[Federal Register Volume 59, Number 73 (Friday, April 15, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-9079]


[[Page Unknown]]

[Federal Register: April 15, 1994]


-----------------------------------------------------------------------


FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76

[MM Docket No. 93-215, CS Docket No. 94-28; FCC 94-39]

 

Cable Television Act of 1992

agency: Federal Communications Commission.

action: Further Notice of Proposed Rulemaking.

-----------------------------------------------------------------------

summary: The Commission has adopted both a Report and Order and a 
Further Notice of Proposed Rulemaking regarding implementation of the 
Cable Television Consumer Protection and Competition Act of 1992. In 
the Report and Order, the Commission establishes interim rules 
implementing a cost-of-service alternative to our primary benchmark and 
price cap approach to setting regulated cable service rates.\1\ (The 
Report and Order may be found elsewhere in this Federal Register). In 
this Further Notice of Proposed Rulemaking, we propose that these 
interim requirements become permanent; we propose a productivity factor 
that could be incorporated into the price cap mechanism governing cable 
service rates; and we solicit comment on a permanent upgrade incentive 
plan for regulated cable service. We also announce initiation of cable 
industry cost studies that will be used to develop average cost 
schedules for regulated cable services and equipment, and to evaluate 
whether we should require full competitive rate reductions for systems 
currently eligible for transition relief. We solicit comment on rate of 
return prescription methodologies, and on proposed rules for an 
accounting system and for affiliate transactions. This action will 
provide notice to the public that the Commission intends to amend its 
rate regulations governing regulated cable services. This action is 
intended to provide a record on which the Commission can establish 
further requirements governing regulated cable services.

    \1\In a separate decision, the Commission is adopting 
significant modifications to the benchmark and price cap approach to 
setting regulated cable service rates. Implementation of sections of 
the Cable Television Consumer Protection and Competition Act of 
1992: Rate Regulation, MM Docket 92-266, Second Order on 
Reconsideration, Fourth Report and Order, and Fifth Notice of 
Proposed Rulemaking, FCC 94-38 (Benchmark Order). That decision does 
not alter our determination in the Rate Order to afford cable 
operators an opportunity to set rates based on costs.
---------------------------------------------------------------------------

dates: Comments due July 1, 1994; Reply Comments due August 1, 1994.

addresses: Federal Communications Commission, 1919 M Street, NW. 
Washington, DC 20554.

for further information contact: JoAnn Lucanik (202) 416-1163; Paul 
D'Ari (202) 416-1166; John Adams (202) 416-1165.

supplementary information:

Synopsis of Notice

    In this Further Notice, we seek comment on the following matters.

(1) Establishment of Final Rules

    In the Report and Order, we establish a comprehensive interim 
regulatory framework for setting cost-based rates for regulated cable 
service. We tentatively conclude that the rules adopted here reflect 
goals and policies that will continue to apply, and that those rules 
may therefore appropriately be adopted on a final basis. We request 
comment on whether we should adopt these requirements as our final cost 
rules in this proceeding.

(2) Rate of Return Prescription

    In the Report and Order, we establish an interim overall rate of 
return of 11.25% for use in cable cost-of-service proceedings. We 
invite comment on whether we should establish a different permanent 
rate of return for regulated cable service, including the equipment 
basket. In this regard, we request interested persons to submit data 
and expert analyses regarding the risks of regulated cable service, and 
on how those risks are affected by our cost-of-service and our 
benchmark/price cap rules for cable. We also invite commenters to 
submit data and expert analyses regarding equity and debt costs for 
regulated cable service, and the capital structure we should use in 
determining any permanent rate of return for that service. We also 
invite comment on whether we should adopt fixed cost of debt and 
capital structure methodologies for possible use in changing the rate 
of return for cable in the future and, if so, what those methodologies 
should be.

(3) Cable Accounting System

    In the Report and Order we have decided to establish a uniform 
accounting system for cable operators electing cost-of-service 
regulation. In a separate attachment to the Report and Order, we set 
forth a draft system that we intend to serve as a starting point for 
development of a uniform accounting system for cable operations. This 
proposal is attached to the FNPRM. We seek comment on this proposal. In 
order to facilitate administration of establishment of a uniform 
accounting system for cable services, we are removing this issue from 
MM Docket 92-666 and designating it as CS Docket No. 94-28. The Cable 
Services Bureau will obtain suggestions on how to improve this proposal 
through informal meetings with representatives from the cable industry 
and other interested parties. Such cooperative efforts will, of course, 
be subject to relevant ex parte rules. (47 CFR 1.1206). Following these 
meetings and the completion of the initial comment cycle, we may seek 
comment on a revised proposal for a uniform system of accounts for 
provision of regulated cable service.
    The system of accounts that we are proposing is adapted from the 
USOA for Class B telephone companies contained in part 32 of the 
Commission's rules, (47 CFR 32.11) and from NARUC model cable 
accounting rules. (Uniform System of Accounts for Class A Community 
Antenna (CATV) Utilities, (National Association of Regulatory Utility 
Commissioners 1977)). This proposed system of accounts is highly 
aggregated and is, therefore, far less burdensome than the USOA for 
Class A telephone companies. We seek comment, however, on whether we 
should adopt an accounting system for cable that is disaggregated to a 
greater extent than that which we have proposed. We have relied on Part 
32 in developing an accounting system for cable because it was designed 
as a functional accounting system that would be adaptable to changes in 
communications technology. (47 CFR 32.2(d), (e)). We tentatively 
conclude that we can accommodate the cable technology of signal 
transport by adding certain cable-specific accounts and by modifying 
account definitions to include cable-specific equipment and activities 
within existing functions.
    We also seek comment on whether smaller cable systems that elect 
cost-of-service regulation should be required to maintain their books 
in accordance with the accounting system we adopt for cable or with 
some alternative system of accounts. In addition, we seek comment on 
accounting requirements for cable operators seeking rate adjustments 
due to changes in their external costs under the benchmark/price cap 
approach. Although we conclude in the Report and Order the operators 
regulated under that approach should not be subject to the uniform 
system of accounts that we adopt for cable, we believe further 
accounting requirements may be necessary to ensure that external cost 
adjustments are correct. Finally, we propose an exemption from these 
requirements for companies that are currently required to maintain 
their accounts in accordance with Part 32 of our rules. We tentatively 
conclude that it would be unduly burdensome to require such companies 
to follow separate accounting procedures for their telephone and cable 
operators.

(4) Affiliate Transactions

    In the Report and Order, we adopt affiliate transaction 
requirements that will govern the costs incurred that can be recovered 
in rates for regulated cable service. These requirements are 
substantially similar to our proposals in the notice in this 
proceeding. Subsequent to the release of that notice, however, we 
conducted a detailed analysis of each of these transaction methods for 
telephone companies. In the Telco notice, (Notice of Proposed 
Rulemaking in CC Docket No. 93-251, FCC 93-453, 58 FR 62080, Nov. 24, 
1993) we proposed to sharply curtail prevailing company pricing for 
transactions between telephone companies and their nonregulated 
affiliates. We also proposed to require telephone companies to value 
affiliate transactions for which we do not permit prevailing company 
pricing at the higher of cost and estimated fair market value when the 
telephone company is the seller, and at the lower of cost and estimated 
fair market value when the telephone company is the buyer.
    We tentatively conclude that the general changes we have proposed 
for telephone companies should be applied to cable operators as well. 
Therefore, we propose to limit the application of the prevailing 
company price as a measure of a reasonable price for an affiliate 
transaction. We tentatively conclude that we should not permit 
prevailing company pricing as a valuation method for transactions 
between cable operators and their affiliates when a primary purpose of 
the non-cable affiliate in transactions is to serve the cable operator 
and its affiliates. We tentatively conclude that prevailing company 
pricing for affiliate transactions should only be utilized where the 
predominant purpose of the non-cable affiliate in the transaction is to 
serve nonaffiliates. We believe that we can identify when the non-cable 
affiliates' predominant purpose is to serve nonaffiliates by measuring 
the percentage of each non-cable affiliate's total output that is sold 
to nonaffiliates.
    Accordingly, we propose that any non-cable affiliate that sells 
less than 75 percent of its output to non-affiliates has too large a 
volume of affiliate transactions to be deemed to have a predominant 
purpose of serving non-affiliates. Therefore, we propose to continue to 
allow prevailing company pricing only for affiliate transactions in 
which the non-cable affiliate sells at least 75 percent of its output 
to non-affiliates. We invite the commenters to discuss this proposal as 
well as alternative percentages we might use. We also invite comment on 
whether we should abandon prevailing company pricing as a valuation 
method for all affiliate transactions if we find no workable test for 
determining when prevailing company prices provide reliable measures of 
how affiliate transactions should be valued.
    For those affiliate transactions that do not meet the prevailing 
company price test, we propose to require cable operators to value all 
affiliate transactions at the higher of cost and estimated fair market 
value when the cable operator is the seller, and at the lower of cost 
and estimated fair market value when the cable operator is the 
purchaser. Since this proposal applies to the sale of both assets and 
services, it would, in effect, retain the existing standard that 
applies to affiliate transactions that involve the sale of assets and 
it would expand the application of this rule to affiliate transactions 
that involve the sale of services. Hence, our proposal would change the 
requirement under the rules we have adopted with this Report and Order, 
which provides that affiliate transactions that do not meet the 
prevailing company price test and involve the sale of services shall be 
recorded at cost. We invite comment on this proposal.
    We propose to retain the definition of affiliate that we adopt in 
the Report and Order. Under that definition, an entity is affiliated 
with a cable system operator when it has a five percent or greater 
ownership interest in the cable system operator. That definition also 
specifies that a cable system operator is affiliated with another 
entity when it has a five percent or greater interest in that entity 
and that two companies that do not own each other are affiliates when a 
single entity has a five percent or greater interest in each of the two 
companies. We also propose that our final affiliate transactions rules 
for cable, like the interim rules, apply to cable operators who either 
elect cost-of-service regulation or seek to adjust benchmark/price cap 
rates for affiliated programming costs. We propose, in addition, to 
require cable operators to apply the costing methods and rate of return 
we adopt for cable in determining the costs of affiliate transactions. 
we propose to include our final affiliate transactions rules in the 
uniform system of accounts we adopt for cable. We invite comment on 
these proposals. Consistent with our approach with regard to the 
uniform system of accounts, we also invite comment on whether we should 
adopt alternative affiliate transactions rules for small cable 
companies.

(5) Establishment of Productivity Offset

    In the Rate Order, we incorporated an annual inflation adjustment 
into our price cap mechanism governing rates for cable television 
service. (See Report and Order and Further Notice of Proposed 
Rulemaking in MM Docket No. 92-266, FCC 93-177, 58 FR 29736, May 21, 
1993). Specifically, we adopted the Gross National Product Price Index 
(GNP-PI) as the annual adjustment index for the cap for basic service 
tier rates. As a result, regulated cable operators are permitted to 
adjust the capped based per channel rate for the basic service tier 
annually by the GNP-PI. In addition, there are certain categories of 
costs that cable operators are generally permitted to ``pass through'' 
to subscribers without a cost-of-service showing, even if the resulting 
rates exceed the applicable price cap. These costs include 
retransmission consent fees, programming costs, taxes, franchise fees, 
and the costs of other franchise requirements.
    In the Rate Order, we declined to adopt a productivity offset to 
the GNP-PI for the non-programming costs incurred by cable companies 
given the paucity of information in the record that would provide a 
basis for determining productivity in the cable industry. We made it 
clear, however, that we should seek such information in the notice.
    In the notice, we solicited comment on whether there is a valid 
economic basis for assuming that cable television service has been, and 
will be, experiencing efficiency gains. We observed that there had been 
insufficient information in the record to adopt a productivity offset 
in the price cap mechanism for cable operators. In considering a 
regulatory framework to govern cost-of-service ratemaking for cable 
service, we invited the submission of industry studies or other expert 
economic analysis to examine four possible options:
    (1) No productivity offset;
    (2) A consumer productivity dividend of 0.5 percentage points;
    (3) a ``telecommunications'' industry adjustment of between 3.0 
(for AT&T) and 3.3 (for the local exchange carriers) percentage points; 
and
    (4) A different productivity offset for cable operators.
    The comments received in response to the notice provided three 
general perspectives on the use of a productivity offset in cost-of-
service ratemaking. The first perspective, which incorporates the views 
of cable operators and programmers, generally supports the first 
option--that is, no productivity offset under the cost-of-service 
rules. The second perspective, articulated by New Jersey, supports the 
use of a productivity offset of 2% as reflecting the known benefits of 
technology improvement in the cable industry. The third perspective, 
which includes CFA, municipal franchising authorities, local exchange 
carriers, and ETS, generally supports the adoption of a 3.3% 
productivity offset, the standard imposed on the local exchange 
carriers, to be the standard for the cable television companies that 
choose cost-of-service ratemaking.
    In this Further Notice, we affirm our tentative decision to 
incorporate an annual inflation adjustment into our price cap mechanism 
governing rates for cable television service. We believe that the use 
of the GNP-PI index in the price cap mechanism will help achieve the 
statutory goal of reducing administrative burdens on cable systems, 
consumers and regulators by permitting rate increases when cable 
operators experience increases in the cost of doing business shared by 
all sectors of the economy, without requiring cable operators to make, 
and regulators to consider, cost-of-service showings.
    We also tentatively conclude that cable operators should reasonably 
be expected to achieve productivity gains in the future analogous to 
those historically realized by other communications firms. Cable 
television networks are similar in many ways to telephone networks, and 
both have benefited from advances in telecommunications technology in 
the past; both are likely to see benefits in the future, especially as 
cable and telephone networks converge. Both are likely to have 
opportunities to improve their productivity in other aspects of their 
operations, including customer service and maintenance. In the near 
term, however, the productivity growth that cable operators may 
reasonably be expected to achieve may differ from that of telephone 
companies, because of the current differences in their networks, 
operators, services, and histories. For example, local telephone 
companies have benefited from advances in computerized local switches, 
which are not in general use by cable systems. Moreover, the 
productivity offsets selected for telephone companies reflect 
adjustments to conform them with Commission policy goals. While we 
recognize the merits of moving toward regulatory parity for cable and 
telephone regulation, we do not believe the current record provides 
adequate support for the automatic adoption of the same productivity 
factor for cable systems as for local telephone companies subject to 
price caps.
    The only evidence of record for productivity growth by cable 
systems appears to be that submitted by New Jersey, supporting a 2 
percent productivity offset. We take note, however, of comments from 
cable operators that there is not sufficient evidence to adopt a 
productivity offset, without providing them the opportunity to develop 
such data. We will accordingly allow them another opportunity to 
provide this data. Based on the current record, we tentatively propose 
to adopt a 2 percent productivity offset as part of the price cap 
mechanism for regulated cable rates. Any interested party seeking to 
justify a different productivity offset will of course be expected to 
provide reliable, detailed, and credible evidence that some other 
figure represents the productivity gains, after inflation, that cable 
systems can reasonably be expected to achieve. In particular, cable 
systems should not expect that their failure to provide any evidence of 
cable system productivity gains, information they are best able to 
provide, should justify the conclusion that cable systems cannot 
reasonably be expected to achieve productivity improvements.
    The Commission envisions the productivity offset as a basic part of 
the two alternatives open to cable operators for setting rates. Under 
the first, the price cap, including the productivity factor, would 
apply to all regulated rates. Under the second, an operator can elect 
to use cost-of-service regulation, using the standards discussed in the 
Report and Order. Once the operator's rates are set based upon actual 
costs of service, however, we would ordinarily expect that the operator 
could achieve the same future productivity gains as other operators. We 
therefore propose that future rate changes should at least meet the 
productivity offset, absent a credible demonstration in the cost-of-
service showing that this will not be the case.
    We do not, however, wish indirectly to restrict the ability of 
cable programmers to obtain fair value for their products. As a result, 
we tentatively conclude that programming costs should not be included 
within the productivity offset for cable system technological and 
operational improvement.
    We invite comment on these proposals, including the 2 percent 
productivity offset and exemption of programming costs from the effects 
of the offset. We emphasize that comments should be supported by 
relevant evidence, such as detailed industry studies and expert 
economic analysis.

