utility Plant Leasedto Others and Property Held for Future Use, the transfer shall berecorded by transferring the original cost t.hereof from the oneaccount, department, or location to the other. Any related amountscarried in the accounts for accumulated depreciation oramortization shall be transferred in accordance with thesegregation of such accounts.
B. When depreciable property is transferred from the utilityplant accounts to account 1,21 - Nonutility Property, Ehe transfershaI1 be accomplished by credit,ing the utility plant accounts andcharging the accumulated depreciation with the book cost of theitem transferred; the accumulated depreciation shall then becredited and account 1-2l - Nonutility Property, concurrentlycharged with the market value of the property transferred. If theproperty is sold within a rel-atively short time, a debit or creditsha1l be made Eo accumulated deprecj-ation to adjust the estimatedsalvage to the amount actually realized.
24. Utility Plant - Common Plant
A. If the utility is engaged in more than one utility servicesuch as water, wastewater, electric and gas, and any of its utilityplant is used in common for several utility services or for otherpurposes to such an extent and in such manner that it isimpracticable to segregate it by utility services current,ly in theaccounts, such property with the approval of t,he Commission, may bedesignated and classified as I'common utility pIant".
B. Utility plant designated as common utility planE shaIl beclassified according to the detailed utility plant accountsappropriat,e for the property.
27
ACCOI'MTTNG INSTRUCTIONS
C. The utility shall be prepared to show at any time and toreport to the Commission annualIy, or more frequently, if required,
and by utility plant accounts (301 to 348) the following: (1) the
book cost of common ut,ility plant 12) the allocation of such costto the respective departments using t,he common ut,i.1iEy plant and(3) the basis of the allocation.
D. The accumuLated depreciatj.on and amortization of the utilityshall be segregated so as to show the amount applicable to theproperty classified as common utility plant.
E. The expenses of operat5-on, maint,enance, rent, depreciation and
amortization of common ut,ility plant shall be recorded in t,he
accounts prescribed herein but designated as common expenses, andthe allocat,ion of such expenses to the departments using the commonutility plant sha1l be supported in such manner as to reflectreadily the basis of allocation used.
25. Utilltv Plant - Multiple Use
Land, rights of way and structures used joint.ly for severalfunctions sha11 be classified according t.o the major use thereof.
25. Utilitv Plant - Plant AccounE. Matrix
A. C1ass B utilities are required to subdivide the plant
accounts into "functionalrr operatj.ons. Each object account shallbe subdivided as shown in the plant account matrix shown on page76. The subaccounts are to be designated by adding a suffix of one
decimal place to the t,hree digit account. number.
B. The "functionalrr operations for the wat,er system are listedbelow along with the designat.ed suffix:
.1 Intangible p1ant..2 Source of supply and pumping plant.3 Water treatment plant.4 Transmission and distribution plant.5 General Plant
27. Operatinq Income - Depreciation Expense
A. Depreciation charges shalI be computed using either thestraight-1ine remaining life method (See definition 35) or thestraight-line method (See definition 37), according to which met,hodhas been approved by the Commission. Composite depreciation rates(See definition 8) may be used wit.h prior Commission approval.
When at all possible, separate depreciation charges shall- be
comput.ed for both contributed p1ant, and for plant generating
28
ACCOIINTING INSTRUCTIONS
investment tax credit,s including progress payment investmenE tax
credits.
B. When t,he st,raight-line remaj.ning life method is used, the
rates shall be reviewed periodically and adjusted as reguired, so
that the depreciation accrual will bear a reasonable re1at.'ionship
to the remaini.ng Iife, the estimated net future salvage, cost ofplant in service and to the balance of accumulated depreciation
accrued in prior periods.
C. When the straight-line met,hod is used, the rates sha1l be
reviewed periodically and adjusted as required, so that t.hedepreciation accrual will bear a reasonable relationship to the
service Iife, the estimated net salvage, and the cost of plant in
service.
D. Amortization of contri-butions in aid of construction (CIAC) ,if recognized by t,he Commission, shall be crediLed to account 403
Depreciation Expense. The concurrent debit is to account 272
Accumulated AmorEizat.ion of CIAC. The resulting balance in the
depreciat.ion expense account will be net of CIAC amortization.
CIAC shaIl be amortized over a period equal to the est.imatedservice tife of the related contribut,ed asset. A group compositeor overall composite rate, which ever is applicable, may be usedfor CIAC that can not be directly related to a particular plant
asset.
28. Operatinq Income - Income Taxes
A. Current income tax provision
The utility shaII initially debit accounE 409 - IncomeTaxes, and credit account 236 - Accrued Taxes, Eorecord its estimated current income tax liability. Asthe exacL amounts of taxes become known, the currenttax accrual-s shall be adjusted by debits or credits to
these accounts unless such adjustments are properlyincludible in accounE 2l-4 - Appropriated Retained
Earni-ngs or account 215 - Unappropriated RetainedEarnings, so that these accounEs as nearly as can beascertained shall include the actual taxes payable bythe utility.
The accruals for income taxes shall be apportioned
among utility departments and to Other Income and
Deductions so that, ds nearly as practicable, each taxshaIl be included in the expenses of t,he utility
department or Other Income and Deductions, sha1l berelated to the income which glave rise to the tax. The
income tax effect of amounts recorded in account 2L4Appropriated Retained Earnings or account 21-5Unappropriated Retained EarnJ.ngs, shaIl be recorded in
29
(L)
Q)
ACCOIINTING INSTRUCTIONS
that amount.
B. Interperiod Tax Allocation - Depreciation
(1) The Federa] Economic Recovery Tax Act of l-98L (ERTA)
ERTA provides that a utiLity claiming accelerateddepreciation (Accelerated Cost Recovery System (ACRS) )
must use a normalized method of accounting for federal
income taxes on its regulated books of account and for
ratemaking purposes. A ut,ility must use the same
deprecj.ation method and service lives i-n comput,ingfederal income tax expense when est.ablishing cost ofservice for rat,emaking purposes as is used in its
regulated books of account, or if it uses a different
method, it must make adjustments to a reserve to reflect,the deferral of taxes resulting from such differences.Similarly, in order to claim investment t,ax credits, autility must defer the entire balance of investment taxcredlts on its books of account and amortize the balanceover the life of the related property.
C. Comprehensive Interperiod Income Tax Allocatj-on - Other ThanDepreciation.(fl(1) Certain regulatory bodies have requS.red comprehensivei-nterperiod income tax allocation of all materialbook-tax timing differences other than depreci-ationdifferences. They have reasoned that where there aretiming differences between the period in whichtransactions affect taxable income and the periods inwhich they enter into t.he determination of pretaxaccounting income, the income tax effects of suchtransactions are to be recognized in the periods inwhich t,he differences between book accounting income ,1ndtaxable income arise and in the period in which t-redj-fferences reverse using the deferred tax method. Ingeneral, comprehensive interperiod tax allocation shouldbe followed whenever transactions enter into thedetermination of pretax accounting income for theperiod even though some transactions may affect thedetermination of taxes payable in a different period,as further qualified below.
30
($
ACCOI'IfiTING INSTRUCTIONS
(2) Utilities are noE required to utilize comprehensiveinterperiod income tax allocation until the deferred
income taxes are included as an expense in the rateIeve1 by t,he regulatory authority having ratejurisdiction over the utility. Where comprehensiveinterperiod tax a]location accounting is not practiced,the utility shal} include as a note t,o each financial
staEement, prepared for public use, a footnoteexplanation setting forth the utility's accountingpolicies with respect to interperj-od tax allocation anddescribing the treatment for raLemaking purposes of thetax timing difference by regulatory authorities havingjurisdiction.
(3) Should the utility be subject to more than one agencyhaving rate jurisdiction, its accounts shallappropriately reflect the ratemaking treaLment (deferral
or flow through) of each jurisdiction.
(4) Once comprehensive interperiod tax aLlocation has beeninitiated either in whole or in part it shal1 bepracti-ced on a consistent basis and shall not. bechanged or discontinued without, prj.or Commissionapproval.
31
ACCOI'IITING INSTRUCTIONS
EXAIVIPLE
The following example shows how the various transactions are
recorded:
a. A utility purchases depreciable plant at a cost of $L0,000.
The pIant, has a 10 year life with no salvage.
b. The utility's federal taxable income from utility operations,before the effect of depreciation is $30,000 (462 tax rate).
c. ACRS depreciat.ion for each year is $800, $L400, $1200, $1000,
$1000, $Loo0, $900, $900, $900, $900.
d. Book depreciation for each year using half year conventj-on inyear placed in service is: $500, $L000, $L000, $1000, $1000,
$1000, $l_000, $L000, $1000, $1000, $500 .
e. Investment tax credit is $800 ($10,000 x 8?) in order to use
100? of the $10,000 cost for ACRS depreciation.
f. Deferred taxes are caLcuLated by subtracting tax depreciationfrom book depreciat,ion and multiplying by the tax rate. If t,axdepreciation is greater than book, debit Account 410 and credit
i::3ll: 323 ""1t.::3l.ti::::il'ii3.is
sreater than tax' debit (D
Account
Number
AccountTitle Debit Credit
Year 1
1-a 409.10
236.1,
L-b 410.10
282
Income Taxes, Utility Operat,ingIncome i1-2,632Accrued Taxes, Utility Operat,ing
Income
To record taxes estimated bepayable for period(.45($30,000 - $800)) - $8oo
Deferred Income Taxes 138
Accumulated Deferred Income Taxes- Liberalized Depreciation
To record deferral of a porEion oftaxes based on the difference
between straight-1ine depreciation
and ACRS depreciation (.46 ($500-$800) .
NOTE:--The deferred tax balance of $138would either be deducted from rate
$t2,632
32
138
ACCOUIITING INSTRUCTIONS
Account
Number
AccountTitle Debit Credit
1- c 4L2 .1,0
255.1
1-d 255.1
4t2.30
1-e 255.L
41,2 .1,t
base or be included in capitalstructure at zero cost.
Investment Tax Credits Deferred toFuture Periods, Ut,ility Operations
AccumuLated Deferred InvestmentTax Credits, Utility Operations
To record the i-nvestment taxcredits realized and deferred tofuture years in accordance withprovj-sions of either the 'rGeneralRule"/Option 1 Treatment or the
"Special Rule for Ratable Flow
t,hrough"/Opt,ion 2 Treatment($10,000 x 8?) .
Accumul-ated Deferred Invest,mentTax Credits, Utilit,y Operations
fnvestment, Tax Credits Restoredto Nonoperating Income, Utility
Operations
To record ratable amortizati-on overthe book depreciable life of theinvestment Eax credits deferred tofuture periods ( .50 ($800 (1/r-0) ) ) .
NOTE:--The net balance of deferredinvestment tax credits ($800 - $40)would be either deducted from rate
base or included in capital structureat zero cosE. This treatment is
foll-owed by utilities subject t,o the
"General Rule"/OpEion L Treatment.
Accumulated Deferred Investment
Tax Credits, Utility Operat.ionsfnvestment Tax Credits Restoredto Operating Income, Utility
Operations.
To record ratable flow-throughover the asset's book depreciableLife of investment Eax credits deferredto future periods (.50 ($800
(r-l10) ) ) . NOTE: --The net
balance of deferred ITC ($800-
$40) would earn che overa]I
800
40
800
40
40
40
(
33
ACCOI'MTING INSTRUCTIONS
Account
Number
Account,Title Debit Credit
Year 2
2-a 409.10
236.1
2-b 4r.0. r-0
282
2-c 255.l-
41-2.30
rate of return. This t,reatmentis followed by utilitj-es subjectto "Special Rule for Rat,ableFlow-through"/Option 2 Treatment, .
Income Taxes, Utility Operating
IncomeAccrued Taxes, Utility Operating
Income
To record taxes estimated to bepayable for peri.od .45 ($30,000
sL,400) .
Deferred Income Taxes
$13, 155
Accumulated Deferred Income
Taxes - Liberal i zed Depreciation
To record deferral of a portionof taxes based on the difference
bet,ween straight-Iine depreciationand ACRS depreciation (.45 ($1000-
$1400) ) . NOTE: --The cumulativebalance of deferred taxes($rg8 + $rAa) would be either
deducted from rat,e base orj-ncl-uded in capital structure atzero cost.
Accumulated Deferred Investment
Tax Credits, Utilit.y Operations
Invest,ment Tax Credits Restoredto Nonoperating Income, UtilityOperations
To record raEable amortizationover the asset's book depreciablelife of the ITC deferred to futureperiods ($800 (r-lr.0) ) . NOTE:--Thenet balance of deferred ITC($800 - ($40 + $80) ) would be eitherdeducted from rate base or includedin capital structure at zero cost.This treaE,ment is followed by utilitiessubject to.the 'rGeneral Ru1e"/Optj.on 1
Treatment.
r.84
$13, 155
184
80
80
34
ACCOUIITING INSTRUCTIONS
Account
Number
AccountTirle Debit Credit
2-d 255.t
4t2.tt
Year 3
3-a 409.10
236.1
3 -b 4r_0 . r-0
282
3 -c 255 .l4t2.30
AccumuLaEed Deferred Investment Tax 80Credits, Ut,ility OperationsInvestment Tax Credits Restored to
Operating Income, Utility Operations
To record ratable flow-through over
t,he asset's book depreciable lifeof investment tax crediEs deferredto future perlod ($800 (1/10) ) . NOTE: --
The net. balance of deferred ITC ($800-($40 + $80) ) would earn the overallrate of return. This treaLment isfollowed by utilities subject tothe "Special Rule for Ratable
Flow-Through'r/Option 2 Treatment.
Income Taxes, Utility Operat,ing
Income
Accrued Taxes, Utility Operation
Income
13 ,248
To record taxes estimated to bepayable for the period (.46(930,000-
$L,2oo) ).
Deferred Income Taxes
Accumulated Deferred Income Taxes- Liberalized Depreciation
To record deferral of a portionof Eaxes based on the differencebetween st,raight-line depreciatj-on and
ACRS depreciation ( ($1,000-$a,200) .46)The cumulative balance of deferredtaxes ($L38 + $184 + $92) would beeither deducted from rate base orincluded in capital structure atzero cost.
"General Ruleu/Option L Treatmentutil"ities would record the sameentry as in Year 2 for amortizationof ITC. The net balance deductedfrom rate base or included incapital structure at zero cost wouldbe ($800- ($40 + 2 ($80))).
80
L3 ,248
92
92
(
35
80
80
ACCOUIiITING INSTRUCTIONS
Account AccountNumber Title Debit Credit
3-d 255.1 "Special Rrile for Ratable FLow- 804l2.tt Through"/option 2 Treatment '80
utilities would record the sameentries recorded in Year 2 forratable flow-through of ITC.
The net ITC balance earning theoveraLl rate of reEurn would be
$600.
Year 4
4-a 409.10 Income Taxes, UtiliEy OperatingIncome 13,340236.1 Accrued Taxes, Utility OperatingIncome 13,340
To record taxes est,imated to be payablefor the period (.46 ($30,000-$1,000) ) .
4-b 410.10 No entry would be made related to282 deferred taxes because book andtax depreciation are equa1. Thecumulative .balance of $414 wouldcontinue to be deducted from ratebase or included in capitalsEructure at, zero cost.
4-c 255.I "General Rule"/Opt,ion 1 Treatment I0- 4L2.30 utilities. Same entry as Year 2Net deferred balance ei-ther deductedfrom raEe base or included incapital struct,ure at zero costwould be ($800- ($e0+3 (S80) ) ) .
4-d 255.1 "Special Rule for Ratable Flow- 804l2.tt Through't /OpLi-on 2 Treatmentut.ilities. Same entry asYear 2. Net balance earningrthe overall rate of return wouldbe $520.
Year 5
5-a 409.10 Same entry as Year 4.
236.1
5-b 4L0.10 See Year 4.
282
80
80
36
13,340
r3,340
ACEOUIITING INSTRUCTIONS
Account
Number
AccountTitle Deblt Credit
($D,-.
5-c 255.1
4L2.30
s-d 2s5. L
412 .a\
Year 5
5-a 409.10
236.1
5-b 410.10
282
255.1
41,2.30
"General RuIe"/Option L Treat,ment.utilities. Same entry as Year 2.Net fTC balance deducted fromrate base or included in capitalstructure is $440.
"Special Rule for Ratable Flow-Through"/Option 2 Treatmentutilit,ies. Same entry as Year 2.Net ITC balance earning overallrate of return is $440.
Same entry as Year 4
See Year 4.
I'General RuIe"/Option L TreatmenEut,ilities same entry as Year 2.Net fTC balance deducted fromrate base or included in capitalstructure at zero cost is $350.
"Special Rule for Ratable FLow-
Through" /Option 2 TreatmenLut,ilities. Same entry as Year 2 .Net ITC baLance earning theoverall rate of return is $SeO.
Income Taxes, Util1t,y Operating
Income
Accrued Taxes, Ut,ility Operating
Income
To record taxes estimated tobe payable for the period(.46($3o,ooo - $eoo)).
Accumulated Deferred Income TaxesLiberalized Depreciat.ion
Deferred Income TaxeS
To record reversal of taxes
80
80
80
80
80
80
80
80
5-d 2s5.t4L2.Lt
L3,340
13,385
13 , 340
13, 385
7-b
(@
Year
7-a
7
409. L0
236.1-
282
410 . 10 46
37
46
ACCOI'If,TING INSTRUCTIONS
Account AccountNumber Title Debit. Credit
deferred in prJ-or years ($1000
$900) .46) . NOTE: --The net deferredtax balance deducted from rate
base or included in capital structureat, zero cost is $368.
'7-c 255.1 'rGeneral Rule"/Option 1 Treatment 804].2.30 utilities. Same entries as Year 2.Net fTC balance deducted from rate
base or included in capit,al structure.at zero cost is $280.
7-d 255.1 "Special Rule for Ratable Flow- 804L2.lt Through"/Option 2 Treatment,utilities. Same entry as Year 2.
NOTE:--Net ITC balance earningthe overall rate of return j-s $280.
Year I
8-a 409.10 Same entry as Year 7.236.t L3,385
13,385
8-b 282 Same entry as Year 7. 45
4l-0 . L0 NOTE: - -Net balance deduct,ed f rom 46rate base or included in capitalstructure at zero cost is $322.
8-c 255.1 "General RuLer'/Option 1 Treatment 80412.30 utiLities. Same entry as Year 2. 80NOTE:--Net ITC baLance deductedfrom rate base or incl-uded incapital structure at zero costis $200.
8-d 255.a "Special Rule for Ratable Flow- 804L2.tt Through"/Option 2 Treatment 80utiliEies. Same enEry asYear 2. NOTE:--Net ITC balanceearning the overall rat,e of returnis 5200.
Year 9
9-a 409. L0 Same ent.ry as Year 7 . 13,385236.1 13,385
8o
80
38
(.@
ACEOI'IIITING INSTRUCTIONS
Account AccountNumber Title Debit Credit
9-b 282 Same ent,ry as Year '7. NOTE:-- 464L0.10 Net balance of deferred taxes 46deducted from rate base orincluded in capital structureat zero cost is $276.
9-c 255.L "General Rule"/Option 1 Treatment 8041-2.30 utilities. Same entry as Year 2. 80NOTE:--Net balance ITC deducted
from rate base or included incapital structure at zero costis $120.
9-d 255.L ,'Special Rule for Ratable Flow- 804t2.Lt Through"/Option 2 Treatment 80utilities. Same entry as Year 2.
NOTE:--NeE balance ITC earningoverall rate of return is $fZO.
Year 10
10-a 409.10 Same entry as Year 7. 13,385236.L 13,395
1,0-b 282 Same entry as Year 7. NOTE:--410.l-0 Net balance deferred taxesdeducted from raEe base orincluded in capital structureat zero cost is 5230.
10-c 255.1 "General Rule"/Option 1 Treatment 804L2.30 utilities. Same enEry as Year 2.NOTE:--Net balance ITC deductedfrom rate base or included incapital strucEure at zero costis $40.
10-d 255.1 "Special Rul-e for Ratable Flow-4l-2.11 Through"/Option 2 Treatmentutilit,ies. Same entry as Year 2.NOTE:--Net balance ITC earningoverall rate of return is $+0.
