[Federal Register Volume 62, Number 141 (Wednesday, July 23, 1997)]
[Rules and Regulations]
[Pages 39450-39451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19351]
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[[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]
BILLING CODE 6712-01-P