(6) Experimental Upgrade Incentive Plan

    In the Report and Order, we adopted an Upgrade Incentive Plan that 
we will implement on an experimental, case-by-case basis. The Upgrade 
Incentive Plan is intended to provide greater assurance of reasonable, 
stable rates to customers for existing services, while also generating 
profit incentives to operators to upgrade their systems in cost-
effective ways that will benefit subscribers. The basic approach of the 
plan is to establish a type of social contract between customers and 
operators, under which the rates for current regulated services are 
frozen or limited to changes permitted by the benchmark/price cap 
mechanism, while the quality of service is at least maintained at 
current levels by some reasonable measure. For their part, operators 
are given substantial rate flexibility for the new services and 
capabilities they introduce. The operator thus gains the opportunity to 
earn higher profits as an incentive and reward for successful 
innovations. The contract would remain in effect for a fixed, minimum 
term of years.
    Developing a permanent incentive plan for cable systems is also 
likely to raise other issues, including issues that might suggest 
different regulations than in the case of the incentive programs we 
have adopted for telephony. One issue involves enrollment. We might, 
for example, require cable systems to seek enrollment in the incentive 
plan in advance of any system upgrade if it wishes to claim the rate 
and profit flexibility accorded to additional regulated services and 
capabilities. Enrollment would make clear to this Commission and to 
customers that the operator was committing itself to keeping existing 
service rates and quality within the bounds set by the plan. We request 
comment on these issues.
    Another issue involves coordination with the regulation of basic 
service tier rates exercised by local franchising authorities. Setting 
price and quality limits on regulated services above the basic tier may 
encourage operators to attempt to shift costs to the basic tier. It may 
be difficult to identify such cost-shifting in a cost-of-service study 
review. One remedy for this problem, which may also reduce regulatory 
burdens for operators, franchising authorities, and this Commission, 
may be to require the operator to commit to maintaining its basic 
service tier rates and quality within baseline/price cap guidelines set 
by a certified franchise authority. We request comment on this or 
approaches to coordinating FCC and local regulation of cable rates 
within the Plan.
    An important part of any incentive plan that limits prices is to 
assure that the value of the service provided to customers under those 
prices does not suffer. The customer should be assured that the 
regulated company is not evading the intent of the plan by increasing 
profits not through improved efficiency or added services, but by 
adulterating the products or services the customer receives. For cable 
service, assuring that appropriate standards are maintained includes 
assuring that programming services valued by customers are not shifted 
out of current tiers and into the additional tiers for which the 
operator would seek to claim rate flexibility. We seek comment on 
appropriate standards to assure that operators subject to the incentive 
plan provide services equal to or better than that offered under 
current rates applicable to those services.
    One possible approach to maintaining the value of current services 
while permitting flexibility to adjust tiers might be to require 
operators to seek the approval of its customers to changes in the 
composition or rates for current regulated services, in effect 
empowering customers to decide whether the change is worthwhile. If 
most of the operator's customers affirmatively agreed by ballot to 
revise regulated services subject to the incentive plan, this 
Commission could be confident that the change was reasonable. In any 
case, of course, operators would be free to offer new services, and we 
expect this Plan will encourage them to do so. The only issue would be 
whether the operator had fulfilled its commitment to maintain or 
improve the quality of the service provided at regulated rates. We 
request comment on this and other approaches that would permit 
reasonable revisions to the current services and rates subject to the 
incentive plan, especially approaches that take into account the views 
of the customers using those services.
    We request comment on whether we should adopt rules for our Upgrade 
Incentive Plan. We request that commenters address how the plan, if 
adopted permanently, might best be structured to maximize the benefits 
to consumers and operators and to encourage efficient operation and 
innovative services, and what procedures should govern implementation 
of the Upgrade Incentive Plan by operators. We solicit comment on what 
standard we should adopt to measure quality of service for existing 
services; we seek comment also on the extent to which we should permit 
operators to move existing channels to new regulated tiers eligible for 
pricing flexibility under an upgrade incentive plan.

(7) Development and Use of Average Cost Schedules

    The Cable Act of 1992 instructs us to consider administrative 
burdens in establishing rate regulation, and to design rate regulation 
in a manner that reduces ``the administrative burdens and cost of 
compliance of cable systems that have 1,000 or fewer subscribers.'' (47 
U.S.C. 543(i)). We have met this mandate by providing in the Benchmark 
Order for streamlined rate reductions for small systems; by providing 
in the Report and Order here for abbreviated Cost of Service filings by 
small systems; and by other measures adopted in this Rate Order.
    We sought comment in the notice regarding the desirability of 
allowing cable operators to justify rates based on average costs of 
providing regulated cable service, in an approach similar to the 
``average schedule'' regulatory scheme for provision of interstate 
access by some telephone companies. We believe that average cost 
schedules could provide administrative relief for cable operators and 
regulators by permitting setting of rates for regulated equipment and 
cable service by reference to average costs rather than an evaluation 
of each individual operator's costs. Accordingly, we tentatively 
conclude that we should establish average cost schedules for provision 
of regulated cable service and equipment.
    We will obtain necessary cost information through our industry cost 
studies as described below. In addition, operators and other interested 
parties may submit other cost information that they believe will be 
useful. The Cable Service Bureau will additionally work informally with 
interested organizations to facilitate the compilation, analysis and 
development of average cost schedules.
    We solicit comment on whether average cost schedules should be 
available for all operators, or only small systems. We note that the 
average schedules developed for use by telephone companies in 
calculating access charges are not restricted to small telephone 
companies, although that has been their principal use. (47 CFR 69.606). 
If use of average cost schedules should be limited to small entities, 
we solicit comment on how we should define small systems for this 
purpose. Commenters suggesting the restriction of average schedules to 
small entities, or suggesting a particular threshold or definition for 
``small,'' should support their recommendations with data, including 
differences in costs, efficiencies, corporate structures or other 
factors, that would necessitate the proposed differences in treatment.

Initiation of Cost Studies

    In the notice we stated that we would conduct cost studies of the 
cable industry to provide information that could be useful to develop 
requirements to set rates based on costs. We have additionally 
tentatively concluded in this proceeding to develop average cost 
schedules for provision of regulated cable service and equipment. In 
the Benchmark Order, we have determined that we will collect 
information on costs with respect to small operators and systems with 
relatively low prices. Accordingly, we are initiating at this time 
general cost studies of the cable industry that will be used for these 
purposes as well as to provide information that will help us determine 
whether any changes should be made in our interim framework for cost-
of-service regulation. We delegate to the Chief, Cable Services Bureau 
authority to conduct these studies. Since the cost studies will be part 
of this rulemaking proceeding, the ex parte rules for non-restricted 
proceedings apply. Requests for confidentiality may be made pursuant to 
section 0.459 of the Commission's rules.

Initial Regulatory Flexibility Analysis for the Further Notice

    Pursuant to section 603 of the Regulatory Flexibility Act, the 
Commission has prepared the following initial regulatory flexibility 
analysis (IRFA) of the expected impact of these proposed policies and 
rules on small entities. Written public comments are requested on the 
IRFA. These comments must be filed in accordance with the same filing 
deadlines as comments on the rest of the Further Notice, but they must 
have a separate and distinct heading designating them as responses to 
the regulatory flexibility analysis. The Secretary shall cause a copy 
of the Further Notice, including the initial regulatory flexibility 
analysis, to be sent to the Chief Counsel for Advocacy of the Small 
Business Administration in accordance with section 603(a) of the 
Regulatory Flexibility Act, Public Law No. 96-354, 94 Stat. 1164, 5 
U.S.C. section 601 et seq. (1981).

Reason for Action

    The Cable Television Consumer Protection and Competition Act of 
1992 requires the Commission to prescribe rules and regulations for 
determining reasonable rates for basic tier cable service and to 
establish criteria for identifying unreasonable rates for cable 
programming services. The Commission has adopted rate regulations that 
require a comparison to the rate of cable systems subject to effective 
competition, as defined in the Cable Act of 1992, and interim 
regulations for setting rates for regulated services based on cost. 
This Further Notice proposes to establish additional and permanent 
regulations governing the setting of rates for regulated cable service 
based on costs.

Objectives

    To propose rules to implement section 623 of the Cable Television 
Consumer Protection and Competition Act of 1992. We also desire to 
adopt rules that will be easily interpreted and readily applicable and, 
whenever possible, minimize the regulatory burden on affected parties.

Legal Basis

    Action as proposed for this rulemaking is contained in sections 
4(i), 4(j), 612(c), and 623 of the Communications Act of 1934, as 
amended.

Description, Potential Impact and Number of Small Entities Affected

    Until we receive more data, we are unable to estimate the number of 
small cable systems that would be affected by any of the proposals 
discussed in the Further Notice. We have, however, attempted to reduce 
the administrative burdens and cost of compliance for cable systems 
that have 1,000 or fewer subscribers as required by section 623(i) of 
the Cable Act of 1992.

Reporting, Record Keeping and Other Compliance Requirements

    The proposals under consideration in this Further Notice include 
new and revised reporting and record keeping requirements for cable 
systems. These reporting requirements include the filings by cable 
operators of financial and/or leased access data annually at the 
Commission or participating in an annual survey. Additionally, this 
Further Notice proposes the permanent use of forms to submit data that 
is to be presented to the regulating entity in a cost-of-service 
showing by a cable operator. Furthermore, the Further Notice proposes 
general cost accounting and cost allocation requirements that could be 
imposed on the cable industry.
    Federal rules which overlap, duplicate or conflict with this rule. 
None.
    Any significant alternatives minimizing impact on small entities 
and consistent with stated objectives. Wherever possible, the Further 
Notice proposes general rules, or alternative rules for small systems, 
to reduce the administrative burdens and cost of compliance for cable 
systems that have 1,000 or fewer subscribers as required by section 
3(i) of the Cable Act of 1992.

Paperwork Reduction Act

    The proposal contained herein has been analyzed with respect to the 
Paperwork Reduction Act of 1980 and found to impose a new or modified 
information collection requirement on the public. Implementation of any 
new or modified requirement will be subject to approval by the Office 
of Management and Budget as prescribed by the Act.

Procedural Provisions

    For purposes of this non-restricted informal rulemaking proceeding, 
members of the public are advised that ex parte contacts are permitted 
from the time of issuance of a notice of proposed rulemaking until the 
time a draft Order proposing a substantive disposition of the 
proceeding is placed on the Commission's Open Meeting Agenda. In 
general, an ex parte presentation is any written or oral communication 
(other than formal written comments or pleadings and oral arguments) 
between a person outside this addresses the merits of the proceeding. 
Any person who submits a written ex parte presentation addressing 
matters not fully covered in any written summary must be served on this 
Commission's Secretary for inclusion in the public file, with a copy to 
the Commission official receiving the oral presentation. Each ex parte 
presentation discussed above must state on its face that the Secretary 
has been served, and must also state by docket number the proceeding to 
which it relates. See generally Sec. 1.1231 of the Commission's Rules. 
47 CFR 1.1231.
    Pursuant to applicable procedures set forth in Sec. Sec. 1.415 and 
1.419 of the Commission's Rules, 47 CFR Sec. Sec. 1.415 and 1.419, 
interested parties may file comments on or before July 1, 1994 and 
reply comments on or before August 1, 1994. To file formally in this 
proceeding, you must file an original plus four copies of all comments, 
reply comments, and supporting comments. If you want each Commissioner 
to receive a personal copy of your comments and reply comments, you 
must file an original plus nine copies. You should send comments and 
reply comments to Office of the Secretary, Federal Communications 
Commission, 1919 M Street, NW. Washington, DC 20554. Comments and reply 
comments will be available for public inspection during regular 
business hours in the FCC Reference Center, room 239, Federal 
Communications Commission, 1919 M Street NW., Washington DC 20554.

Ordering Clause

    Accordingly, it is ordered That, pursuant to sections 4(i), 4(j), 
612, 622(c) and 623 of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 154(j), 532, 542(c) and 543, that authority is delegated 
to the Chief, Cable Services Bureau to conduct cost studies in 
conjunction with this proceeding and to develop forms necessary and 
appropriate to implement this Order.

List of Subjects in 47 CFR Part 76

    Cable television.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

    Part 76 of title 47 of the CFR is amended as follows:

Part 76--CABLE TELEVISION SERVICE

    1. The authority citation for part 76 continues to read as follows:

    Authority: Secs. 2, 3, 4, 301, 303, 307, 308, 309, 48 Stat., as 
amended, 1064, 1065, 1066, 1081, 1082, 1083, 1084, 1085, 1101; 47 
U.S.C. Secs. 152, 153, 154, 301, 303, 307, 308, 309, 532, 533, 535, 
542, 543, 552, as amended, 106 Stat. 1460.

    2. Part 76 is proposed to be amended by adding Subpart P, 
consisting of Secs. 76.1100-76.1241, to read as follows:
Subpart P--Uniform System of Accounts for Cable System Operators
Sec.
76.1100  Background.
76.1101  Reporting companies.
76.1102  Records.
76.1103  Accounts--General.
76.1104  Regulated accounts.
76.1105  Interpretation of accounts.
76.1106  Waivers.
76.1107  Address for reports and correspondence.
76.1108  Number convention.
76.1109  Sequence of accounts.
76.1110  Nonregulated activities.
76.1111  Compensated absences.
76.1112  Materiality.
76.1113  Nonregulated investments.

Current Assets

76.1114  Cash and equivalents.
76.1115  Accounts receivable--cable services.
76.1116  Accounts receivable allowance--cable services.
76.1117  Other accounts receivable.
76.1118  Accounts receivable allowance--other.
76.1119  Notes receivable.
76.1120  Notes receivable allowance.
76.1121  Interest and dividends receivable.
76.1122  Inventories.
76.1123  Prepayments.
76.1124  Other current assets.

Noncurrent Assets

76.1125  Investments in affiliated companies.
76.1126  Investments in nonaffiliated companies.
76.1127  Nonregulated investments.
76.1128  Unamortized debt issuance expense.
76.1129  Sinking funds.
76.1130  Other noncurrent assets.
76.1131  Deferred maintenance and retirements.
76.1132  Deferred charges.

Regulated Plant

76.1133  Instructions for cable services plant accounts.
76.1134  Cable services plant in service.
76.1135  Property held for future use.
76.1136  Cable service plant adjustment.
76.1137  Nonoperating plant.
76.1138  Goodwill.
76.1139  Land.
76.1140  Buildings.
76.1141  Head end equipment.
76.1142  Distribution system.
76.1143  Drops.
76.1144  Production equipment.
76.1145  Customer premises equipment.
76.1146  Maintenance and warehouse equipment.
76.1147  Furniture.
76.1148  Office equipment.
76.1149  Capital leases.
76.1150  Leasehold improvements.
76.1151  Intangibles.
76.1152  Accumulated depreciation.
76.1153  Accumulated depreciation held for future use.
76.1154  Accumulated depreciation--nonoperating.
76.1155  Accumulated amortization--capitalized leases.
76.1156  Accumulated amortization--leasehold improvements.
76.1157  Accumulated amortization--intangible.
76.1158  Accumulated amortization--other.

Current Liabilities

76.1159  Accounts payable.
76.1160  Notes payable.
76.1161  Advance billing and payments.
76.1162  Customers' deposits.
76.1163  Current maturities--long-term debt.
76.1164  Current maturities--capital leases.
76.1165  Income taxes--accrued.
76.1166  Other taxes--accrued.
76.1167  Net current deferred operating income taxes.
76.1168  Net current deferred nonoperating income taxes.
76.1169  Other accrued liabilities.
76.1170  Other current liabilities.
76.1171  Funded debt.
76.1172  Premium on long-term debt.
76.1173  Discount on long-term debt.
76.1174  Reacquired debt.
76.1175  Obligations under capital leases.
76.1176  Advances from affiliated companies.
76.1177  Other long-term debt.
76.1178  Other long-term liabilities.
76.1179  Unamortized operating investment tax credits--net.
76.1180  Unamortized nonoperating investment tax credits--net.
76.1181  Net noncurrent deferred operating income taxes.
76.1182  Net noncurrent deferred nonoperating income taxes.
76.1183  Other deferred credits.
76.1184  Capital stock.
76.1185  Additional paid--in capital.
76.1186  Treasury stock.
76.1187  Other capital.
76.1188  Retained earnings.

Revenue Accounts

76.1189  Instructions for revenue accounts.
76.1190  Basic service tier revenues.
76.1191  Cable programming services revenues.
76.1192  Equipment and installation revenues.
76.1193  Nonregulated cable programming services.
76.1194  Other cable revenues.
76.1195  Uncollectible revenue--cable services.
76.1196  Uncollectible revenue--other.