Year l-1
11-a 409.10 Income Taxes, Utility Operating
Income
( ;.h 236.t Accrued Taxes, Utilit,y Operating'\ 'tY rncome
46
80
45
80
80
39
13,800
L3,800
ACCOUITTING INSTRUCTIONS
Account AccountNumber Title Debit Credit
To record taxes estimated to
be payable for period
(.45 ($30,000)) .
L]--b 282 Accumulated Deferred Income TaxesLiberalized Depreciation4l-0.10 Deferred Income Taxes
230
230
To record reversal of taxesdeferred in prior years
( ($500 - 0).46). NOTE:--Thereis no longer a deferred tax
balance to be deducted from rate
base or included in capitalstructure at zero cost.
l-1-c 255.1 "General Rule"/Option 1 Treatment 40
4l.2.30 utilities. Same entry as Year 1. 40
NOTE:--There is no longer an ITCbalance to be deduct,ed from rate
base or included in capitalstructure at zero cost.
l-1-d 255.1 "Special Rate for Ratable Flow- 404l2.Ll Through" /OptLon 2 Treatment 40utllities. Same entry as Year 1.
NOTE:--There is no longer an ITCbalance to earn the overall raEeof return.
29. Operatinq Income - Clearinq Accounts
A. The purpose of a clearing account is to temporarily accumulatein one account costs of a specific type which affect more than asingle account, and which subsequently will be apportioned amongutility plant accounts, operating expense accounts and otherappropriate accounts.
B. The use of clearing accounts is optional. In addition to thepayroll clearing account, a utility may use such additionalclearing accounts as it f inds useful. However, all operat,i.ng
expenses must be recorded in the accounts prescribed by this manuaL
and the utrility remains responsible for providing the underlying
source document,s as if all entries were made directly without the
use of a clearing account.
40
(.h
ACCOI]NTING INSTRUCTTONS
30. Operatincr Income - Accrual Accountinq
A. Mont.h1y accounting using the accrual method is required.
Durj-ng t.he accounting period, certain amounLs may have been earned
although collection is not to be made until the subsequent period,
and certain expenses may have been j-ncurred, although payment isnot to be made until a subsequent period. At the end of the
accounting period the revenues and expenses sha1l be recognized by
charging t.he appropriate expense account and correspondingliability or receivabLe account.
B. A reversing entry will be necessary at the beginning of the
subsequent period.
3L. Operatinq Income - Operation and Maintenance Bxpense Account MaErix
A. Class B ut.ilities are required to subdivide the operation and
maj-ntenance expenses into functions. Each object account shaIl be
subdivided by the functions as shown in the matrix schedule which
proceeds the Operation and Maintenance Expense Accounts (page l-15).
The function will be designated by adding an additional one digitsuffix to the basic object account.
B. The "functional" operations for the water system are listedwith the designated suffix:
(
.1 Source of supply and pumping expenses.2 Source of supply and pumping expenses.3 Water treatment expenses - operations.4 Water treatment expenses - maintenance.5 Transmission and distribution expenses.5 Transmission and distribution expenses.7 Customer accounts expense.8 Administrative and general expenses
operations
maintenance
operations
maintenance
32 Operatinq Income - Requlatorv Assets and I-,iabilities
Regulatory debits and credits will often be used t.o reconciledj-fferences between the requirements of Generally Accepted
Account.ing Principles, regulatory practice and federal, state, and1ocal tax laws. For example, when there is a change in a federal,state or 1ocaI income tax rate, Statement of Financial AccountingStandards No. 109, AccounE.ing for Income Taxes, (SFAS 109) requiresthat adjustments be made t.o existing debit and credit deferred t.axbalances through the income statement in the year in which thechange is known or can be reasonably estimated. However, the TaxReform Act of 1985 requires the effect of a federal income tax ratechange to be recognized over a different period. Some stat.e taxcodes piggy-back the provisions of the federal tax code.Regulatory agencies may require that SFAS L09 be implemenEed in a
revenue neutral way or they may accept the period of time and\F
47
ACCOUIiITING INSTRUCTTONS
met,hod required by tax Iaw for the adjustmenL of deferred incometax balances. These different requirements can be accommodatedthrough the use of AccounE 186 - Miscellaneous Deferred Debits,
AccounE 253 - Other Deferred Credits, AccounE 407.4 - Amortizationof Regulatory Assets and Account 407.5 - Amortization of RegulatoryLiabilities. By debiting and crediting these accounts, ErsappropriaEe, the difference between t,he existing deferred tax
bal-ances and the re-stated deferred tax balances can be flowedthrough the income statement as required by SFAS l-09, withoutaffecting the revenue requirement or violating t.he normalizationrequirements of the Int,ernal Revenue Code. Further, thedifferences can be retained on the balance sheet so there is alsono ef f ect on eit.her rate base or the utilit,y's allowed rate ofreturn.
42
BAIJAIICE SHEET ACCOI'NTS
Agset,s and Other Debits
Utility Plant
l-01. Utility Plant, in Service102. Utility Plant Leased to OthersL03. Property HeId for Fut,ure Use104. Utility Plant Purchased or Sold105. Construction Work j.n 'Progress
108. Accumulated Depreciation of Utility Plant in Service110. Accumulated Amortization of Utility Plant in Servicel-t(. Utility Plant Acquisition Adjustments115. Accumulated AmorE,ization of Utility P1ant. Acquisition Adjustment,s
Other Property and Investment,s
L2l. Nonutility PropertyL22. Accumulated Depreciation and Amortization of Nonutility Property:.23. Investment in Associated Companies124. Utility Investments]-25. Other Investments
1-27 . Other Special Funds
Current and Accrued Assets
l-31. Cash131.1 Cash on Hand]-3]-.2 Cash in Bank132. Special Deposits134. Working Funds135. Temporary Cash Investmentsl4]-. Customer Accounts ReceivableL42. Other AccounEs Receivable143. Accumulated Provision for Uncollectible Account.s--Cr.144. Notes Receivablel-45. Accounts Receivable from Associated CompaniesL46. Not,es Receiwable from Associated Companies151. Plant Material and Supplies
1-62. Prepayment,sL7L. Accrued Interest and Dividends Receivable174. Miscellaneous Curent and Accrued Assets
Deferred Debits
' 18L. Unamortized Debt Discount and Expense
1-82. Extraordinary Property Losses
- 185. Miscellaneous Deferred Debits, fu-go. Accumulat,ed Def erred Income Taxes\..,H7
43
BAIJA}ICE SIIEET ACCOUIIrS
Equity Capital and Liabilities
Eguity Capital
20L. Common Stock Issued204. Preferred Stock Issued2lt. Other Paid-In Capital212. Discount on Capital St.ock21-3. Capital St,ock Expense2J-4. Appropriated Retained Earnj.ngs2L5. Unappropriated Retained Earnings
. 2J-5. Reacquired Capital Stock
21-8. Proprietary Capital (for proprietorships and partnerships only)
Long-Term Debt
22]-. Bonds223. Advances from Associated Companies224. Ot.her Long-Term Debt
Current and Accrued Liabilities
231-. Accounts Payable232. Notes Payable233. Accounts Payable to Associated Companies234. Notes Payable t.o Associated Companies235. Customer Deposits235. Accrued Taxes
237 . Accrued Int.erest238. Accrued Dividends239. Mat.ured Long-Term Debt240. Mat,ured Interest24]-. Miscellaneous Current and Accrued Liabilities
Deferred Credits
25L. Unamortized Premium on Debt252. Advances for Construction253. Other Deferred Credits255. Accumulated Deferred. Investment. Tax Credits
Operating Reserves
26:-.. Propert.y Insurance Reserve252. Injuries and Damages Reserve263. Pensions and Benef it,s Reserve265. Miscellaneous Operating Reserves
44
&
BALAI{CE SHEET ACCOI'NTS
Contributions in Aid of Construction
27L. Contributions in Aid of Construction272. Accumulated Amortization of ConLributi-ons in Aid of Construction
Accumulated Deferred Income Taxes
287. Accumulated Deferred fncome Taxes - Accelerated Amortization282. Accumulated Deferred'Income Taxes - Liberalized Depreciation283. Accumulated Deferred Income Taxes - Other
(jil
45
,o
Utilit.y P1ant.
l-oL. Utilitv P1ant in Service
A. This account is the control account for plant accounts.301
through 348.
B. This account shall include t,he original cost, of utility pIant,
included in the plant accounts prescribed herein and in similar
accounts for ot,her utility departments, owned and used by the
utility in its ut.ilit.y operations, and having an expected life inservice of more than one year from date of installation, including
such property owned by t,he utility but held by nominees. Separate
subaccounts shal1 be maintained hereunder for each utility
depart,ment and/or division.
C. The cost of additions to and betterments of property leased
from others, which are includible in this account, shaLl be
recorded in subdivisions separate and dist,inct from those relatJ.ngto owned property (See Accounting Instruct,ion L7).
1,02. Utilitv Plant Leased to Ot,hers
A. This account shall include the original cost of utiLity planffi
owned by the utility, but leased to ot.hers as operatj.ng units or \-gr7
systems, where the lessee has exclusive possession.
B. The property included in this account shaIl be classifiedaccording to the detailed accounts prescribed for utilit.y plant inservice and this account shall be maintained in such detail asthough the propert,y were used by the owner in its utilityoperations.
l-03. Propertv Held for Fut,ure Uses
A. This account shal1 include the original cost of property ownedand held for fut,ure use in ut,ility service under a definite planfor such use. There sha11 be included herein property acquired butnever used by the utility in utility service, but held for suchservice in the future under a definite p1an, and propertypreviously used by the utility in utility service, but ret.ired fromsuch service and held pending its reuse in the future, under adefinite p1an, in utility service.
BAIJAI{CE SHEET ACCOUIf,TS
B. In the event that property recorded inlonger be needed or appropriate for future
company sha11 notify t,he Commission of suchapproval of j ournal ent.ries to remove such
account..
this accounE shall noutility operat,ions, thecondition and requestproperty from this
(9
BAI,A}ICE SEEET ACCOUIITS
C. Gains or losses from the sale of land and land rights or otherdisposition of such property previously recorded in t.his accounE
and not, placed in utility service shaI1, unless otherwise
authorized or required by the Commission, be recorded directly in
account 4L4 - Gains (Losses) from Disposition of Utility P.roperty.
However, when determined to be significant by the Commission thegain or loss shalL be transferred to account 253 - Other DeferredCredits, or account 185 - Miscellaneous Deferred Debits. Suchdeferred amounts shall then be amortized to account 414 - Gains(Losses) from Disposit,ion of Utility Property, unless otherwise
auEhorized or reguired by the Commissj-on.
D. The property included in this account shaLl- be classifiedaccording to the detailed accounts prescri-bed for utility pIant. inservice and the account shaII be maintained in such detail asthough the properLy were in service. Separate subaccounts shall bemaintained hereunder for each utility department for which plant isheld for future use.
Note:--Materials and supplies, and meters held in reserve, andnormal spare capacity of plant in service shaIl not be included inthis account.
104. Utilitv Plant Purchased or Sold
A. This account sha11 be charged with the cost of utiLity plantacquired as an operat.ing unit or system by purchase, merger,consolidation, liquidation, or otherwise, and shaI1 be credit.edwith the selling priie of like property transferred to otherspending the distribution to appropri-ate accounts in accordance withAccounting Inst,ruction 15.
B. Within six months from the date of acquisition or transfer ofproperty recorded herein, the utility shal1 file with theCommission the proposed journal entries to clear from t,his accountthe amounts recorded herein.
105. Construction Work in Proqress
A. This account shal1 include the total of balances of workorders for utility plant in process of construction but not readyfor service at the date of t.he balance sheet.
B. Expenditures on research and development projects forconstruct.j.on of utility facilities are to be included in a separatesubdivision in Ehis account. Records must be maintained to showseparately each project along wit,h complete details of t,he natureand purpose of the research and development project together with-b. che related costs.,t\/
BALAI{CE SHEET ACCOI'MTS
(. )
108. Accumulated Depreciation of Utility Plant in Service
A. This account shall reflect the depreciation accumulated onplant used in water utility service.
B. This account shalI be credited with:
(1) Amounts charged to account 403 - Depreciation Expense,
represenE,ing currentl-y accruing depreciat,ion of water plant
(which excludes contributed plant) .
Q) Amounts equal to Ehose concurrently charged to account
272 - Accumulated Amort,ization of Contributions in Aid of
Construction, representj-ng currently accruing amortization of
contributed p1ant, if recognized by the Commission.
(3) Amounts charged to account i.82 - Extraordinary Property
Losses, when authorized by t.he Commission.
(4) Amounts represent.ing the balance of accumulateddepreciation of plant acquired from others.
C. At the time of retirement of utility plant, this account
sha11 be charged with the book cost of the property retj-red and tFfficost of removal, and shalI be credited with the salvage value and\fl
any other amounts recovered, such as insurance. When retiremenEs,cost of removal and salvage are entered originally in retiremenEwork orders, the net tot,aI of such work orders may be included in aseparate subaccount hereunder. Upon completion of the work order,the proper dj-stribution to subdivisions of this account shall be
made.
D. The utility should maint.ain separate subaccountscorresponding with Lhe depreciable plant accounts, in which theaccumulated depreciat,ion total is segregated.
E. When transfers of plant are made from one utility plant
account t.o another, or from one or to another utility department,or from one or to nonutj-lity properE|, t,he accountj.ng for therelated accumulated depreciation sha11 be as provided in AccountingInstruction 23.
F. The utility is restricted in its use of the provisions fordepreciation to the purposes set. forth above. It sha1l not divert
any portion of this account or make any use thereof withoutauthorization by Lhe Commission.
110. Accumulated Amortization of UtiliEv Plant in Service
A. This account shalL reflect the amortizat.ion accumulated on (3
plant used in water ut.ility service.
48
@
BAIJNICE SIIEET ACCOITIiIIS
B. This account shaIl be credited with:
(1) Amounts charged to account 407.1 - Amortization of
Limited Term P1ant., for the cument amortization of limited
term invesEmenLs. It shalI be credited also.with amounts
which may be charged to account 407.3 - Amortizat,ion of Other
Utility P1ant., or to account 426 - Miscellaneous Nonutility
Expenses, to amortize intangible or other utilit,y plant which
does not have a definite or terminable life and is not
subject t,o charges for depreciation expense.
(2) Amounts charged to account 413 - Income from UtilityPlant Leased to Ot,hers, for the current amortization oflimited term. or other investments subject to amorEizationincluded in account 1-02 - Utilit,y Plant Leased to Others.
C. When any property to which this account applies is sold,relinguished, or otherwise retired from service, t.his account shal1be charged with the amount prevlously credited in respect to suchproperty. The book cost of the property so retired less the amountchargeable to this account and less the new proceeds realized aLretirement shall be included in account 4]-4 - Gains (Losses) fromDisposition of Utility Property, unless otherwise authorized orrequired by the Commission.
D. The utility is restricted ln its use of Ehe accumulatedamortization account to the purposes set forth above. It shalI nott,ransfer any portion of this account or make any other use thereofwithout authorizatiori by t.he Commj-ssion.
E. The utility should maintain separate subaccountscorresponding with the amortj.zable plant accounts, in which theaccumulated amortization total is segregated.
114. Utilitv Plant Acquisition Adiustments
A. This account sha11 i-nclude the difference between (a) thecost to the accounting utility of utility plant acquired as anoperat.ing unit or syst.em by purchase, merger, consolj-dation,liquidat,ion, or otherwise, and (b) the original cost, estj-mated,not, known, of such property, less the amount or amounts creditedthe accounting utility at the time of acquisition to accumulateddepreciation, accumulated amortization and contributions in aidconstruction with respect to such property.
B. This account shal1 be subdivided so as to show the amountsincluded herein for each property acquisition and the amountsapplicable to each utility department and to utility plant inservice and utility plant leased to others (See AccountingInstruction 15).
if
by
of
(.4
49
BALAI{CE SHEET ACCOUT{TS
,@
C. The amounts recorded in this account with respect to each
property acquisition shal1 be amortized, or otherwise disposed of,
as the Commission may approve or direct.
L15. Accumulated Amort.ization of Utilitv Plant, Acqui-sition Ad-iusEments
This account shalI be credited or debited with amounts which
are includible in account 406 - Amortization of Utility Plant
Acquisition Adjustments, or account 426 - Miscellaneous Nonutility
Expenses, for the purpose of providing for the extinguishment of
amounts in account L14 - Utility P1ant Acguisition Adjustments.
Other Property and Investments
L2]-. Nonutilitv Propertv
A. This account shall include the book cost of Iand, structures,
eguipment or other tangible or j.nEangible property owned by theutility, but not used in utility service and not properly
includible in account 103 - ProperEy Held for Future Use.
B. This accounE sha11 be subdivided so as to show t.he amount ofproperty used in operations which are nonutility in character but,nevertheless constitute a distinct operat,ing activity of the ihcompany (such as plant merchandising and repair where such activi\rpis not cLassed as utility) and the amount of miscellaneousproperty not used in operations. The records in support of each
subaccount sha1l be maintaj.ned so as t,o show an appropriateclassification of the property.
Note:--For transfers from utility pIant, accounts (see AccountingInstruction 23B).
122. Accumulated Depreciation and Amortization of Nonutilitv Propertv
This account sha1l included the accumul-ated depreciation andamortization applicable to property other than utility p1ant.
1-23. Investment ln Associdt.ed Companies
A. This account shaII include the book cost of investments insecurities issued or assumed by assocj.ated companies (See
definition 5) and investment advances Eo such companies, includinginterest accrued thereon when such int,erest is not subject tocurrent settlement. Include also the offsetting entry to therecordj-ng of amortization of discount or premium on interestbearing investments (See account 419 - Interest and Dividend
Income).
B. The account shaLl be maintained in such manner as to showinvestment in securities of, and advances to, each associat.ed
50
(
BAIJAI{CE SIIEET ACCOUI{TS
company together with fuII particulars regarding any of such
investments that are Pledged.
Not.e A: --Securities and advances of associated companies owned and
pledged shal1 be included in this account, but such securities, ifheld in special deposits or in special funds, shall be included in
the appropriate deposit or fund account. A complete record of
securitj-es pledged shal1 be maintained.
Note B:--Securities of associated companies held as temporary cash
investments are includible in account 135 - Temporary Cash
Investments.
Note C:--Balances in open accounts with associated companies, whichare subject to current settlement, are includible in account l-45
Accounts Receivable from Associated Companies.
Note D:--The utilit,y may write down the cost of any security inrecognition of a decline in the value thereof. Securities sha1l bewritten off or written down to a nominal value if there is no
reasonable prospect of substant j-aI vaIue. Fluctuat,ions in marketvalue shall not. be recorded but, a permanent impairment in the valueof securiLies shaLl be recognized in the accounts. When securitiesare written off or written down, the amount of the adjustment sha1l
be charged to account 426 - Miscellaneous Nonutility Expenses, orto an appropriat.e account for provisions for loss in valueestablished as a separate subdivision of this account.
124. Utility Investments
This account shall include book cost of investments insecurities issued or assumed by nonassociated companies for thepurpose of insuring adequate water service (i.e., source of water
supply) .
]-25, Other Investments
A. This account shal-I include Ehe book cost of investments insecurit.ies issued or assumed by nonassociated companies, investment
advances to such companies, and any investments not accounted forelsewhere. Include also the offsetting entry to the recording ofamort.ization of discount or premium on interest bearing investments(See account 4]-9 - Interest and Dividend Income).
B. The cost of capital stock of the ut,ility reacquired by itunder a definit,e plan for resale pursuant to authorization by theBoard of Directors mdfr if permitted by statutes, be included in aseparate subdivisj.on of this account (see also account 2L]- - OtherPaid in Capital, and account 216 - Reacquired Capital Stock).
51
'..
BAIJA}ICE STIEET ACCOIINTS
(
C. The records sha1I be maintained in such manner as to show the
amount of each investment and the investment advances to each
person.
