Uniform System of Accounts for Class A and Class B Telephone Companies To Raise the Expense Limit for Certain Items of Equipment From $500 to $750

[[Page 39451]]

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 32

[CC Docket No. 95-60; FCC 97-188]

Uniform System of Accounts for Class A and Class B Telephone

Companies To Raise the Expense Limit for Certain Items of Equipment

From $500 to $750

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Report and Order (Order), the Commission raises the

expense limit specified in its rules regarding Instructions for

telecommunications plant accounts from $500 to $2,000, with one

exception related to personal computers recorded in Account 2124,

General purpose computers. The purpose of the expense limit is to

reduce the cost of maintaining property records for the acquisition,

depreciation, and retirement of a multitude of low-cost, high-volume

assets. The Commission also adopts a five-year amortization period

during which incumbent local exchange carriers (ILECs) may recover the

undepreciated portion of embedded assets affected by this rule change.

We will allow carriers to implement these changes effective January 1,

1998.

DATE EFFECTIVE: January 23, 1998.

FOR FURTHER INFORMATION CONTACT: Warren Firschein, Accounting and

Audits Division, Common Carrier Bureau, (202) 418-0844.

SUPPLEMENTARY INFORMATION: On March 1, 1994, USTA filed a Petition for

Rulemaking to raise the expense limit in Section 32.2000(a)(4) from

$500 to $2,000. USTA also requested that the carriers be permitted to

amortize the net book cost of embedded assets that were purchased at

prices ranging from $500 to $2,000 over each company's remaining asset

life for accounts covered by the expense limit, which it indicated

would result in amortization periods of three to five years. On March

23, 1994, the Commission issued a Public Notice inviting comments on

USTA's petition. After reviewing the comments, the Commission issued

the Notice in which it proposed to raise the expense limit to $750.

Moreover, on May 31, 1994, USTA filed a Petition for Rulemaking to

Amend Part 32 of the Commission's Rules to eliminate detailed property

records for Accounts 2115, Garage work equipment; 2116, Other work

equipment; 2122, Furniture; 2123.1, Office support equipment; 2123.2,

Company communications equipment; and the personal computers and

peripheral devices recorded in 2124, General purpose computers. In

place of detailed property records, USTA requested that the Commission

permit carriers to adopt a vintage amortization level (``VAL'')

process. Under this process, a carrier would not track an asset over

its life through a continuing property record system. Instead, it would

assign each asset a life and retire the asset from its books of account

at the end of the assigned life, regardless of whether it was still

used in providing telecommunications service. A Public Notice inviting

comments on this petition was released on May 10, 1995. All comments

were taken under consideration. By raising the expense limit from $500

to $2,000 for Accounts 2115, 2116, 2122, 2123 and 2124 (except for PC

components) in this Order, the Commission has greatly reduced the

number of items carriers will need to capitalize. Accordingly, the May

31, 1994 petition is dismissed.

Regulatory Flexibility Analysis

We have determined that Section 605(b) of the Regulatory

Flexibility Act of 1980, 5 U.S.C. 605(b), does not apply to the rules

adopted in this Order because they will not have a significant economic

impact on a significant number of small entities. Even if a substantial

number of small entities were affected by the rules, there would not be

a significant economic impact on those entities. These rules govern the

accounting treatment of specific assets, in particular, whether their

costs are expensed or capitalized. Capitalization is more

administratively burdensome because it requires additional

recordkeeping over a period of years. Because we are raising the limit

under which items are expensed, the effect of this Order is to reduce

regulatory burdens for all companies that use our Part 32 accounts.

Ordering Clause

Accordingly, It Is Ordered, pursuant to Sections 4(i), 4(j), 218,

and 220 of the Communications Act of 1934, as amended, 47 U.S.C.

154(i), 154(j), 218, and 220, Part 32, Uniform System of Accounts for

Telecommunications Companies, of the Commission's Rules IS AMENDED, as

set forth below, effective January 23, 1998. Affected parties may elect

to implement these changes on January 1, 1998.

List of Subjects in 47 CFR Part 32

Communications common carriers, Reporting and recordkeeping

requirements, Telephone, Uniform System of Accounts.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

Rule Changes

Part 32 of title 47 of the CFR is amended as follows:

PART 32--UNIFORM SYSTEM OF ACCOUNTS FOR TELECOMMUNICATIONS

COMPANIES

1. The authority citation for Part 32 is revised to read as

follows:

Authority: 47 U.S.C. 154(i), 154(j) and 220 as amended, unless

otherwise noted.

2. Section 32.2000 is amended by revising paragraph (a)(4) to read

as follows:

Sec. 32.2000 Instructions for telecommunications plant accounts.

(a) * * *

(4) The cost of the individual items of equipment, classifiable to

Accounts 2112, Motor vehicles; 2113, Aircraft; 2114, Special purpose

vehicles; 2115, Garage work equipment; 2116, Other work equipment;

2122, Furniture; 2123, Office equipment; and 2124, General purpose

computers, costing $2,000 or less or having a life less than one year

shall be charged to the applicable Plant Specific Operations Expense

accounts, except for personal computers falling within Account 2124.

Personal computers classifiable to Account 2124, with a total cost for

all components, including initial operating software, of $500 or less

shall be charged to the applicable Plant Specific Operations Expense

accounts. If the aggregate investment in the items is relatively large

at the time of acquisition, such amounts shall be maintained in an

applicable material and supplies account until items are used.

* * * * *

[FR Doc. 97-19351 Filed 7-22-97; 8:45 am]

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