Expense Accounts

76.1197  Instructions for expense accounts.
76.1198  Property held for future use expense.
76.1199  Land and building expense.
76.1200  Headend equipment expense.
76.1201  Distribution system expense.
76.1202  Drops expense.
76.1203  Production equipment expense.
76.1204  Customer premises equipment expense.
76.1205  Maintenance and warehouse equipment expense.
76.1206  Furniture and artworks expense.
76.1207  Office equipment expense.
76.1208  Basic cable programming expense.
76.1209  Basic cable satellite programming expense.
76.1210  Retransmission consent expense.
76.1211  Public, educational, governmental access expense.
76.1212  Local origination expense.
76.1213  Other basic cable programming expense.
76.1214  Cable programming service expense.
76.1215  Cable programming service satellite programming expense.
76.1216  Cable programming service retransmission consent expense.
76.1217  Cable programming service local origination expense.
76.1218  Other cable programming service expense.
76.1219  Accumulated depreciation and amortization expense.
76.1220  Accumulated depreciation expense--cable services plant in 
service.
76.1221  Accumulated depreciation expense--property held for future 
cable services use.
76.1222  Amortization expense--tangible.
76.1223  Amortization expense--intangible.
76.1224  Amortization expense--other.
76.1225  Other property, plant and equipment expenses.
76.1226  Cable system operations expenses.
76.1227  Marketing.
76.1228  Customer services.
76.1229  Executive and planning.
76.1230  General and administrative.
76.1231  Provision for uncollectible notes receivables.
76.1232  Instructions for other income accounts.
76.1233  Contents of accounts.
76.1234  Other operating income and expenses.
76.1235  Operating taxes.
76.1236  Nonoperating income and expense.
76.1237  Nonoperating taxes.
76.1238  Interest and related items.
76.1239  Extraordinary items.
76.1240  Nonregulated net income.
76.1241  Glossary of terms.

Subpart P--Uniform System of Accounts for Cable System Operators


Sec. 76.1100  Background.

    The Uniform System of Accounts (USOA) for cable systems is designed 
for those cable operators that elect cost of service regulation. The 
purpose of the USOA is to help ensure that in cost of service 
proceedings, regulators will have accurate records of cable operators' 
revenues, operating expenses, depreciation expenses and capital 
investments. In order for an accounting system to fulfill this purpose, 
it must exhibit consistency and stability in financial reporting. This 
USOA has, therefore, been designed to reflect stable, recurring, 
financial data, based to the extent regulatory considerations permit, 
upon the consistency of the well established body of accounting 
theories and principles commonly referred to as generally accepted 
accounting principles.


Sec. 76.1101  Reporting companies.

    (a) Cable operators, that elect cost of service regulation must 
have or develop accounting records in accordance with this Subpart for 
the relevant test year in the cost of service proceeding.
    (b) If a cable operator does not develop or maintain its accounting 
records in accordance with this subpart for the relevant test year, the 
cable operator's cost of service application will be dismissed.


Sec. 76.1102  Records.

    (a) The reporting company's financial records shall be kept in 
accordance with generally accepted accounting principles to the extent 
permitted by this system of accounts.
    (b) The reporting company's financial records shall be kept with 
sufficient particularity to show fully the facts pertaining to all 
entries in these accounts. The detail records shall be filed in such 
manner as to be readily accessible for examination by representatives 
of this Commission.
    (c) The Commission shall require a company to maintain financial 
and other subsidiary records in such a manner that specific 
information, of a type not warranting disclosure as an account or 
subaccount, will be readily available. When this occurs, or where the 
full information is not otherwise recorded in the general books, the 
subsidiary records shall be maintained in sufficient detail to 
facilitate the reporting of the required specific information. The 
subsidiary records, in which the full details are shown, shall be 
sufficiently referenced to permit ready identification and examination 
by representatives of this Commission.


Sec. 76.1103  Accounts--General.

    (a) As a general rule, all accounts kept by reporting cable 
companies shall conform in numbers and titles to those prescribed 
herein. However, reporting companies may use different numbers for 
internal purposes when separate accounts (or subaccounts) maintained 
are consistent with the title and content of accounts and subaccounts 
prescribed in this system. A company may subdivide any of the accounts 
prescribed. The titles of all such subaccounts shall refer by number or 
title to the controlling account.
    (b) A company may make any such subdivisions,reclassifications or 
consolidations of existing balances as are necessary to meet 
requirements of this system of accounts.


Sec. 76.1104  Regulated accounts.

    (a) In the context of this subpart, regulated accounts shall be 
interpreted to include the investments, revenues and expenses 
associated with basic cable service, cable programming services, 
equipment and installation and other cable activities. For those cable 
operators that elect cost of service regulation, these regulated 
products and services are fully subject to the accounting requirements 
in this subpart.
    (b) In the application of detailed accounting requirements 
contained in this subpart, when a regulated activity involves the 
common or joint use of assets and resources in the provision of 
regulated and nonregulated products and services, companies shall 
account for these activities within the accounts prescribed in this 
system. Assets and expenses shall be subdivided in subsidiary records 
among amounts solely assignable to basic cable services, amounts solely 
assignable to cable programming services, amounts solely assignable to 
equipment and installation, amounts solely assignable to nonregulated 
cable programming services, amounts solely assignable to other cable 
activities, amounts solely assignable to noncable activities and 
amounts related to assets used and expenses incurred jointly or in 
common, which will be allocated among these service cost categories. 
Companies shall submit reports identifying regulated and nonregulated 
amounts in the manner and at the times prescribed by this Commission. 
Nonregulated revenue items not qualifying for incidental treatment 
shall be recorded in the Nonregulated Operating Revenue account.
    (c) Other income items which are incidental to the provision of 
regulated products and services shall be accounted for as regulated 
activities.


Sec. 76.1105  Interpretation of accounts.

    In order to maintain uniform accounting within the prescribed 
system, questions involving matters of significance which are not 
clearly provided for, shall be submitted to the Chief, Cable Services 
Bureau, for explanation, interpretation, or resolution. Questions and 
answers thereto with respect to this system of accounts will be 
maintained by the Cable Services Bureau.


Sec. 76.1106  Waivers.

    A waiver from any provision of this system of accounts shall be 
made by the Federal Communications Commission upon its own initiative 
or upon the submission of written request therefore from any reporting 
company, provided that such waiver is in the public interest and each 
request for waiver expressly demonstrates that: Existing peculiarities 
or unusual circumstances warrant a departure from a prescribed 
procedure or technique; a specifically defined alternative procedure 
will result in substantially equivalent or more accurate portrayal of 
operating results or financial condition, consistent with the 
principles embodied in the provisions of this system of accounts; and 
the application of such alternative procedure will maintain or improve 
uniformity in substantive results as among reporting companies.


Sec. 76.1107  Address for reports and correspondence.

    Reports, statements, and correspondence submitted to the Federal 
Communications in accordance with or relating to instructions and 
requirements contained herein shall be addressed to the Cable Services 
Bureau, Federal Communications Commission, Washington, DC 20554.


Sec. 76.1108  Number convention.

    (a) The number ``76'' (appearing to the left of the first period) 
indicates the part number.
    (b) The numbers immediately following to the right of the period 
indicate, respectively, the section or account. All account numbers 
contain 4 digits to the right of the period.
    (c) Cross references to accounts are made by citing the account 
numbers to the right of the period; e.g., Account 1114, rather than the 
corresponding complete reference number 76.1114.


Sec. 76.1109  Sequence of accounts.

    The order in which the accounts are presented in this system of 
accounts is not to be considered as necessarily indicative of the order 
in which they will be scheduled at all times in reports to this 
Commission.


Sec. 76.1110  Nonregulated activities.

    (a) This section describes the accounting treatment of activities 
classified for accounting purposes as ``nonregulated.'' Activities 
classified as ``nonregulated cable programming services'' and 
``noncable activities'' will be classified for accounting purposes as 
``nonregulated.'' Activities that qualify for incidental treatment 
under the policies of this Commission will be classified for accounting 
purposes as regulated activities. The treatment of nonregulated 
activities shall differ depending on the extent of the common or joint 
use of assets and resources in the provision of both regulated and 
nonregulated products and services.
    (b) When a nonregulated activity does not involve the joint of 
common use of assets and resources in the provision of both regulated 
and nonregulated products and services, reporting companies shall 
account for these activities on a separate set of books. In the 
separate set of books, reporting companies may establish whatever 
detail they deem appropriate beyond what is necessary to provide this 
Commission with the information required in this subpart.
    (c) When a nonregulated activity does involve the common or joint 
use of assets and resources in the provision of regulated and 
nonregulated products and services, the reporting company shall account 
for these activities within accounts prescribed in this system. Assets 
and expenses shall be subdivided in subsidiary records among amounts 
solely assignable to nonregulated cable programming activities, amounts 
solely assignable to other cable activities, amounts solely assignable 
to noncable activities, amounts solely assignable to basic cable 
services, amounts solely assignable to cable programming services, 
amounts solely assignable to equipment and installation, and amounts 
related to assets used and expenses incurred jointly or in common, 
which will be allocated among these service costs categories. Companies 
shall submit reports identifying regulated and nonregulated amounts in 
the manner and at the times prescribed by this Commission. Nonregulated 
revenue items not qualifying for incidental treatment shall be recorded 
in the nonregulated operating revenue account.


Sec. 76.1111  Compensated absences.

    Reporting companies shall record a liability and charge the 
appropriate expense accounts for compensated absences (vacations, sick 
leave, etc.) in the year in which these benefits are earned by 
employees.


Sec. 76.1112  Materiality.

    Reporting companies shall follow this system of accounts in 
recording all financial and statistical data irrespective of an 
individual item's materiality under GAAP, unless a waiver has been 
granted under the provisions of Sec. 76.1106 to do othewise.


Sec. 76.1113  Nonregulated investments.

    Nonregualted investments shall include the investments in 
nonregulated activities that are conducted through the same legal 
entity as the cable operator, but does not involve the joint or common 
use of assets or resources in the provision of both regulated and non-
regulated products and services.

Current Assets


Sec. 76.1114  Cash and equivalents.

    This account shall include the following:
    (a) The amount of current funds available for use on demand in the 
hands of financial officers and agents, deposited in banks or other 
financial institutions and also funds in transit for which agents have 
received credit.
    (b) The amount of cash on special deposit, other than in sinking 
and other special funds provided for elsewhere, to pay dividends, 
interest, and other debts, when such payments are due one year or less 
from the date of deposit; the amount of cash deposited to insure the 
performance of contracts to be performed within one year from date of 
the deposit; and other cash deposits of a special nature not provided 
for elsewhere. Cash on special deposit shall include the amount of cash 
deposited with trustees to be held until mortgaged property sold, 
destroyed, or otherwise disposed of is replaced, and also cash realized 
from the sale of the company's securities and deposited with trustees 
to be held until invested in physical property of the company or for 
disbursement when the purposes for which the securities were sold are 
accomplished. Cash on special deposit to be held for more than one year 
from the date of deposit shall be included in the Other Noncurrent 
Assets Account.
    (c) The amount of cash advanced to officers, agents, employees, and 
others as petty cash or working funds from which expenditures are to be 
made and accounted for.
    (d) The cost of securities acquired for the purpose of temporarily 
investing cash, such as time drafts receivable and time loans, 
bankers's acceptances, United States Treasury certificates, marketable 
securities, and other similar investments of a temporary character. 
Accumulated changes in the net unrealized losses of current marketable 
equity securities shall be included in the determination of net income 
in the period in which they occur in the Other Nonoperating Income 
Account.


Sec. 76.1115  Accounts receivable--cable services.

    This account shall include all amounts due from customers for 
services rendered or billed and from agents and collectors authorized 
to make collections from customers. This account shall also include all 
amounts due from customers or agents or products sold. This account 
shall be kept in such manner as will enable the company to make the 
following analysis:
    (a) Amounts due from customers who are receiving cable service.
    (b) Amounts due from customers who are not receiving service and 
whose accounts are in process of collections.
    (c) Collections in excess of amounts charged to this account may be 
credited to and carried in this account until applied against charges 
for services rendered or until refunded.


Sec. 76.1116  Accounts receivable allowance--cable services.

    (a) This account shall be credited with amounts charged to the 
Uncollectible Revenue Account, to provide for uncollectible amounts 
included in the Accounts Receivable--Cable Services account. There 
shall be credited to this account amounts collected which previously 
had been written off through charges to this account and credits to the 
Accounts Receivable--Cable Services account. There shall be charged to 
this account any amounts covered thereby which have been found to be 
impracticable of collection.
    (b) If no such allowance is maintained, uncollectible amounts shall 
be charged directly to the Uncollectible Revenue account.


Sec. 76.1117  Other accounts receivable.

    This account shall include all amounts currently due, and not 
provided for in other accounts, such as divisions of revenue, material 
and supplies, matured rents, and interest receivable under monthly 
settlements on short term loans, advances, and open accounts.


Sec. 76.1118  Accounts receivable allowance--other.

    (a) This account shall be credited with amounts charged to 
Uncollectible Revenue--Other account to provide for uncollectible 
amounts included in Other Accounts Receivable account. There shall also 
be credited to this account amounts collected which previously had been 
written off through charges to this account and credits to the Other 
Accounts Receivable account. There shall be charged to this account any 
amounts covered thereby which have been found to be impracticable of 
collection.
    (b) If no such allowance is maintained, uncollectible amounts shall 
be charged directly to the Uncollectible Revenue--Other account.


Sec. 76.1119  Notes receivable.

    This account shall include the cost of demand or time notes, bills 
and drafts receivable, or other similar evidences (except interest 
coupons) of money receivable on demand or within a time not exceeding 
one year from date of issue.


Sec. 76.1120  Notes receivable allowance.

    (a) This account shall be credited with amounts charged to the 
Provision for Uncollectible Notes Receivable account to provide for 
uncollectible amounts included in the Notes Receivable account. There 
shall also be credited to this account amounts collected which 
previously had been written off through charges to this account and 
credits to the Notes Receivable account. There shall be charged to this 
account any amounts covered thereby which have been found to be 
impracticable of collection.
    (b) If no such allowance is maintained, uncollectible amounts shall 
be charged directly to the Provision for Uncollectible Notes Receivable 
account.


Sec. 76.1121  Interest and dividends receivable.

    (a) This account shall include the amount of interest accrued to 
the date of the balance sheet on bonds, notes and other commercial 
paper owned, on loans made, and the amounts of dividends receivable on 
stocks owned.
    (b) This account shall not include dividends or other returns on 
securities issued or assumed by the company and held by or for it, 
whether pledged as collateral, or held in its treasury, in special 
deposits, or in sinking and other funds.
    (c) Interest receivable under monthly settlements on short term 
loans, advances, and open accounts, shall be included in the Accounts 
Receivable--Cable Services account or the Accounts Receivable--Other 
account, as appropriate.
    (d) Dividends received and receivable from affiliated companies 
accounted for on the equity method shall be included in the Investments 
in Affiliated Companies account, as a reduction of the carrying value 
of the investment.


Sec. 76.1122  Inventories.

    (a) This account shall include the cost of materials and supplies 
held in stock and inventories of goods held for resale or lease. This 
investment in inventories shall include materials and supplies and 
property held for sale or lease. This account shall not include items 
which are related to a nonregulated activity unless that activity 
involves joint or common use of assets and resources in the provision 
of regulated and nonregulated products and services.
    (b) This account shall include cost of material and supplies held 
in stock, including plant supplies, motor vehicles supplies, tools, 
fuel, other supplies and material and articles of the company in 
process of manufacture for supply stock.
    (c) This account shall include transportation charges and sales and 
use taxes, so far as practicable, as a part of the cost of the 
particular material to which they relate. Transportation and sales and 
use taxes which are not included as part of the cost of a particular 
material shall be equitably apportioned among the detail accounts to 
which material is charged.
    (d) So far as practicable, cash and other discount on material 
shall be deducted in determining cost of the particular material to 
which they relate or credited to the account to which the material is 
charged. When such deduction is not practicable, discounts shall be 
equitably apportioned among the detail accounts to which material is 
charged.
    (e) Material recovered in connection with construction, maintenance 
or retirement of property shall be charged to this account as follows:
    (1) Reusable items that, when installed or in service, were 
retirement units, shall be included in this account at the original 
cost, estimated if not known.
    (2) Reusable minor items that, when installed or in service, were 
not retirement units, shall be included in this account at current 
prices new.
    (3) The cost of repairing reusable material shall be charged to the 
appropriate account in the Plant Specific Operations Expense accounts.
    (4) Scrap and nonusable material included in this account shall be 
carried at the estimated amount which will be received therefor. The 
difference between the amounts realized for scrap and nonusable 
material sold and the amounts at which it is carried in this account, 
so far as practicable, shall be adjusted in the accounts credited when 
the material was taken up in this account.


Sec. 76.1123  Prepayments.

    (a) This account shall include the following:
    (1) The amounts of rents paid in advance of the period in which 
they are chargeable to income, except amounts chargeable to cable plant 
under construction and minor amounts which may be charged directly to 
the final accounts.
    (2) The balance of all taxes, other than amounts chargeable to 
cable services plant under construction and minor amounts which may be 
charged to the final accounts, paid in advance and which are chargeable 
to income within one year.
    (3) The amount of insurance premiums paid in advance of the period 
in which they are chargeable to income, except premiums chargeable to 
cable services plant under construction and minor amounts which may be 
charged directly to the final accounts.
    (b) As the term expires for which any prepayment applies, this 
account shall be credited monthly and the appropriate account charged.