Note A:--Securities owned and pledged shaI1 be incLuded in this
account, but securities held in special deposits or in special
funds sha1l be included in appropriate deposit or fund accounts. A
complete record of securit.ies pledged sha1I be maintained.
Note B:--Securities held as temporary cash investments shalL noE, beincluded in this account.
Note C:--See Note D gf account 1-23.
L27. Other Special Funds
This account shall incl,ude the amounE of cash and book cosE. of
investments which have been segregated in special funds forinsurance, employee pensions, savings, relief, hospital, and otherpurposes not provided for elsewhere. A separate account, withappropriate tit1e, sha1l be kept for each fund.
Not.e:--Amounts deposited with a trustee under the terms of anirrevocable trust agreement, for pensions or ot.her employee benefishaIl not be included in this account.
Current and Accrued Assets
Current and accrued assets are cash, those assets whj-ch arereadily convertible into cash or are held for current use inoperations or construction, current claims against others, paymentof which is reasonably assured, and amounts accruing, to the utilitywhich are subject to current settlement, except such items for
which accounts other than those designated as current and accruedasset,s are provided. There shal1 not be included in the group ofaccounts designated as current and accrued assets any item, the
amount of collect,ability of which is not reasonably assured, unlessan adequat.e provision for possible loss has been made therefor.Items of current character but of doubtful value may be wrj-tten
down and for record purposes carried in these accounts at nominalvalue.
131. Cash
A. This account shall include the amount of cash on hand or ondeposit in banks.
B. The following subaccounEs shalI be maintained:
131-.l- Cash on Hand.]-3t.2 Cash in Bank.
52
BAIJAI{CE SHEET ACCOUIIITS
1-32. Special Deposits
This accounE shaIl include special deposits with fiscal agentsor others for the payment of interest and/or dividends.
1-34. Workinq Funds
This account shall- included cash advanced to officers, agents,
employees, and others as petty cash or working funds.
135. Temoorarv Cash Investments
A. This account shal1 include the book cost of investments, suchas demand and time 1oans, bankers' acceptances, United States
. Treasury certificates, marketable securities, certificaEes ofdeposit, and other similar invest,ments, acquired for the purpose oftemporarily investing cash.
B. This account shall be so maintained as to show separat,ely
temporary cash investments in securities of associated companiesand of others. Records shal1 be kept of any pledged investments.
14L. Customer Accounts Receivable
\.8 A. This account shall include amounts due from customers forutility service. This account shal1 not j-nclude amounts due from
assocj-ated companies .
1,42 .
]-43.
Other Accounts Receivable
A. This account shall include amounts due the utility upon openaccounts, plus merchandising, jobbing and contract work, other than
amounts due from associated companies and from customers forut,ility services.
B. This account shalL be maint,ained so as to show separately
amounts due on subscriptions to capital stock and from officers andemployees, but the amount shall not include amounts advanced toofficers or others as working funds (See account 1-34 - Working
Funds).
Accumulated Provision for Uncollectible Aecounts--Cr.
A. This account shall be credited with amounts provided forlosses on accounts receivable which may become uncoll-ectibIe, andalso with col]ections on accounts previously charged hereto.
Concurrent, charges sha1I be made to account 670 - Bad Debt Expense,for amounts applicable to utility operations, and to correspondingaccounts for other operations. Records shaIl be maintained so asto show t.he write-offs of accounts receivable for each utility
department,.,.8
53
BAI,AI{CE SHEET ACCOI'NTS
B. This account sha1I be subdivided to show the provision
applicable to the following classes of accounts receivable:
(1) Utility Customers(2) Merchandising, Jobbing and Contract Work'(3) Officers and EmPloyees
(e ) Other
Note A:--Accretions Eo this account shall not be made in excess of
a reasonable provision against losses of the charact,er provided
for.
Note B:--If provisions for uncollectible notes receivable or for
uncolLect.ible receivables from associated companies are necessary,
separate subaccounts therefor shal1 be established under the
account in which the receivable is carried.
144. Notes Recei-vab1e
This account shall include the book cost, noE includibleelsewhere, or all collectible obligations in the form of notesreceivable and similar evidences (except interest coupons) of money
due on demand or within one year from the date of issue, except,however, notes receivable from associated companies (See account
135 - Temporary Cash Investments, and account L46 - NotesReceivable from Associated Companies) .
Note:--The face amount. of notes receivable discount.ed, sold ortransferred, without reLeasing the utility from liabiliE.y asendorser thereon, sha11 be credited to a separate subdivision ofthis account and appropriate disclosure sha1l be made in financialstatements of any contingent liability arising from such
transacEions.
145. Accounts Receivable from Associated Companies
See account ]-46.
L46. Notes Receivable from Associated Companies
These accounts sha1l include notes and drafts upon whichassociated companies are Iiable, and which mature and are expect.edto be paid in fuII not lat.er than one year from dat,e of issue,together with any interest thereon, and debit balances subject tocument settlement ln open accounts with associated companies.ftems which do noE bear a specified due date but which have beencarried for more than twelve months and it,ems which are not paidwithin twelve months from due date shalI be transferred to account.123 - Investment in Associated Companies. f ,.h\. .,
54
151_.
BAI.ATICE SHEET ACCOI'NTS
Note A:--On the balance sheet, accounts receivable from an
associated company may be set off against accounts payable t.o the
same company
Note B:--The face amount of notes receivabl-e dj.scounted, sold ortransferred without reLeasing the utility from liability as
endorser thereon, shal1 be credited to a separate subdivision ofthis account and appropriate disclosure shal1 be made in financial
statements of any cont.ingent liability arising from such
transaction.
Plant Material and Suoplies
A. This account shall i-nclude t,he cost of fuel on hand andunapplied materials and supplies (except meters) purchasedprimarily for use in the utility business for construction,operation and maj-ntenance purposes. It sha11 include also the bookcost of material-s recovered in connection wit,h construction,
maintenance or accumulated depreciation, respectively, and includedherein as follows:
(1) Reusable materials consisting of large individual itemsshall be included in this account at original cost, estimatedif not known.
(2) Reusable materials consisting of relatj-veIy sma11it.ems, the identity of which (from the date of originalinstallat.ion to the final abandonment or sale thereof) cannotbe ascert,ained withouE undue refinement in accounting, shallbe incLuded in t,his account at. current prices for suchiLems. The cost of repairing such items shal1 be charged tothe appropriat.e expense account as indicated by previous use.
@
(3) Scrap and nonusable materialsshaII be carried at the estimatedtherefrom. The difference betweenscrap and nonusable mat.erials soldthe materials were carried in thispract,icable, shall be adjusted tothe mat.erj.als were charged to this
included in t.his accountnet. amount real-izablethe amounts realizedand the net amount ataccount, &s far asthe accounts creditedaccount.
for
which
when
B. Materials and supplies issued shall be credited hereto andcharged to the appropriate construction, operating expense, orother account on the basis of a unj-t price determined by the use ofcumulative average, first-in-first-out, oF such other method ofinventory accounting as conforms with accepted accounting st,andardsconsistently applied.
C. Inventories of materials, supplies, fuel, etc., shal1 betaken at least annually and the necessary adjustments shal-I be made
Eo bring this account into agreement. with the act,ual inventories.\&
55
BALA}ICE SEEET ACCOUIITS
In affecting the adjustments, large differences which can be
assigned to important classes of materials shall be equiEably
adjust,ed among the accounts to which such classes of materials have
been charged since the previous inventory. Other differences sha11
be equitably apportioned among t.he accounts to which materials have
been charged.
Items
Invoice price of materials less cash or other discounts.
Freight, switching or other transportation charges whenpracticable to include as part of the cost of particuLar
materials to which they relate.
Customs, duties and excise taxes.
Cost,s of inspection and special tests prior to
acceptance.Insurance and other directly assignable charges.
Note A:--Where expenses applicable to materials purchased cannot bedirectly assigned to particular purchases, they may be charged Eo astores expense clearing account and distributed therefrom to the
appropriat,e account.
Note B:--When materials and supplies are purchased for immediate t-fu.use, they need not be carried through this account but may be (fl
charged directly to the appropriate utility plant or expense
account.
L62. Preparrments
A. This account shaII include the amounts of rents, insurance,interest and like disbursement,s made in advance of the period towhich they appfy. As the periods covered by such prepaymentsexpire, credit this account and charge the proper operating expenseor other account with the amount applicable to Ehe period.
B. This account shall include t,he amounts of Eaxes paid in
advance of the period in which they are chargeable to income,except amounts chargeable to water and/or wastewater plant underconstruction and minor amounts which may be charged direct to thefinaL accounts. As the term expires for which the taxes are paid,this account shal1 be credited at monthly intervals and theappropriate account charged (Note aLso 408.10, 408.13, 409.l-0,408.20, 409.20, 409.30) .
C. This account shal] be kept or supported in such manner as todisclose the amount of each class of prepayments.
55
BALAI{CE SHEET ACCOUNTS
l7t.Accrued Int.erest and Dividends Receivable
This account shal1 include t,he amount of int.erest on bonds,
mortgages, notes, commercial paper, loans, open accounts, deposits,etc., the payment of which is reasonably assured.and the amount ofdividends declared or guaranteed on stocks owned.
Note A:--Interest which is not subject to current settlement shaLl
not. be included herein but in the account in which is carried t.heprincipal on which t,he interest is accrued.
Note B:--Interest and dividends receivable from associated
companies shaLl be included in account 145 - Accounts Receivable
f rom Associat,ed Companies.
174. Miscellaneous Current and Accrued Assets
This account shall include the book cost of all other current
and accrued assets, appropriately designated and supported so as to
show the nature of each asset included herein.
Deferred Debits
181-.
A. This account shall include the total of the debit balance ofdiscount and expense for all cLasses of long-term debt.
B. The discount and expense sha11 be amortized over the life ofthe respective issues under a plan which will distribute theamounts equi-tab1y over the life of the securities. Theamortization shall be charged to account 428 - Amortization of DebtDiscount and Expense. The utility may, however, accelerate thewriting off of discount and expense where the amounts areinsignificant unless otherwise ordered by the Commission.
L82. Extraordinary Property Losses
A. When authorized or directed by the Commission, this accountshall include extraordinary losses, net of income taxes, onproperty abandoned or otherwise retired from service which are notprovided for by accumulated depreciation or amortization and whichcould not reasonably have been foreseen and provided for, andextraordinary losses, such as unforeseen damages to property, whichcouLd not reasonably have been anticipated and which are notcovered by insurance or other provisions.
B. The entj.re cost, less net salvage,retired shall be charged to accumulatedportion, of Ehe loss is to be included
depreciaEion shal1 then be credited and
of depreciable propertydepreciation. If all, or ain this account, accumulatedt.his account charged with
57
185.
BAI,A}ICE SHEET ACCOUIIIS
the amount properly chargeable hereto.
Miscellaneous Deferred Debits
A. This account shall include the following classes of items:
(1) Expenditures for preliminary surveys, pIans,
investigations, etc., made for Ehe purpose of determining thefeasibility of projects under contemplation. If constructionresults, t,hj-s account shal1 be credited wit,h the amounEapplicable thereto and the appropriate plant accounts shallbe charged with an amount which does not exceed t,he
expenditures which may reasonable be determined to contribut.edirectrly and immediat,ely and wit,hout duplication t.o plant.
If the work is abandoned, the charge shall be to account 426
Miscellaneous Nonutility Expenses, or to the appropriateoperating expense accounts (See account 675 - Miscellaneous
Expenses) .
(2) Undistributed balances in clearing accountsdate of the balance sheet. Balances in cleari.ngshal1 be substant.ially cleared not later than the
cal-endar year unless items held therein relate toperiod.
at the
accountsend of thea future
(3) Balances representing expenditures for work inprogress other t,han on utility p1ant. This includes jobbing
and contract work in progress.
(4) Losses on disposition of property, net of incometaxes, deferred by authorization of the Commission.
(5) Large and significant research and developmentexpenditures (See definition 25), deferred by authorizationof the Commission, except those properly includible in
accounL 105 - Construction Work in Progress. Theamorti-zation of deferred research and development.expenditures and those research and development expenditureswhich are mj-nor recurring shaIl be charged to account 675Miscellaneous Expenses .
(6) Balances representing the deferred portion of ratecase expense.
(7) Regulatory created assets, not included in otheraccounts, resulting from the ratemaking acLions of regulatoryagencies. (See Definition 27.) The amounts included in thisaccount are t.o be established by those charges which wouldhave been included i-n net income determination in the currgal*period under the general requirements of the Uniform Syst"( 'ffAccount. buE for it being probable that such items will be \-Jer
58
190.
BAI.AI{CE SIIEET ACCOUIiMS
included in a different period(s) for purposes of developing
the rates that the utility is authorized to charge for its
uEiliEy services. When specific identification of theparticular source of a regulat,ory asset cannot be made, such
as in plant phase-ins, Account 40'1.5 - Amortization of
Regulatory Liabilities sha11 be credited. The amounts
recorded in this account are generally to be charged,
concurrently with the recording of the amount in rates, to the
same account that would have been charged if included in
income when incurred, except all regulatory assets established
through the use of Account 407.5 shal1 be charged to Account
407.4 - Amortization of Regulatory Assets, concurrent with the
recovery of the amounts in rates.
If rate recovery of all or part of an amount included in
this account is disallowed, the disallowed amount shall be
charged to Account 426 - MiscelLaneous Non-ut.i1ity Expenses,
or Account 434 - Extraordinary Deductions, in the year of the
disallowance.
(8) Other debit balances, the proper final disposition of
which is uncertain, and unusual or extraordinary expenses,not included in other accounts, which are in the process of
being written-off.
B. Separate subaccounts sha1l be established and maintained for
each of the above cl-asses of deferred items. The records
supporting the entries Eo each subaccount shall be so kept that t.heutility can furnish ful1 information as to the cost, nature and
purpose of each item included therein.
Accumulated Deferred Income Taxes
A. This account shall be debited and account 4l-l-.10 - Provisionfor Deferred Income Taxes - Credit, Utility Operating Income, or
account 4L1.20 - Provision for Deferred Income Taxes - Credit,
Other Income and Deductions, ds appropriate, shall be credited with
an amount equal to that by which income taxes payable for the yearare higher because of the inclusion of certain items in income fortax purposes, which items for general accounting purposes will notbe fuI1y reflected in the utility's determination of annual net
income unt.il subsequent years.
B. This account shalI be credited and account 410 - DeferredFederal, State or Local Income Taxes, or account 410.20 - Provisionfor Deferred Income Taxes, Ot,her Income and Deductions, Ersappropriate, sha11 be debited with an amount equal to that by which
income taxes payable for the year are lower because of prior
payment of taxes as provided by paragraph A above, because ofdifferences in t,iming for tax purposes of part.icular items of
income or income deductions from that, recognJ-zed by the utility for,-,.'b
59
BAIJAI{CE SHEET ACCOIT}iIITS
general- accounting purposes. Such credit to this account and debitto account 4L0, or 4]-0.20 shalI, in general, represent the effect
on taxes payable in the current year of the smaller amount of book
income recognized for tax purposes as compared to the amount
recognized in t,he utility's current accounts with respect to theitem or cLass of items for which deferred tax accounting by theutility was aut,horized by the Commission.
C. Vintage year records with respect to entries to this account,as described above, and t.he account balance, shal1 be so maintainedas to show the factor of calculation with respect to each annual
amount of the iEem or class of items for which deferred taxaccounting by the utility is utilized
D. The utility is restricted in its use of this accounE to thepurpose set forth above. It shall not.make use of the baLance inthis account or any port,ion thereof except as provided in t.he textof this account, wi-thout prior approval of the Commission. Anyremaining deferred tax account balance with respect to an amountfor any prior year's tax deferral, the amortization of which orother recognition in the utility's j-ncome accounts has beencompleted, or oEher disposition made shal1 be debited to account410 - Deferred Income Taxes, or accounL 4]-0.2 - Provision forDeferred Income Taxes - Other Income and Deductions, Elsappropriate, or otherwise disposed of as the Commission mayaut,horize or direct (See Accounting Instruction 28) .
Equity Capital
20]-. Common Stock Issued
See account 204.
204.
(&
Preferred Stock Issued
A. These accounts shalI include the par value or the statedvalue of stock without par value if such stock has a stated vaIue,and, if not, the cash value of the consideration received for suchnonpar stock, of each class of capital stock actually issued,incLuding the par or st,ated value of such capital stock in account,
21,6 - Reacquired Capital St,ock.
B. When the actual cash value of the considerat.ion received ismore or ]ess than the par or st,ated value of any stock having a paror stated value, the difference shal] be credited or debited, asthe case may be, to the premium or discount account for theparticular class and series.
C. When capital stock is retired, this account sha1l be chargedT,with the amount at which such stock is carried herein. (J,
50
BAI,AI{CE SIIEET ACCOIT}iITS
D. A separate ledger account, wit,h a descriptive tit.le, shal1 be
maint.aj-ned for each class and series of stock. The supporting
records shalI show the shares nominally issued, actually issued,
and nominally outstanding.
Note:--When a Ierry or assessment, excepE a call for payment onsubscriptions, is made against holders of capital stock, the amountcollected upon such levy or assessmenE shall be credited to account
2]-]- - Other Paid in Capital; provided, however, that t.he creditshal] be made to account 2a2 - Discount on Capital Stock, to theextent of any remaining balance of discounts on the issue of stock.
2tt. Other Paid-In Capital
This account shaIl include the balance of all other creditsfor paid-in capital not includible in the capital stock accounts,and sha1l be kept to show the source of the credits includibleherein.
Items
Premium received on original issues of capital st,ock.
DonaEions received from stockholders consisting ofcapit.al stock or reduction of debt of the utility, andthe cash value of other assets received as a donation.Reduction in par or stated value of capital stock.Gain on resale or cancellation of reacquired capit.alstock.5. Mj-scellaneous paid-in capital.
Note:--Premium on capital stock sha11 not. be set off againstexpenses. Further, a premium received on an issue of a certainclass or series of stock sha1l not be set off against expenses ofanother issue of the same class or seri-es.
212. Discount on Capital Stock
A. This account shall include, J-n a separate subdivision foreach class and series of capital stock, all discount on theoriginal issuance and sal-e of capital stock, including additionalcapital stock of a particular class or series as well- as first.issues.
B. When capital stock which has been actually j-ssued is retired,the amount in this account applicable to the shares retired shallbe written off to account 2ll - Other Paid-In Capital, provided,however, that the amount sha1l be charged to account 439
Adjustment.s to Retained Earnings, to the extent that it exceeds thebalance j-n accounE 211- and provided, further, that in no eventshall debits in excess of accumulated credits from the ret,iremenEof st,ock be charged to account 21l-.
1.
z.
3.
4.
5L
r
BAIJAI{CE SHEET ACCOI'NTS
C. The utility may amortize the balance in this account by
syst,ematic charges Eo accounE 426 - Miscellaneous Nonutilit,y
Expenses.
2t3. Capital Stock Expense
A. This account, sha1l include in a separate subdivj-sion for eachclass and series of st,ock all commissions and expenses incurred inconnection with the original issuance and sale of capital sEock,including additional capital stock of a part.icular class or seriesas wel-I as f irst issues.
B. When capital stock which has been actually issued by theutility is ret.ired, the amount in this account applicable to the
shares retired sha1l be written-off to account 2LL - Other Paid-InCapital, to the extent of gains on resale or cancellatj-on ofreacquired stock includible therein.
C. The utiliEy may amortize the balance carried in this accounLby systematj-c charges to account 426 - MisceLLaneous Nonutility
Expenses.
Note:--Expenses in connection with the reacquisition or resale ofthe utility's capital stock shal1 not be included herein.
' 21-4. Appropriated Retained Earni-nqs
This account sha1l include the amount of ret,ained earningswhich has been appropriated or set aside for specific purposes.Separate subaccounts shal1 be maintained under such titles as wil,ldesignate t.he purpose for which each appropriation was made.
21-5. Unappropriated Retained Earninqs
This account shafl include the balance, either debit orcredit, of unappropriated retained earnings. It shall not includeitems includibLe in any subaccount of account 21-l - Other Paid-InCapit,al.
