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


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[[Page 39451]]

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 32

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


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

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Report and Order (Order), the Commission raises the 
expense limit specified in its rules regarding Instructions for 
telecommunications plant accounts from $500 to $2,000, with one 
exception related to personal computers recorded in Account 2124, 
General purpose computers. The purpose of the expense limit is to 
reduce the cost of maintaining property records for the acquisition, 
depreciation, and retirement of a multitude of low-cost, high-volume 
assets. The Commission also adopts a five-year amortization period 
during which incumbent local exchange carriers (ILECs) may recover the 
undepreciated portion of embedded assets affected by this rule change. 
We will allow carriers to implement these changes effective January 1, 
1998.

DATE EFFECTIVE: January 23, 1998.

FOR FURTHER INFORMATION CONTACT: Warren Firschein, Accounting and 
Audits Division, Common Carrier Bureau, (202) 418-0844.

SUPPLEMENTARY INFORMATION: On March 1, 1994, USTA filed a Petition for 
Rulemaking to raise the expense limit in Section 32.2000(a)(4) from 
$500 to $2,000. USTA also requested that the carriers be permitted to 
amortize the net book cost of embedded assets that were purchased at 
prices ranging from $500 to $2,000 over each company's remaining asset 
life for accounts covered by the expense limit, which it indicated 
would result in amortization periods of three to five years. On March 
23, 1994, the Commission issued a Public Notice inviting comments on 
USTA's petition. After reviewing the comments, the Commission issued 
the Notice in which it proposed to raise the expense limit to $750. 
Moreover, on May 31, 1994, USTA filed a Petition for Rulemaking to 
Amend Part 32 of the Commission's Rules to eliminate detailed property 
records for Accounts 2115, Garage work equipment; 2116, Other work 
equipment; 2122, Furniture; 2123.1, Office support equipment; 2123.2, 
Company communications equipment; and the personal computers and 
peripheral devices recorded in 2124, General purpose computers. In 
place of detailed property records, USTA requested that the Commission 
permit carriers to adopt a vintage amortization level (``VAL'') 
process. Under this process, a carrier would not track an asset over 
its life through a continuing property record system. Instead, it would 
assign each asset a life and retire the asset from its books of account 
at the end of the assigned life, regardless of whether it was still 
used in providing telecommunications service. A Public Notice inviting 
comments on this petition was released on May 10, 1995. All comments 
were taken under consideration. By raising the expense limit from $500 
to $2,000 for Accounts 2115, 2116, 2122, 2123 and 2124 (except for PC 
components) in this Order, the Commission has greatly reduced the 
number of items carriers will need to capitalize. Accordingly, the May 
31, 1994 petition is dismissed.

Regulatory Flexibility Analysis

    We have determined that Section 605(b) of the Regulatory 
Flexibility Act of 1980, 5 U.S.C. 605(b), does not apply to the rules 
adopted in this Order because they will not have a significant economic 
impact on a significant number of small entities. Even if a substantial 
number of small entities were affected by the rules, there would not be 
a significant economic impact on those entities. These rules govern the 
accounting treatment of specific assets, in particular, whether their 
costs are expensed or capitalized. Capitalization is more 
administratively burdensome because it requires additional 
recordkeeping over a period of years. Because we are raising the limit 
under which items are expensed, the effect of this Order is to reduce 
regulatory burdens for all companies that use our Part 32 accounts.

Ordering Clause

    Accordingly, It Is Ordered, pursuant to Sections 4(i), 4(j), 218, 
and 220 of the Communications Act of 1934, as amended, 47 U.S.C. 
154(i), 154(j), 218, and 220, Part 32, Uniform System of Accounts for 
Telecommunications Companies, of the Commission's Rules IS AMENDED, as 
set forth below, effective January 23, 1998. Affected parties may elect 
to implement these changes on January 1, 1998.

List of Subjects in 47 CFR Part 32

    Communications common carriers, Reporting and recordkeeping 
requirements, Telephone, Uniform System of Accounts.

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

Rule Changes

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

PART 32--UNIFORM SYSTEM OF ACCOUNTS FOR TELECOMMUNICATIONS 
COMPANIES

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

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

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


Sec. 32.2000  Instructions for telecommunications plant accounts.

    (a) * * *
    (4) The cost of the individual items of equipment, classifiable to 
Accounts 2112, Motor vehicles; 2113, Aircraft; 2114, Special purpose 
vehicles; 2115, Garage work equipment; 2116, Other work equipment; 
2122, Furniture; 2123, Office equipment; and 2124, General purpose 
computers, costing $2,000 or less or having a life less than one year 
shall be charged to the applicable Plant Specific Operations Expense 
accounts, except for personal computers falling within Account 2124. 
Personal computers classifiable to Account 2124, with a total cost for 
all components, including initial operating software, of $500 or less 
shall be charged to the applicable Plant Specific Operations Expense 
accounts. If the aggregate investment in the items is relatively large 
at the time of acquisition, such amounts shall be maintained in an 
applicable material and supplies account until items are used.
* * * * *
[FR Doc. 97-19351 Filed 7-22-97; 8:45 am]
BILLING CODE 6712-01-P