Sec. 76.1124  Other current assets.

    This account shall include the amount of all current assets which 
are not includable in Accounts 1115 through 1123.

Noncurrent Assets


Sec. 76.1125  Investments in affiliated companies.

    (a) This account shall include the acquisition cost of the 
company's investment in equity or other securities issued or assumed by 
affiliated companies, other than securities held in special funds which 
shall be charged to the Sinking Funds account. The carrying value of 
the investment (securities) accounted for on the equity method shall be 
adjusted to recognize the company's share of the earnings or losses and 
dividends received or receivable of the affiliated company from the 
date of acquisition.
    (b) Declines in value of investments accounted for under the cost 
method shall be charged to the Other Capital account, if temporary and 
as a current period loss if permanent. Detail records shall be 
maintained to reflect unrealized losses for each investment.
    (c) This account shall also include advances represented by book 
accounts only with respect to which it is agreed or intended that they 
shall be either settled by issuance of capital stock or debt; or shall 
not be subject to current cost settlement.
    (d) A subsidiary record shall be kept identifying separately common 
stocks, preferred stocks, long-term debt, investment advances and 
special deposits of cash for more than one year from the date of 
deposit. Further, the company's record shall identify the securities 
pledged as collateral for any of the company's long-term debt or short-
term loans or to secured performance of contracts.
    (e) Amounts due from nonaffiliated companies which are subject to 
current settlement shall be included in the Accounts Receivable--Cable 
Services account or the Notes Receivable account, as appropriate.
    (f) Subsidiary record categories shall be maintained in order that 
the entity may separately report the amounts contained herein that 
relate to the equity method and the cost method.


Sec. 76.1126  Investments in nonaffiliated companies.

    (a) This account shall include the acquisition cost of the 
company's investment in securities issued or assumed by nonaffiliated 
companies and individuals, other than securities held in special funds 
which shall be charged to the Sinking Funds account, and also its 
investment advances to such parties and special deposits of cash for 
more than one year from date of deposit.
    (b) Declines in value of investment shall be charged to the Other 
Capital account, if temporary and as a current period loss if 
permanent. Detail records shall be maintained to reflect unrealized 
losses for each investment.
    (c) This account shall also include advances represented by book 
accounts only with respect to which it is agreed or intended that they 
shall be either settled by issuance of capital stock or debt; or shall 
not be subject to current cost settlement.
    (d) A subsidiary record shall be kept identifying separately common 
stocks, preferred stocks, long-term debt, investment advances and 
special deposits of cash for more than one year from the date of 
deposit. Further, the company's record shall identify the securities 
pledged as collateral for any of the company's long-term debt or short-
term debt or short-term loans or to secure performance of contracts.
    (e) Amounts due from nonaffiliated companies which are subject to 
current settlement shall be included in the Accounts Receivable--Cable 
Services account, the Accounts Receivable--Other account, or the Notes 
Receivable account, as appropriate.


Sec. 76.1127  Nonregulated investments.

    This account shall include the reporting company's investment in 
nonregulated activities accounted for in a separate set of books as 
provided in Sec. 76.1110(b).


Sec. 76.1128  Unamortized debt issuance expense.

    (a) This account shall include the total unamortized balance of 
debt issuance expense for all classes of outstanding long-term debt. 
Amounts included in this account shall be charged to Interest and 
Related Items account.
    (b) Debt Issuance expense includes all expenses in connection with 
the issuance and sale of evidence of debt, such as fees for drafting 
mortgages and trust deeds; fees and taxes for issuing or recording 
evidences of debt; costs of engraving and printing bonds, certificates 
of indebtedness, and other commercial paper; fees paid trustees; 
specific costs of obtaining governmental authority; fees for legal 
services; fees and commissions paid underwriters, brokers, and 
salesmen; fees and expenses of listing on exchanges, and other like 
costs.
    (c) A subsidiary record shall be kept of each issue outstanding.


Sec. 76.1129  Sinking funds.

    (a) This account shall include the amount of cash and other assets 
which are held by trustees or by the company's treasurer in a distinct 
fund, for the purpose of redeeming outstanding obligations.
    (b) Interest or other income arising from funds carried in this 
account shall generally be charged to this account.
    (c) A subsidiary record shall be kept for each sinking fund which 
shall designate the obligation in support of which the fund was 
created.


Sec. 76.1130  Other noncurrent assets.

    This account shall include the amount of all noncurrent assets 
which are not includable in Accounts 1125 through 1129.


Sec. 76.1131  Deferred maintenance and retirements.

    This account shall include such items as the unprovided-for loss in 
service value of cable plant for extraordinary non-recurring retirement 
not considered in depreciation and the cost of extensive replacements 
of plant normally chargeable to the current period Plant Specific 
Operations Expense accounts.


Sec. 76.1132  Deferred charges.

    (a) This account shall include all deferred charges not provided 
for in the Deferred Maintenance and Retirements account. Such charges 
include unaudited amounts and other debit balances in suspense that 
cannot be cleared and disposed of until additional information is 
received; the amount, pending determination of loss, of funds on 
deposit with banks which have failed; revenue, expense, and income 
items held in suspense; amounts paid for options pending final 
disposition.
    (b) This account shall include the cost of preliminary surveys, 
plans, investigation, etc., made for construction projects under 
contemplation. If the projects are carried out, the preliminary costs 
shall be included in the cost of the plant constructed. If the projects 
are abandoned, the preliminary costs shall be charged to the 
Nonoperating income and Expense account.
    (c) This account shall include also the cost of evaluations, 
inventories, and appraisals taken in connection with the acquisition or 
sale of property. If the property is subsequently acquired, the 
preliminary costs shall be accounted for as a part of the cost of 
acquisition, or if it is sold, such costs shall be deducted from the 
sale price in accounting for the property sold. If purchases or sales 
are abandoned, the preliminary costs included herein (including options 
paid, if any) shall be charged to the Nonoperating Income and Expense 
account.

Regulated Plant


Sec. 76.1133  Instructions for cable services plant accounts.

    (a) Purpose of cable services plant accounts. (1) The cable 
services plant accounts (1134 to 1138 inclusive) are designed to show 
the investment in the reporting company's tangible and intangible cable 
services plant which ordinarily has a service life of more than one 
year, including such plant whether used by the company or others in 
providing cable service.
    (2) The cable services plant accounts shall not include the cost or 
other value that cable plant contributed to the company. Contributions 
in the form of money or its equivalent toward the construction of cable 
services plant shall be credited to the accounts charged with the cost 
of such construction. Amounts of non-recurring reimbursements based on 
the cost of plant or equipment furnished in rendering service to a 
customer shall be credited to the accounts charged with the cost of the 
plant or equipment. Amounts received for construction which are 
ultimately to be repaid wholly or in part, shall be credited to the 
Other Deferred Credits account; when final determination has been made 
as to the amount to be returned, any unrefunded amounts shall be 
credited to the accounts charged with the cost of such construction. 
Amounts received for the construction of plant, the ownership of which 
rests with or will revert to others, shall be credited to the accounts 
charged with the cost of such construction.
    (b) Cable services plant acquired. (1) Property, plant and 
equipment acquired from an entity, whether or not affiliated with the 
accounting company, shall be accounted for at original cost.
    (2) The accounting for property plant and equipment to be recorded 
at original cost shall be as follows:
    (i) The amount of money paid (or current money value of any 
consideration other than money exchanged) for the property (together 
with preliminary expenses incurred in connection with the acquisition) 
shall be charged to the Deferred Charges account.
    (ii) The original cost, estimated if not known, of cable services 
plant, governmental franchises and other similar rights acquired shall 
be charged to the applicable cable services plant accounts, Cable 
Services Plant Under Construction, and Property Held for Future Use as 
appropriate, and credited to the Deferred Charges account. When the 
actual original cost cannot be determined and estimates are used, the 
company shall be prepared to furnish the Commission with the 
particulars of such estimates.
    (iii) Depreciation and amortization of plant acquired shall be 
credited to the Accumulated Depreciation account, the Accumulated 
Depreciation-Held for Future Cable Services Use account, the 
Accumulated Amortization--Tangible account, the Accumulated 
Amortization--Capitalized Leases account, the Accumulated 
Amortization--Leasehold Improvements account, the Accumulated 
Amortization--Intangibles account and the Accumulated Amortization--
Other account, and debited to the Deferred Charges account.
    (iv) Any amount remaining in the Deferred Charges account, 
applicable to the plant acquired, shall, upon completion of the entries 
provided in paragraphs (b)(2) (i), (ii) and (iii) of this section, be 
debited or credited, as applicable to the Goodwill account, or the 
Plant Adjustment account, as appropriate.
    (3) A memorandum record shall be kept showing the amount of 
contributions in aid of construction applicable to the property 
acquired as shown by the accounts of the previous owner.
    (c) Cost of construction. (1) Cable services plant represents an 
economic resource which will be used to provide future services, the 
cost of which will be allocated in a rational and systematic manner to 
the future periods in which it provides benefits. In accounting for 
construction costs, the reporting company shall charge to the cable 
services plant accounts, where applicable, all direct and indirect 
costs.
    (2) Direct and indirect costs shall include, but not be limited to 
the following:
    (i) Labor, which includes the wages and expenses of employees 
directly engaged in or in direct charge of construction work. It 
includes expenses directly related to an employee's wages, such as 
worker's compensation insurance, payroll taxes, benefits and other 
similar items of expenses.
    (ii) Engineering, which includes the portion of the wages and 
expenses of engineers, draftsmen, inspectors, and their direct 
supervision applicable to construction work. It includes expenses 
directly related to an employee's wages, such as worker's compensation 
insurance, payroll taxes, benefits and other similar items of expense.
    (iii) Material and supplies, which includes the purchase price of 
material used at the point of free delivery plus the costs of 
inspection, loading and transportation, and an equitable portion of 
provisioning expense. In determining the cost of material used, proper 
allowance shall be made for unused material, for material recovered 
from temporary structures used in performing the work involved, and for 
discounts allowed and realized in the purchase of material. This item 
does not include construction material that is stolen or rendered 
unusable due to vandalism. Such material should be charged to the 
applicable plant specific operations expense accounts.
    (iv) Transportation, which includes the cost of transportating 
employees, material and supplies, tools and other work equipment to and 
from the physical construction location. It includes amounts paid 
therefor to other companies or individuals and the cost of using the 
company's own motor vehicles or other transportation equipment.
    (v) Contract work, which includes amounts paid for work performed 
under contract or other agreement by other companies, firms or 
individuals; engineering and supervision applicable to such work; cost 
incident to the award of contracts; and the inspection of such work. 
The cost of construction work performed by affiliated companies and 
other details relating thereto shall be available from the work in 
progress and supporting records.
    (vi) Protection, which includes the cost of protecting the 
company's property from fire or other casualties and the cost of 
preventing damages to others or the property of others.
    (vii) Privileges, Permits and Rights of Way, which includes such 
costs incurred in obtaining these privileges, permits, or rights of way 
in connection with construction work, such as for use of private 
property, streets or highways. The cost of such privileges and permits 
shall be included in the cost of the work for which the privileges or 
permits are obtained, except for costs includable in the Land account 
and the Intangibles account.
    (viii) Taxes, which includes taxes properly includable in 
construction costs before the facilities are completed for service, 
which taxes are assessed separately from taxes on operating property or 
under conditions that permit separate identification of the amount 
chargeable to construction.
    (ix) Special machine service, which includes the cost of labor 
expended, materials and supplies consumed and other expenses incurred 
in the maintenance, operation and use of special and other labor saving 
machines (other than transportation equipment) such as trenching 
equipment, cable plows and pole setting trucks. Also included are 
expenditures for rental, maintenance and operation of such machines 
owned by others. When a construction job requires the purchase of 
special machines, the cost thereof, less the appraised or salvage value 
at the time of release from the job, shall be included in the cost of 
construction.
    (x) Insurance, which includes premiums paid specifically for 
protection against loss and damage in connection with the construction 
of cable services plant due to fire or other casualty, injury to or 
death of employees or others, damages to property of others, 
defalcations of employees and agents, and the nonperformance of 
contractual obligations of others.
    (xi) Construction services, which includes the cost of cable, 
electricity, power, construction quarters, office space and equipment 
directly related to the construction project.
    (xii) Indirect construction costs, which includes indirect costs 
such as general engineering, supervision and support. Such costs, in 
addition to direct supervision, shall include indirect plant operations 
and engineering supervision up to, but not including, supervision by 
executive officers whose pay and expenses are chargeable to the 
Executive and Planning account. The records supporting the entries for 
indirect construction cost shall be kept so as to show the nature of 
the expenditures, the individual jobs and accounts charged, and the 
bases of the distribution. The amounts charged to each plant account 
for indirect costs shall be readily determinable. The instructions 
contained herein shall not be interpreted as permitting the addition to 
plant of amounts to cover indirect costs based on arbitrary 
allocations.
    (xiii) The cost of construction shall not include any amounts 
classifiable as Corporate Operations Expense.


Sec. 76.1134  Cable services plant in service.

    This account shall include the original cost of the investment 
included in Accounts 1139 through 1151.


Sec. 76.1135  Property held for future use.

    (a) This account shall include the original cost of property owned 
and held for no longer than two years under a definite plan for use in 
cable service. If at the end of two years the property is not in 
service, the original cost of the property shall be transferred to the 
Nonoperating Plant account.
    (b) Subsidiary records shall be maintained to show the character of 
the amounts carried in this account.


Sec. 76.1136  Cable service plant adjustment.

    (a) This account shall include amounts determined in accordance 
with Sec. 76.1133(b) representing the difference between
    (1) The fair market value of the cable services plant acquired, 
plus preliminary expenses incurred in connection with the acquisition; 
and
    (2) The original cost of such plant, governmental franchises and 
similar rights acquired, less the amounts of reserve requirements for 
depreciation and amortization of the property acquired. If the actual 
original cost is not known, the entries in this account shall be based 
upon an estimate of such costs.
    (b) The amounts recorded in this account with respect to each 
property acquisition (except land and artworks) shall be disposed of, 
written off, or provision shall be made for the amortization thereof, 
as follows:
    (1) Debit amounts may be charged to, in whole or in part, or 
amortized over a reasonable period through charges to the Other 
Nonoperating Income Account. When the provisions of paragraph (b)(3) of 
this section apply, debit amounts shall be amortized to the 
Amortization Expense--Other account.
    (2) Credit amounts shall be disposed of in such manner as this 
Commission may approve or direct, except for credit amounts referred to 
in paragraph (b)(3) of this section.
    (3) Within one year from the date of inclusion in this account of a 
debit or credit amount with respect to a current acquisition, the 
company may dispose of the total amount from an acquisition of cable 
services plant by a lump-sum charge or credit, as appropriate, to the 
Amortization Expense--Other account without further approval of this 
Commission, provided that such amount does not exceed $100,000 and that 
the plant was not acquired from an affiliated company.


Sec. 76.1137  Nonoperating plant.

    (a) This account shall include the company's investment in 
regulated property which is not includable in the plant accounts as 
operating cable services plant. It shall include the company's 
investment in cable services property held for sale.
    (b) Subsidiary records shall be maintained to show the character of 
the amounts carried in this account.


Sec. 76.1138  Goodwill.

    This account shall include any portion of the plant purchase price 
that cannot be assigned to specifically identifiable property acquired 
and such amount should be identified as ``goodwill''.


Sec. 76.1139  Land.

    (a) This account shall include the original cost of all land held 
in fee and of easements, and similar rights in land having a term of 
more than one year used for purposes other than the location of outside 
plant. It shall also include special assessments upon land for the 
construction of public improvements.
    (b) When land, together with buildings thereon, is acquired, the 
original cost shall be fairly apportioned between the land and the 
buildings and accounted for accordingly. If the plan of acquisition 
contemplates the removal of buildings, the total cost of the land and 
buildings shall be accounted for as the cost of the land, and the 
salvage value of the buildings when disposed of shall be deducted from 
the cost of the land so determined.
    (c) Annual or more frequent payments for use of land shall be 
recorded in the rent subsidiary record category for the Land and 
Building Expense.
    (d) When land is acquired for which there is not a definite plan 
for its use in cable service, its costs shall be included in the 
Nonoperating Plant account.
    (e) When land is acquired in excess of that required for cable 
purposes, the cost of such excess land shall be included in the 
Nonoperating Plant account.
    (f) Installments of assessments for public improvement, including 
interest, if any, which are deferred without option to the company 
shall be included in this account only as they become due and payable. 
Interest on assessments which are not paid when due shall be included 
in the Interest and Related Items account.


Sec. 76.1140  Buildings.