2]-6. Reaccruired CapitaL Stock
A. This accounL shal-I i-nclude in a separate subdivision for eachclass and series of capital stock the cost of capital stockactually issued by the utility and reacquired by it and not retiredor cancelled, except, however, stock which is held by trustees insi-nking or other funds.
B. When reacquired capital stock is retired or cancelled, thedif f erence between its cosE, including commissions and expenses ,,ahpaid in connection wit.h the reacquisition, and its par or statedlJ,value plus any premium and less any discount and expenses
62
BALAI{CE SHEET ACCOI'NTS
applicable to the shares retired, shal1 be debited or credited, dsappropriate, to account 21-l - Other Paid-In Capital.
C. When reacquired capital stock'is resold by the utility, the
difference between the amount received on the resale of the stock,
less expenses incurred in the resale, and the cost of the stock
included in this account sha]I be accounted for as outlined in
paragraph B.
Note A:--See account 1-25 - Ot.her Investments, for permissive
accounting treatment of stock reacquired under a definite plan for
resale.
Note B:--The accounting for reacquired stock shalI be as prescribedherein unless otherwise specifically required by statute.
2L8. Proprietary Capital (for proprietorships and partnerships onlv)
A. This account sha1I be credited with the investment of a soleproprj.etor, or partners, in an unincorporated water utility.
B. At the end of eeich calendar year the net income or loss forthe year sha11 be entered in this account.
,' ,ffi
\ jp C. Accounting adjustments not propgrly attribuE.able tooperations of the current period shaI1 be charged or credited tothis account.
Note A: --When the ut1I1ty is owned by a partnership, a separateaccount shall be kept to show the net equity of each member thereinand the transactions affecting the interest of each such partner.
Note B:--This account may be restricted t.o the amount considered bythe proprietor to be the permanenE investment in the business,
. subject to change only by additionaL investment by Ehe proprietoror the withdrawal of portions thereof not representing net income.
When this option is taken, earned surplus accounts shal1 bemaintained.
Long-Term Debt
221. Bonds
A. Separate accounEs shall be maintained hereunder for unmaturedbonds of each class and series. Each such account shall besubdivided, so as to show, (t) the face value of the actuallyissued and unmatured bonds, which have noE been ret,ired orcancelled; a1so, the face value of such bonds issued by others, thepayment of which has been assumed by the utility, (2) the face
\ value of bonds actually issued or assumed by t.he ut.ility and
-,/ reacquired by it and not paid, retired, or cancelled. The account
53
BALA}ICE SIIEET ACCOI'NTS
,i@
for reacquired debt shal1 not include securities which are held bytrustees in sinking or other funds.
B. When bonds are reacguired, the difference between face value,adjusted for unamortized dj-scount, expense or premium and the
amount paid upon reacquisition, sha1l be debited or credited, dsappropriate, to account 421- - Nonut.ility Income, or account 426
Miscellaneous Nonutility Expense .
223. Advances from Associdted Companies
A. This account shal1 inelude the face value of notes payable toassociated companj-es and the amount of open book accounEsrepresenting advances from associated companies. It does notinclude notes and open accounts, representing indebtedness, subjectto current settlement which are includible in account 233Accounts Payable to Associated Companies, or account 234 - NotesPayable to Associated Companies.
B. The records supporting the entries t,o these accounts shaLl beso kept that the utility can furnish complete j-nformation
concerning each note and open account.
224. Other Lonq-Term Debt (p
A. This account sha11 include, untj-I maturity, all long-term debt,not otherwj-se provided for. This covers such items as receiver'scertificates, real estat,e mortgages execut,ed or assumed,assessments for public improvements, notes and unsecuredcertificates of indebtedness not owned by associated companies,receipts outstanding for long-term debt, and other obligaEions- maturing more than one year from date of issuance and assumption.
B. Separat.e subaccounts sha11 be maintained for each class ofobligation, and records sha1l be maintained to show separately foreach class all details as to date of obligation, date of maturity,interest dat.es and rates, security for the obligation, etc.
Note:--Miscellaneous long-term debt reacguired shal1 be accountedfor in accordance with t,he procedure set forEh in account 221
Bonds.
Current and Accrued Liabilities
23L. Accounts Pavable
This accounE sha11 include all amounEs payable by t,he utili-tywithin one year, which are not provided for in other account,s.
64
G
BALAI{CE SIIEET ACCOI'}iITS
232. Notes Payable
This account shaII include the face value of all notes,drafts, acceptance, or other similar evidences of indebtedness,payable on demand or wit.hin a time not exceeding .one year .from Cate
of issue.
233. Accounts Pavable to Associat.ed Companies
See account 234.
234. Notes Pavable to Associated Companies
This account shaI1 include amounts owing to associated
companies on notes, drafts, accepLances, or other similar evidencesof indebtedness, dD open accounts payable on demand or wj-thin atime not exceeding one year from date of issue or creation.
Note:--Exclude from this account noLes which are includible inaccount 223 - Advances from Associated Companies.
235. Customer Deposits
'h This account sha11 include all amounts deposited with the'\ry utility by customers as securj-ty for the payment of bilIs.
236. Accrued Taxes
A. This account shalI be credited with the amount of taxesaccrued during t,he accounting period, corresponding debit,s being
made to the appropriate accounts for tax charges. Such credits maybe based upon estimates, but from time to t.ime during the year as. the facts become known, the amount of the periodic credits shall beadjusted so as to include as nearly as can be determined in eachyear the taxes applicable thereto. Any amount representing aprepayment of taxes applicable to a period subsequent to the dat,eof the balance sheet, sha11 be shown under account L62
Prepayments.
B. If accruals for taxes are found to be insufficient orexcessive, correction therefor sha1I be made through current taxaccruaLs. However, if such corrections are so large as toseriously disLort current expenses, see Account,ing Instruction 8.
C. Accrual-s for taxes sha11 be based upon the net amountspayable after credit for any discounts, but shal1 not include any
amounts for i-nterest on tax deficiencies or refunds. Interestreceived on refund sha1l be credi.ted to account 4L9 - Interest and
h Dividend Income, and interest paid on deficiencies sha1l be charged
_,p to account, 427.5 - Interest Expense - Other.
55
BAIJAI{CE SIIEET ACCOUIITS
D. The records supporting the entries to this account shall bekept so as to show for each class of taxes, the amount accrued, EheUaiis for the accrual, the accounts to which charged, and the
amount of tax paid.
237. Accrued Interest
A. This account shall include the amount of interest accrued but
not matured on all liabilit,ies of t,he utiLit,y not including,
however, interest, which is added to the principal of the debt on
which incurred. Supporting records shall be maintained so as to
show the amount of interest accrued on each obligation.
238. Accrued Dividends
This account shaIl i-nclude the amount of dividends which have
been declared but not paid. Dividends shaLl be credited to this
accounE when they become a liability.
239. Matured Lonq-Term Debt
This accounE shal1 include the amount of long-term debt(including any obligation for premiums) matured and unpaid, wit.houtspecific agreement for extension of the time of payment, and bonQ6
caLLed for redemption but not presented. \g
240. Matured fnterest
This account shaII include the amount of matured int.erest onlong-term debt or other obligations of the utility at the date ofthe balance sheet unless such interest is added to the principal ofthe debt on which i.ncurred.
24L. Miscellaneous Current and Accrued Liabi-lities
This account shall include the amount of all other current
and accrued ]iabilities not provided for elsewhere appropriatelydesignated and supported so as to show the nature of eachliability.Deferred Credits
251. Unamortized Premium on Debt
A. This account sha]I include t,he total of the credit balancesin the discount, expense and premium accounts, for all classes oflong-term debt, including receivers' certificates.
B. The premium and expense shall be amortized over the l-ifethe respective issues under a plan which will distribute the
amounts equitably over the life of the securities. The
of
amortization shaI1 be credited Eo account 429 - Amortization of
66
252.
253.
BATAI{CE SHEET ACCOI'IiI1TS
Premium on Debt.
Advances for Construction
This account sha]I include advances by or in.behalf ot
customers for construction which are to be refunded either who11yor in part. When a person is refunded the entire amount to which
he is entitled according to the agreement or rule under which the
advance was made, the balance, if dDy, remaining in this account
shal-I be credited to account 271' - Contributions in Aid of
Construct,ion.
Other Deferred Credi-ts
A. This account shalL incLude the following classes of credits:
(1) Gains on disposition of properEy, net of income taxes,deferred by authorizatj-on of the Commission, advance billings
and receipts and other deferred credit items, not provided
elsewhere, including amounts which cannot be entirely clearedor disposed of until additional information has been received.
(2) Regulatory created liabilities, not included in otheraccounts, imposed on the utility by the rat.emaking actions ofregulaE.ory agencies. (See Def inition 27. ) The amounts to beincluded in t,his account are to be established by thosecredits which would have been included in net incomedeterminations in the current period under Lhe general
requirements of the Uniform System of Accounts but for itbeing probable that: L) such items will be i-ncluded in adifferent period(s) for purposes of developing rates that theutility is authorized to charge for it.s ut.ility servicesi or2) refunds to customers, not provided for in other accounts,will be required. When specific identification of theparticular source of the regulatory liability cannot be madeor when the liability arises from revenues collected pursuantto t.ariffs on file with a regulatory agency. Account 407.4Amortization of Regulatory Assets, shall be debited. The
amounLs recorded in this account generally are to be creditedto the same account that, wouLd have been credited if includedin income when earned except; 1) all regulatory liabilitiesestablished through the use of Account 407.4 shal1 be creditedto Account 407.5 - Amortization of Regulatory Liabilities; and2) in t.he case of refunds, a cash account or oLher appropriateaccount shouLd be credited when the obligation is satisfied.
B. If it is later determined that any regulat.ory liabilitiesrecorded in this account will not be returned to customers throughrates or refunds, such amounts sha1I be credited to Account 42LNonutility Income in the year such determj.nat.ion is made.
i,B
67
,3
BAI.AIICE SHEET ACCOT'NTS
C. Separate subaccounts shall be est,ablished and maintained for
each of the above classes of deferred credit.s. The records
supporting the entrj.es to each subaccount shaLl be so kept that theutility can furnish fuII information as to t,he cosE, naEure and
purpose of each item included therein
255. Accumulated Deferred Investment Tax Credits
A. This account shaII be credited with all investment tax creditsdeferred by companies which have elected t,o foIlow deferral
accounEing, parEial or fu]1, rather than recognizing in the income
statement the total benefits of the tax credit as realized. After
such election, a company may not transfer amounts from thisaccount, except as authorized herein and in account.s 4L2.1l
Investment Tax Credits Restored Lo Operating Income , 4L2.20
Investment Tax Credits - Net, Nonutility Operat,ions, and account
472.30 - Investment Tax Credj.ts Rest,ored to Nonoperatlng Income,Utility Operations, or with approval of the Commission.
B. Where the company's accounting provides that invest,ment taxcredits are to be passed on to customers, this account shalI bedebited and account 4L2.ll credited with a proportionate amount
determined in relation to the book depreciable life of aL1 utilityproperty or utility property to which the tax credits relaEe or ,.-_'fusuch lesser period of time as allowed by a regulatory agency havihffirate jurisdiction. If, however, the deferral procedure providesthat investment. tax credits are not passed on to customers, theproportj-onate restoratlons to income sha1l be credited to account
41,2.30.
C. Subdivisions of this account by department shaI1 be
maintai-ned for deferried investment tax credits that. are related tononutility or other operations. Cont,ra entries affecting such
account subdivisions shall be appropriately recorded. Use ofdeferral or nondeferral accounting procedures adopted fornonutility or other operations are to be followed on a consistentbasis.
D. Separate records for each utility department,, and nonut.ilit.yor other operations shall be maintained identifying the propert,iesgiving rise t,o the investment tax credits for each year with theappropriate service life of such properties and any unused balancesof such credits. Such records are not necessary unless the taxcredit.s are deferred.
Operating Reserves
26]-. Prooertv Insurance Reserve
A. This account shall incLude amounts reserved by the utifity (,$for self-insurance against losses through accident, fire, fLood,'dr
68
(p
BAIJAI{CE SIIEET ACCOIIMIS
other hazards to its own property or propert.y leased from others.
A schedule of risks covered by this reserve shalI be maintained,giving a description of the property involved, the character of the
risks covered and the rates used.
B. Charges shall- be made to this accounE for losses covered byself-insurance. Details of t.hese charges sha11 be maintained
according t.o the year the casualty occurred which gave rise to the
loss.
252. Iniuries and Damaqes Reserve
A. This account shalI be credited with amounts to be charged to
account 558 - Insurance - Workman's Compensation, or otherappropriate accounts, to meet the probable liability, not coveredby insurance, for deaths or injuries to employees and others, andfor damages to property neither owned nor held under lease by theutility.
B. When liability for any injury or damage is admitted by Eheutility either voluntarily or because of the decision of a court orother lawful authority, such as a workmen's compensation board, theadmit,ted liability sha1I be charged to this account and credited tothe appropriat,e liability account. Details of these charges shal1be maintai-ned according to the year the casualty occurred whichgave rise to the 1oss.
Note:--Recoveries or reimbursements for losses charged to thisaccount shall be credited hereto; the cosE of repairs to propertyof others if provided for herein, shal1 be charged to this account.
253. Pensions and Benefits Reserve
A. This account sha1l include provisions made by the ut.ility andamounts contributed by employees, for pensions, accident and deathbenefit.s, savings, relief, hospital and other provident purposes,
where the funds represented by the reserve are included in theassets of the util,ity either in general or in segregated fundaccounts.
B. Amounts paid by t,he utility for the purposes for which thisreserve is established sha1l be charged hereto.
C. A separaEe account shal1 be kept for each kind of reserveincluded herein.
Note:--If employee pension or benefit plan funds are included amongthe asset,s oi the utility but are held by outside trustees, -
payments into such funds, ot accruals therefore, sha1I not beincluded in this account unless requj.red payments are made on aperiodic basis to the outside trustees of the various funds.l-p
59
BAIJAI{CE SHEET ACCOI'If,TS
265. Miscellaneous Operatinq Reserves
A. This account shal1 include all operat.ing reserves maintainedby the utility which are not provided for elsewhere.
B. This account shal-I be maintained in such manner as to show
the amount of each separate reserve and t,he nature and amounEs of
the debits and credits thereto.
Note:--This account includes only such reserves as may be createdfor operating purposes and does not include any reservaEions of
income the credit,s for which should be carried in account 274
Appropriated Retained Earnings.
Contri.butions in Aid of Construction
27L. Contributions in Aid of Construction
A. This account shaII include:
1. Any amount or item of money, services or propertyreceived by a utJ-Iity, from any person or governmentaL
agency, any portion of which is provided at no cost to theutility, which represents an addition or transfer to thecapital of the utility, and whj,ch is ut,ilized to offset theacquisition, improvement or construction cosEs of theutilit.y's property, facilities, or equipment used to provideutility services to the public.
2. Amounts transferred from account 252 - Advances forConstruction, representing unrefunded balances of expiredcontracts or discounts resulting from termination ofcontracEs in accordance with the Commission's rules andregulations.
3. Compensation received from government.al agencies andothers for relocation of water mains or other plants.
4) Any amount of money recej-ved by a utility, dny portion ofwhich is provided at no cost to the utility, which representsan addition or transfer t,o the capital of the utility andwhich is ut,ilized t,o of f set the f ederaL, state or Local incometax effect of taxable contributions in aid of construction,taxable amounts transferred from Account, 252 - Advances forConstruction, and taxable compensation received fromgovernmental agencies and others for rel"ocation of water mainsor ot,her plants sha1l be reflected in a sub-account of thisaccount.
B. The credits to this account shaLl noE be t.ransferred to "rry(Bother account without the approval of the Commission.
70
(&
BAIJAI{CE SHEET ACCOUNTS
C. The records supporting the entries to this account shal1 be so
kept that the utilit.y can furnish information as to the purpose of
each donation, the conditions, if Brry, upon which it was made, Ehe
amount of donations from (a) staLes, (b) municipalities, (c)
customers, and (d) others, and the amount applicable t,o eachutility department..
Note:--There shaIl not be included in this account advances for
construction which are ultimat.ely to be repaid wholly or in part
(See account 252 - Advances for Construction).
272. Accumulated Amortization of Contributions in Aid of Construction
A. This accounE shal1 reflect the amortization accumulated onaccount 271 - Contribut.ions in Aid of Construction, if recognizedby the Commissj-on.
B. Specifically, balances in account 2TL which representcontributions of depreciable plant shall be amortized by charges tot,his account over a period equal to the estimaE.ed service life ofthe related contributed asset. A group or overall composite rate
may be used for contributed balances that cannot be directlyrelated to a plant asseE.
C. The concurrent credit for the amortization recorded in thisaccount shall be made to account 403 - Depreciation Expense.
D. If a regulatory body allows the amortization of any portion ofthe monies coLlected to pay the tax obligation caused by thereceipt of CfAC, such amortization shall also be reflected in asub-account of this account. Specifically, balances in account 27J-which represent monies collected for the gross-up of CIAC (SeeDefinition 15. ) shaLl be amortized by charges to this account overa period determined by t,he regulatory body.
Accumulated Deferred Income Taxes
Before using the deferred tax accounts provided below, refer
t.o Accounting InstruiEion 28 (B) and (C) . Interperiod Income TaxAllocation - Depreciation and Comprehensive fnterperiod Income TaxAllocation - Other.
Public utilities shal1 use the accounts provided below forprior accumulations of deferred taxes on income for additionalprovisions. Prj-or to any use of these accounts, the utility mustfile wit,h the Commission, for the purpose of obtainingaut,horization, its proposed plan of account,ing for deferred taxeson income. The utility shal1 not use these account.s unless suchuse has been authorized by the Commisslon. If deferred taxaccounting is initiated with respect, to any property such
tB)
\,
'7t
BAtA}ICE SHEET ACCOUNTS
(.-&
accounting sha11 not be discontinued on that property without. prior
approval of the Commission.
The utility is restricted in its use of these accounts to the
purposes set forth therein. It, shall not make any. transfers fromthese accounts or make any use thereof except, as provided in thetext of the accounts without prior approval of the Commission. It
sha1l not transfer the balance in these accounEs or any portionthereof to retained earnings except as provided in lhe text of this
account without prior approval of the Commission.
Upon the disposition by sale, exchange, transfer,
abandonment, or premature retirement of plant on which there is arelated balance in these accounts, Ehe deferred t,ax account shallbe debited with an amount egual to the relat.ed income tax expense,if dDy, arising from such disposition and account 4LL - Provisionfor Deferred Income Taxes-Credit, shal1 be credited. When the
remaining balance, after consideration of any related income taxexpenses, is not significant, the deferred tax account sha11 bedebited and account 4l-L credited with such balance. If af t.erconsj.deratj-on of any related income tax expense, and the remaining
amount is significant, t,hen the Commission sha]] authorize ordirect how such amount shaII be accounted for at. the time approvalfor the disposition of account is granted. When plant is disposEilof by transfer to a who1Iy owned subsidiary, the related balance \pthe deferred tax account shaLl also be transferred. When thedisposition relates to retirement of an item or items under a group
method of depreciation where there is no tax effect in t,he year ofretirement, no entries are required in the deferred tax account ifit can be determined that the related balances wouLd be necessaryto be retained to offset future group item tax deficiencies.
Note:--Public utilities having more than one utility departmentand/or nonutility property and which have deferred taxes on incomewith respect thereto shall classify such deferrals in the accountsprovided elsewhere so as t.o aLlow ready identificat.ion of itemsrelating to each utility department and to Other Income andDeductions.
28L. Accumulated Deferred Income Taxes - Accelerated Amorti-zation
A. This accounE shall include tax deferral resulting fromadoption of the principles of Comprehensive Interperiod Income TaxA}Locat,ion - Other described in Accounting Instruction 28 (c) ofthis syst,em of accounts that relate to property for which theut.ility have availed itself of the use of accelerated (5-year)amortization of (1) cert,ifj-ed defense facilities as permitted bySection 168 of the Internal Revenue Code and Q\ certifiedpollut.ion control facilities as permitted by Section 159 of the,..*oInternal Revenue Code ($
72
(.b
BALAI.ICE SHEET ACCOUNTS
B. This account shalI be credited and accounts 410.L0 - Deferred
Income Taxes, or account 4]-0.20 - Provision for Deferred Income
Taxes, Other Income and Deductions, ds appropriaLe, shal1 bedebited with tax effects related to property described in paragraph
A above where taxable income is lower than pretax accounting income
due to differences between t,he periods in which revenues and
expense transactions affect taxable i-ncome and the periods in whichthey enter into the determinaEion of pretax accounting income.
