[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] ----------------------------------------------------------------------- [[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. ----------------------------------------------------------------------- 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