    (a) This account shall include the original cost of buildings, and 
the cost of all permanent fixtures, machinery, appurtenances and 
appliances installed as a part thereof. It shall include costs incident 
to the construction or purchase of a building and to securing 
possession and title.
    (b) When land, together with the buildings thereon, is acquired, 
the original cost shall be fairly apportioned between the land and 
buildings, and the amount applicable to the buildings shall be included 
in this account. The amount applicable to the land shall be included in 
the Land account.
    (c) This account shall not include the cost of any cable services 
equipment or wiring apparatus for generating or controlling electricity 
for operating the cable system.


Sec. 76.1141  Headend equipment.

    This account shall include the original cost of headend equipment. 
It shall include the original cost of towers and antennas comprising 
the headend tower assemblies or arrays, headend receiving and signal 
processing equipment, all power supply and distribution equipment 
serving as or associated with the prime source of power used in headend 
operations, and miscellaneous equipment devoted to general station use.


Sec. 76.1142  Distribution system.

    This account shall include the following:
    (a) The original cost installed of towers and poles together with 
appurtenant fixtures used for supporting overhead distribution 
conductors and service wires;
    (b) The original cost installed of underground conduit and tunnels 
used for housing distribution cables or wires.
    (c) The original cost installed of conductors and devices for 
distribution purposes.
    (d) The original cost of all power supply and distribution 
equipment serving as or associated with the prime source of power used 
in signal distribution. This account shall include also the cost of 
power rectifiers or motor generator installations (not forming an 
integral part of the transmitting or head end stations) that are 
provided as a source of power for the distribution system.


Sec. 76.1143  Drops.

    This account shall include the original cost of overhead and 
underground conductors leading from the pressure tap to the point of 
connection with the customers outlet or wiring. This account includes 
conduit used for underground service conductors.


Sec. 76.1144  Production equipment.

    This account shall include the original cost of all production 
equipment owned by the reporting company that is used for the 
production of programming, including public, educational, and 
governmental access and local origination programming.


Sec. 76.1145   Customer premises equipment.

    This account shall include the original cost of equipment on 
customers' premises, leased or loaned to customers, but not including 
property held for sale. This account also shall include the cost 
installed of equipment on customer's premises when the reporting 
company incurs such cost and when the reporting company retains title 
to and assumes full responsibility for maintenance and replacement of 
such property.


Sec. 76.1146   Maintenance and warehouse equipment.

    This account shall include the original cost of the following:
    (a) Motor vehicles of the type which are designed and routinely 
licensed to operate on public streets and highways.
    (b) Special purpose vehicles.
    (c) Tools and equipment used to maintain items included in 
paragraphs (a), (b) and (d) of this section.
    (d) Power operated equipment, general purpose tools and other items 
of work equipment.


Sec. 76.1147   Furniture.

    This account shall include the original cost of furniture in 
offices, storerooms, shops, and all other quarters. This account shall 
also include the cost of objects which possess aesthetic value, are of 
original or limited edition, and do not have a determinable useful 
life. The cost of any furniture attached to and constituting a part of 
a building shall be charged to the Buildings account.


Sec. 76.1148   Office equipment.

    This account shall include the original cost of office equipment in 
offices, shops and all other quarters. The cost of any equipment 
attached to and constituting a part of a building shall be charged to 
the Building account.


Sec. 76.1149   Capital leases.

    (a) This account shall include all property acquired under a 
capital lease. A lease qualifies as a capital lease when one or more of 
the following criteria is met:
    (1) By the end of the lease term, ownership of the leased property 
is transferred to the leasee.
    (2) The lease contains a bargain purchase option.
    (3) The lease term is substantially (75% or more) equal to the 
estimated useful life of the leased property. However, if the beginning 
of the lease term falls within the last 25% of the total estimated 
economic life of the leased property, including earlier years of use, 
this criterion shall not be used for purposes of classifying the lease.
    (4) At the inception of the lease, the present value of the minimum 
lease payments, excluding that portion of the payments representing 
executory costs to be paid by the lessor, including any profit thereon, 
equals or exceeds 90% or more of the fair value of the leased property. 
However, if the beginning of the lease term falls within the last 25% 
of the total estimated economic life of the leased property, including 
earlier years of use, this criterion shall not be used for purposes of 
classifying the lease.
    (b) All other leases are operating leases.
    (c) The amounts recorded in this account at the inception of a 
capital lease shall be equal to the original cost, if known, or to the 
present value not to exceed fair value, at the beginning of the lease 
term, of minimum lease payments during the lease term, excluding that 
portion of the payments representing executory costs to be paid by the 
lessor, together with any profit thereon.


Sec. 76.1150   Leasehold improvements.

    (a) This account shall include the original cost of leasehold 
improvements made to cable services plant held under a capital or 
operating lease, which are subject to amortization treatment. This 
account shall also include those improvements which will revert to the 
lessor.
    (b) Improvements to leased cable services plant which are of a 
relatively minor cost or short life or for which the period of the 
lease is one year or less shall be charged to the account chargeable 
with the cost of repairs to such plant.
    (c) Amounts contained in this account shall be amortized over the 
term of the related lease.


Sec. 76.1151   Intangibles.

    (a) This account shall include the cost of organizing and 
incorporating the company, the original cost of government franchises, 
the original cost of patent rights, and other intangible property 
having a life of more than one year and used in connection with the 
company's cable operations.
    (b) Subsidiary records for this account shall include a description 
of each class of intangible property.
    (c) The cost of other intangible assets having a life of one year 
or less shall be charged directly to the Amortization Expense--
Intangible account. Such intangibles acquired at small cost may also be 
charged to the Amortization Expense--Intangibles account, irrespective 
of their term of life.
    (d) This account shall not include any discounts on securities 
issued, nor shall it include costs incident to negotiating loans, 
selling bonds or other evidences of debt, or expenses in connection 
with the authorization, issuance, sale or resale of capital stock.
    (e) When charges are made to this account for expenses incurred in 
mergers, consolidations, or reorganizations, amounts previously 
included in this account on the books of the various companies 
concerned shall not be carried over.
    (f) Franchise taxes payable annually or more frequently shall be 
charged to Operating Taxes account.
    (g) This account shall not include the cost of plant, material and 
supplies, or equipment furnished to municipalities or other 
governmental authorities when given other than as initial consideration 
for franchises or similar rights.
    (h) This account shall not include the original cost of easements, 
rights of way, and similar rights in land having a term of more than 
one year. Such amounts shall be recorded in the Land account, or in the 
appropriate outside plan account.


76.1152  Accumulated depreciation.

    (a) This account shall include the accumulated depreciation 
associated with the investment contained in Cable Services Plant in 
Service account.
    (b) This account shall be credited with depreciation amounts 
concurrently charged to the Depreciation Expense--Cable Services Plant 
in Service account.
    (c) At the time of retirement of depreciable operating cable 
services plant, this account shall be charged with the original cost of 
the property, retired plus the cost of removal and credited with the 
salvage value and any insurance proceeds recovered.
    (d) This account shall be credited with amounts charged to the 
Deferred Maintenance and Retirements account. This account shall be 
credited with amounts charged to the Depreciation Expense--Cable 
Services Plant in Service account with respect to other than relatively 
minor losses in service values suffered through terminations of service 
when charges for such terminations are made to recover the losses.


76.1153  Acculated depreciation held for future use.

    (a) This account shall include the accumulated depreciation 
associated with the investment contained in the Property Held for 
Future Use account.
    (b) This account shall be credited with amounts concurrently 
charged to the Depreciation and Amortization Expense account.


76.1154  Accumulated depreciation--nonoperating.

    (a) This account shall include the accumulated amortization and 
depreciation associated with the investment contained in the 
Nonoperating Plant account.
    (b) This account shall be credited with amortization and 
depreciation amounts concurrently charged to the Nonoperating Income 
and Expense account.
    (c) When nonoperating plant not previously used in cable service is 
disposed of, this account shall be charged with the amount previously 
credited hereto with respect to such property and the book cost of the 
property so retired less the amount chargeable to this account and less 
the value of the salvage recovered or the proceeds from the sale of the 
property shall be included in the Nonoperating Income and Expense 
account. In case the property had been used in cable service previous 
to its inclusion in the Nonoperating Plant account, the amount accrued 
for depreciation thereon after its retirement from cable service shall 
be charged to this account and credited to the Accumulated Depreciation 
account, and the accounting for its retirement from the Nonoperating 
Plant account shall be in accordance with that applicable to cable 
services plant retired.


76.1155  Accumulated amortization--capitalized leases.

    (a) This account shall include the accumulated amortization 
associated with the investment contained in the Capital Leases account.
    (b) This account shall be credited with amounts for the 
amortization of capital leases concurrently charged to the Amortization 
Expense--Tangible account. (Note also the Accumulated Depreciation--
Nonoperating account.)
    (c) When any item carried in the Capital Leases account is sold, is 
relinquished, or is otherwise retired from service, this account shall 
be charged with the cost of the retired item. Remaining amounts 
associated with the item shall be debited to the Nonoperating Income 
and Expense account.


Sec. 76.1156  Accumulated amortization--leasehold improvements.

    (a) This account shall include the accumulated amortization 
associated with the investment contained in the Leasehold Improvements 
account.
    (b) This account shall be credited with amounts for the 
amortization leasehold improvements concurrently charged to the 
Amortization Expense--Tangible account. (Note also the Accumulated 
Depreciation--Nonoperating account.)
    (c) When any item carried in the Leasehold Improvements account is 
sold, is relinquished, or is otherwise retired from service, this 
account shall be charged with the cost of the retired item. Remaining 
amounts associated with the item shall be debited to the Nonoperating 
Income and Expense account.


Sec. 76.1157  Accumulated amortization--intangible.

    (a) This account shall include the accumulated amortization 
associated with the investment contained in the Intangibles account.
    (b) This account shall be credited with amortization amounts 
concurrently charged to the Amortization Expense--Intangible account. 
(Note also the Accumulated Depreciation--Nonoperating account.)
    (c) When any item carried in the Intangibles account is sold, 
relinquished, or otherwise retired from service, this account shall be 
charged with the cost of the retired item. Remaining amounts associated 
with the item shall be debited to the Nonoperating Income and Expense 
account.


Sec. 76.1158  Accumulated amortization--other.

    (a) This account shall include the accumulated amortization 
associated with the investment contained in the Plant Adjustment 
account.
    (b) This account shall be credited with amortization amounts 
concurrently charged to the Amortization Expense--Other. (Note also the 
Accumulated Depreciation--Nonoperating account.)
    (c) When any item carried in the Plant Adjustment account is sold, 
relinquished, or otherwise retired from service, this account shall be 
charged with the cost of the retired item. Remaining amounts associated 
with the item shall be debited to the Nonoperating Income and Expense 
account.

Current Liabilities


Sec. 76.1159  Accounts payable.

    (a) This account shall include all amounts currently due to others 
for recurring trade obligations, and not provided for in other 
accounts, such as those for material and supplies, repairs to cable 
services plant, matured rents, and interest payable under monthly 
settlements on short-term loans, advances, and open accounts. It shall 
also include amounts of taxes payable that have been withheld from 
employees' salaries.
    (b) Subsidiary record categories shall be maintained for this 
account in order that the company may separately report the amounts 
contained herein that relate to nonaffiliates and affiliates.
    (c) There shall be included herein accounts payable arising from 
sharing of revenues.


Sec. 76.1160  Notes payable.

    (a) This account shall include the face amount of notes, drafts, 
and other evidences of indebtedness issued or assumed by the company 
(except interest coupons) which are payable on demand or not more than 
one year or less from the date of issue.
    (b) Subsidiary record categories shall be maintained for this 
account in order that the company may separately report the amounts 
contained herein that relate to nonaffiliates and affiliates.
    (c) If any part of an obligation, otherwise includable in this 
account matures more than one year from date of issue, it shall be 
included in the Funded Debt account, the Advances from Affiliated 
Companies account, or other appropriate account.
    (d) The records supporting the entries to this account shall be 
kept so that the company can furnish complete details as to each note, 
when it is issued, the consideration received, and when it is payable.


Sec. 76.1161  Advance billing and payments.

    This account shall include the amount of advance billing creditable 
to revenue accounts in future months; also advance payments made by 
prospective customers prior to the establishment of service. Amounts 
included in this account shall be credited to the appropriate revenue 
accounts in the months in which the service is rendered or cleared from 
this account as refunds are made.


Sec. 76.1162  Customers' deposits.

    (a) This account shall include the amount of cash deposited with 
the company by customers as security for the payment for cable 
services.
    (b) Advance payments made by prospective customers prior to the 
establishment of service shall be credited to the Advance Billing and 
Payments account.


Sec. 76.1163  Current maturities--long-term debt.

    This account shall include the amount (including any obligations 
for premiums) of long-term debt matured and unpaid without any specific 
agreement for extension of maturity, including unpresented bonds drawn 
for redemption through the operation of sinking and redemption fund 
agreements.


Sec. 76.1164  Current maturities--capital leases.

    This account shall include the current portion of obligations 
applicable to property obtained under capital leases.


Sec. 76.1165  Income taxes--accrued.

    (a) This account shall be credited or charged with the offsetting 
amount of current year income taxes (Federal, state and local) accrued 
during the period or adjustments to prior accruals.
    (b) If significant, current year income taxes paid in advance shall 
be reclassified to the Prepayments account.


Sec. 76.1166  Other taxes--accrued.

    (a) This account shall be credited or charged and the Operating 
Taxes account, or the Nonoperating Taxes account, or, for payroll 
related costs, the appropriate expense accounts shall be charged or 
credited for all taxes, other than Federal, State and local income 
taxes, accrued or adjusted for previous accruals during the period. 
Among the taxes includable in this account are property, gross 
receipts, franchise, capital stock, social security and unemployment 
taxes.
    (b) Taxes paid in advance of the period in which they are 
chargeable to income shall be included in the Prepayments account or 
the Other Noncurrent Assets account, as appropriate.


Sec. 76.1167  Net current deferred operating income taxes.

    (a) This account shall include the balance of income tax expense 
related to current items from regulated operations which have been 
deferred to later periods as a result of the normalized method of 
accounting for tax differentials authorized by this Commission and not 
provided for elsewhere.
    (b) As regulated assets or liabilities which generated the deferred 
income tax are reclassified from long-term or noncurrent status to 
current, the appropriate deferred income tax shall be reclassified from 
the Net Noncurrent Deferred Operating Income Taxes account, to this 
account.
    (c) This account shall be debited or credited with the amount being 
debited or credited to the Provision for Deferred Operating Income 
Taxes--Net account.
    (d) The classification of deferred income taxes as current or 
noncurrent shall follow the classification of the asset or liability 
that gave rise to the deferred income tax. If there is no related asset 
or liability, classification shall be based on the expected turnaround 
of the tax timing difference.
    (e) Subsidiary record categories shall be maintained in order that 
the company may separately report the amounts contained herein that are 
property related and those that are nonproperty related.


Sec. 76.1168  Net current deferred nonoperating income taxes.

    (a) This account shall include the balance of income tax expense 
resulting from comprehensive interpreted tax allocation which has been 
deferred to later periods.
    (b) As other assets or liabilities which generated the deferred 
income tax are reclassified from long-term or noncurrent status to 
current, the appropriate deferred income tax shall be reclassified from 
the Net Noncurrent Deferred Nonoperating Income Taxes account, to this 
account.
    (c) This account shall be debited or credited with the amount being 
credited or debited to the Provision for Deferred Nonoperating Income 
Taxes--Net account.
    (d) This account shall also include the balance of the income taxes 
(Federal, state and local) related to current extraordinary items which 
have been deferred to later periods resulting from comprehensive 
interperiod tax allocation.
    (e) As the extraordinary item which generated the deferred income 
tax becomes current, the appropriate deferred income tax shall be 
reclassified from the Net Noncurrent Deferred Nonoperating Income Taxes 
account, to this account.
    (f) This account shall be debited or credited with the amount being 
credited and debited to the Extraordinary Items account.
    (d) The classification of deferred income taxes as current or 
noncurrent shall follow the classification of the asset or liability 
that gave rise to the deferred income tax. If there is no related asset 
or liability, classification shall be based on the expect turnaround.
    (h) Subsidiary record categories shall be maintained in order that 
the company may separately report the amounts contained herein that are 
property related and those that are nonproperty related.


Sec. 76.1169  Other accrued liabilities.

    (a) This account shall include the amount of wages, compensated 
absences, interest on indebtedness of the company, dividends on capital 
stock, and rents accrued to the date for which the balance sheet is 
made, but not payable until after that date.
    (b) This account shall be maintained so as to show separately the 
amount and nature of the items accrued to the date of the balance 
sheet.
    (c) Matured rents, dividends and interest shall be included in the 
Accounts Payable account.
    (d) Interest payable under monthly settlements on short-term loans, 
advances, and open accounts shall be included in the Accounts Payable 
account.