C. This account shaIl be debited and accounts 411.10 - Provisionfor Deferred Income Taxes - Credit, Utility Operating Income, or
43-1-.20 - Provision for Deferred Income Taxes-Credit, Other Income
and Deductions, ES appropriate, shall be credited with tax effectsrelated to property described in paragraph A above where taxablej-ncome is higher than pretax accounting income due to differences
between the periods in which revenues and expenses transactionsaffect taxable income and t,he periods in which they enter into thedetermination of pretax accounting income.
D. Records with respect to entries to this account, ds describedabove, and the account balance, sha1I be so maintained as to showthe factors of calculation and the separate amounts applicable tothe plant additions of each vintage year for each class, grroup, otunit. The underlying calculations Eo segregate and associatedeferred tax amount.s with the respect.ive vintage years may be basedon reasonable met.hods of approximation, if necessary, consistentlyapplied.
282. Accumulated Deferred Income Taxes - Liberalized Depreciation
A. This account shall include all credit tax deferrals resultingfrom adoption of the principles of comprehensive interperiodincome tax allocation described in Accounting Inst.ruction 28 ofthis system of accounts ot.her than those deferraLs which areincludible in accounts 28]- - Accumulated Deferred Income TaxesAccelerated Amortization, and account 283 - Accumulated DeferredIncome Taxes - Other.
B. This account shalI be credited and accounts 4l-0.L0 DeferredIncome Taxes, or 410.20 - Provision for Deferred Income Taxes,Other Income and Deductions, ds appropriate, shalL be debited withtax effects related Eo property described in paragraph A abovewhere taxable income is lower than pretax accounting income due todifferences between the periods in which revenue and expensetransactions affect t,axable income and the periods in which theyenEer into the det.ermination of pretax account.ing income.
C. This account sha1I be debited and accounts 41L.10 - Provisionfor Deferred Income Taxes - Credit., Utility Operating Income, or
4l-3-.2O - Provj-sion for Deferred fncome Taxes - Credit, Other Incomeand Deductions, Ets appropriate, shaI1 be credited with tax ef fect.sreLated to property described in paragraph A above where taxable
'3
\3
?3
BAIJAIVCE SHEET ACCOI'NTS
income is higher than pretax accounting income due to diffet"rr."" (@
between the periods in which revenue and expense transactionsaffect taxable income and the periods in which they enter into thedetermination of pretax accounting income.
D. Records with respect to entries to this account, ds de.scribedabove, and the account balance, shall be so maintained as to showthe facEors of caLculation and the separate amounLs applicable tothe plant additions of each vintage year for each c1ass, grroup, orunit. The underlying calculations to segregate and associatedeferred tax accounts with the respective vintage years may be
based on reasonable methods of approximation, if necessary,consistently applied.
283. Accumulated Deferred Income Taxes - Other
A. This account shall include a1] credit tax deferraLs resultingfrom the adoptlon of the principles of comprehensive interperiod
income tax allocation descri-bed in Accounting InstrucEion 28 ofthis system of accounts ot,her t,han those deferrals which areincludible in accounts 28]- - Accumulat.ed Deferred Income TaxesAccelerated Amortization, and 282 - Accumulated Deferred IncomeTaxes - Liberalized Depreciation.
B. This account shaLl be credited and account 4L0 - Provisionfor Deferred Income Taxes, shaIl be debited with tax effectsrelated to items described in paragraph A above where taxableincome is lower than pret,ax accounting income due to differencesbetween the periods in which revenue and expense transactionsaffect, taxable income and the periods in which they enter into thedetermination of pretax accounting income.
C. This account, shall be debited and accounts 411.10 - Provisionfor Deferred Income Taxes - Credit, Utility Operating Income or
41-1.20 - Provision for Deferred Income Taxes - Credit, Other Incomeand Deductions, Ers appropriat,e, shall be credited with tax effectsrelated to items described in paragraph A above where taxableincome is higher than pretax accounEing income due to differencesbetween the periods in which revenues and expense transactionsaffecE taxable income and the perj.ods in which they enter into thedetermination of pretax accounting income.
D. Records with respect to entries to this account, BS describedabove, and t.he account balance, shal1 be so maintained as to showthe factors of calculation with respect to each annual amount, ofthe item or class of items.
E. For ratemaking purposes, the balance in accounts 28!, 282,and 283 - Accumulated Deferred Income Taxes - AcceleratedAmortization, Liberalized Depreciation, and Ot,her, net of anybaLance j,n account. L90 - Accumulated Deferred Income Taxes, shaeither be deducted from rate base by all companies having a net
'74
BALA}ICE SHEET ACCOUIITS
credit balance of deferred taxes or shal1 be included in capitalstructure as zero cost funds. The treatment sha11 be determined by
t,he regulatory body having jurisdiction over t,he regulatedoperations of the utility. Where regulated operations are subject
t,o the jurisdiction of more than one regulatory body, each.regulat.ory body sha1l establish the ratemaking treatment of thosedeferrals related to operations under its jurisdiction.
\,p
75
WATER IIIIIJITY PIJAIII ACCOITIflIS
301. Organization302. Franchises303. Land and Land Right,s
304. St,ruct,ures and Improvement.s
305. Collect,ing and Impounding Reservoirs
306. Lake, River and Ot.her Intakes
307. Wells and Springs308. Infiltration Galleries and Tunnels309. Supply Mains310. Power Generation Equipment3L1. Pumping Equipment320. Water Treatment Equipment,330. Distribut,ion Reservoirs and Standpipes331. Transmission and Distribution Mains333. Services334. Meters and Meter Inst.allations335. Hydrants336. Backflow Prevention Devices339. Other Plant and Miscellaneous Eguipment340. office Furniture and Eguipment
34:-.. Transportation Equipment342. Stores Equipment343. Tools, Shop and .Garage Equipment344. Laboratory Eguipment345. Power Operated Equipment
346 . Communicat,ion Equipment
347 . Miscellaneous Equipment348. Other Tangible Plant
.1
Intangible. Plant
301.1
302.r.
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339.1
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(
WATER IITII,ITY PLAIIT ACCOUNTS
.2
Sourceof Supplyand Pumping
Plant
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303.2
304.2
305.2
306.2
307 .2
308.2
309.2
310.2
3]-1, .2xxxxxxxxxxxxxx
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339.2
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.3
Water
TreatmentPlant
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303.3
304.3
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311.3
320.3
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339.3
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.4
Transmission
andDistributionPlant
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303.4
304.4
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31L.4xxxxxxxxxxxx
330.4
331.4
333 .4
334.4
335.4
336.4
339.4xxxxxxxxxxxx
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.5
GeneralPlant
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303.s
304.5
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340.5
341.5
342.5
343 .5
344.5
345.5
345.5
347.5
348.5
, _'b
77
WATER IIIIIJITY PIJAIII ACCOITIiI1IS
The water utility p1ant, accounts have been designed ut.ilizing an
account matrix. The matrix employs a list of object accounts which ineffect act as control accounts. The object accounts are further
segregated by the matrix into classifications by functions orsubaccounts. The instructions for segregating the object, accounEs Eothe function subaccounts are contained in Accounting Instructi-on 24.Listed below are the object account descriptions.
301. Orqanization
This account shalI include all fees paid to federal or stat.e
governments for the privilege of incorporation and expendituresincident to organizing the corporation, partnership or otherenterprise and putting it into readiness t,o do business. A sampleof i.tems to be included in this account are listed below.
l-. Act,ual cosE of obtainj-ng certif icates authorizing anenterprise to engage in the public utility business.2. Fees and expenses for incorporation.3. Fees and expenses for mergers or consolidations.4. Office expenses incident to organizing the utility.5. Stock and minute books and corporate seal.
Note A:--This account shall not include any discounts uponsecurities issued or assumed; nor shaIl it include any costsincident to negotiat.ing loans, selling bonds or other evidences odebt, or expenses in connection with the authorization, issuance
and sale of capital sEock.
Note B:--Exclude from this accounE and include in the appropriate
expense account the cost of preparing and filing papers inconnection with the extension of the term of incorporation unlessthe first organization costs have been writt.en off. Where chargesare made to this account for expenses incurred in mergers,consolidations or reorganizations, amounts previously includedherein or in simiLar accounts in the books of the companies
concerned shall be excLuded from this account.
302. Franchises
A. This account sha1l include amount,s paid to the federalgovernment, to a state or to a political subdlvision thereof lnconsideration for franchises, consenEs or certificates, running inperpetuity or for a specified term of more than one year, togetherwith necessary and reasonable expenses incident to procuring suchfranchises, consents or cert,ificates of permission and approval,including expenses of organizing and merging separate corporat.i-ons,where statutes require so1ely for t,he purpose of acquiringfranchise.
r,B
f
'78
303.
WATER IITII.ITY PI.AIIT ACCOUMTS
B. If a franchise or certificate is acquired by assignment, the
charge to this account in respect thereof shaII not. exceed the
amount paid therefor by t,he utility Lo the assignor, nor sha1l it,
exceed the amount paid by t,he original grantee, plus the expense of
acquisition to such grantee. Any excess of the arnount actuallypaid by the ut,ility over t.he amount above specified shall be
charged Eo account 426 - Miscellaneous Nonutility Expenses.
C. When any franchise has expired, the book cost thereof shaLlbe credited hereto and charged to account 426 - MiscellaneousNonutility Expenses, or to account l-10 - Accumulated Amortizationof Utility Plant in Service, as appropriate.
D. Records supporting this account shal1 be kept so as to showseparately the book cost of each franchise.
Note:--Annua] or other periodic payments under franchises sha11 notbe included herein but in the appropriate expense accounE.
Land and Land Riohts
This account sha1l include the cost of land and land rightsused in connectj.on with source of supply, pumping, water treatmentp1ant, transmission and dist.ribution, and general plant operations(See Accounting Instruction 19). A sample of items to be includedin this account are listed below:'.. )
1.
2.
3.
4.
5.
6.
7.
8.
Bulkheads buried, not requiring maintenance or
replacement.Cost, first, of acguisition including mortgages and otherliens assumed (but not subsequent interest thereon).
Condemnation proceedings, includingr court and counselcosts.
Consents and abutting damages, payment for.Conveyancers' and notaries' fees.Fees, commissions, and salarj-es t,o brokers, agents, andothers in connection with the acquisition of the land orland rights.
Leases, cost of voiding upon purchase to securepossession.of land.
Removing, relocating, or reconstruct.ing property ofothers, such as buildings, highways, raJ-lroads, bridges,cemeteries, churches, telephone and power 1ines, etc., inorder to acquire quiet possession.Retaining wa11s unless ident,ified with structures.Special assessments levied by public authorities forpublic improvements on t,he basis of benefits for newroads, new bridges, new sewers, new curbj-ng, newpavements, and other public improvements, but noE taxeslevied to provide for the maintenance of suchimprovements.
9.
10.
'r-,8
79
LL.
t2.
13.
]-4.
15.
r_6 .
77.
L8.
19.
20.
21.
zz.
WATER IIIIIJfTY PIJANI ACCOITlillIS
Surveys in connection with the acguisiuion, but not
amounts paid for topographical surveys and maps where
such costs are at,t,ributable to structures or plant
equipment erected or to be erected or inst,aLled on such
land
Taxes assurned, accrued to date of transfer of title.Tit1e, examining, clearing, insuring and registering in
connection wit.h the acquisition and defending againstclaims relating to t.he period prior to the acquisition.Appraisals prior to closing tit,le.
CosE of dealing with distributees or legatees residing
out,side of the state or county, such as recording powerof attorney, recording will or exemplification of wiII,
recording satisfaction of state t,ax.Filing sat j-sf action of mortgage.
Documentary stamps.
Photographs of property at acquisition.
Fees and expensesr incurred in the acguisition of wat,errights, and grants.
Cost, of fill to extend bulkhead line over land under!,rater, where riparian rights are held, which is notoccasioned by the erection of a structure.Sidewalks and curbs construct.ed by the utility on public
i:;::t:Id .*p"rr"" j.n connection with securins rishts "@wdy, where performed by company employees and company
agenEs.
304. Structures and Improvements
This account shall include cost in place of structures and
improvements used in connection with source of supply, pumping,water treatment, transmission and distribution and general plant(See Accounting Instruction 20). A sample of items to be includedin this accounE are listed below:
Architects' plans and specifications includingsupervision.BoiLers, furnaces, piping, wiring, fixtures and machineryfor heat.ing, lighting, signaling, ventilating and airconditioning systems, plumbing, vacuum cleaning systems,incinerator and smoke pipe, flues, etc.Bulkheads, including dredging, riprap fiIl, piling,decking, concrete, fenders, etc., when exposed and
subj ect to maint,enance and replacement, .
Commissj-ons and fees Eo brokers, agents, architects andothers.Conduit (not to be removed) wit.h its contents.
Damages Lo abutting properEy during construction.
Drai-nage systems.
1.
2.
3.
4.
5.
5.
7.
80
(3
WATER UTILITY PIrAIII ACCOUI{TS
8. Elevators, cranes, hoists, eEc., and the machj,nery for
oPerating t,hem.9. Excavation, including shoring, bracing, bridging, refi1I
and disposal of excess excavaEed material, cofferdams
around foundat,ions, pumping water from cofferdam.duringconstruction, Eest borings.l-0. Fences and fence curbs (not including protective fencesisolat,ing items of equj-pment, which should be charged tothe appropriate equipment account) .11. Fire protection systems when forming a part of astructure.1-2. F1agpo1e.L3. Floor covering (permanently attached) .L4. Foundations and piers for machinery, constructed as apermanent part. of a building or other item lisLed herein.15. Grading and clearing when directly occasioned by thebuilding of a structure.l-5. fnErasite communj.cation syst.em, po1es, pole fixtures,wires and cables.
1,7 . Landscapi-ng, lawns, shrubbery, etc.18. Leases, voJ-ding upon purchase, to secure possession ofstructures.L9. Leased property, expenditures on.20. Lighting fixtures and outside lighting systems.21-. Marquee, permanently aLtached to building.\p 22. Painting, first cost.23. Permanent paving, concrete, brick, flagstone, asphalt,
eEc. , withj-n the property 1ines.24. Partitions, including movable.25. Permits and privileges.26. Water and waste$rater systems, for general use.- 27. Power boards for services to a building.28. Retaining wa1Is except when identified with land.29. Roadways.
30 . Roofs.31. Scales, connected to and forming a part of a structure.32. Sidewalks, culverts, curbs and streets constructed by theutility on its property.
33 . Sprinkling .systems.
34. Sump pumps and pits.35. Stacks brick, stee1, or concrete, when set onfoundation forming part of general foundation andsteelwork of a building.35. Steel inspection during construction.37. St,orage facillties constituting a part of a building.38. Storm doors and windows.39. Tanks, constructed as part. of a building or as distinctstructural units.
\. 40. Temporary heating during construction (net cost) ., i 41-. Temporary water connection during construction (net
cost).
81
WATER IITILITY PLANT ACCOUIITS
42. Temporary shanties and other facilities used duringconstruction (net cost) .43. Topographical maps.44. Tunnels, int,ake and discharge, when constructed as part,of a structure, including sluice gates and thoseconstructed to house mains.45. Vaults constructed as part of a building.46. Watchmen's sheds and clock systems (net cost when usedduring construction only) .
47 . Water basi-ns or reservoirs.48. Water front improvements.49. Water supply piping, hydrants and weLls.50. Water meters and supply system for a building or forgeneral company purposes.51. Yard surfacing, gravel, concrete, or oil (First costonly) .52. Plant metering.
305. Collectinq and Impoundinq Reservoirs
This account shal1 include the cost in place of structures andlmprovements used for impounding, collecting and storing wat,er inthe source of supply system. A sample of items t,o be included inthis account are list.ed beLowr @L. Aerators (uihen installed as an integral part ofcollecting and impounding reservoirs) .2. Bridges and culverts.3. Clearing Land.4. Dams.5. Drainage conduits.6. Embankments.7. Fish ladders and elevators.8. Fences.9. Gate houses and equipment.10. Landscaping.L1. Lighting systems.
12 . Retaj-ning waIIs.13. Roads and paths.
1-4 . Sewers.15. Spillways and channels.15. Any other permanent improvement to collecting andimpounding reservoirs.
305. Lake, River and Other Intakes
This account shall include the cost installed of Iake, riverand other intakes used as a source of water supply. A sample ofitems to be included in this account, are list.ed below, ,.:7(}
82
(,.&
WATER IITIIJITY PIJAIII ACCOITNIS
1. Clearing land.2. Conduits.3. Cribs.4. Fences.5. Gate houses and eguiPment.6. Int,ake pipes (up to suction header) .7. Intake wells.8. Lighting systems.9. Screens and racks.
307. Wel1s and Sprinqs
This account shaII include the cosL installed of wells and
springs used as a source of water supply. A sample of items to be
included in this account are listed below:
1. Clearing land.2. Collecting basins.3. Collecting pipes.4. Fences.5. Landscaping.
6 . Lighting syst.ems.7. Overf1ow spillways and channeLs.8. Sewers.9. Springs and appurtenances.10. We11s, casings and appurtenances, including cost of test,wells and nonproductive wel1s drilled as part of aproject resulting in a source of water within the samesupply area.
308. Infiltration Galleries and Tunnels
This account shal1 include the cost installed of infiltrationgalleries and tunnels used as a source of water supply. A sampleof items to be included in this account are listed below:
1. Conduits.
3 ' g?;:"1:"""= and equiPment '
309. Supplv Mains
This account shalL include the cost install-ed of supply mains,pipes, aqueducts and canaLs and their appurEenances. A sample ofitems to be included in this account are listed below:
1. Air chambers.2. Blow-offs and overflows.
B 3. Bridges and culverts.4. Canals.
"- ry 5. El-ectrolysis control equipment.
\..p
83
WATER IITILITY PIJAIIT ACCOIIIilIS
6. Manholes.7. Municipal inspection or permits.
8. Pavement disturbed, including cutting and replacing
pavement, pavement base and sidewalks.9. Pipes, aqueducts or conduits10. Placing mains and accessories.11. Special castings.1-2. Sterilizing new mains.
L3 . Surge t,anks.]-4. Trenching, including shoring, bracing, bridging, pumping,
backfill and disposal of excess excavated maEerial.15. Tunnels.15. Valves, valve vaults and appurEenances.
3L0. Power Generation Equipment
A. This account shaI1 include the cost installed of any eguipment
used for the production of poh,er principally used in pumping
operations.
B. Subaccounts shall be maintained hereunder for the cost of
equipment used for each tlpe of power generating equipment.
311 . Pumpincr Eouipment
Thisdriven byhydraulicincluded
account sha1l include the cost of pumping equipmentelectrj-c power, diesel engines, steam engi.nes andwater wheels and turbj-nes. A sample of items to bein this account are listed below:
Engines, motors, water wheels and t,urbines for driving
pumps.
Pumps, including set,ting, gearing, shafting and belting.Water piping within station, including valves.Auxiliary equipment for engines and pumps such as oilingsystems, cooling systems, condensers, etc.OiI supply lines and accessories.Regulating, recording and measuring devices.Foundations, frames and bed plates.
Ladders, stairs and platforms if a part of pumping unit.
320. Water Treatment Eouipment
This account shal1 include t.he cost installed of apparatus,
equipment, and other facilities used for the treatment of water. A
sample of items to be included in this account are listed below:
1. Aerators (when insLalLed as an int,egral part of the watertreatment plant.) .2. Chemical treating p1ant.3. Clear water basin.
84
(
WATER ITTIIJTTY PLA}iIT ACCOUNTS
4. Filter pIant.5. Mixing chambers.5. Sedimentation or coagulation basin.
7 . Softening plant.8. Disinfect j.on equipment.9. Reverse osmosis membranes.