Sec. 76.1170  Other current liabilities.

    This account shall include liabilities of current character which 
are not includable in Accounts 1160 through 1169.


Sec. 76.1171  Funded debt.

    (a) This account shall include the total face amount of unmatured 
debt, maturing more than one year from date of issue, issued by the 
company and not retired, and the total face amount of similar unmatured 
debt of other companies, the payment of which has been assumed by the 
company, including funded debt the maturity of which has been extended 
by specific agreement.
    (b) This account shall include such items as mortgage bonds, 
collateral trust bonds, income bonds, convertible debt, debt securities 
with detachable warrants and other similar obligations maturing more 
than one year from date of issue.
    (c) In the case of debt securities with detachable warrants this 
account shall include only the face amount of the security at the time 
of issuance. The value of detachable warrants shall be charged to 
either the Premium on Long-Term Debt account, or the Discount on Long-
Term Debt account, as appropriate, and credited to the Additional Paid-
in Capital account, in the case of capital stock warrants or retained 
in this account as a separately identifiable amount in the case of 
detachable long-term debt warrants. No similar allocation shall be made 
for the issuance of either convertible debt or debt securities with 
non-detachable warrants.
    (d) Subsidiary records shall be maintained for each issue.
    (e) Securities maturing in one year or less, including securities 
maturing serially, shall be included in the Current Maturities--Long-
Term Debt account.
    (f) Investment advances, including those represented by notes, 
shall be included in the Other Long-Term Debt account.


Sec. 76.1172  Premium on long-term debt.

    (a) This account shall include the premium associated with all 
classes of long-term debt. Premium, as applied to securities issued or 
assumed by the company, means the excess of the current money value 
received at their sale over the sum of their book or face amount and 
interest or dividends accrued at the date of the sale.
    (b) Amounts included in this account shall be amortized monthly by 
the interest method and credited to the Interest and Related Items 
account.
    (c) Subsidiary records shall be maintained to identify the premium 
attributable to each issue.


Sec. 76.1173  Discount on long-term debt.

    (a) This account shall include the discount associated with all 
classes of long-term debt. Discount, as applied to securities issued or 
assumed by the company, means the excess of the book or face amount of 
the securities plus interest or dividends accrued at the date of the 
sale over the current money value of the consideration received at 
their sale.
    (b) Amounts included in this account shall be amortized monthly by 
the interest method and charged to the Interest and Related Items 
account.
    (c) Subsidiary records shall be maintained to identify the discount 
attributable to each issue.


Sec. 76.1174  Reacquired debt.

    This account shall include the face amount of debt reacquired prior 
to maturity that has not been retired. Gain or loss shall be recognized 
at the time of reacquisition by credits or charges to the Nonoperating 
Income and Expense account, except that material gains or losses shall 
be treated as extraordinary. (See Extraordinary Income Credits account 
and Extraordinary Items account.)


Sec. 76.1175  Obligations under capital leases.

    (a) This account shall include the noncurrent portion of 
obligations applicable to property obtained under capital leases.
    (b) Amounts subject to current settlement shall be included in the 
Current Maturities--Capital Leases account.


Sec. 76.1176  Advances from affiliated companies.

    (a) This account shall include the amount of advances from 
affiliated companies.
    (b) Amounts due affiliated companies which are subject to current 
settlement shall be included in the Notes Payable account or the 
Accounts Payable account, as appropriate.


Sec. 76.1177  Other long-term debt.

    This account shall include long-term debt not provided for 
elsewhere.


Sec. 76.1178  Other long-term liabilities.

    (a) This account shall include amounts accrued to provide for such 
items as unfunded pensions (if actuarially determined), death benefits, 
deferred compensation costs and other long-term liabilities not 
provided for elsewhere.
    (b) Subsidiary records shall be maintained to identify the nature 
of the items included herein.


Sec. 76.1179  Unamortized operating investment tax credits--net.

    (a) This account shall be credited and the Operating Taxes account 
shall be debited with investment tax credits generated from qualified 
expenditures related to regulated operations which the company defers 
rather than recognizes currently in income.
    (b) This account shall be debited and the Operating Taxes account 
credited with a proportionate amount determined in relation to the 
period of time used for computing book depreciation on the property to 
which the tax credit relates.


Sec. 76.1180  Unamortized nonoperating investment tax credits--net.

    (a) This account shall be credited and the Nonoperating Taxes 
account shall be debited with investment tax credits generated from 
qualified expenditures related to other operations which the company 
has elected to defer rather than recognize currently in income.
    (b) This account shall be debited and the Nonoperating Taxes 
account credited with a proportionate amount determined in relation to 
the useful book life of the property to which the tax credit relates.


Sec. 76.1181  Net noncurrent deferred operating income taxes.

    (a) This account shall include the balance of income tax expense 
related to noncurrent items from regulated operations which have been 
deferred to later periods as a result of comprehensive interperiod tax 
allocation related to timing differences that arise from regulated 
operations.
    (b) This account shall be credited or debited, as appropriate, and 
the Operating Taxes account shall reflect the offset for the tax effect 
of revenues and expenses from regulated operations which have been 
included in the determination of taxable income, but which will not be 
included in the determination of book income or for the tax effect of 
revenues and expenses from regulated operations which have been 
included in the determination of book income prior to the inclusion in 
the determination of taxable income.
    (c) As regulated assets or liabilities which generated the prepaid 
income tax or deferred income tax are reclassified from long-term or 
noncurrent status to current status, the appropriate deferred income 
tax shall be reclassified from this account to the Net Current Deferred 
Operating Income Taxes account.
    (d) The classification of deferred income taxes as current or 
noncurrent shall follow the classification of the asset or liability 
that gave rise to the deferred income tax. If there is no related asset 
or liability, classification shall be based on the expected turnaround 
of the tax timing difference.
    (e) Subsidiary record categories shall be maintained in order that 
the company may separately report the amounts contained herein that are 
property related and those that are nonproperty related.


Sec. 76.1182  Net noncurrent deferred nonoperating income taxes.

    (a) This account shall include the balance of income tax expense 
(Federal, state and local) that has been deferred to later periods as a 
result of comprehensive interperiod tax allocation related to 
nonoperating timing differences.
    (b) This account shall be credited or debited, as appropriate, and 
the Nonoperating Taxes account, shall reflect the offset for the tax 
effect of revenues from other operations and extraordinary items and 
nonoperating expense which have been included in the determination of 
taxable income, but which will not be included in the determination of 
book income or for the tax effect of nonoperating expenses and 
extraordinary items and nonoperating income which have been included in 
the determination of book income prior to the inclusion in the 
determination of taxable income.
    (c) As other assets or liabilities which generated the prepaid 
income tax or deferred income tax are reclassified from long-term or 
non-current status to current status, the appropriate deferred income 
tax shall be reclassified from this account to the Net Current Deferred 
Nonoperating Income Taxes account.
    (d) This account shall also include the balance of the income tax 
effect (Federal, State and local) related to noncurrent extraordinary 
items which have been included in the determination of taxable income 
in a period different from when it is included in the determination of 
book income, that is, more than one year.
    (e) This account shall be charged or credited with the contra 
amount recorded to the Extraordinary Items account.
    (f) As the extraordinary item which generated the deferred income 
tax becomes current, the appropriate deferred income tax shall be 
reclassified from this account to the Net Current Deferred Nonoperating 
Income Taxes account.
    (g) The classification of deferred income taxes as current or 
noncurrent shall follow the classification of the asset or liability 
that gave rise to the deferred income tax. If there is no related asset 
or liability, classification shall be based on the expected turnaround 
of the tax timing difference.
    (h) Subsidiary record categories shall be maintained in order that 
the company may separately report the amounts contained herein that are 
property related and those that are nonproperty related.


Sec. 76.1183  Other deferred credits.

    This account shall include the amount of all deferred credits not 
provided for elsewhere, such as amounts awaiting adjustment between 
accounts; and revenue, expense, and income items in suspense.


Sec. 76.1184  Capital stock.

    (a) This account shall include the par value, stated amount, or in 
the case of no-par stock the amount received for capital stock issued 
and outstanding.
    (b) Subsidiary records shall be maintained so as to show separately 
each class of stock.
    (c) This account shall be charged with the book amount of any stock 
retired.


Sec. 76.1185  Additional paid-in capital.

    (a) This account shall include the difference between the net 
proceeds (including discount, premium and stock issuance expense) 
received from the issuance of capital stock and the amount includable 
in the Capital Stock account, unless such difference results in a debit 
balance for that class of stock, in which case the amount shall be 
charged to the Retained Earnings account.
    (b) This account shall also include gains arising from the 
retirement and cancellation of capital stock. Losses from the 
retirement and cancellation of capital stock shall be charged to this 
account to the extent that there exist credits in this account for the 
same class of stock; otherwise to the Retained Earnings account.


Sec. 76.1186  Treasury stock.

    This account shall include the cost of the company's own capital 
stock which has been issued and subsequently reacquired but not retired 
or resold.


Sec. 76.1187  Other capital.

    This account shall include amounts which are credits arising from 
the donation by stockholders of the company's capital stock, capital 
recorded upon the reorganization or recapitalization of the company and 
temporary declines in the value of marketable securities held for 
investment purposes. (See also the Investment in Affiliated Companies 
account.)


Sec. 76.1188  Retained earnings.

    (a) This account shall include the undistributed balance of 
retained earnings derived from the operations of the company and from 
all other transactions not includable in the other accounts appropriate 
for inclusion of stockholders' equity.
    (b) Subsidiary records shall be maintained wherein are recorded all 
entries to retained earnings during the year such that the detail of 
the entries may be disclosed to the Commission.

Revenue Accounts


Sec. 76.1189  Instructions for revenue accounts.

    (a) Purpose of revenue accounts. The revenue accounts are intended 
to include the actual cash inflows (or equivalents) that have or will 
occur as a result of the company's ongoing major or central operations 
during the period. They will include the revenues which arise from 
furnishing regulating cable services such as basic cable services, 
cable programming services, equipment and installation, and 
nonregulated cable services such as pay per view, and pay per channel 
services.
    (b) Deductions from revenue. Corrections of overcharges, authorized 
refunds of overcollections previously credited to revenue, authorized 
refunds and adjustments on account of failure in service, and other 
corrections shall be charged to the revenue account previously credited 
with the amounts involved.
    (c) Commissions. Commissions paid to others or employees in place 
of compensation or salaries for services rendered shall be charged to 
the Customer Services account, and not to the revenue accounts.
    (d) Revenue recognition. Credits shall be made to the appropriate 
revenue accounts when such revenue is actually earned. When the billing 
cycle encompasses more than one accounting period, adjustments are 
necessary to properly recognize the revenue applicable to the current 
accounting period under report. Revenues recorded under the terms of 
two-tier contracts or other variable payment plans should be deferred, 
if necessary, and recognized ratably with expenses over the term of 
related contract. Any amounts deferred shall be credited to the Other 
Deferred Credits account.
    (e) Structure of revenue accounts.
    (1) The revenue section of the system of accounts shall be 
organized by revenue group summary account, account and subsidiary 
record category (if required).
    (2) The revenue section of this system of accounts shall be 
comprised of five major groups--Basic Service Revenues, Cable 
Programming Service Revenues, Equipment and Installation Revenues, 
Nonregulated Cable Programming Service Revenues, Other Cable Revenues, 
Noncable Revenues, and Uncollectible Revenues.
    (3) Summary accounts within revenue groups shall be used to 
describe aggregations of two or more accounts having a certain 
commonality.


Sec. 76.1190  Basic service tier revenues.

    This account shall report all revenues derived from the provision 
basic cable service as defined by Sec. 76.901(a). These revenues shall 
include:
    (a) Revenues derived from subscriptions to basic cable;
    (b) Revenues derived from advertising on channels carried on the 
basic cable service tier; and
    (c) Other revenues derived from basic cable services.


Sec. 76.1191  Cable programming services revenues.

    This account shall report all revenues derived from the provision 
cable programming services as defined by Sec. 76.901(b). These revenues 
shall include:
    (a) Revenues derived from subscriptions to cable programming 
services;
    (b) Revenues derived from advertising on channels carried on the 
cable programming service tiers; and
    (c) Other revenues derived from cable programming services.


Sec. 76.1192  Equipment and installation revenues.

    This account shall include all revenues derived from the following 
activities:
    (a) Customer service installation fees.
    (b) Lease of basic converters.
    (c) Lease of one-way addressable converters.
    (d) Lease of two-way addressable converters.
    (e) Lease of remotes.


Sec. 76.1193  Nonregulated cable programming services.

    This account shall include all revenues from the provision of any 
cable service other than basic cable service and cable programming 
service, such as, per-channel or per-program premium services. These 
revenues shall include:
    (a) Revenues derived from subscriptions to other cable programming 
services;
    (b) Revenues derived from advertising on channels carried on other 
cable programming services; and
    (c) Other revenues derived from other cable programming services.


Sec. 76.1194  Other cable revenues.

    This account shall include all revenues that are derived from the 
provision of cable services that are not derived from basic cable 
services, cable programming services or nonregulated cable programming 
services. Other cable revenues include revenues from leased access, 
billing and collection services, studio equipment engineering and 
rental services, sale of equipment, and maintenance of equipment sold 
to customers.


Sec. 76.1195  Uncollectible revenue--cable services.

    This account shall be charged with amounts concurrently credited to 
the Receivable Allowances--Cable Services account.


Sec. 76.1196  Uncollectible revenue--other.

    This account shall be charged with amounts concurrently credited to 
the Other Accounts Receivable account or the Accounts Receivable 
Allowance--Other account, when such allowance is maintained.

Expense Accounts


Sec. 76.1197  Instructions for expense accounts.

    (a) Structure of the expense accounts.
    (1) The expense section of the system of accounts shall be 
organized by expense group summary account, and subsidiary record 
category (if required).
    (2) The expense section of this system of accounts shall be 
comprised of four major expense groups--Plant Specific Operations, 
Plant Nonspecific Operations, Customer Operations and Corporate 
Operations. Expenses to be recorded in Plant Specific and Plant 
Nonspecific Operations Expense Groups generally reflect cost associated 
with the various kinds of equipment identified in the plant asset 
accounts. Expenses to be recorded in the Customer Operations and 
Corporate Operations accounts reflect the costs of, or all associated 
with, functions performed by people, irrespective of the organization 
in which any particular function is performed.
    (3) Summary accounts within expense groups shall be used to 
describe aggregations of two or more accounts having a certain 
commonality.
    (b) Plant Specific Operations Expense.
    (1) The Plant Specific Operations Expense Accounts are used to 
record costs related to specific kinds of cable services plant.
    (2) The Plant Specific Operations Expense accounts predominantly 
mirror the cable services plant in service detail accounts and are 
numbered consistently with them; the first two digits of the expense 
account being one, eight (18) and the remaining digits being the same 
as the last two numbers of the related plant account. In classifying 
Plant Specific Operations expenses, the text of the corresponding plant 
account should be consulted to ensure appropriateness.
    (3) The Plant Specific Operations Expense accounts shall include 
the costs of inspecting, testing and reporting on the condition of 
cable plant to determine the need for repairs, replacements, 
rearrangements and changes; performing routine work to prevent trouble, 
replacing items of plant other than retirement units; rearranging and 
changing the location of plant not retired; repairing material for 
reuse; restoring the condition of plant damaged by storms, floods, fire 
or other casualties (other than the cost of replacing retirement 
units); inspecting after repairs have been made; and receiving training 
to perform these kinds of work. Also included are the costs of direct 
supervision (immediate or first-level) and office support of this work.
    (4) In addition to the activities specified in paragraph (b)(3) of 
this section, the appropriate Plant Specific Operations Expense 
accounts shall include the cost of personnel whose principal job is the 
operation of plant equipment. However, when the operation of equipment 
is performed as part of other identifiable functions (such as the use 
of office equipment, capital tools or motor vehicles) the operators' 
cost shall be charged to accounts appropriate for those functions.
    (c) Plant Nonspecific Operations Expense. The Plant Nonspecific 
Operations Expense accounts shall include expenses related to property 
held for future use, provisioning expenses, and depreciation and 
amortization expenses. Accounts in this group shall include the costs 
of performing activities described in narratives for individual 
accounts. These costs shall also include the costs of supervision and 
office support of these activities.
    (d) Customer Operations Expense. The Customer Operations Expense 
accounts shall include the cost of performing customer related 
marketing and services activities described in narratives for 
individual accounts. These costs shall also include the costs of 
supervision, office support and training for these activities.
    (e) Corporate Operations Expense. The Corporate Operations Expense 
accounts shall include the costs of performing executive and planning 
activities and general and administrative activities described in 
narratives for individual accounts. These costs shall also include the 
costs of supervision, office support and training for these activities.
    (f) Expense matrix. The expense accounts shall be maintained by the 
following subsidiary record categories, as appropriate to each account.
    (1) Salaries and wages. This subsidiary record category shall 
include compensation to employees, such as; wages, salaries, 
commissions, bonuses, incentive awards and termination payments.
    (2) Benefits. This subsidiary record category shall include payroll 
related benefits on behalf of employees such as the following:
    (i) Pensions.
    (ii) Savings plan contributions (company portion).
    (iii) Worker's compensation required by law.
    (iv) Life, hospital, medical, dental, and vision plan insurance.
    (v) Social Security and other payroll taxes.
    (3) Rents.
    (i) This subsidiary record category shall include amounts paid for 
the use of real and personal operating property. Amounts paid for real 
property shall be included in Land and Buildings Expense account. This 
category includes payments for operating leases but does not include 
payments for capital leases.
    (ii) This subsidiary record category is applicable only to the 
Plant Specific Operations Expense accounts. Incidental rents, e.g., 
short-term rental car expense, shall be categorized as Other Expenses 
(see paragraph (f)(4) of this section) under the account which reflects 
the function for which the incidental rent was incurred.
    (4) Other expenses. This subsidiary record category shall include 
costs which cannot be classified to the other subsidiary record 
categories. Included are material and supplies, including provisioning 
(note also the Provisioning Expense account); contracted services; 
accident and damage payments, insurance premiums; traveling expenses 
and other miscellaneous costs.
    (5) Clearances. This subsidiary record category shall include 
amounts transferred to Construction accounts (see 
Sec. 76.1133(c)(2)(iii)), the Other Plant Specific Operations Expense 
account, and/or the Accumulated Depreciation account, as appropriate, 
from the Maintenance and Warehouse Equipment account.
    (g) Reimbursements. Reimbursements of actual costs incurred in 
connection with joint operations or projects repairing plant due to 
damages by others, and obligations to make changes in cable plant (such 
as highway relocations), shall be credited to the accounts originally 
charged.