Note:--Prot.ecting superstructures shal1 be included in account 304- Structures and Improvements.
330. Distribution Reservoirs and Standpipes
This account sha1l include Ehe cost in place of reservoirs,tanks, standpipes, and appurtenances used in storing water fordistribution (See Accounting Instruction 24). A sample of items tobe included in t,his account are listed below:
\.B
1.
2.
3.
4.
5.
6.
'7.
8.
9.
10.
11.
L2.
13.
:l.4.
L5.
15.
]-7.
18.
19.
20.
Aerators (when installed as an integral part ofdistribution reservoirs) .Bridges and culverts.Clearing 1and.
Dams.
Embankment.s.
Fences.
Foundations.
Gates and gat.e houses.
Landscaping.Lighting systems.Piping system within reservoirs.
Ret.aining wa11s.
Roads and paths.
Rust-proofing apparatus.
Sewer drain or storm sewer.Spillways and channels.
Standpipes.
Tanks
Towers
Va1ves.
Air chambers.Blow-offs and overflows.Bridges and culverts.Elect.rolysis conErol equipment..
Gauges and recorders.Jointing and joint,ing material.
33L. Transmission and Di-stribution Mains
A. This account shalI include the cost installed of transmissionand distributj-on mains and appurtenances. A sample of items to beincluded in this account are listed below:
1.
2.
3.
A, p ;:
6.
85
WATER IITII,ITY PIJAIIT ACCOUNTS
7. Manho1es.8. Meters and appurtenances.9. Municipal inspection or permits.L0. Pavement disturbed, including cutting and replacing
pavement, pavement base and sidewalks.11. Pipes.12. Fire mains.
B. Records supporting this account sha1l be so kept as to showseparately the cost of mains of different sizes and types and of
each tunneL, bridge, or river crossing.
333. Services
A. This account shall include the cost installed of service pipes
and accessories leading to the customers' premj-ses.
B. A complete service begins wit,hextends to but does not include themeter. A stub service extends fromor the curb stop (curb stop cock).
the connection on the main andconnection with t,he customer'sthe main to the property line,
C. Services which have been used but have become inactive shall
i:" ffi : : I" ?":':3,:: l' l:I, n 1i":,;"i:IIl':n:I "i:":: lL:5 ;l' I;"' :.@of the second year foI]owing t.hat during which the service becameinactlve unless reused in the interim.
Items
L. Corporation stops or tees.2. Gate valves and boxes.3. Goose necks.4. ,Jointing and jointing material.5. Municipal inspection or permits.6. Pavement,s disturbed, including cut,ting and replacingpavement, pavement base and sidewalks.
7 . Pipes.8. Placing pipes and accessories.9. Protection of street openings.L0. Service or curb boxes.L1. Service or curb stops (curb stop cocks) .t2. Tapping main.
l-3 . Tapping saddle.
Note:--When a customer pays all or a part of the cost of theservice and such cosE is properly includible in this account,amount borne or contributed by the cust,omer sha1l be creditedaccount 271 - Contributions in Aid of Construction.
theto
85
rp
WATER IITII.ITY PI,ANT ACCOUTflTS
334. Meters and Meter Installations
A. This account shaIl include the cost of meters, devices and
appurtenances attached thereto, used for measuring the quantity ofwater delivered to users, whether actually in service or held inreserve. It sha1l also include the cost of labor employed,materials used and expenses incurred in connect.ion with theoriginal installation of a customer's meters and devices and
appurtenances atEached thereto.
B. When a meter and/or meter installation is permanently retired
from service, the amount at which it is included herein shaIl becredited to this account.
C. The records covering meters shall be so kept that the utility
can furnish information as to the number of meters of each type andsize in service and in reserve as well as the location of eachmeter included in this account.
D. A sample of items t,o be incl-uded in this account are listed
below:
1. Meters, including badging and initial testing.2. Remote meter registers.3. Installation labor (first installation only) .4. Meter coupling.5. Meter bars.5. Meter yokes.'7. Meter fittlngs, connections and shelves.8. Meter vaults or boxes.9. Stops.
Note A:--This account sha11 not include meters for recording theoutput of a supply of treatment plant, or those located on mains.ft includes only those meters to record water delivered tocust.omers, including company use and for those used elsewhere inthe system if a type available for general use.
Note B:--The utility shall maintain a statisticaL record to showseparately the number of each tlpe and size of meter or group oftlT)es and sizes as carried in t.he continuing property record.Underlying records sha1l be kept so that the utility can determinereadlly for each such classification the number of company-ownedmeters in service (subdivided between active and inact,ive) and Lhenumber of meters carried herein but not in service, the latter toinclude meters undergoing repairs; and the number of meters inservice owned by cust,omers.
'B)
87
WATER IITIIJITY PIJAIII ACCOUIIIS
Note C:--When a customer pays all or a part of the cost of the
meter and such cost is properly includible in this accounE, the
amount borne or contributed by the customer sha1I be credited to
account 27]- - Contributi-ons in Aid of Construction.
335. Hydrant.s
A. This account shall include t,he cost installed of hydrants inservice owned by t,he utility. A sample of items to be included inthis accounL are listed below:
1. Connections to main.2. Excavation, backfill, and disposal of.excess excavatedmaterial.3. Hydrants and fittings, including barrel and shoe.4. Manholes5. Pavement dj-sturbed, including cutting and replaci-ngpavement, pavement base and sidewalks.6. Pipe including leads and drains.7. Tee at main.8. Valves and valve boxes.
335. Backflow Prevention Devices
A. This account shal1 include the cost of backflow preventj-on ('&
devices, and appurtenances attached thereto, used for preventingthe backflow of water, whether actually in service or held inreserve. It shal1 also include the cost, of labor employed,materiaLs used and expenses incurred in connectj.on with theoriginal installation of a customer's backflow prevention deviceand appurtenances attached thereto unless done in conjunction wit.ha meter i-nstalIation.
B. When a backflow prevention device is permanently retired fromservice, the amounE at which it is included herein sha11 becredited to this account.
C. The records covering backflow prevention devj-ces sha1I be sokept that the ut,ilit,y can furnish information as to the number ofbackflow prevention devices of each tlpe and size in service and inreserve as well as the location of each backflow prevention deviceincluded in this account.
339. Other Plant and Miscellaneous Eouipment
This account shaI1 include the cost installed of all- otherintangible, source of supply and pumping, water t,reatment andtransmission and distribut,ion plant not provided for in t,heforegoing accounts.(-3
88
WATER UTILITY PLANT ACCOI'NTS
r,p
340. Office Furniture and Equipment
. A. This account shall include the cost of office furniture and
equipment owned by the utility and devoted to utility service, andnot permanently at,tached to buildings, except the.cost of suchfurniture and equipment which the utility elects to assign to ot.herplant accounts on a functional basis. A sample of items to beincluded in this account are listed below:
l-. Book cases and shelves.2. Desk, chairs, and desk equipment,.3. Drafting room equipment.4. Electronic data processing equipment..5. Filing, st.orage and other cabinets.6. Floor covering.
'7 . Library and library equipment.8. Mechanical office equipment such as accounting machines,tlpewriters, etc.
9 . Safes.10. Tables.
B. If the utility has equipment includible in this account atmore than one location, separate records shal1 be maintained for
g each location.
' 341. Transportation EouipmentIThis account sha11 include the cost of transportation vehiclesused for utility purposes. A sample of items to be included inthis account are list.ed below:
1. Airplanes.
2 . Automobil-es.
3 . Bicycles.4. Electrical vehicles.5. Motor trucks.6. Motorcycles.
7 . Repair cars or trucks.8. Tractors and trailers.
9 . Ot.her transportation vehicles.
342. Stores Equipment
A. This accounE shall i.nclude the cost of equipment used for t.hereceiving, shipping, handling and storage of maEerials andsupplies.
' B. If the utility has equipmenc includible in this account ar.^h, more than one Location, separate records shall be maintained forI B each location. A sample of items to be incLuded in this account--' are Listed below:
89
WATER IITILITY PIJAIIT ACCOI'NTS
L. Chain faIIs.2. Counters.3. Cranes (portable) .4. Elevating and stacking equipment (portable).
5. Hoists6. Lockers.
7 . Scales.8. Shelving.9. Storage bins.10. Trucks, hand and power driven.11. Wheelbarrows.
343. Tools, Shop and Garaqe Equipment
This account shaII include the cost of tooIs, implements, and
equipment. used in construct,ion, repaJ.r work, general shops and
garages and not specifically provided for or includible in otheraccounts. A sample of items to be included in t,his account arelisted below:
l_.
2.
3.
4.
5.
6.
7.
8.
o
10.
LL.
]-2.
13.t4.
15.
16.
1-7 .
18.
l_9.
20.2t.
22.23.
24.
25.
26.
27.28.29.
Air compressors.Anvils.
Aut,omobile .repair shop eguipment.Bat,tery charging equipment.Be1t,s, shafts and countershaft,s.Boilers.
Cable pulling equipment.
Concrete mixers.Drill presses.
Derricks.Electric equipment.
Engines.
Forges.
Furnaces.Foundations and set,tings specially constructednot, expected t,o outlast the equipment for which
Gas producers.
Gasoline pumps, oil pumps and storage t,anks.Greasing tools and equipment.Hoists.
Ladders.
Lathes.
Machine too1s.
Motor driven tools.
Motors.Pipe threading and cutting tooIs.
Pneumatic tools.
Pumps.Riveters.Smithing equipment.
for andprovided.
90
WATER IIIIIJITY PIJAIIT ACCOUIi|ITS
30. Tool racks.31. Vises.
32 . Welding apparat,us.33. Work benches.
' 344. Laboratorv Ecruipment
A. This account shall include the cost installed of laboratory
equipment used for general laborat.ory purposes and not specificallyprovided for or includible j-n other departmental or functionalplant accounts. A sample of items to be included in this account
are listed below:
1. Autoclaves..2. Barometers.3. Cameras.4. Centrifuge.5. Distilling apparatus.6. Furnaces.7. Microscopes.8. Ovens.9. Pitometers.L0. Rain gauges.
.fu. 11. Refrigerators.
' fl i:=. S:3liii,ersL4. Stop watches.
l-5 . Testing machines.
l-6 . Thermometers.]-7. Voltmeters.18. Other bacteriological, electric, chemical hydraulic orresearch eguipment.
B. If the utility has equipment. includible in this account at
more than one location, separate records sha1l be maintaj-ned for
each location
345. Power Operated Equipment
This account shal1 include the cost of power operatedequipment used in construction of repair work exclusive ofequipment includible in other accounts. Include, also, the toolsand accessories acquired for use with such equipment and thevehicle on which such eguipment is mounted. A sample of items tobe included in this accounE are listed below:
L.. Air compressors, including driving unit and vehicle.2. Back filling machines.3. Boring machines.4. Bulldozers.5. Cranes and joists.
91
3
WATER IEfIJITY PLAIII ACCOUIITS
6. Diggers.7. Engines.8. Pile drivers.9. Pipe cleaning machines.10. Pipe coating or wrapping machines
l-L . Tractors Crawler t)pe.]-2. Trenchers.L3. Other power operated equipment.
Note:--It is intended that t.his account include only such largeunits as are generally self-propelled or mounted on moveable
equipment.
346 . Communication Equipment
This account shall include the cost installed of E,elephone,telegraph and wireless eguipment for general use in connectj-on withuEility operations. A sample of items to be included in thisaccount are listed below:
L.
2.
3.
4.
5.
6.
7.
8.
9.
10.
l_1.
L2.
13.t4.
15.
16.
1,7 .
18.
19.
20.
2l..
22.
23.
Antennae.
Booths.
Cables.Distribution boards.
Extension cords.
Gongs.
Handset,s, manual and dial .Insulators.
Intercommunicating sets.Loading coils.
Operators desks.Poles and fixtures used who11y for telephone andtelegraph wires.
Radio transmitt,ing and receiving seEs.
Remote cont,rol equipment and lines.
Sending keys.
Storage batt,eries.
Swi.tchboards.Teleautograph circuit connections.Telegraph receiving seLs.Telephone and Eelegraph circuit,s.Testing instruments.
Towers.
Underground conduit used who11y for telephone ortelegraph wires and cable wires.
('m
347 . Miscellaneous Equipment.
This account sha1l incLude the cost, of equipment, apparatusetc., used in utility operat.ions, and which is not includible inany other account. A sample of items to be incLuded in this
92
WATER UTIIJITY PIJANT ACCOI'}iI:TS
account are listed below:
1. Hospital and infirmary equipment .2. Kitchen equipment.3. Recreation equipment4. Radios.5. Restaurant equipment,.5. Soda fountains.
7 . Operator's cott,age furnishings.8. Elect,ric signs advertising the corporate name or symbol,plant or fa6ility name, o; otherwiEe serving only thegeneral purpose of acquainting the public with thefacilities and serwi.ces of the utility.
9 . Other miscellaneous equi.pment.
Note:--Miscellaneous equipment of the nature indicated abovewherever practicable shall be included in the utility plant
accounts on a functional basi-s.
348. Other Tanoible Plant
"". nl:iiu35"?X;t"i:3*i"i::'"u" the cost of tansible utilitv plant
a
'B
93
INCO!m ACCOUT{TS
Utility Operating Incone400. Operat,ing Revenues401. Operating Expenses403. Depreciation Expense406. Amortizat.ion of Ut,ility Plant Acguisition Adjustment
407 . Amort,izatj"on Expense407.1 Amortization of Limited Term Plant407.2 Amortization of Property Losses407.3 Amortization of Other Utllity Plant407.4 Amortization of Regulat.ory Assets407.5 Amortization of Regulatory Liabilities408. Taxes Other Than Income408.10 Utilit,y Regulatory AssessmenE Fees408.L3 Other Taxes and Licenses409. Income Taxes409.10 Federal Income Taxes, Utility Operating Income410. Provision for Deferred Income Taxes4l-0.10 Deferred Federal Income Taxes4r-]-. Provision for Deferred Income Taxes - Credit411.10 Provision for Deferred Income Taxes - Credit,, UtilityOperating Income4]-2. Investment Tax Credits4]-2.10 Invest,ment Tax Credits Deferred to Future Periods, Utility
Operations412.LA Investment Tax Credits Restored t,o Operating Income,Utility Operations413. Income From Utility P1ant Leased to Others
41-4. Gains (Losses) From Disposition of Utility Property
Other Incoure and Deduct,ions
-415. Revenues From Merchandising, ,Jobbing and Contract Work4L6. Costs and Expenses of Merchandising, Jobbing and Contract Work4]-9. Interest and Dividend Income420. Allowance for Funds Used During Construct,ion42i-. Nonutility Income
426 . Mj.scellaneous Nonutility Expenses
Taxee Applicable to Other Income and Deductione
408. Taxes Other Than Income408.20 Taxes Other Than Income, Other Income and Deductions409. Income Taxes409.2O Income Taxes, Other Income and Deductions410. Provision for Deferred Income Taxes410.20 Provisj-on for Deferred Income Taxes, Other Income and
Deductions
411,. Provision For Deferred Income Taxes - Credit4l-3-.20 Provision for Deferred Income Taxes - Credit, Other In
and Deductions
(fl
94
@
INCOME ACCOI'NTS
4]-2. Investment Tax Credit.s4L2.20 Investment Tax Credits - Net, Nonutility Operations412.30 Investment Tax Credits Restored to Nonoperating Income,Utility Operations
Interest Expenee
427. Interest Expense427.1 Interest on Debt to Associated Companies427.2 Interest on Short-Term Debt42?.3 Interest on Long-Term Debt427.4 Interest on Customer Deposits427.5 Interest - Other428. Amortization of Debt Discount and Expense429. Amortizati-on of Premium on Debt
Extraordinary fEema
433. Extraordinary Income
434 . Extraordinary Deductions409. fncome Taxes409.30 Income Taxes, Extraordinary Items
i&
95
rNcol,IE AccoutiEs
Operating Income
400. Operatinq Revenues
This is the revenue control account, which totals t,he accounts
recorded in water revenue accounts 460 through 480.
401. Operatinq Expenses
This is the operating expense control account whj,ch totals the
amounts recorded in operating expense accounts 601 through 675 for
water systems.
. 403. Depreciat,ion Expenses
A. This account shaIl be charged with depreciation credited to
account 108 - Accumulated Depreciation of Water Plant and creditecwith amorti-zation debited t,o account 272 - Accumulated Amortizaticof Contributions in Aid of Construction. Depreciation shal1 be
accrued on a straight-line remaining life basis or straight-Iinebasis, €rs required by the Commission. A single compositedepreciatj-on rate may be used if approval from the Commission isobtained
Note A:--See Accounting Instructioa 27, for more det,ailedinstructions on depreciation accounting.
B. Depreciation for property not, used in water operat,ions ischarged to account 425 - Miscellaneous Nonutility Expenses, and iscredited to account !22 - Accumulated Depreciation and Amortizationof Nonutility Property.
406. AmorttzaLion of Utilitv Plant Acquisition Adiustments
This account shall be debited or credited, Ers the case may be,only upon the approval of the Commission, for the purpose ofproviding for the extinguj,shment of the amount in account, 1L4Utility PIanL Acquisition Adjustments.
4O7 . Amortization Expense
This account sha1l be the control account for amortization
account.s totaling the amounts in accounts 407 .1 to 4O7 .3.
407.1- AmorLization of .Limited Term Plant
This account sha1l include amortization charges applicable t,o
amounts included in the utility plant accounts for limitedterm franchises, 1j-censes, patent, rights, limited t,erm , ..*interests in 1and, and expendit,ures on leased property wheref;fthe service life of the improvement,s is terminable by action
(
96
INCOIIE AECOUilrtS
rB
of the Iease. The charges to this account shall be such asto distribute the book cost of each investmenL evenly over
the period of benefit to the utility (See account 1l-0
Accumulated Amortization of Utility Plant in Service).
407.2 Amortization of Property Losses
This account sha11 be charged with amounts credited to
account L82, Extraordinary Property Losses, when the
Commission has aut,horized the amount in the latter account to
be amortized by charges to operat,ing expenses.
407.3 Amortization of Other Utilitv Plant
A. when authorized by he Commission, this account shalIinclude charges for amortj-zat.ion of intangible or ot,herutility plant in service which does not have a definite orterminable life and which is not subject to depreci-ation
expense.
B. This account shal1 be supported in such detail as to
show the amortization applicable to each invest.ment beingamortized, t.ogether with the book cost of the investment andthe period of the amortization.
:' ; 407.4 Amortization of Requlatorv Assets
This account sha11 be debited, when approprlate, withthe amounts credited to Account 253 - Other DeferredCredits, to record regulatory liabilities imposed on theutility by the ratemaking actions of regulatory agencies.This account sha1l also be debited, when appropriate, withthe amounts credited to Account l-85 - Miscellaneous DeferredDebits, concurrent with the recovery of such amounts inrates
407 .5 Amortizat.ion of Requlatorv Liabilities
This account shall be credited, when appropriate, with
amounts debited to Account L85 - Mi-sceLl-aneous DeferredDebits, to establish regulatory assets. This account, sha11also be credited, when appropriate, with t.he amountsdebited to Account 253 - Other Deferred Credits, concurrentwith the return of such amount to customers through rates.
408. Taxes Other Than Income
A. These accounts sha11 include t,he amount of ad valorem, gross
]u. revenue or gross receipts t,axes, regulatory agency general
lif assessments for purposes of public utility regulation, sEate--{ unemployment insurance, franchise taxes, federa} excise taxes,
97
INCOME ACCOI'NTS
social security taxes, and all other taxes assessed by federal
state, county, municipal, or other l-ocal governmental aut.horities,except income taxes.
B. These accounts sha]I be charged in each accounting period with
the amounts of taxes which are applicable thereto, with concurrentcredits to account 236 - Accrued Taxes, or accounE 1-62
PrepaymenEs, BS appropriate. When it. is not possible to determinethe exact amounts of taxes, the amounts shall be estimated and
adjustments made in current accruals as the acEual t,ax levies
become known.