Sec. 76.1198  Property held for future use expense.

    This account shall include expenses associated with property held 
for future use.


Sec. 76.1199  Land and building expense.

    This expense shall include expenses associated with land and 
buildings (excluding amortization of leasehold improvements). This 
amount shall also include janitorial service, cleaning supplies, water, 
sewage, fuel and guard service, and electrical power.


Sec. 76.1200  Headend equipment expense.

    This account shall be charged only with expenses incurred in 
connection with head end equipment.


Sec. 76.1201  Distribution system expense.

    This account shall be charged only with expenses incurred in 
connection with the distribution system.


Sec. 76.1202  Drops expense.

    This account shall be charged only with expenses incurred in 
connection with drops.


Sec. 76.1203  Production equipment expense.

    This account shall be charged only with expenses incurred in 
connection with production equipment.


Sec. 76.1204  Customer premises equipment expense.

    This account shall be charged only with expenses incurred in 
connection with customer premises equipment.


Sec. 76.1205  Maintenance and warehouse equipment expense.

    This account shall be charged only with expenses incurred in 
connection with maintenance and warehouse equipment. These expenses 
shall include:
    (a) Motor vehicle expenses such as the costs of fuel, lubrications, 
license and inspection fees, washing, repainting, and minor 
accessories. Also included are the costs of personnel whose principal 
job is operating motor vehicles, such as chauffeurs and shuttle bus 
drivers. The costs of users of motor vehicles whose principal job is 
not the operation of motor vehicles shall be charged to accounts 
appropriate for the activities performed. Credits shall be made to this 
account for amounts transferred to Construction and/or other Plant 
Specific Operations Expenses accounts. These amounts shall be computed 
on the basis of direct labor hours.
    (b) Special purpose vehicles expenses such as the costs of fuel, 
licenses and inspection fees, washing, repainting, and minor 
accessories. The costs of operators of this equipment shall be charged 
to accounts appropriate for the activities performed. Credits shall be 
made to this account for amounts transferred to Construction and/or to 
other Plant Specific Operations Expense accounts. These amounts shall 
be computed on the basis of direct labor hours.
    (c) Garage work and equipment expenses.
    (d) Other work equipment expenses. Credits shall be made to this 
account for amounts transferred to Construction and/or to other Plant 
specific Operations Expense accounts. These amounts shall be computed 
on the basis of direct labor hours.


Sec. 76.1206  Furniture and artworks expense.

    This account shall include expenses associated with furniture and 
artworks.


Sec. 76.1207  Office equipment expense.

    This account shall be charged only with costs incurred in 
connection with the office equipment itself. The costs of operators of 
this equipment shall be charged to accounts appropriate for the 
activities performed.


Sec. 76.1208  Basic cable programming expense.

    This account shall be used for reporting purposes to summarize 
Accounts 1209 through 1213.


Sec. 76.1209  Basic cable satellite programming expense.

    This account shall include all expenses associated with procuring 
satellite programming on the basic cable tier.


Sec. 76.1210  Retransmission consent expense.

    This account shall include all expenses associated with 
retransmission consent on the basic tier.


Sec. 76.1211  Public, educational, governmental access expense.

    This account shall include all expenses associated with public, 
educational, and governmental access.


Sec. 76.1212  Local origination expense.

    This account shall include all expenses associated with local 
origination programming.


Sec. 76.1213  Other basic cable programming expense.

    This account shall include all basic cable programming expenses 
that were not included in Accounts 1209 through 1212.


Sec. 76.1214  Cable programming service expense.

    This account shall be used for reporting purposes to summarize 
Accounts 1215 through 1218.


Sec. 76.1215  Cable programming service satellite programming expense.

    This account shall include all expenses associated with procuring 
satellite programming on the cable programming service tiers.


Sec. 76.1216  Cable programming service retransmission consent expense.

    This account shall include all expenses associated with 
retransmission consent on the cable programming service tiers.


Sec. 76.1217  Cable programming service local origination expense.

    This account shall include all expenses associated with local 
origination programming on the cable programming service tiers.


Sec. 76.1218  Other cable programming service expense.

    This account shall include all cable programming service expenses 
that were not included in Accounts 1215 through 1218.


Sec. 76.1219  Accumulated depreciation and amortization expense.

    This account shall summarize for reporting purposes the contents of 
Accounts 1220 through 1225.


Sec. 76.1220  Accumulated depreciation expenses--cable services plant 
in service.

    This account shall include the depreciation expense of capitalized 
costs in Accounts 1139 through 1151, inclusive.


Sec. 76.1221  Accumulated depreciation expense--property held for 
future cable services use.

    This account shall include the depreciation expense of capitalized 
costs included in the Property Held for Future Cable Services Use 
account.


Sec. 76.1222  Amortization expense--tangible.

    This account shall include only the amortization of costs included 
in the Capital Leases account and the Leasehold Improvements account.


Sec. 76.1223  Amortization expense--intangible.

    This account shall include the amortization of costs included in 
the Intangibles account.


Sec. 76.1224  Amortization expense--other.

    (a) This account shall include only the amortization of costs 
included in the Cable Services Plant Adjustment account.
    (b) This account shall also include lump-sum write offs of amounts 
of plant acquisition adjustment.
    (c) Subsidiary records shall be maintained so as to show that 
character of the amounts contained in this account.


Sec. 76.1225  Other property, plant and equipment expenses.

    This account shall include all expenses associated with the 
following:
    (a) Property held for future cable use expenses; and
    (b) Costs incurred in provisioning material and supplies, including 
office supplies. This includes receiving and stocking, filling 
requisitions from stock, monitoring and replenishing stock levels, 
delivery of material, storage, loading or unloading and administering 
the reuse of refurbishment of material. Also included are adjustments 
resulting from the annual or more frequent inventory of material and 
supplies. Credits shall be made to this account for amounts transferred 
to construction and/or to plant specific operations expense. These 
costs are to be cleared by adding to the cost of material and supplies 
a suitable loading charge.


Sec. 76.1226  Cable system operations expenses.

    This account shall include the following expenses associated with 
operating the cable system:
    (a) The cost of electrical power used to operate the cable system.
    (b) Costs incurred in testing cable services facilities from a 
testing facility (test desk or other testing system) to determine the 
condition of plant on either a routine basis or prior to assignment of 
the facilities; receiving, recording and analyzing trouble reports; 
testing to determine the nature and location of reported trouble 
condition; and dispatching repair persons or otherwise initiating 
corrective action.
    (c) Costs incurred in the general administration of plant 
operations. This includes supervising plant operations; planning, 
coordinating and monitoring plant operations; and performing staff work 
such as developing method and procedures, preparing and conducting 
training (except on-the-job training) and coordinating safety programs. 
Credits shall be made to this account for amounts transferred to 
Construction accounts. These amounts shall be computed on the basis of 
direct labor hours.
    (d) Costs incurred in the general engineering of the cable services 
plant which are not directly chargeable to an undertaking or project. 
This includes developing input to the fundamental planning process, 
performing preliminary work or advance planning in connection with 
potential undertakings, and performing special studies of an 
engineering nature. Credits shall be made to this account for amounts 
transferred to Construction accounts. These amounts shall be computed 
on the basis of direct labor hours.


Sec. 76.1227  Marketing.

    This account shall include the following expenses associated with 
establishing and servicing customer accounts:
    (a) Costs incurred in performing administrative activities related 
to marketing products and services. This includes competitive analysis, 
product and service identification and specification, test market 
planning, demand forecasting, product life cycle analysis, pricing 
analysis, and identification and establishment of distribution 
channels.
    (b) Costs incurred in selling products and services. This includes 
determination of individual customer needs, development and 
presentation of customer proposals, sales order preparation and 
handling, and preparation of sales records.
    (c) Costs incurred in developing and implementing promotional 
strategies to stimulate the purchase of products and services. This 
excludes nonproduct-related advertising, such as corporate image, stock 
and bond issue and employment advertisements, which shall be included 
in the appropriate functional accounts.


Sec. 76.1228  Customer services.

    This account shall include costs incurred in establishing and 
servicing customer accounts. This includes:
    (a) Initiating customer service orders and records;
    (b) Maintaining and billing customer accounts;
    (c) Collecting and investigating customer accounts, including 
collecting revenues, reporting receipts, administering collection 
treatment, and handling contacts with customers regarding adjustments 
of bills;
    (d) Collecting and reporting pay station receipts; and
    (e) Instructing customers in the use of products and services.


Sec. 76.1229  Executive and planning.

    This account shall include the following expenses:
    (a) Costs incurred in formulating corporate policy and in providing 
overall administration and management. Included are the pay, fees and 
expenses of boards of directors or similar policy boards and all board-
designated officers of the company and their office staffs, e.g., 
secretaries and staff assistants.
    (b) Costs incurred in developing and evaluating long-term courses 
of action for the future operations of the company. This includes 
performing corporate organization and integrated long-range planning, 
including management studies, options and contingency plans, and 
economic strategic analysis.


Sec. 76.1230  General and administrative.

    This account shall include the following expenses:
    (a) Costs incurred in providing accounting and financial services. 
Accounting services include payroll and disbursements, property 
accounting, capital recovery, regulatory accounting (revenue 
requirements, settlements and corollary cost accounting), non-customer 
billing, tax accounting, internal and external auditing, capital and 
operating budget analysis and control, and general accounting 
(accounting principles and procedures and journals, ledgers, and 
financial reports). Financial services include banking operations, cash 
management, benefit investment fund management (including actuarial 
services), securities management, debt trust administration, corporate 
financial planning and analysis, and internal cashier services.
    (b) Costs incurred in maintaining relations with government, 
regulators, other companies and the general public. This includes:
    (1) Reviewing existing or pending legislation;
    (2) Preparing and presenting information for regulatory purposes;
    (3) Performing public relations and non-product-related corporate 
image advertising activities;
    (4) Administering relations, including negotiating contracts, but 
excluding sales contracts; and
    (5) Administering investor relations.
    (6) Costs incurred in performing personnel administration 
activities. This includes:
    (i) Equal Employment Opportunity and Affirmative Action Programs;
    (ii) Employee data for forecasting, planning and reporting;
    (iii) General employment services;
    (iv) Occupational medical services;
    (v) Job analysis and salary programs;
    (vi) Labor relations activities;
    (vii) Personnel development and staffing services, including 
counseling, career planning, promotion and transfer programs;
    (viii) Personnel policy development;
    (ix) Employee communications;
    (x) Benefit administration;
    (xi) Employee activity programs;
    (xii) Employee safety programs; and
    (xiii) Nontechnical training course development and presentation.
    (c) Expenses incurred in providing information management, 
including costs associated with planning, developing, testing, 
implementing and maintaining data bases and application systems for 
computers.
    (d) Expenses incurred for the provision of legal services. This 
includes conducting and coordinating litigation, providing guidance on 
regulatory and labor matters, preparing, reviewing and filing patents 
and contracts and interpreting legislation. Also included are court 
costs, filing fees, and the costs of outside counsel, depositions, 
transcripts and witnesses.
    (e) Expenses incurred in procuring material and supplies, including 
office supplies. This includes analyzing and evaluating suppliers' 
products, selecting appropriate suppliers, negotiating supply 
contracts, placing purchase orders, expediting and controlling orders 
placed for material, developing standards for material purchased and 
administering vendor or user claims.
    (f) Expenses incurred in making planned search or critical 
investigation aimed at discovery of new knowledge. it also includes 
translating research findings into a plan or design for a new product 
or process or for a significant improvement to an existing product or 
process, whether intended for sale or use. This excludes making routine 
alterations to existing products, processes, and other ongoing 
operations even though those alterations may represent improvements.
    (g) Costs incurred in performing other general administrative 
activities not directly charged to the user, and not provided for in 
other accounts. This includes providing general reference libraries, 
food services (e.g., cafeterias, lunch rooms and vending facilities), 
archives, general security investigation services, operating official 
private branch exchanges in the conduct of the business, and 
telecommunications and mail services. Also included are payments in 
settlement of accident and damage claims, insurance premiums for 
protection against losses and damages, direct benefit payments to or on 
behalf of retired and separated employees, accident and sickness 
disability payments, supplemental payments to employees while in 
governmental service, death payments, and other miscellaneous costs of 
a corporate nature. This account excludes the cost of office services, 
which are to be included in the accounts appropriate for the activities 
supported.


Sec. 76.1231  Provision for uncollectible notes receivable.

    This account shall be charged with amounts concurrently credited to 
the Notes Receivable account, or to the Notes Receivable Allowance 
account, when such allowance is maintained.


Sec. 76.1232  Instructions for other income accounts.

    The Other Income Accounts are designed to reflect both operating 
and nonoperating income items including taxes, extraordinary items and 
other income and expense items not properly included elsewhere.


Sec. 76.1233  Contents of accounts.

    Other Operating Income and Expense accounts are intended to record 
the results of transactions, events or circumstances during the periods 
which are incidental or peripheral to the major or central operations 
of the company. They shall include all items of an operating nature as 
incidental work performed for others not provided for elsewhere. 
Whenever practicable the inflows and outflows associated with a 
transaction, event or circumstances shall be matched and the results 
shown as a net gain or loss.


Sec. 76.1234  Other operating income and expenses.

    This account shall include the following operating income and 
expenses:
    (a) Profits realized from custom work (plant construction) 
performed for others incident to the company's regulated cable services 
operations. The records supporting the entries in this account shall be 
maintained with sufficient particularity to identify separately the 
revenue and costs associated with each undertaking.
    (b) A return on investment for the use of regulated property plant 
and equipment to provide nonregulated products and services.
    (c) All gains and losses resulting from the exchange of foreign 
currency. Transaction (realized) gains or losses shall be measured 
based on the exchange rate in effect on the transaction date. 
Unrealized gains or losses shall be measured based on the exchange rate 
in effect at the balance sheet date.
    (d) Gains or losses resulting from the disposition of land or 
artworks.
    (e) Gains or losses resulting from transactions, events or 
circumstances which are of an operational nature, but occur irregularly 
or are peripheral to the major or central operations of the company and 
not provided for elsewhere.


Sec. 76.1235  Operating taxes.