C. The charges t,o these accounts sha11 be made or supported so asto show t.he amount of each tax and the basis upon which each chargeis made. In the case of a utilit.y rendering more than one utilityservice, Eaxes of the kind includible in t,hese accounEs shaI1 beassigned directly to the ut,ility department, the operation of whichgave ri-se to the tax in so far as practicable. Where the tax is notattributable to a specific utility department, it sha11 bedist.ributed among the ut,ility departments or nonutility operationson an equitable basis after appropriate study to determine such
basi.s.
Note A:--Special assessments for street and similar improvement,sshal1 be included in the appropriate ut,ility planL or nonutilit.yproperty account.
Note B:--Taxes specifically applicable to construction shall beincluded in the cost of constructlon.
Note C:--Gasoline and other sales taxes sha1l be charged as far aspracticable to the same account as the materials on which the tax islevied.
Note D:--SociaL security and other forms of payroll taxes shal1 bedistributed to utility departments and to nonutility functions on abasis related to payro1l. Amounts applicable to construction sha1lbe charged to t.he appropriate plant account.
Note E:--Interest on tax refunds or deficiencies shall not beincluded in these accounts but in account 419 - Interest andDividend Income, or 427.5 - Int.erest - Ot.her, BS appropriate.
408.1-0 Utilitv Requlatory Assessment Fees
This account shalI include those general fees assessed byregulatory agencies for t,he purpose of public utilityregulation.
(&
98
INCOME ACCOUNTS
408.13 Other Taxes and Licenses
This account shall include all other taxes and licensesrelating to utiLity operating income not properly accountedfor elsewhere.
408.20 Taxes Other Than Income, Other Income and Deductions
This account shalI incl-ude those taxes recorded in account408 - Taxes Other Than Income, which relate to Other Income
and Deductions.
409. Income Taxes
A. These accounts shalI include the amounts of locaI, state andfederal income taxes on income properly accruable during the period
covered by t,he income statement t.o meet the actual liabilit.y forsuch taxes. Concurrent credits for the tax accruals shaII be madeto account 236 - Accrued Taxes, and as the exact amounts of taxes
become known, the current tax accruals sha11 be adjusted by chargesor credits to these accounts unless such adjustments are properlyincluded in account 439 - Adjustments to Retained Earnings, sothat these accounts as nearly as can be ascertained shal1 includet.he actual taxes payable by the utility (See AccounEing Instruction8 for prior period adjusLments).
B. The accruals for 1ocaI, state and federal income taxes shaIlbe apportj-oned to Utility Operating Income (bydepartment/dlvision), Other Income and Deductions and ExtraordinaryItems so that, ds nearly as practicable, each tax included in theexpenses of the utility department, Other Income and Deductions orExtraordinary ltems,.sha11 be relat.ed to the income which gave riseto the t,ax. The income tax effect of the amounts recorded i-naccount 439 - Adjustments to Retained Earnings, sha11 be recordedin that account. The t,ax effects relating to interest charges,other than interest specifically applicable to indebtedness onproperty in account L2L shalI be included in account 409.10Income Taxes, Utility Operating Income.
C. This account shal1 be maintained according to the subaccounts409.10, 409.20 and 409.30 inclusive, as shown below.
Note A:--Taxes assumed by t.he utility on interest shall be chargedto account, 427.5 - Int.erest Other.
Note B:--Interest on tax refunds or deficiencies shall not beincluded in this account but in account 4]-9 - Interest and DividendIncome, or account 427.5 - Interest - Other, ds approprlaEe.
--See Accounting Instruction 28.
99
rNcot[E Accou![Ts
409.10 Income Taxes, Utilitv Operatinq Income
This account shalI include the amount of those federal,st,ate, and LocaL income taxes reflected in account 4O9
Income Taxes, which relate to utilit,y operating incomeaft,er interest charges and other tax adjustments. This
account shall be maintained so as to allow readyidentificat,ion of tax effects (both positive and negative)relatsing to Utility Operating Income (by
department/division), Utility Plant Leased to Ot.hers and
Other Utility Operating Income.
409.20 Income Taxes, Other Income and Deduct,ions
This account shall include t,hose IocaI, state, and federal
income taxes reflected in account 409 - Income Taxes, (both
positive and negative), which relat,e to Other Income and
Deductions.
409.30 Income Taxes, Extraordinarv Items
This account shall include those Iocal, state, and federal .rt
income taxes (both positive and negrative) which relate to ffitt,pExtraordinary Items.
410. Provision for Deferred Income Taxes
A. Accounts 410.10, and 410.20 shall be debited and accounts
28:-., 282, or 283 Accumulated Deferred Income Taxes - AcceleratedAmortizaEion, Liberalized Depreciat,ion, oE Other, shall be credit,edwith amounEs egual t.o any current deferrals of taxes on i-ncome orany allocations of deferred t,axes originating in prior periods, dsprovided by the texts of accounts 190, 281-,282, and 283. Nocredit amounts appropriately includible in account 411.L0 or 411.20shalL be netted against ent,ries required t,o be made to these
accounts.
B. This account shaII be maint,ained according to the subaccounts4L0.10, and 4]-0.20 inclusive, as shown below.
Note: - -See Account j-ng Inst.ruction 28.
410.10 Deferred Income Taxes
This account sha1l include t,he amount,s of those deferralsof federal, state, and 1ocal income taxes and allocationsof deferred federal income taxes which relate to UtilityOperating Income (by department/division) .
100
$
TNCOME ACCOI'NTS
41-0.20 Provision for Deferred Income Taxes, Other Income and
Deductions
This account shall include the amount of those deferredfederal, state and local income taxes reflected in account
410 - Provision for Deferred Income Taxes, which relate toOther Income and Deductions.
41,1. Provision for Deferred Income Taxes - Credit
Accounts 411.10 and 41-2.20 sha1l be credit.ed, and accounts28]-, 282, or 283, Accumulated Deferred Income Taxes - Accelerat,edAmortization, Liberalized Depreciation or Other, sha11 be debited,with arqounts equal to any alLocations of deferred taxes originatingin prior periods or any current deferrals of taxes on income, BSprovided by the texts of accounts 190, 281, 282, and 283. No debitamounts appropriately includible in account 410.10, or 41-0.20 sha1lbe netted against. entries required to be made to these accounEs.
4l-l-. L0 Provision For Def erred Income Taxes - Credit. Utilitv.Operatinq Income
This account sha11 include the amounts of thoseaLlocations of deferred federal, state and 1ocal incometaxes and deferrals of federaL, state and l-ocaI incometaxes, credit which relate to Utility Operating Income (by
department /division) .
4L:--.20 Provision For Deferred Income Taxes - Credit. Other Incomeand Deductions
This account shaIl include the amounts of those allocationsof deferred taxes and deferrals of taxes, credit,, whichrelate to Other Income and Deductions.
4L2. Investment Tax Credits
A. This account shaII be debited with the total amounE ofinvestment tax credit,s used in calculating the reported currentyear's income taxes payable.
Account 255 - Accumulat,ed Deferred Investment Tax Credits,shal1 be credited with an equal amount of j-nvest.ment t,ax creditsdebited to this account. Investment. tax credits related toproperty used in uEility operations shall be debited to subaccount412.10 - Investment Tax Credits Deferred to Future Periods, UtilityOperations. Those investment tax credits reLated to property usedin nonutilit,y operations shall be debited to account 4]-2.20 -Investment Tax Credits - Net, Nonutillty Operations.
10L
INCOME ACCOI'NTS
(&
B. A company which has deferred its investment tax credit,s sha1lamortize these deferred credit amounts by crediE,ing this account
and debiting accounE 255 - Accumulated Deferred fnvestment Tax
credits. Such annual amortization shall be allocatedproportionately over the service lives of all assets or of theassets generating the credit,s. The proport,ional amounts shall be
determined in relation to the method of depreciation actually used
on the regulated books of account.
(1) In amortizing the deferred investment. tax credits relatedto property used in utility operations, the annualproportionaL amount credited to account 4l-2 - Invest,menE TaxCredits may or may not be passed on to customers in accordancewith the Internal Revenue Code section applicable to the
company. Where the company is subject to Section 46 (f) (2) ofthe code which provides a "Special rule for rat,able flow-
through" or Option 2 treatment, the annual proportionalamortization is to be credited to subaccount 41-2.11Investment Tax Credits Restored to Operating Income, UtilityOperations. Where the company is subject to Code Section 45(f ) (1), which is the rrGeneral RuLerr or Option L treatment, theannual proportional amortization shalI be credited tosubaccount 4L2.3O - Investment Tax Credi-ts Restored toNonoperating Income, UEility Operations.
(2) In amortizing the deferred investment tax credit.srelated to property used in nonutility operations, the annual
amounE sha1l be credited to subaccount 4l.2.20, Investment TaxCredits - Net, Nonutilit,y Operations.
C. This account sha1l be maintained so that the debits andcredits relating to each alIowable percentage of credit, i.e., 3*,4*, 6%, 7t, 8*, LOZ, etc., may be readily identified.
D. This account shalL be maintained so that the debits andcredits relating Eo each ut,ility department/division and eachnonutility operation may be readily identified.
E. This accounE sha11 be maint,ained according to subaccounEs4L2.l0, 4L2.]-l, 412.20 and 4]-2.30 as shown below.
412.10 Investment Tax Credits Deferred to Future Periods. UtilityOperations
This account shaII be debit,ed and account 255
Accumulated Deferred Investment Tax Credlts, shal1 becredited with the amounts of realized investment taxcredits deferred to future periods related to property usedin ut,ility operations (department/division) . , ,,fu
I ilE\-rp
($
)-o2
M
INCOME ACCOIIMTS
4l2.Ll Investment Tax Credits Restored to Operatinq Income.IIt-i1itv Ooerations
This account shall be credited and account 255
Accumulated Deferred Investment Tax Credits, sha11 be
debited with the proportionate amounts of deferred
investment tax credits related to property used in utility
operations being restored to operating income in accordancewith the "Special Rule for Ratable Flow-through" or OptJ-on2 t,reatment as provided in the Revenue Act of 197l-, the Tax
Reduction Act, of 1975 or the Economic Recovery Tax Act of
r-981-.
4L2.20 Investment Tax Credits - Net. Nonutility Operations
A. This account shalI be debited and account 255
Accumulated Deferred Investment Tax Credits, shal1 becredited with the amounts of realized investment taxcredits deferred to future periods which relate to property
used in nonutility operations.
B. This account shall be credited and account 255
Accumul-ated Deferred Investment Tax Credits shalI bedebit.ed with t,he proportionate amounts of deferredinvestment tax credits related to property used innonutilit.y operations being restored to nonoperati-ng
income.
4L2.30 Investment Tax Credits Restored t.o Nonoperatinq Income.Utilitv ogerations
This account shal1 be credited and account 255Accumulated Deferred Investment Tax Credits shal1 bedebited with the proportionate amounts of deferredinvestment tax credits related to property used in utilityoperations being restored to nonoperatJ-ng income inaccordance with the "General Rulerr or Option 1 as providedby the Revenue Act of L971, the Tax Reduction Act of 19'75and the Economj-c Recovery Tax Act. of 1981-.
41"3. Income from Utilitv Plant Leased to Others
A. This account sha1l include, revenues from utility propertyconstitut.ing a distinct operating unit or system leased by theutility to others, and which property is properly includible inaccount !O2 - Utility Plant Leased to Others, and the expensesat.t,ributable to such properEy. A series of subaccounts shal1 bemaintained for each operating unit or system leased to showseparately revenues and expenses.
103
INCOME ACCOUIIIS
B. The detail expenses shal1 be kept or supported so as to showseparately the following:
(1)
Q)(3)
Operation;Depreciation; andAmortization.
C. The related taxes shall be recorded in the appropriatesubsidiary accounts and the control account 408 - Taxes Other t.han
Income and Account 409 - Income Taxes. Records shaIl be maintained
such that, these Laxes associated with leased plant are separatelyidentifiable.
4t4. Gain (Losses) from Disposition of Utility Property
A. This account sha11 include, when authorized by the
Commission, gains and losses from the sale, conveyance, exchange ortransfer of utility property to another. The income taxattributable to gaing and losses recorded in this account shall berecorded in the appropriat,e subsidiary account and cont,rol account
409 - Income Taxes.
B. This account shall be maintai.ned so that the transactions anddetails underlying each gain or loss will be readily identifiaUfe @Other Income and Deductions
415. Revenues from Merchandisinq, Jobbinq. and Contract Work
416. Cost and Expenses of Merchandisj-ncr, Jobbinq, and Contract Work
A. These accounts shall include respectively, all revenuesderived from the sale of merchandise and jobbing or conEract work,including any profit or commission accruing to t.he utility onjobbing work performed by it as agent under contracts whereby itdoes jobbing work for another for a stipulated profit orcommission, and aL1 expenses incurred in such activities.
B. Records in support of t,hese accounts shalL be so kept as topermit ready summarization of revenues, costs and expenses by suchmajor items as are feasible.
Note:--Related operating taxes shall be recorded in account408.20 - Taxes Other Than Income Taxes, Other Income andDeductions, and income Eaxes shaIl be recorded in account 409.20,Income Taxes, Other Income and Deduct.ions.
4]-9. Interest and Dividend Income , ',-.1,This account shall include interest revenues on securities, ( u,Jloans, notes, advances, special deposits, tax refunds and all othY
t-04
i;&
INCO}TE ACCOI'NTS
int.erest bearing assets and dividends on stocks of other companies,
whet.her the securit.ies are carried as investments or included in
sinking or other special funds accounts.
42O. Allowance for Funds Used Durinq Construction
This account shaIl include concurrent credits for allowancefor funds used during construction based upon the net cost of funds
used for construction purposes and a reasonable rate upon other
funds when so used. Appropriate regulatory approval shall be
obtained for lra reasonable raterr.
421. Nonutilitv Income
In t.his account is ent.ered all income not includible in
operating revenue accounts 460 through 474 or in account 4L9
Interest and Dividend Income. Items in this account shalI include:
L. Gross income from nonutilit,y operations; and2. Net gain on sale of nonutility property.
426 . Miscellaneous Nonutilitv E>q>enses
t ,"t" "."""* shall contain all expenses other than expenses of
'..:ry utility operations and interest expense. Items which are included- in this account are:
l-. Expenses disallowed in a proceeding before the
Commisslon.2. Amortization of an Acquisit.ion Adjustment not approved bythe Commission.3. Depreciation associated with plant not used and useful in
t,he public service.4. Depreciation of Nonutility P1ant.5. Imprudent expenses.6. Donations for charitable, social or community welfare
purposes.7. Life insurance on officers and employees where utility isbeneficiary (net premj.ums less increase in cash surrendervalue of policies).8. PenaLt,ies or fines for violations of statutes pertainingto regulation.9. Expenditures for the purpose of:a. Influencing public opinion with respect to theelection or appointment of public officials, or theadoption, repeal, revocation or modification ofreferenda, legislation or ordinances.b. Influencing public opinion with respect to obtainingapproval, modification or revocation of franchises.c. Influencing the decisions of public officials notincluding such expenditures which are directly
,h
w
105
INCOME ACCOI'If,IS
related to appearances before regulatory or othergovernmental bodies in connection with the utility'sexisting or proposed operat,ions.10. Loss relating to investments in securities written-off orwritten-down11. Loss on sale of investments.12. Loss on reacquisition, resale or reLiremenE of utility'sdebt securit,ies.L3. Preliminary survey and invesEigation expenses related to
abandoned projects, when not written-off to theappropriate operating expense account.14. Golf club dues, social club dues and service club dues(Kiwanis, Rotary, etc.) house charges and items of asimilar nature whether such expenditures are madedirectly by t,he utiliEy or indirectly by payment or
reimbursement to associated companies, officers, or ot,her
employees, .or by any other direct or indirect means.
427. Interest Expense
This accounE sha1l be the contro] account for recordinginterest expense and shalI total t.he sum of accounts 427.1 through
427 .5.
427.1 fnterest on Debt to Associated Companies
This account shaII record interest incurred with relatedcompanies.
427.2 Interest on Short-Term Debt
This account sha1I record interesE expense associated withshort,-term debt (principal due in 1 year or less).
427.3 Interest on Lonq-Term Debt
This account shal1 record interest expense associated withlong-term debt (principal due in more than one year).
427.4 Interest on Customer Deposits
This account shall record interest expense assocj.ated withcustomer deposits.
427.5 Interest-Other
This account shaI1 include in each accounting period allinterest charges not provided for elsewhere.
105
(
INCOME ACCOI'NTS
,b
428. Amortization of Debt Discount and Expense
A. This account shall include in each accounting period theportion of unamortized debt discount and expense on outstanding
long-term debt which is applicable to such period. Amounts chargedto this account shal1 be credited concurrently to account 181
Unamortized Debt, Discount and Expense.
B. This account sha11 be so kept or supported as t,o show the debtdiscount and expense on each class and series of long-term debt.
429. Amortization of Premium on Debt
A. This account shall include in each accounting period theportion of unamortized net premium on outstanding long-term debt
which is applicable t,o such period. Amounts credited to this
account sha1l be charged concurrently to account 251- - Unamortized
Premium on Debt.
B. This account shaLl be so kept or supported as to show thepremium on each class and series of long-Eerm debt.
Extraordinary Items
,.'@ nrr. Extraordinarv rncome
Upon approval of the regulatory authority this account shallbe credited with nont14pical, noncustomary, infrequently recurringgains, which would significantly distort the current year's income
computed before extraordinary items, if reported other than asextraordinary items. The applicable income tax effecLs of theaccount shall be recorded in account 409.30 - Income Taxes,Extraordinary Items.
434 . Extraordinarv Deductions
Upon approval of the Commission t.his account shall be debitedwith nont14>icaI, noncustomary, infrequently recurring losses, whichwould distort the current year's income, if not reportedseparately. The applicable income tax effects shalI be recorded inaccount 409.30 -Income Taxes, Extraordinary ltems.
L07
INCOME ACCOUIITS
435. Balance Transferred From Income436. Appropriations of Ret,ained Earnings437. Dividends Declared - Preferred Stock438. Dividends Declared - Common St,ock439. Adjustments to Retained Earnings
,',
RETATIIED EJA,RNINGS ACCOI'MTS
435. Balance Transferred from Income
This account shaII include the net credit or debit transferredfrom income for the year.
436. Appropriations of Retained Earninqs
This accounE shaI1 include appropriations of retained
earnings.
Items
1. Appropriations required under Eerms of mortgages, ordersor courts, conEracts or other agreements.2. Appropriations required by action of regulatoryauthori-ties.3. Other appropriations made at, option of utility forspecific purposes.
. 437. Dividends Declared - Preferred Stock
A. This account, shall include amounts declared payable out ofretained earnings as dividends on actually outstanding preferred or
l:..B prior lien capital stock issued by the utility.
B. Dividends shall be segregated for each class and series ofpreferred stock as to those payable in cash, stock and other forms.If not payable in cash, t.he medium of payment sha1I be describedwith sufficienr detail to identify it.
438. Dividends Declared - Common Stock
A. This account shall include amounts declared payable out ofretained earnings as dividends on actually outstanding commoncapital stock issued by t,he utility.
B. Dividends sha1l be segregated for each class of common stockas to those payable in cash, stock and ot,her forms. If not payablein cash, the medium of pa)rment shall be described with sufficient.detail to identify it.
439. Adiustments to Retained Earnincrs
A. This account shal1 include significant nonrecurringtransactions relating to prior periods. Other than Eransactions ofcapital stock as specified in paragraph B below, all entries tothis account must receive prior Commission approval. Thesetransactions are generally limited to those adjustment.s which:
(1) correcE an error in t.he financial sEat.ement,s of a priorperiod; or
109
RETAITIED EARNINGS ACCOIT}f,TS
(fl
Q) adjustment,s t.hat result from realization of income taxbenefits of preacquisition loss carry forwards of purchasedsubsidiaries.
This account shaIl aLso include the relat,ed income tax. effects(state and federal,) on items included herein. All items includedin this account, shaLl be sufficiently described in the entriesrelating thereto as to permit ready analysis.
B. Debits due to losses on reacquisition, resale or retirement ofthe company's own capital stock shall be included in t,his account.