    (a) The Operating Tax account shall reflect the taxes arising from 
the central operations of the company.
    (b) This account shall be charged and the Unamortized Operating 
Investment Tax Credits--Net account, shall be credited with investment 
tax credits generated from qualified expenditures related to regulated 
operations which the company defers rather than recognizes currently in 
income.
    (c) This account shall be credited and the Unamortized Operating 
Investment Tax Credits--Net account shall be charged ratably with the 
amortization of each year's investment tax credits included in the 
Unamortized Operating Investment Tax Credits--Net account for 
investment services for ratemaking purposes. Such amortization shall be 
determined in relation to the period of time used for computing book 
depreciation on the property with respect to which the tax credits 
relate.
    (d) This account shall be charged and the Income Taxes--Accrued 
account, shall be credited for the amount of Federal Income Taxes for 
the current period. This account shall also reflect subsequent 
adjustments to amounts previously charged. Taxes should be accrued each 
month on an estimated basis and adjustments made as later data becomes 
available. Tax credits, other than investment tax credits, if 
normalized, shall be recorded consistent with the accounting for 
investment tax credits and shall be amortized to income as directed by 
this Commission. No entries shall be made to this account to reflect 
interperiod tax allocations.
    (e) This account shall be charged and the Income Taxes--Accrued 
account, shall be credited for the amount of state and local income 
taxes for the current period. This account shall also reflect 
subsequent adjustments to amounts previously charged. Taxes should be 
accrued each month on an estimated basis and adjustments made as later 
data becomes available. No entries shall be made to this account to 
reflect interperiod tax allocations.
    (f) This account shall be charged and the Other Taxes--Accrued 
account, shall be credited for all taxes, other than Federal, state, 
and local income taxes and payroll related taxes, related to regulated 
operations applicable to current periods. Among the items includable in 
this account are property, gross receipts, franchise and capital stock 
taxes; this account shall also reflect subsequent adjustments to 
amounts previously charged.
    (g) Special assessments for street and other improvements and 
special benefit taxes, such as water taxes and the like, shall be 
included in the operating expense accounts or investment accounts, as 
may be appropriate.
    (h) Discounts allowed for prompt payment of taxes shall be credited 
to the account to which the taxes are chargeable.
    (i) Interest on tax assessments which are not paid when due shall 
be included in the Interest and Related Items account.
    (j) Taxes paid by the company under tax-free covenants on 
indebtedness shall be charged to the Nonoperating Income and Expense 
account.
    (k) Sales and use taxes shall be accounted for, so far as 
practicable, as part of the cost of the items to which the taxes 
relate.
    (l) Taxes on rented telecommunications plant which are borne by the 
lessee shall be credited by the owners to the Miscellaneous Revenue 
account, and shall be charged by the lessee to the appropriate Plant 
Specific Operations Expense account.


Sec. 76.1236   Nonoperating income and expense.

    (a) The nonoperating income and expense accounts are intended to 
record the results of transactions, events and circumstances affecting 
the company during a period and which are not operational in nature. 
They shall include such items as nonoperating taxes, dividend income 
and interest income. Whenever practicable the inflows and outflows 
associated with a transaction or event shall be matched and the result 
shown as a net gain or loss.
    (b) This account shall include dividends on investments in common 
and preferred stock, which is the property of the company, whether such 
stock is owned by the company and held in its treasury, or deposited in 
trust (except in sinking or other funds, or otherwise controlled. These 
accounts shall not include dividends or other returns on securities 
issued or assumed by the company and held by or for it, whether pledged 
as collateral, or held in its treasury, in special deposits, or in 
sinking or other funds. Dividends on stocks of other companies held in 
sinking or other funds shall be credited to this account. Dividends 
received and receivable from affiliated companies accounted for on the 
equity method shall be included in the Investments in Affiliated 
Companies account, as a reduction of the carrying value of the 
investments.
    (c) This account shall include interest on securities, including 
notes and other evidences of indebtedness, which are the property of 
the company, whether such securities are owned by the company and held 
in its treasury, or deposited in trust (except in sinking or other 
funds, see paragraph (d) of this section) or otherwise controlled. It 
shall also include interest on bank balances, certificates of deposits, 
open accounts, and other analogous items. There shall be included in 
this account for each month the applicable amount requisite to 
extinguish, during the interval between the date of acquisition and 
date of maturity, the difference between the purchase price and the par 
value of securities owned, the income from which is includable in this 
account. Amounts thus credited or charged shall be concurrently 
included in the accounts in which the securities are carried. This 
account shall not include interest or other returns on securities 
issued or assumed by the company and held by or for it, whether pledged 
as collateral, or held in its treasury, in special deposits, or in 
sinking or other funds. Cash discounts on bills for material purchased 
also shall not be included in this account.
    (d) This account shall include the income accrued on cash, 
securities issued by other companies, and other assets (not including 
securities issued or assumed by the company) held in sinking and other 
funds. There shall be included in this account for each month the 
applicable amount requisite to extinguish, during the interval between 
the date of acquisition and the date of maturity, the difference 
between the purchase price, and the par value of securities held in 
sinking or other funds. Amounts thus credited or charged shall be 
concurrently included in the accounts in which the securities are 
carried.
    (e) This account shall be credited with such amounts as are charged 
to the cable services plant accounts for the purpose of recording an 
allowance for funds used for construction purposes.
    (f) This account shall include gains or losses resulting from the 
disposition of gains or losses from the disposition of land or 
artworks; disposition of plant with traffic; and disposition of 
nonoperating cable services plant not previously used in the provision 
of cable services.
    (g) This account shall include all other items of income and gains 
or losses, including:
    (1) Fees collected in connection with the exchange of coupon bonds 
for registered bonds;
    (2) Gains or losses realized on the sale of temporary cash 
investments or marketable equity securities;
    (3) Uncollectible amounts previously credited to Accounts 7310 
through 7350, inclusive;
    (4) Net unrealized losses on investments in current marketable 
equity securities;
    (5) Write-downs or write-offs of the book costs of investment in 
equity securities due to permanent impairment;
    (6) Gains or losses of nonoperating nature arising from foreign 
currency exchange or translation;
    (7) Gains or losses from the extinguishment of debt made to satisfy 
sinking fund requirements;
    (8) Amortization of Goodwill;
    (9) Company's share of the earnings or losses of affiliated 
companies accounted for on the equity method; and
    (10) The net balance of the revenue from and the expenses 
(including depreciation, amortization and insurance) of property, 
plant, and equipment, the cost of which is includable in the 
Nonoperating Plant account.
    (h) This account shall include the following costs, which are 
presumed to be exclude from the cost of service in setting rates:
    (1) Lobbying includes expenditures for the purpose of influencing 
public opinion with respect to the election or appointment of public 
officials, referenda, legislation, or ordinances (either with respect 
to the possible adoption of new referenda, legislation or ordinances, 
or repeal or modification of existing referenda, legislation or 
ordinances) or approval, modification, or revocation of franchises, or 
for the purpose of influencing the decisions of public officials. This 
also includes advertising, gifts, honoraria, and political 
contributions. This does not include such expenditures which are 
directly related to communications with and appearances before 
regulatory or other governmental bodies in connection with the 
reporting utility's existing or proposed operations;
    (2) Contributions for charitable, social or community welfare 
purposes;
    (3) Membership fees and dues in social, service and recreational or 
athletic clubs and organizations;
    (4) Penalties and fines paid on account of violations of statutes. 
This account shall also include penalties and fines paid on account of 
violations of U.S. statutes including judgments arising from a 
violation of antitrust laws; and
    (5) Abandoned construction projects.


Sec. 76.1237  Nonoperating taxes.

    (a) The Nonoperating Tax accounts shall include taxes arising from 
activities which are not a part of the central operations of the 
entity.
    (b) This account shall be charged and the Unamortized Nonoperating 
Investment Tax Credits--Net account, shall be credited with investment 
tax credits generated from qualified expenditures related to operations 
which the company has elected to defer rather than recognize currently 
in income.
    (c) This account shall be credited and the Unamortized Nonoperating 
Investment Tax Credits--Net account shall be charged with the 
amortization of each year's investment tax credits included in such 
accounts relating to amortization of previously deferred investment tax 
credits of other property or regulated property, the amortization of 
which does not serve to reduce costs of service (but the unamortized 
balance does reduce rate base) for ratemaking purposes. Such 
amortization shall be determined with reference to the period of time 
used for computing book depreciation on the property with respect to 
which the tax credits relate.
    (d) This account shall be charged and the Income Taxes--Accrued 
account shall be credited for the amount of nonoperating Federal income 
taxes for the current period. This account shall also reflect 
subsequent adjustments to amounts previously charged. Taxes shall be 
accrued each month on an estimated basis and adjustments made as later 
data becomes available. Companies that adopt the flow-through method of 
accounting for investment tax credits shall reduce the calculated 
provision in this account by the entire amount of the credit realized 
during the year. Tax credits, other than investment tax credits, if 
normalized, shall be recorded consistent with the accounting for 
investment tax credits. No entries shall be made to this account to 
reflect interperiod tax allocation.
    (e) This account shall be charged and the Income Taxes--Accrued 
account should be credited for the amount of state and local income 
taxes for the current period. This account shall also reflect 
subsequent adjustments to amounts previously charged. Taxes shall be 
accrued each month on an estimated basis and adjustments made as later 
data becomes available. No entries shall be made to this account to 
reflect interperiod tax allocation.
    (f) This account shall be charged and the Other Taxes--Accrued 
account shall be credited for all nonoperating taxes other than 
Federal, state and local income taxes, and payroll related taxes for 
the current period. Among the items includable in this account are 
property, gross receipts, franchise and capital stock taxes. This 
account shall also reflect subsequent adjustments to amounts previously 
charged.


Sec. 76.1238  Interest and related items.

    (a) This account shall include the current accruals of interest on 
all classes of debt the principal of which is includable in the Funded 
Debt Account. It shall also include the interest on funded debt the 
maturity of which has been extended by specific agreement. It shall not 
include charges for interest on funded debt issued or assumed by the 
company and held by or for it, whether pledged as collateral or held in 
its treasury, in special deposits or in sinking or other funds. 
Interest expressly provided for and included in the face amount of 
securities issued shall be charged at the time of issuance to the Other 
Prepayments accounts and cleared to this account as the term expires to 
which the interest applies. This account shall also include monthly 
amortization of balances in the Premium on Long-Term Debt account and 
the Discount on Long-Term Debt account.
    (b) This account shall include the interest portion of each capital 
lease payment .
    (c) This account shall include the monthly amortization of the 
balances in the Unamortized Debt Issuance Expense account.
    (d) This account shall include all interest deductions not provided 
for elsewhere, including:
    (1) Advances from affiliated companies;
    (2) Advances from nonaffiliated companies and other liabilities
    (3) Assessments for public improvements past due;
    (4) Bond coupons, matured and unpaid;
    (5) Claims and judgments;
    (6) Customers' deposits;
    (7) Funded debt mature, with respect to which a definite agreement 
as to extension has not been made;
    (8) Notes payable on demand or maturing one year or less from date 
of issue;
    (9) Open accounts;
    (10) Tax assessments, past due; and
    (11) Discount, premium, and issuance expense of notes maturing one 
year or less from date of issue.


Sec. 76.1239  Extraordinary items.

    (a) This account is intended to segregate the effects of events or 
transactions that are extraordinary. Extraordinary events and 
transactions are distinguished by both their unusual nature and by the 
infrequency of their occurrence, taking into account the environment in 
which the company operates. This account shall also include the related 
income tax effect of the extraordinary items.
    (b) This account shall be credited with nontypical, noncustomary 
and infrequently recurring gains which would significantly distort the 
current year's income computed before such extraordinary items, if 
reported other than as extraordinary items.
    (c) This account shall be debited with nontypical, noncustomary and 
infrequently recurring losses which would significantly distort the 
current year's computed before such extraordinary items, if reported 
other than as extraordinary items.
    (d) This account shall be charged or credited and the Income 
Taxes--Accrued account shall be credited or charged for all current 
income tax effects (Federal, state and local) of items included in 
paragraphs (b) and (c) of this section.
    (e) This account shall be charged or credited, as appropriate, with 
a contra amount recorded to the Net Noncurrent Deferred Nonoperating 
Income Taxes account or the Net Current Deferred Nonoperating Income 
Taxes account for the income tax effects (Federal, state and local) of 
items included in paragraphs (b) and (c) of this section that have been 
deferred.


Sec. 76.1240  Nonregulated net income.

    (a) This account shall be used by those companies who offer 
nonregulated activities that do not involve the joint or common use of 
assets or resources used in the provision of both regulated and 
nonregulated products and services, and which have not established a 
separate subsidiary for that purpose.
    (b) All revenue and expenses (including taxes) incurred in these 
nonregulated activities shall be recorded on separated books of account 
for such operations.


Sec. 76.1241  Glossary of terms.

    When used in this system of accounts:
    Account means a specific element of a chart of accounts used to 
record, classify and accumulate similar financial transactions 
resulting from the operations of the entity. ``Accounts'' or ``these 
accounts'' refer to the accounts of this system of accounts.
    Accounting system means the total set of interrelated principles, 
rules, requirements, definitions, accounts, records, procedures and 
mechanisms necessary to operate and evaluate the entity from a 
financial perspective. An accounting system generally consists of a 
chart of accounts, various parallel subsystems and subsidiary records. 
An accounting system is utilized to provide the necessary financial 
information to users to meet judiciary and other responsibilities.
    Affiliated companies means companies that directly or indirectly 
through one or more intermediaries, control or are controlled by, or 
are under common control with, the accounting company. See also Control
    Amortization means the systematic recoveries, through ratable 
charges to expense, of the cost of assets.
    Associated equipment means that equipment which functions with a 
specific type of plant or with two (2) or more types of plant, e.g., 
switching equipment, network power equipment, circuit equipment, common 
channel network signaling equipment or network operations equipment. 
Associated equipment shall be classified to the account appropriate for 
the type of equipment with which it is predominately used rather than 
on its own characteristics.
    Book cost means the amount at which property is recorded in these 
accounts, without deduction of related allowances.
    Company or the company means the accounting entity unless otherwise 
indicated in the context.
    Control (including the terms controlling, controlled by, and under 
common control with) means the possession directly or indirectly, of 
the power to direct or cause the direction of the management and 
policies of a company, whether such power is exercised through one or 
more intermediary companies, or alone, or in conjunction with, or 
pursuant to an agreement with, one or more other companies, and whether 
such power is established through a majority or minority ownership 
voting of securities, common directors, officers, or stockholders, 
voting trusts, holding trusts affiliated companies, contract, or any 
other direct or indirect means.
    Cost means the amount of money actually paid (or the current money 
value of any consideration other than money exchanged) for property or 
services, except as applied to cable services plants, franchises, and 
patent rights. See also Original Cost.
    Cost of removal means the cost of demolishing, dismantling, 
removing, tearing down, of otherwise disposing of cable services plant 
and recovering the salvage, including the cost of transportation and 
handling incident thereto.
    Depreciation means the loss not restored by current maintenance, 
incurred in connection with the consumption or prospective retirement 
of cable services plant in the course of service from causes which are 
known to be in current operation, against which the company is not 
protected by insurance, and the effect of which can be forecast with a 
reasonable approach to accuracy. Among the causes to be given 
consideration are wear and tear, decay, action of the elements, 
inadequacy, obsolescence, changes in technology, changes in demand and 
requirements of public authorities.
    Intangible property means assets that have no physical existence 
but instead have value because of the rights which ownership confers.
    Minor items means any part or element of such plant, which when 
removed, (with or without replacement) does not initiate retirement 
accounting, as applied to depreciable cable services plant.
    Original cost or cost means the actual money cost of (or the 
current money value of any consideration other than money exchanged 
for) property at the time when it was first dedicated to use by a cable 
operator, whether the accounting company or by predecessors, as applied 
to cable services plant, rights of way and other intangible property. 
For the application of this definition of property acquired from 
predecessors see Sec. 76.1600(b)(1). Note also the definition of Cost 
in this section.
    Plant retired means plant which has been removed, sold, abandoned, 
destroyed, or otherwise withdrawn from service.
    Retirement units means those items of plant which when removed 
(with or without replacement) cause the initiation of retirement 
accounting entries, as applied to depreciable cable services plant.
    Salvage value means the amount received for property retired, if 
sold, or if retained for reuse, the amount at which the material 
recovered is chargeable to the Material and Supplies account or other 
appropriate account.
    Subsidiary record means accumulation of detailed information which 
is required by this Commission to be maintained in support of entries 
to the accounts.
    Subsidiary record categories means those segregations of certain 
regulated costs, expenses and revenues which must be maintained and are 
subject to specific reporting requirements of this Commission.
    Subsystems, parallel mechanisms means processes or procedures which 
augment the use of a chart of accounts in the financial operation of 
the entity. These subsystems operate on and/or process account and 
subsidiary record information for specific purposes.
    Time of installation means the date which cable services plant is 
placed in service.
    Time of retirement means the date at which cable services plant is 
retired from service.
    Tangible property means assets characterized by physical existence, 
such as land, buildings, equipment, furniture, fixtures and tools.

[FR Doc. 94-9079 Filed 4-14-94; 8:45 am]
BILLING CODE 6712-01-M