C. Changes in depreciation or amortization estimat,es or methodsare considered changes in accounting estimates rather thanaccounting errors and therefore are not subject t,o prior periodadjust,ments. Any adjustment,s made to the accumulated amortizationor depreciation balarices of t.he utiliEy due to a change in estimateor method shal-I be of f set by a charge or credit t,o either: anincome account; account L86 - Miscellaneous Deferred Debits; oraccount 253 - Other Def erred Credits, Ers is direct,ed by the
Commission.
110
WATER OPERATING REVENT'E ACCOI'IiITS
Water Salee
460. UnmeEered Water Revenue46]-. Metered Water Revenue461.L Metered Sales.to Residential Customers46L.2 Met,ered Sales to Commercial Customers461.3 Metered Sales to Industrial Customers467.4 Met,ered SaLes to Publ-ic AuEhorities461.5 Metered Sales to Mu1tiple Family Dwellings462. Fire Protection Revenue462.1 Public Fire Protection462.2 Private Fire Protect,ion464. Other Sales to Public Authorities465. Sa1es to Irrigation CusEomers466. Sales for Resale467. Interdepartmental Sales
Other WaEer Revenues
469. Guaranteed Revenues470. Forfeited Di-scounts47]-. Miscellaneous Service Revenues472. Rents From Water Property473. fnterdepartmental Rents
,& nrn. Other Water Revenues
'p
l_11
WATER OPERATING REVENUE ACCOIIMTS
supplied for resj-dentiaI, commercial or industrialirrigation) purposes where the tot,aI charge is, orway dependent on the guantity of water delivered.
(Water Sa1es
450. Unmetered Water Revenue
A. This account sha1l include the net billing for water suppliedfor residential, commercial and industrial (except- irrigation)purposes where the charge is not dependant in any way on thequantiEy of water delivered but is based on diameter of servicepipe, room, foot of front,age or other similar unit.
B. Records shaIl be maintained so that the estimated quantity ofwater sold and the amount of revenue under each raLe schedule shallbe readily available.
461. Metered Water Revenue
A. This account shal1 include the net billing for measured water(except
may be, in any
B. Records sha11 be maint,ained so that the quant.ity of water soldand the amount of revenue under each rate schedule shal1 be readilyavai-1abIe.
C. This account shaIl be subdlvided at least as follows:
46]-.1 Metered Sales to Residential Customers45]-.2 Metered Sales to Commercial Customers451.3 Metered Sa1es to Indust,rial Customers46r..4 Metered Sales to Public Authorities45t.5 Metered Sales to Multiple Family Dwellings
Note:--This account includes all revenues under servi-ceclassifications which consist of a rate for a specified diameter ofservice pipe, or per meter, fixture, room, foot of frontage, orother similar unit, plus an additional charge or an adjusE.mentdependent upon t,he quantity of water delivered.
452. Fire Protection Revenue
A. Include herein all revenue from public agencies and othersfor hydrant charges, private fire proEection service, streetsprinklirg, sewer flushing and similar sources.
B. The following subaccounts sha11 be used:
462.1, PubLic Fire Protection452.2 Privat.e Fire Protect.ion
tt2
(,
IS 464.
.b
456 .
467 .
Note:--Do not include herein revenues from water supplied for fireprotection or for resale, or from sales billed under generalservice classiflcations (See accounts 45O, 46]-, 452 and 456).
465. Sales to Irriqation Customers
A. This account shaLl include the net, billing for water suppliedfor commercial irrigation purposes, under distinct irrigationrates, billed under either metered or flat. raEe tariff schedules.
B. Records shal1 be maintained so that the quantity (estimat,ed ifnot, metered) of water soLd and the amount of revenue under eachrate schedule shall be readily available.
WATER OPERATING REVENT'E ACCOUNTS
Other Sales to Public Authorities
A. This account sha1l include the neE billing for water suppliedto municipalities, ot other municipal subdivisions or agencies ofstate or federal governments, biI1ed under special contracEs or
agreements or service cl-assifications applicable only to public
authorit,ies.
B. Records shall be maintained so that the quantity (estimated ifnot metered) of water sold and the amount of revenue under eachcontract, agreement or rate schedule sha11 be readily available.
C. This account shaII be subdivided as foLlows:
465.1 Ivletered Sales to Irrigation Customers465.2 Flat Rate Sales to Irrigation Customers
Sales for Resale
A. This account shaLl include the net billing for water supplied(including stand-by service) to other water ut,ilities or to publicauthorities for resale purposes.
B. Records shall- be maintained so that the quantity (estimated ifnot metered) of water sold and the amount of revenue under eachrate schedule sha11 be readily available.
Note:--Where the contract is reciprocal, i.e., where either part.ythereto may take water from the ot,her, the total amount receivablefor water supplied to t.he other party sha1l be included herein andthe total amount payable for water received from the other partyshall be charged to account 5L0 - Purchased Water.
fnterdepartmental Sales
A. This account sha1l include amounts charged by the wat.erdepartment, at, tariff or ot,her specified rates for water supplied byit to other utility departments.,'.b
113
(&
OPERATING REVENUE ACCOUIITS
B. Records shall be maintained so that the guantity of wat.ersupplied each ot.her department and the charges t.herefor sha1l bereadj-Iy available.
Other Water Revenues
469. Guaranteed Revenues
This account shaLl be credited with revenue received from
developers or other persons for a period of time prior to waterservice being established. Norma11y, thj.s type of revenue isusually received to reserve or guarantee the availabiliEy of plant
capacity when needed.
47O. Forf ei-ted Discounts
This account shalL include the amount of dj-scounts forfeitedor addit,ional charges imposed because of failure of customers topay t,heir water bilIs on or before a specified date.
471. Miscellaneous Service Revenues
This account shal1 include revenues for all miscellaneouswater related services and charges bilIed to customers which arenot specifically provided for in other accounts.
L.
2.
3.
Items
Fees for changing, or reconnect,ing service.Profit on maintenance of appliances, piping or otherinstallations on customers' premises.Net credit or debit (cost less net. salvage and Lesspayment from customers) on closing of work order forplant instalLed for t,emporary service of less than oneyear (See account 185 - Temporary FaciLities).Recovery of expenses in connection with unaut.horizedtaking of water (biIIing for the water used shall beincluded in the appropriate wat,er revenue account).Late payment fees.
4.
5.
472. Rents from Water Propertv
A. This account sha11 include rents received for the use byothers of 1and, buildings and other property devoted to wateroperations by the utilit.y.
B. When propert.y owned by the utiLity is operated jointly withothers under a definite arrangement for apportioning the actuaLexpenses among the parties to t,he arrangement, any amounts receivedby the utllity for interest or return or in reimbursement of tax.:r.h*or depreciation on the property sha11 be credited to t.hj-s accoul,='f,
LL4
WATER OPERATING REVENUE ACCOI'NTS
1"S Note:--Do not include in this account renEs from propertyconstituting an operating unit or system (See account 413 - Income
from Utility Plant Leased to Others).
473. Interdepartmenta] Rents
This account shall include rents credited to the water
department on account of rental charges made against otherdepartments (gas, electric, etc. of the utility). In the case ofproperty operaEed under a definite arrangement to allocate the cost
among the departments using the propert|, any reimbursement to thewater department for interest, fair return, depreciation or taxesshall be credited to this account.
Note:--Charges for water supplied other utility depart,ments shallnot be included in this account,, but in account 467Interdepartmental SaIes .
474. Other Water Revenues
This account shall include revenues derived from wateroperations not includible in any of the foregoing account.s.
ftems
l-. Commission on sales or distribution of water ofothers when sold under rates filed by such others.2. Compensatj.on for minor incidental services providedfor others such as customer bi11ing, engineering,etc.3. Profit or loss on sale of material and supplies notordinarily purchased for resale and not handledthrough merchandising and jobbing accounts.4. Sale of steam, but not lncluding sales made by asteam heating department or transfers of steam underjoint facility operations.
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1l_5
WATER OPERATION AIID MAIIf,TENAI{CE EXPENSE ACCOI'MTS
(M
601-. Salaries and Wages
Employees603. Salaries and WagesOfficers, Directors andMajority Stockholders604. Employee Pensions and
6r_0.
5r.5.
6l.6.
618 .
620.
631.
632.
533.
534.
BenefitsPurchased Water
Purchased PowerFuel for Power Production
ChemicalsMaterials and SuppliesCont.ractual Services - Eng.Contractual Services - Acct.Contractual Services - LegalContractual Services
Management Fees535. Contractual- ServicesTesting636. Contractual Services - Ot,her641-. Rental of Building/RealProperty642. Rental of Equipment,650. Transportation Expenses656. Insurance - Vehicle657. Insurance - GeneralLiability558. Insurance - Workman's
Compensation559. Insurance - Other550. Advertising Expense566. Regulatory commission
Expenses - Amortizatj-onof Rate Case Expense
667 . Regulatory commj.ssion
Expense - Ocher558. Water Resource
Conservat,ion Expense670. Bad Debt Expense675. Miscellaneous Expenses
.1
Source of
Supply and
Expenses
Operations
60r.. 1
503 .1
504 .1
310.1
515. 1
5L6.1
518.1620.t
531. L
632.1
533 .1
534.L
535.1
635.1
54L.1642.t
550 .1
655 .1
657 .t
658.1
659.1
xxxxxxxxx
xxxxxxxxx
567 .t
558.1
xxxxxxxxx
675.1
.2
Source of
Supply and
Expenses%
60L.2
603.2
604.2
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
6]-8.2
620.2
53]-.2
632.2
633.2
634.2
535.2
636.2
64]-.2
642.2
650.2
656.2
557 .2
658.2
659.2
xxxxxxxxx
xxxxxxxxx
667 .2
xxxxxxxxxxxxxxxxxx
675.2
.3
Wat,er
Treatment
Expenses
601.3
503 .3
604.3
xxxxxxxxx
5r_5.3
5r.5.3
618.3
620.3
531.3
632.3
533.3
634.3
535.3
535.3
64]-.3
642.3
650.3
6s5.3
657.3
5s8.3
5s9.3
xxxxxxxxx
xxxxxxxxx
667 .3
xxxxxxxxx
xxxxxxxxx
675.3
(#
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1r-5
WATER OPERATION AI{D I-IAMTENAI{CE EXPENSE ACCOUNTS
i$
.4
Water
Treatment.
Expenses
Maint.
501.4
.5Trans. &Dist.
ExpensesOperations
601.5
603.s
604.5
xxxxxxxxx
6r_5.5
6r-5.5
518 .5
620.5
631.5
632.5
633.s
634.5
535.5
636.s
64L.5
642.5
550.5
655 .5
657.5
658 .5
659. 5xxxxxxxxx
xxxxxxxxx
667.5
xxxxxxxxx
xxxxxxxxx
675.5
.6Trans. &Dist.
Expenses
, Maint .
501.6
503 .5
604 .5
xxxxxxxxx
xxxxxxxxx
xxxxxxxxx
618.5
520 .6
531.5
632 .6
533 .6
634 .6
535.5
536 .6
. 64]-.6
642 .6
550. 5
6s6 .6
657.6
558.5
659 .6
xxxxxxxxx
xxxxxxxxx
667.6
xxxxxxxxx
xxxxxxxxx
675.6
.7 .8
Customer Admin. &AccounLs GeneralExpenses Expenses
503 .4
504.4
xxxxxxxxxxxxxxxxxx
xxxxxxxxx
61-8 .4
620.4. 631.4
532 .4
633.4
634.4
r.rf,. 63s - 4qD 63G .4
64]- .4642.4
550 .4
656.4
657.4
558 .4
559.4
xxxxxxxxx
xxxxxxxxx
667.4
xxxxxxxxx
xxxxxxxxx
675 .4
60]-.7
603.7
604.7
xxxxxxxxx
5]-5.76t6.7
xxxxxxxxx
620.7
631.7
632.7
633.7
634.7
635.7
636.7
64L.7
642.7
650.7
656 .7
657 .7
658.7
659.7
xxxxxxxxx
xxxxxxxxx
667 .7
xxxxxxxxx
670.7
675.7
501. I
503.8
504.8
xxxxxxxxx515.I
515.8
xxxxxxxxx
620 .8
63r_.8
632 .8
633.8
534.8
635.8
536.8
641,.8
642 .8
550.8
556.8
557.8
558.8
659.8
550.8
565.8
567.8
xxxxxxxxx
xxxxxxxxx
675 .8
i''@l
lL7
WATER OPERATION A![D }IAIIITENAI{CE EXPENSE ACCOI'NTS
501. Salaries and Waqes - Employees .
This account shall include the compensation (salaries,
bonuses and ot,her consideration of services) paid or accrued to
employees of the util-ity company for work related to operation andmaintenance of that utility company. This account sha1l noEinclude t,he saLaries and wages of officers, directors or majoritystockholders of the utility company.
603. Salaries and Waqes - Officers. Directors and Ma'iority Stockholders
This account sha1l include the compensatlon (salaries, bonusesand other consideration for services) paid or accrued to officers,directors or majority stockholders of the utility company.
604. Emplovee Pensi.ons and Benefits
This account shall include all accruaLs under employee pensionplans to which the utility has irrevocably committed such funds,and payments for employee accident, sickness, hospit,al and deathbenefits or insurance Eherefor. Include also expenses for medical,educationaL or recreational activities of employees.
510. Purchased Water
A. This account sha1l include the cost at the point of deliveryof water purchased for resale.
B. The records supporting this account shall be so kept as toshow for each supplier from which wat,er is purchased, point ofdelivery, quantity purchased, basis of charges, and the cost ofwater purchased.
515. Purchased Power
This account shall include the cost of all electric powerexpense incurred by the utility.
6]-6. Fuel For Power Production
A. This account shaI1 include the cost of fuel used in theproduction of power to operate the pumps. Records shall bemaintained to show the quantity and the cost of each type of fuelused.
B. The cost of fuel sha1l be charged initial]y to appropriat.efuel accounts under account L51 - Plant Materials and Supplies,cleared t.o this account on the basi-s of the fueL used.
and
w
l_18
WATER OPERATION AI{D !{AI}{TENAI{CE EXPENSE ACCOIIIf,TS
518. Chemicals
This account shall include the cost of all chemicals used inthe t.reatment of water. Include also the cost (except salaries and
wages includible in accounts 500 - 603) of any chemicals
manufactured by the utility and used to provide wat,er services toits customers.
Items
L. Activated carbon2. Ammonia3. Caust,ic soda4. Chlorine5. Copper sulPhat,e6. Fluorine compound7. High test hypochlorite8. Iron sulphate9. Lime10. Soda ash11. Sodium chloride12. Sulphate of al-umina13. Sulphuric acid1-4. Other chemicalsr-1, G20.
,,
Materials and Supplies
This account shalI include all materj-aIs and supplies used inoperation and maintenance of the wat,er system, other t,han materials
and supplies charged to Contractual Services Account.
531. Contractual Services - Enqineerinq
This account shalL include costs paid to outside engineers orengineering firms t,o perform ongoing, recurring work for theut.iIity. Engineering services for plant items are properlyincludible in the appropriate plant account. Engineering servicesfor rate relief filings sha1l be included in account 566Regulatory Commission Expenses - Amortization of Rate Case Expense
and account 186 - Mi.sce]Laneous Deferred Debits.
632. Contract,ual Services - Accountinq
This account shal1 include cosEs paid to outside accounting
companj.es to maintain or audit the books and records of theutility. AccountJ-ng expenses for rate relief filings sha1l beincLuded in account 666 - Regulatory Commission ExpensesAmortizat.ion of Rate Case Expense and account 185 - MiscellaneousDeferred Debits.
1r_ 9
WATER OPERATION A![D MAINTENA}ICE EXPENSE ACCOI'NTS
533. Contractual Services - Leqal
This account sha11 include costs paid to outside lega1 firmsto perform legal services for the utility. Legal services for rat,eproceedings before the Commission shall be included in account 666- Regulatory Commission Expenses - Amortization of.Rate Case
Expense or account L85 - Miscellaneous Deferred debits.
634. Contractual Services - Manaqement Fees
This account sha1l include contractua] costs (other than thoseproperly included in accounts 500 - 503 - Salaries and Wages) paidfor the performance of management functions.
(.@
635. Contractual Services - Testinq
This account shall include costs
f or test,ing.
636. Contractual Services - Other
This account sha1l include cosEsbuildings and/or real property whichcosts -
paid to outside laboratories
associated with the rental ofare properly t.reated as period
This account sha11 include those operations costs contractedfor which are not included in accounts 631, 632, 633, 634.
541-. Rental of Buildincl/Real Prooertv
642.Rental of Equipment
This account shal1 include costs associated with the rental ofequipment, except, vehicles, used in the operation of Ehe utility.Vehicle rentals and leases are properly included in account 550Transportation Expenses .
550. Transportation Expenses
This accounE shai-l include all truck, auEomobile, constructionequipment, and other vehicle expense chargeable to ut,ilityoperations, except depreciation and insurance.
656. Insurance - Vehicle
This account shalI include costs associated with insurance ofautomobj-Ie and trucks used for utility purposes.
657. Insurance - General Liabilitv
This account shaLl incl-ude 'i.nsurance costs associatedgeneral liability coverage of the utility company.
I fqtwith qg
t20
itS
WATER OPERATION AIID !{AINTENAI{CE EXPENSE AECOI'NTS
658. Insurance - Workman's Compensation
This accounE shaII
workman' s compensation
company.
659. Insurance - Other
include insurance costs associated with
coverage for employees of the utility
This account shal1 include insurance costs associated with
coverage for the utilit,y company which are not included in account656, 657 , or 558.
560. Advertisinq Expenses
Advertising costs not associated with regulatory commissi-onexpenses shall be included in this account, if authorized by the
Commission. This account sha1I be maintained so that informationaland instructional advertising can be readily ident,ified.
666. Requlatorv Commission E>cpenses - Amortj-zation of Rate Case Expense
This account shal1 include amortization of account l-86. l-Deferred Rate Case Expense. Costs associated with rate cases shaLlbe first. charged to account 185.1 and then amortized as prescribedby the Commission to this account.
667. Requlatorv Commission Expenses - Other
This account sha1l include all expenses (except saLaries ofregular ut,ility employees) incurred by the utilit.y in connect,ionwith formal cases before regulatory commissions, except for ratecase expenses which are accounted for as described above. Thisaccount shall not include payment, of taxes which shall be reportedin the Taxes Other Than Income accounts.
668. Water Resource Conservati-on Expense
A. This account shall include costs incurred to promoteconservation efforts within a utility's service area. This accountsha11 also incLude any amount,s charged by governmental entities forconservation purposes.
B. This account shall include amounts required by a regulatoryauthority to be paid to other utility systems, such as wastewatersystems to defray the costs of the wastewat,er utility in supplyingreclaimed water for reuse purposes.
B. The records supporting this account, shal1 be so kept as toshow for each supplier from which water is purchased, point of
.il delivery, quantity purchased, basis of charges, and t.he cost ofp wat,er purchased.
]-21
WATER OPERATTON AI{D MAI}iTTENAI{CE EXPENSE ACCOUIiITS
6'70. Bad Debt Expense
(,m
This account shall be charged wit,h amounts sufficient toprovide for losses from uncollect,ible utility revenues. Concurrentcredits shal1 be made to account ]-43.
675. Miscellaneous Expenses
This account shall include all expenses not includible inother operating expenses accounts.
Items
1. Industry association dues for company.memberships.2. Contributions for conventions and meetings of theindustry.3. Communication service not chargeable t,o other accounts.4. Trustee, registrar, and transfer agent, fees and expenses.5. Stockholders meeting expenses.6. Divrdend and other financial notices.7. Printing and mailing dividend checks.8. Director's fees and expenses.9. Publishing and distributing annual reports tostockholders.LO. Public notices of financial, operating and other daEa f..furequired by regulatory stat,utes, not including, however,\$tnotices required in connect,ion with security issues oracquisition of property.11. Write off of expenditures for preliminary surveys, plans,investigations, etc., included in account l-83Preliminary Survey and Investigation Charges, reLative Loproject.s which have been abandoned.
t_H
1,22